The times, they are a-changin’! These days, you could become 51% owner of Playboy Enterprises, Inc. (NYSE:PLA) for less than $50 million. I’m not sure what you’d do with half of Hef’s robe or half of his harem of nubile blondes. But it sure has a certain ring to it!

If you wanted to become half-owner of Marvel Entertainment, Inc. (NYSE:MVL), however, you’d have to shell out $1.35 billion! Comic books are now worth 27 times as much as the well-written articles and witty cartoons that I hear are the sales engine of Playboy magazine.

The interesting part of this is that the demographic both businesses used to appeal to are nearly identical: Adolescent and post-adolescent male virgins.

Only that Playboy’s original audience apparently has outgrown the franchise. While Marvel’s demographics steadfastly refuses to grow up.

Of course, it’s never too late to have a happy childhood.

But there’s a lesson in it regarding what’s shaping up to be the most titillating IPO this year: After dragging their feet for over a year, “adult” social networking company FriendFinder Networks—which absorbed Playboy’s competitor Penthouse a while ago—filed it’s Form S1 with the SEC
on May 18.

The company remains heavily loss-making as free networking and porn sites are eroding what’s left of its market share. Whatever fizz there will be in the actual offering will be media-generated.

The proposed ticker for this stock is NYSE:FFN, which unfortunately remains taken by an unrelated company, the initial amount of the offering (filed last December) was $460 million.

It looks like a prime candidate to shorting the day after the IPO is launched.

Source: Playboy’s (NYSE:PLA) Numbers Don’t Add Up to Much in Regard to the FriendFinder IPO

• The publisher of one of the world’s best known adult magazines, Playboy Enterprises Inc., (PLA) said it would be open to discussions about an outright sale after posting a wider fourth-quarter loss on weaker-than-expected revenue.  The company, which has been through a management shake-up including the resignation in December of longtime Chief Executive Officer Christie Hefner, posted a net loss in each quarter of 2008. A restructuring charge of $157.2 million, and other one-time costs, also hurt results, Reuters reported.

• Confronting its first quarterly loss in at least 15 years, Honda Motor Co. Ltd. (ADR: HMC) will scale back plans to make business jets and may offer voluntary retirements for the first time as it slashes costs in the United States.  The worst global financial crisis since the Great Depression has cut corporate demand for jets. The company will produce 70 to 80 jets a year for delivery from the end of 2010, compared with an earlier plan to make 100 planes a year, CEO Takeo Fukui said in a Monday Bloomberg News interview.

• After record investment losses and client redemptions cut assets by 37% in the second half of 2008, many hedge funds are looking to consolidate, Bloomberg reported.  As many as 40% of the 9,000 hedge funds and funds of funds may disappear in the next two years, according to Karamvir Gosal, a New York-based investment banker at Jefferies Putnam Lovell. While some will return money to investors and shut their doors, mergers and acquisitions will be more prevalent than in the past.

• JPMorgan Chase & Co (JPM) could modify more than the 600,000 mortgages it has already singled out for restructuring, CEO Jamie Dimon told CNBC in an interview yesterday (Wednesday).  JPMorgan and other major banks have announced plans to modify loans as unemployment has risen in recent months, raising concerns that more borrowers may start to miss payments on their mortgages. Dimon’s bank has agreed to renegotiate $70 billion in mortgages since October.

• Google Inc. (GOOG) wants to curb growth in the number of frivolous patent challenges it faces by fighting rather than settling lawsuits, Bloomberg reported.  Patent claims against Google rose to 14 last year from 11 in 2007 and three in 2006.  The company is going on the offensive to fight patent claims, a strategy the Internet-search giant says will deter frivolous lawsuits.  Google didn’t settle any patent suits last year.

• Mortgage applications filed last week rose a seasonally adjusted 45.7% compared with the week before, reflecting a spike in refinancings as interest rates fell, the Mortgage Bankers Association said yesterday (Wednesday). Applications to refinance existing loans jumped 64.3% on a week-to-week basis, and total application volumes increased an unadjusted 5.2% from the comparable week in February 2008. The rate on 30-year fixed-rate mortgages averaged 4.99%, down from 5.19% the previous week, MarketWatch reported.

