Primerica Getting An IPO, But Are Investors As Easily Duped As Their Recruits?

Clearly we're seeing the light at the end of the economic tunnel when the banks start offering ludicrous Initial Public Offerings again.

Primerica, Citigroup's red-headed MLM stepchild is being spun off and taken public.

Clusterstock: Meet Primerica, The New Wall Street IPO That's Really A Multi-Level Marketing Scheme

Citigroup (C) has officially priced the IPO of its spinoff of Primerica.
At $15 per share, the pricing went strong.
Warburg Pincus will pick up 22% to 33% of shares and Citigroup will retain 32% to 46% of equity, which it will divest after Primerica begins trading.
But will investors buy Primerica's stock?
That depends if they can figure out what Primerica actually does first.

For pretty much as long as Primerica has existed, it's been a flash-point for controversy over it's shady recruiting practices. All you have to do is Google them, and you'll see for yourself. Expert Fraud Investigator Tracey Coenen has pilloried them on several occasions, and she's not alone.

When I worked in retail sales, I averaged one or two contacts a week with Primerica "reps" who would waste my valuable on-commission time, only to offer me their so-called opportunity. When I was still young, I would be civil, thinking I still might be able to get a sale out of them. Eventually, I realized that, if they had any money to buy the luxury goods I sold, they wouldn't have become Primerica reps in the first place.

Fact: Real financial advisers are too busy either advising their clients on financial matters, or looking for more clients to advise. What they aren't doing is cruising shopping malls looking to recruit new sales reps: real financial planning companies have HR departments for that.

Whatever Primerica is good for, it isn't making their sales reps rich, since the average Primerica rep makes $5,156 a year. Bike messengers make more than that, and hardly anyone spits on them in public.

About the only value Primerica generates aside from the half a billion dollars it funnels up to the top of the pyramid is the click-through ad revenue that it generates for blogs and websites that criticize them. Apparently their 100,000 rep workforce has so much time on their hands that they constantly surf for sites critical of Primerica and leave thousands of flaming spam comments defending the company.

Wouldn't their time be better spent trying to make money? One would think so.

Back on track, the big question this IPO raises is: is there enough dumb money to buy this stock? Certainly, the average Primerica rep is priced out of becoming a shareholder.

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Tired Of Taleb?

Theodore Sturgeon famously said "80% of everything is crap." I remain convinced that if he had lived to see the Internet, he would have revised his figures substantially upward.

How that quote is relevant is because I was disappointed by this guest column on the normally thoughtful and insightful Infectious Greed blog (which defies the odds by usually being 80% good) by author Pablo Triana:

Paul Kedrosky's Infectious Greed: Guest Post: Nassim Taleb Got It Right

Unless you're just now tuning into the world financial crisis, I'm struggling to see what insight this essay has to offer, beyond a lot of back patting, which is somewhat redundant given how self-sufficient Taleb is when it comes to very public acts of self-congratulation. That, and telling us, again and repeatedly, what he's already told us many times before.

As a reader of Taleb's work I have to wonder at his self-exemption from his own line of reasoning from Fooled By Randomness.

Take a big enough sample of mathematicians and economists, and like the proverbial monkeys with typewriters, Taleb would argue that just as a large enough sample of investors will produce someone as wealthy as Warren Buffett, it's inevitable that one of them would be right about what was going to happen.

If it was someone else, he'd call them a product of survivor bias, but because it just happened to be him, that make him a genius.

Besides, the fact that this Taleb is correct is a sample size of one, which anyone tell you is meaningless, but of all the possible economic scenarios, what about the average across all possible Talebs? Would the deviation across the Taleb mean be significant? Would all possible Taleb's be mostly-wrong, or mostly-right? If you buy into Fooled By Randomness, this is important!

More than one commentator has begun to think that Taleb is growing tiresome. At the risk of sounding cute, he's gone from being a Cassandra to being a broken record.

I don't begrudge Taleb his passion for appearing on television, but if he's going to keep up his schedule of media appearances, it's time to stop telling us what he began telling us ten years ago.

It's time to pull the self-congratulation train into the station, and tell us what he thinks is going to happen in the next ten years, and start dining out on that, if and when he happens to be right.

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Sirius XM Not Out Of The Woods Yet

Good news, but not great news for Sirius XM.

