When the world was running around talking of the "subprime meltdown" and the "freezing of credit markets" Goldman quietly looked at the situation and placed their bets accordingly.
Sunday, September 30, 2007
"Fast Money" for Monday
Monday's Picks...
None. It was a "Review" show. Records and winning percentages to date below
Friday's Results
Jeff Macke recommended getting long Yahoo (YHOO) Open $26.27 Close $26.84 and Palm (PALM). Open $16.40 Close $16.27
Guy Adami liked KB Home (KBH). Open $24.71 close $25.06
Karen Finerman preferred Seacor Holdings (CKH). Open $93.83 Close $95.10
Pete Najarian said Nordic American Tanker Shipping (NAT) is a buy. Open $38.60 Close $39.24
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 28-18 = 60%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 33-24 = 57%
Pete Najarian= 21-17 = 55%
Tim Seymore= 3-2 = 60%
Karen Finerman= 13-6 = 68%
Stacey Briere-Gilbert= 2-0 = 100%
Saturday, September 29, 2007
This Week's Insider Buys
Smithfield Foods (SFD)= $9,429,000
American Financial Group (AFG)= $4,211,000
Credit Acceptance (CACC)= $1,414,000
Inventure Group (SNAK)= $1,040,000
Valance Technology (VLNC)= $1,019,000
Mercer International (MERC)= $890,000
Chesapeake Energy (CHK)= $882,000
Pep Boys (PBY)= $826,000
Lions Gate Entertainment (LGF)= $636,000
The Week's Top Stories at Value Investing News
Here are this weeks tops stories. If you are a value investor and do not read this site daily, you are cheating yourself...
2. Bruce Greenwald joining team at First Eagle
(via biz.yahoo.com)
Value investing professor guru joins highly successful Global value team at First Eagle. This is just the press release, so not all that detailed, but interesting nonetheless.
3. Lectures from Columbia University's Value Investing Program
(via valueinvestingresource.blogspot.com)
A nice list of lectures from a Columbia University course intended to teach students the fundamentals of the value approach to investment management developed by Graham and Dodd.
5. Aventine Renewable Energy's hope: The 2008 Presidential Election
(via thestockmasters.com)
Ethanol investors know the Aventine Renewable Energy Holdings, Inc. (Public, NYSE:AVR) sad story well. The IPO in 2006 showed amazing potential, but then shares of AVR fell to the $30's, then $20's, and today they barely register above $10. So is ethanol just a fad fuel, yesterday's news, and a lost investing opportunity?
Friday, September 28, 2007
Apple's Intentional iPhone Destruction: Illegal
Apple's (APPL) quest to keep total control over its iPhone seems to have caused it to break the law.
Ever heard of the Magnuson-Moss Federal Warranty Act? It would seem those at Apple's HQ have not either but when they put out an iPhone update this week that disabled hacked iPhones, they broke this law.
The site Phone News.com details how Apple did do. The act says that Apple cannot void a warranty for a product with third-party enhancements or modifications to their product. The only exception to this rule is if Apple can determine that the modification or enhancement is responsible damaging the product in question. Since it was Apple that intentionally caused the damage to the iPhone, the phones are still technically still covered under the warranty. Apple has a problem because they are refusing to honor the warranty on the hacked phones.
Once ownership of the phones was transferred from Apple to the buyer at purchase, the new owners have the right to do whatever they want with the phone. Kind of like buying a car and customizing it. Now, if your customization of the car (phone) causes it not to work, the auto maker (or Apple) need not honor the warranty, but, and this is a key point, the car maker (or Apple)cannot come out and take the transmission out of the car because they do not like the modifications you made. This is essentially what Apple did. They said "if you change the phone, we will break it on you". Illegal.
If nothing else this come as another PR pothole for Apple who has gone from wearing the lovable underdog label to corporate bully in the course of a few weeks. First there was the unexpected (not to ValuePlays readers) $200 price drop on the phone less than 3 months after it's release that had those who waited in lines for two days to get the initial phones outraged. Apple attempted to sooth them by offering them a $100 rebate which still leaves them $100 short but it was better than nothing.
The iPhone hype has subsided and sales are not as hot as Apple would like them. they are running short of their 10 million unit by the end of 2008 goal and negative press like this will not encourage those folks on the fence to make the plunge and pony up the $399 necessary to get one now.