Source: Global Investment News Briefs Thursday, February 19th, 2009

• Freddie Mac (FRE) yesterday (Wednesday) posted a second-quarter loss that was more than three-times larger than Wall Street expected, The Associated Press reported. Freddie lost $821 million, or $1.63 a share, for the quarter that ended June 30, compared with a profit of $729 million, or 96 cents a share, in the year-ago period. Revenue fell to $1.69 billion from $2.34 billion. Stock analysts surveyed by Thomson Financial expected a loss of just 53 cents a share.

• Sprint Nextel Corp. (S) reported a $344 million loss yesterday (Wednesday), compared with a profit of $19 million a year ago. Revenue fell 11% to $9.06 billion. Sprint ended the quarter with just under 52 million customers, down from 54 million customers a year ago.

• Time Warner Inc.’s (TWX) second-quarter earnings fell 26% on declining subscriber fees at its AOL online unit and lower ad revenue at the Time publishing business, The Associated Press reported. Time Warner said net income fell to $792 million, or 22 cents per share, from $1.07 billion, or 28 cents per share, a year ago. The media conglomerate also took legal and tax steps that make it possible to split its AOL online business and sell it in parts.

• Mining giant Xstrata PLC (PINK: XSRAF) launched a $10 billion takeover bid for the world’s third-biggest platinum producer Lonmin PLC (OTC: LNMIY) yesterday (Wednesday), though Lonmin swiftly rejected the bid. “This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets,” the company said.

• Bond insurer Ambac Financial Group Inc. (ABK) said yesterday (Wednesday) that net income rose to a record $823.1 million, or $2.80 a share, from $173 million, or $1.67 a share, a year earlier.

• Playboy Enterprises Inc. (PLA) yesterday (Wednesday) reported a second-quarter loss of $2.1 million, or 6 cents per share, compared to a profit of $1.9 million, or 6 cents per share, in the second quarter of 2007. Revenue dropped 14% to $73.4 million from $85.7 million in the year-ago period, The Associated Press reported.

• Oil prices fell below $118 a barrel yesterday (Wednesday) – $30 below their July 11 high. Light, sweet crude for September delivery settled 59 cents lower at $118.58 a barrel, after earlier falling as low as $117.11.

Source: Global Investing Roundups Thursday, August 7th, 2008

NEW HIGHS OF NOTE LAST WEEK

Halliburton (HAL)… oil services
Patterson-UTI (PTEN)… oil services
Carbo Ceramics (CRR)… oil services
Atwood Oceanics (ATW)… oil services
Key Energy Services (KEG)… oil services
National Oilwell Varco (NOV)… oil services
Spectra Energy (SE)… gas pipelines
U.S. Steel (X)… you guessed it
Schnitzer Steel (SCHN)… scrap steel
Fluor (FLR)… infrastructure
Quanta Services (PWR)… infrastructure
Crude oil, Natural gas, Gasoline, Corn, Soybeans, Cocoa

NEW LOWS OF NOTE LAST WEEK

JetBlue (JBLU)… airline
US Airways (LCC)… airline
Continental Airline (CAL)… airline
MGM Mirage (MGM)… casinos
Boyd Gaming (BYD)… casinos
Wynn Resorts (WYNN)… casinos
Las Vegas Sands (LVS)… casinos
Monarch Casinos (MCRI)… casinos
Winnebago (WGO)… RVs
Thor Industries (THO)… RVs
Fleetwood Enterprises (FLE)… RVs
Goodyear Tire (GT)… tires
News Corp (NWS)… media
Hershey (HSY)… candy
Playboy (PLA)… eye candy
American Express (AXP)… credit cards
Capital One Financial (COF)… credit cards
International Gaming (IGT)… gambling machines
Circuit City (CC)… landfill stuffing continues to suffer
Veolia Environnement (VE)… world’s largest water stock
Honeywell (HON)… conglomerate
General Electric (GE)… conglomerate
United Technologies (UTX)… conglomerate
XM Satellite Radio (XMSR)… satellite radio
Legg Mason (LM)… asset management
Callaway Golf (ELY)… golf equipment
Whole Foods (WFMI)… expensive groceries
General Motors (GM)… read the letter from the Chairman
Lead, Nickel

Source: Brian Hunt’s Market Notes Monday, June 30, 2008

We received some absolutely brilliant news from a far corner of the world yesterday. Exciting moves are afoot on the island of Bougainville in Papua New Guinea.

We’ve got a brilliant copper and gold mining play on the island… so far we are up by 122% on this investment and the news just keeps on getting better. The international media is taking a much greater interest in the Bougainville story… which means that our gains could be looking to jump up even further.