Clusterstock: Sirius XM Growth Hits The Wall (SIRI)

Sirius lost $248.5 million on $644 million of Q4 sales, better than the $405 million (pro-forma) loss on $558 million of sales during Q4 '07. The Street had expected Sirius to report $616 million in Q4 sales, so it beat by about $28 million, or about 4%.

CE Pro: Sirius XM Sales Up, But Subscriber Growth Slows

Sirius XM beat expectations for its Q4 sales but still lost nearly $250 million, according to the Associated Press.The satellite radio service's sales on a pro forma basis hit $644 million, up from $577 million last year. "In the fourth quarter 2008, the company's first full quarter of combined operations, SIRIUS XM made remarkable financial progress," says Mel Karmazin, CEO of Sirius in a press release.

Despite still being sorely wounded financially, Sirius XM still has some fight left in it. If you want to use hate mail as a metric of success, whenever I've posted about Sirius XM, I get deluged by comments from transparently pro-terrestrial radio astroturfers. If Sirius XM wasn't threatening to them, the bashers wouldn't work so hard.

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I Came Here Not To Praise Circuit City, But To Bury It

Clusterstock's Henry Blodget takes a two-part swipe at both Circuit City's inept management, and his favorite whipping boy, Treasury Secretary Paulson:

Clusterstock: What? No Bailout For Circuit City?

What was the disastrous business mistake that will now cost Circuit City stockholders and bondholders everything and 35,000 employees their jobs?
Not buying enough crap assets to make Hank Paulson come running with his arms full of money.

As droll as that was, if I can be semi-serious for a minute, there were two key factors that contributed to CC's demise.

First, their senior management were absolutely useless. Even if you don't know the first thing about business, you'd really have to exert yourself to have less strategic retail savvy than they.

More importantly, the global credit crunch meant that the supply of eager beaver Private Equity companies with access to shitloads of easy money dried up. Less than two years ago, CC's board rebuffed a $20/share takeover offer (further proof of my first point, above), a high water mark that they would never again come close to.

Without crazed PE money sloshing around the globe, the number of white knights who were capable of turning the company around was, well, zero.

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Circuit City Done, Like Dinner

After a rollercoaster year (rollercoasters mostly go downhill, right?), Circuit City is finished.

Clusterstock: Circuit City To Be Fully Liquidated (CC)

Circuit City's (CC) hopes to ride out bankruptcy have faded: CNBC reports the electronics retailer will be fully liquidated. Its 35,000 remaining employees will lose their jobs.

It appears now that there really is nobody who wants to pick up a CE retailer on the cheap. I used to use the little homemade graphic above just to be mean, but now it's become incredibly apt.

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Global Shipping Now Taking Cues From Amazon.com

Clusterstock's Joe Weisenthal covers a number of interesting beats, including global cargo carriers. His piece today reports that not only are some sea routes below their break-even, they're effectively free.

Clusterstock: Global Trade: Now With Free Shipping And Handling

Shipping rates, which totally collapsed in 2008, have shown some signs of life in the past few weeks, but it's still a pretty miserable environment. Along some Asia-Europe trade lines, shippers are charging $0 for suppliers to send their wares overseas. It literally couldn't get any worse.

Naturally, the first thing that I thought was "Well, maybe they can make it up on volume."

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ClusterStock's Modest Proposal For American Economics

In only his second day on the job, ClusterStock's John Carney is already swinging for the fences, and knocking them out of the park. To wit:

Stuff People Should Stop Doing In A Financial Crisis

Recognizing the financial calamity faced by the United States, John McCain has decided to “suspend” his job as a presidential candidate until a solution can be worked out. He’s called on Barack Obama to do the same, and wants to cancel the presidential candidates debate scheduled for this Friday.
While we’re tempted to breathe a sigh of relief that we’ll no longer have to go through another day of this crisis without the economic leadership of McCain, we realize we should be following his example. There are dozens of things that need to be suspended in light of this calamity. Here’s five.

He then goes on to itemize the activities that should be suspended in light of the gravity of the situation that now imperils the US economy.

Really, none of them are anywhere near as absurd as the idea that McCain, who admits to knowing fuck-all about economics, should be allowed a time-out from his campaign for the Presidency. In fact, some of Mr. Carney's suggestions are downright salubrious, and if adopted swiftly might actually save his country.

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