Apple could miss a quarterly earnings expectation and still keep the aura around itself. The stock would take a hit but a good quarter following it would repair that. Expectations are way too high currently for the company and its products and it would seem Apple may be letting that guide its decision making process. If they alienate those who are buying it's products with moves like this that make them feel like the enemy, that damage will take much longer to repair.
Ever heard of the Magnuson-Moss Federal Warranty Act? It would seem those at Apple's HQ have not either but when they put out an iPhone update this week that disabled hacked iPhones, they broke this law.
The site Phone News.com details how Apple did do. The act says that Apple cannot void a warranty for a product with third-party enhancements or modifications to their product. The only exception to this rule is if Apple can determine that the modification or enhancement is responsible damaging the product in question. Since it was Apple that intentionally caused the damage to the iPhone, the phones are still technically still covered under the warranty. Apple has a problem because they are refusing to honor the warranty on the hacked phones.
Once ownership of the phones was transferred from Apple to the buyer at purchase, the new owners have the right to do whatever they want with the phone. Kind of like buying a car and customizing it. Now, if your customization of the car (phone) causes it not to work, the auto maker (or Apple) need not honor the warranty, but, and this is a key point, the car maker (or Apple)cannot come out and take the transmission out of the car because they do not like the modifications you made. This is essentially what Apple did. They said "if you change the phone, we will break it on you". Illegal.
If nothing else this come as another PR pothole for Apple who has gone from wearing the lovable underdog label to corporate bully in the course of a few weeks. First there was the unexpected (not to ValuePlays readers) $200 price drop on the phone less than 3 months after it's release that had those who waited in lines for two days to get the initial phones outraged. Apple attempted to sooth them by offering them a $100 rebate which still leaves them $100 short but it was better than nothing.
The iPhone hype has subsided and sales are not as hot as Apple would like them. they are running short of their 10 million unit by the end of 2008 goal and negative press like this will not encourage those folks on the fence to make the plunge and pony up the $399 necessary to get one now.
Apple could miss a quarterly earnings expectation and still keep the aura around itself. The stock would take a hit but a good quarter following it would repair that. Expectations are way too high currently for the company and its products and it would seem Apple may be letting that guide its decision making process. If they alienate those who are buying it's products with moves like this that make them feel like the enemy, that damage will take much longer to repair.
Friday's 52 Week Low's
Ethanol makers still going lower, someone will start snapping them up soon.
SMRT Stein Mart Inc 7.66
SCSS Select Comfort Corp 13.95
RUTH Ruths Chris Steak Hse Inc 14.31
RT Ruby Tuesday, Inc. (G ... 18.37
PTRY Pantry Inc 25.69
USBE US Bioenergy Corp 7.65
UFPI Universal Forest Products 29.65
SPF Standard Pacific Corp 5.49
MGPI Mgp Ingredients Inc 10.24
MED Medifast Inc 5.58
MAXY Maxygen Inc
HMX Hartmarx Corporation 4.94
HHS Harte-Hanks Communica ... 19.83
GMTN Gander Mountain Co 5.45
LZB La-Z-Boy Incorporated 7.50
DSW Dsw Inc 25.55
DEIX Directed Electronics Inc 3.97
CRC Chromcraft Revington, Inc 4.67
SMRT Stein Mart Inc 7.66
SCSS Select Comfort Corp 13.95
RUTH Ruths Chris Steak Hse Inc 14.31
RT Ruby Tuesday, Inc. (G ... 18.37
PTRY Pantry Inc 25.69
USBE US Bioenergy Corp 7.65
UFPI Universal Forest Products 29.65
SPF Standard Pacific Corp 5.49
MGPI Mgp Ingredients Inc 10.24
MED Medifast Inc 5.58
MAXY Maxygen Inc
HMX Hartmarx Corporation 4.94
HHS Harte-Hanks Communica ... 19.83
GMTN Gander Mountain Co 5.45
LZB La-Z-Boy Incorporated 7.50
DSW Dsw Inc 25.55
DEIX Directed Electronics Inc 3.97
CRC Chromcraft Revington, Inc 4.67
Friday's Links
9/25, Housing, Natural Gas, Cheap Music Downloads
- I did not know Sept. 25th was such a notable day.
- According to this. As goes housing, so goes the economy. I hope it is wrong.
- Why would you build a plant in the US with these Natural gas prices.
