Saturday, June 28, 2008
Weekend Edition: Probably Not a ‘Beat-and-Raise’ Month for Obama
The following email arrived this morning, from the Obama campaign:
On Monday, everyone will be watching our fundraising totals to see if we can compete with the McCain campaign.
This month is the first test of our grassroots fundraising strategy since we declared our independence from the broken campaign finance system….
Make a donation of $30 or more by midnight on Monday, June 30th, and show off your support with an Obama logo T-shirt…
This political version of quarter-end discounting—more usually associated with commercial ventures looking to make their numbers than political campaigns—comes on the heels of Obama’s first actual earnings “miss” in its entire, brief history:
Obama Raises $22 Million in May, His Weakest Month This Year
June 20, 2008 10:23 p.m.
WASHINGTON -- Democrat Barack Obama raised $22 million in May for his presidential campaign, his weakest fund-raising month this year, and ended the month with $43 million cash on hand, the campaign reported Friday.
—The Wall Street Journal
In Wall Street’s parlance, the Obama campaign “missed the number” in the month of May.
Sure, $22 million in one month is a lot of money, even in Presidential politics. But the Obama campaign’s earnings ‘momentum’ slowed sharply in May: that $22 million was down 29% sequentially from the $31 million raised in April.
More ominously, his campaign spent $26.6 million in May, making it a cash-flow negative month.
No wonder we’re getting t-shirt offers for a month-end donation.
Why does all this possibly matter to a financial observer of the investment scene?
Well, Intrade has buyers willing to pay 65.3 for the right to earn 100 if Obama wins the election. (Intrade is not a bet on the actual voting split: it’s all or nothing, so buyers of Obama at 65.3 would make 50% on their money if he wins.)
McCain, on the other hand, is trading at 30.8.
Meanwhile, our inbox with the t-shirt offer suggests that June will not turn out to be a “beat-and-raise” month for the Obama finance team.
And if "the number" comes in materially worse than expected, we might start to see a bit more of the skepticism already starting to creep into the Obama press coverage. Not to mention the Swift-Boaters that have turned their sites from Hillary to Obama: Michael Bloomberg actually had to publicly deny that Obama is secretly a Muslim.
There’s one more reason we’d bet Obama won’t stay at 65.3 for very long: he’s the front-runner now, and America likes front-runners to earn their place.
So, while we never recommend stocks in these pages, if Obama was a stock, we’d short him right here.
Full disclosure: a family member volunteers for Obama.
But that wouldn’t stop us from shorting now, and covering on the pullback.
I Am Not Making This Up
© 2008 NotMakingThisUp, LLC
The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way. Inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 11:15 AM