The mine shut down nineteen years ago due to civil unrest – but these problems have been sorted out, and money is now rolling in the direction of our investors.

Yesterday, Pacific Magazine ran an article on the improving situation on the island. The crucial bit was an interview with the Vice-Chairman of the local Landowners’ Association (PLA). He said that the PLA fully supports the re-opening of the mine after the feasibility studies are completed. “We are content with the way negotiations are going on and we fully support the initiative taken to restart the mine.”

Which is excellent, because it means that there will be no local disruption to the re-starting of the mining operation.

But there’s more to this story…

Our contact in Bougainville has sent us the latest version of the so-called “landowner’s proposal” which gives details on what the revised Bougainville Copper Agreement (BCA) might look like. No other financial publication has reported on it yet. So my Profit Hunter readers are probably the first ones to receive exclusive information.

The four-page-long document written by a long-time adviser to Bougainvillean landowners is supposed to provide the basis for an update of the BCA. It aims for a fairer division of future earnings than the old agreement – especially for local landowners.

It was the unfair distribution of profits that led to rebels attacking the mining site and forcing the closure of the mine. You can’t really blame them. Under the old agreement, local landowners received only 0.2% of profits between 1972 and 1989. The new proposal suggests paying them a royalty of 3.5% of sales.

It also suggests splitting taxes at the ratio of 50:50 between the Autonomous region of Bougainville (ABG) and the National Government.

Of course we would be happy to see the local population get a better deal than the old one. But what really grabbed our attention is the value that the proposal places on our plays mining shares should the mine re-open soon.

The proposal’s calculations are based on the following assumptions: the current price of copper is US$3.88 per pound and the price for one troy ounce of gold is $878; US$1.5bn capital investment is needed to reopen the mine, repayable at an interest rate of 7.5% over 7 years; there will be no issue of additional ordinary shares by the company; The company gets a tax free status for the first two years of production; there will be no dividend withholding tax; the tax rate will be 30% from year three on; there will be a royalty payment of 3.5% of sales to landowners.

We could be looking at a 2,414% gain

Assuming that the mine produces the same amount of copper and gold it did in 1987, total sales per annum would amount to US$1,948m. Even after the operating costs, loan repayment, royalties and taxes, the company would be left with a total profit after tax of US$1,157m, or US$2.49 per share.

On a conservative price earnings ratio of 12, that would value the shares at US$29.88 or A$31.17. That target is a lot higher than we had estimated and translates into a potential gain of 2,414% on the price of A$1.24 at the time of writing! And the company owns several additional licences on the island as well – so there could be additional upward potential beyond that.

This isn’t going to happen overnight though. And nothing is ever guaranteed – especially in Bougainville. But if things play out as we believe they will, we could bank the biggest gains that we have ever made in Profit Hunter’s history.

Our contact tells us that there is now a three-step plan in effect. Step one aims to get all, or most, of the 510 local landowners to sign the proposal. Secondly, to win support for the draft from a majority of ABG MPs. Finally, to attend the planned joint supervisory board meeting in July and win backing for the proposal. They have obviously got their work cut out for them…

The coming months are going to be very exciting for everyone who holds shares in this company. Reaching each off those three milestones should provide a further boost to the share price. And the mid- to long-term potential on this share remains huge.

As a subscriber to Profit Hunter you would have access to this and all our other investment recommendations.

At present we’re looking at one African company we think can do very well as it involves a small company that holds all the cards in a huge oil deal – involving the biggest super-powers and billions of dollars…

If gains of 122% (and that’s just for starters) are of interest to you… learn more about Profit Hunter opportunities right now

Regards,

Manraaj Singh
Editor
Profit Hunter

Source: Our Bougainville Gold and Copper Mining Play Is Way Up, And Climbing

A dozen or so gun-laden soldiers from China’s People’s Liberation Army (PLA) stood quietly among the customs agents at Lo Wu Station. The KCR East Rail, the commuter train that left Hong Kong at Tsim Sha Tsui 45 minutes prior, pulled in for its last stop. Shenzhen, once a remote Chinese fishing village nestled peacefully at the mouth of the infamous Pearl River Delta, towered in the distance.

My friends and I exited the train onto the long, cracked concrete platform. A drainage stream littered with rusty steel barrels trickled by. On the northern bank, a retaining wall backed by an even more daunting barbed wire fence served to support the numerous lookout posts dotting China’s most traversed southwestern border. This wasn’t the Rio Grande.