- Here is how Amazon (AMZN) is selling songs for your iPod cheaper than Apple (APPL)
- I did not know Sept. 25th was such a notable day.
- According to this. As goes housing, so goes the economy. I hope it is wrong.
- Why would you build a plant in the US with these Natural gas prices.
- Here is how Amazon (AMZN) is selling songs for your iPod cheaper than Apple (APPL)
Greenspan the Odds Maker
I Greenspan jockeying for a job on Vegas?
Before the summer began he made waves with the first understandable statement of his career. "The US has a greater than 30% chance of a recession this year". Whoa, it is actually a coherent blathering from the former chief. Since that prediction seems to be wrong, Greeenie decided to follow it up yesterday.
"The danger of recession has obviously risen but in my judgment ... is still less than 50/50. It's less optimistic than one would like," Greenspan told BBC Radio 4. So, I guess that means we are about 30% to 45% chance? If only he were this clear when he was in office.
Oh yea the reason for the interview? He was peddling his new book overseas. Funny how the almighty quest for a fast buck clears ones thought process.
Before the summer began he made waves with the first understandable statement of his career. "The US has a greater than 30% chance of a recession this year". Whoa, it is actually a coherent blathering from the former chief. Since that prediction seems to be wrong, Greeenie decided to follow it up yesterday.
"The danger of recession has obviously risen but in my judgment ... is still less than 50/50. It's less optimistic than one would like," Greenspan told BBC Radio 4. So, I guess that means we are about 30% to 45% chance? If only he were this clear when he was in office.
Oh yea the reason for the interview? He was peddling his new book overseas. Funny how the almighty quest for a fast buck clears ones thought process.
Bank of America Piles on Starbucks
Just in case Starbucks thought the bashing was finally over...
Banc of America (BAC) downgraded Starbucks (SBUX) to Sell from Neutral, and lowered their target to $23 from $27, as they see downside risk to estimates due to slower growth. The firm is concerned that expectations for a near-term recovery are too high.
The analyst, Mr. Barrish wrote, "Although we believe that the company controls a very strong brand and can continue to grow, we believe the pace of growth will be slower [with international business still too small to make significant contribution to operating profits, and could be several years away from such a contribution], and that expectations are too high for a short-term recovery."
He added, "We also believe that store operations have 'slipped' and longer lines, more complexity and less-than-stellar-looking assets could be causing a modest decrease in sales in this challenging consumer environment."
I guess the first question isn't "is he right" but "where have you been"? I mean, none of this stuff is an enlightened opinion and those of you who read ValuePlays have been seeing the same sentiment since Fenruary when shares were sitting at $35 each. Shares were down some 2% yesterday and there isn't really anything to stop the fall on the horizon. If anything, the upcoming earnings release may do more harm than good as it is looking more apparent everyday that meeting their number is becoming less and less likely. What took the analyst almost 10 months to see what the rest of us already new? Also, the fact that shares dropped so much despite all this shows how much "hope" is still baked into the current price.
Starbucks may give us a valueplay soon enough. But shares will fall further first..
Banc of America (BAC) downgraded Starbucks (SBUX) to Sell from Neutral, and lowered their target to $23 from $27, as they see downside risk to estimates due to slower growth. The firm is concerned that expectations for a near-term recovery are too high.
The analyst, Mr. Barrish wrote, "Although we believe that the company controls a very strong brand and can continue to grow, we believe the pace of growth will be slower [with international business still too small to make significant contribution to operating profits, and could be several years away from such a contribution], and that expectations are too high for a short-term recovery."
He added, "We also believe that store operations have 'slipped' and longer lines, more complexity and less-than-stellar-looking assets could be causing a modest decrease in sales in this challenging consumer environment."
I guess the first question isn't "is he right" but "where have you been"? I mean, none of this stuff is an enlightened opinion and those of you who read ValuePlays have been seeing the same sentiment since Fenruary when shares were sitting at $35 each. Shares were down some 2% yesterday and there isn't really anything to stop the fall on the horizon. If anything, the upcoming earnings release may do more harm than good as it is looking more apparent everyday that meeting their number is becoming less and less likely. What took the analyst almost 10 months to see what the rest of us already new? Also, the fact that shares dropped so much despite all this shows how much "hope" is still baked into the current price.
Starbucks may give us a valueplay soon enough. But shares will fall further first..
