Century Aluminum (CENX): Long: Shares of Century Aluminum, which closed on Friday at $3.55, down a whopping 55% on the week, are setting up perfect for a snapback trade. Century, which is in the process of issuing an additional $100 million dollars of common stock, or about 50% of its total market capitalization, is in the process of announcing the secondary this week at $4.5 cents per share. In situations like this, the stock normally drifts higher after the secondary was issued. I am betting that this is what happens. Sure things are rough all over the place, particularly if you’re a commodity producer, but with a stated book value of $29+, Century certainly has the power to trade in the $5 range within a week’s time.

Scotts Miracle-Gro (SMG): Catalyst: Earnings on 2/3 will likely pop this balloon. Everyone knows Scotts Miracle-Gro (SMG), which manufactures, and markets, the sale of lawn and garden care products in the US and EU. SMG’s principal line of sales come from their granular lawn fertilizer and combination products, including fertilizer and crabgrass control, weed control, or pest control products and plant foods. For 2008: SMG Net sales were $2.9 billion: broken down as follows: 75% global consumer, 12% global professional, 8% Scott’s lawn service, 5% Smith & Hawken. Net sales went from $2.871.8B in 07’ to $2.981.8B in 08’ a 3.83% increase, while gross profit actually declined going from $1.004B in 07’ to just 939.6M in 08’, a YoY decline of 10.556%. Adjusted EBITDA went from $382.6M in 07’ to $318.4M in 08’ a YoY decline of 21.4%. Thesis: Up roughly 50% or so in the past 6 months, shares of SMG represent an attractive short ahead of earnings based on several trends: 1) severely overvalued: forward P/E of 14.37, EV/EBITDA of 9.886. 2) Misperception by the market regarding Scotts growth potential/business---is not likely to grow more than 1%-2% MAX. 3) Mammoth insider selling ever since the stock started to rip higher in August---no buying. 4) Q1 SMG always reports a loss to the tune of -$0.80 to -$1. Ultimately, a short position in SMG is an indirect short on the consumer, and lack of discretionary spending. Despite dominate market share, there are SEVERAL generic versions one might use, which cost ½ the price of an SMG product. Going forward, one seriously has to question the profitability of such a company, given high unemployment, a massive amount of residential defaults, and extreme water shortages on the west coast. Additionally, SMG has a decent amount of debt to roll over this year and into next—any slight hick-up in revenue, could lead to a nasty roll over

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