Lo Wu is called a “control point.” I imagine the Chinese authorities used the Korean DMZ as a suitable inspiration.

Consequently, I saw no need to draw the army’s attention. My friends, Western journalists from Hong Kong, certainly weren’t the red-carpet type. So we hung back, letting the hundreds of Chinese scurry by.

The rush for customs ensued. The soldiers, dressed in their long pea-green military topcoats, suspiciously surveyed the masses. And the masses nudged to and fro, like cattle in a stockyard, hoping to find the most expedient line to re-enter the mainland.

My fire engine red North Face duffel bag drew some stares, but Western garb doesn’t fascinate as much in Shenzhen as it would in the more remote, rural regions of northern China. After all, I should thank some among the Chinese hustling all around me for stitching it together. That’s probably also true for just about every item of pure Americana attached to my privileged self. And if the Chinese didn’t construct the authentic item, they could easily point me to an alley where I could haggle the repro.

Shenzhen, Deng Xiaoping’s first attempt at capitalism, Chinese-style, received the elevated status of China’s first Special Economic Zone (SEZ) in 1980. Seemingly overnight, factories popped up along the hot, humid delta like a nasty, uncontrollable case of Southern kudzu. Naturally, more factories required more transportation. Shenzhen became the world’s fourth busiest port by 2005.

Within 20 years, market reforms turned a relatively remote city the size of Green Bay, Wis., into an industrial and financial powerhouse on par with Chicago.

Wal-Mart shelves and Christmas mornings in the West have been built on a 90-hour, six-day workweek in the East. The last 20 years of growth have produced more than 90,000 export-oriented processing firms on the mainland, with nearly 70,000 based in Shenzhen’s Guangdong province alone.

It’s no wonder Chinese officials fear what a slowdown in the export economy may bring. Domestic growth and stability have risen with Chinese workshops. And make no mistake, the first three long-term domestic priorities on Beijing’s list are and will remain stability, stability and more stability.

The yuan-dollar peg has gone a long way in ensuring constancy. Chinese economic growth – we would argue, all economic growth – ensues under the auspice of a stable currency.

But ties to the greenback have recently come with a price. American policymakers have facilitated a weak dollar. The Fed, for its part, announced another $200 billion injection on March 11. Its most recent funding equals the $200 billion Bernanke set free on March 7. For its part, the dollar didn’t know what to think ($400 billion in four days). Or else, it’s in a rather cruel denial.

For the first time since Word War II, owning U.S. Treasuries is a riskier bet than owning German bonds.

On the basis of credit default swaps, which are used to speculate on a government’s ability to repay debt, the 10-year note reached a record high of 16 basis points on March 12. German bonds traded at 15 basis points, also a record. A decline in these spreads shows improving confidence in the government’s ability to pay…an increase shows the opposite.

“That’s certainly eye-opening,” writes our esteemed colleague Chris Mayer. “The market consensus is that you stand a greater chance of default investing in U.S. Treasuries than in German bonds.”

Officials in Beijing must keep shaking their heads. China holds more than $387 billion in Treasury securities.

For China, a weak dollar makes critical imports (wheat, corn, iron and soy) more expensive. Expensive imports mean higher prices. Higher prices mean more inflation. More inflation means less stability.

Chinese Premier Wen Jiabao addressed the equal and opposite reaction on the other side of the planet.

“The primary task for macroeconomic regulation this year,” he decreed, “is to prevent fast economic growth from becoming overheated growth and keep structural price increases from turning into significant inflation.”

In his annual policy speech to China’s legislators, Wen clearly labeled rising commodity prices and the subsequent food shortages as China’s No. 1 policy issue for 2008.

So Beijing finds itself in a bind.

Going forward, yuan appreciation would certainly help alleviate rising prices (commodity imports would be cheaper). Export dependence, however, has thwarted this policy. On the other hand, protecting the export industry by enforcing a close yuan-dollar peg only intensifies further inflation as the dollar continues to slide.

In the meantime, Beijing has turned to price controls. But price controls are nothing more than a short-term stopgap. Price controls disincentivize ample production. Shortages ensue. Prices, therefore, rise even higher.

Beijing may have hope. China’s appetite for consumption keeps growing. We see signs that China’s GDP growth is no longer so export dependent.