ADM and ConocoPhillips In Pact
Well that did not take long. In the morning I pondered what was up with ADM (ADM) and their recent restructuring along the lines of an energy company and only a few hours later get an answer.
Archer Daniels Midland and CononcoPhillips (COP) announced that they agreed to collaborate on the development of renewable transportation fuels from biomass, creating a partnership between the biggest U.S. ethanol producer and one of the biggest oil refiners. The collaboration will research and seek to commercialize two components of a next-generation biofuel production process:
* The conversion of biomass from crops, wood or switchgrass into biocrude, a non-fossil substance that can be processed into fuel; and
* The refining of biocrude to produce transportation fuel.
ADM will provide "biomass," or organic material left over from crops, wood or switchgrass and ConocoPhillips will convert the materials into "biocrude" fuel for transportation.
"ConocoPhillips believes that the development of next-generation biofuels is a critical step in the diversification of our nation's energy sources," said Jim Mulva, chairman and chief executive officer, ConocoPhillips. "We are hopeful that this collaboration will provide innovative technology toward the large-scale production of biofuels that can be moved efficiently and affordably through existing infrastructure."
Patricia Woertz, chairman and CEO of ADM, added, "As we advance our global bioenergy interests, this alliance with ConocoPhillips represents an important next step. Innovative collaboration like this will identify and bring to market feasible, economic and sustainable next-generation biofuels."
This is very interesting. There has been a ton of talk out there about "cellulostic ethanol" and while ADM is developing that technology, what they seem to be doing here is creating "cellulostic crude". The ramifications of the agreement between the two are far reaching. Big Oil has thus far rejected the biofuel industry and this agreement serves as that needed recognition. It also diversifies ADM's earnings profile away from ethanol and farther into the biodiesel and now biocrude areas that are growing at staggering rates.
Consider that just three years ago, only 25 million gallons of biodiesel were produced in the US. That number will top 250 million gallon this year and it is expected to double next year. Biodiesel burns cleaner and is 30% MORE mileage friendly than it's pure petroleum brethren.
What ADM and Conoco are doing is jumping into a thus far untouched market head first to dominate it. The fact they are even setting up the refining of the finished product says it is close to a reality.
Sound good shareholders? Me too.
Archer Daniels Midland and CononcoPhillips (COP) announced that they agreed to collaborate on the development of renewable transportation fuels from biomass, creating a partnership between the biggest U.S. ethanol producer and one of the biggest oil refiners. The collaboration will research and seek to commercialize two components of a next-generation biofuel production process:
* The conversion of biomass from crops, wood or switchgrass into biocrude, a non-fossil substance that can be processed into fuel; and
* The refining of biocrude to produce transportation fuel.
ADM will provide "biomass," or organic material left over from crops, wood or switchgrass and ConocoPhillips will convert the materials into "biocrude" fuel for transportation.
"ConocoPhillips believes that the development of next-generation biofuels is a critical step in the diversification of our nation's energy sources," said Jim Mulva, chairman and chief executive officer, ConocoPhillips. "We are hopeful that this collaboration will provide innovative technology toward the large-scale production of biofuels that can be moved efficiently and affordably through existing infrastructure."
Patricia Woertz, chairman and CEO of ADM, added, "As we advance our global bioenergy interests, this alliance with ConocoPhillips represents an important next step. Innovative collaboration like this will identify and bring to market feasible, economic and sustainable next-generation biofuels."
This is very interesting. There has been a ton of talk out there about "cellulostic ethanol" and while ADM is developing that technology, what they seem to be doing here is creating "cellulostic crude". The ramifications of the agreement between the two are far reaching. Big Oil has thus far rejected the biofuel industry and this agreement serves as that needed recognition. It also diversifies ADM's earnings profile away from ethanol and farther into the biodiesel and now biocrude areas that are growing at staggering rates.
Consider that just three years ago, only 25 million gallons of biodiesel were produced in the US. That number will top 250 million gallon this year and it is expected to double next year. Biodiesel burns cleaner and is 30% MORE mileage friendly than it's pure petroleum brethren.
What ADM and Conoco are doing is jumping into a thus far untouched market head first to dominate it. The fact they are even setting up the refining of the finished product says it is close to a reality.
Sound good shareholders? Me too.
Sherwin Williams: Persistant Rumors
More rumors, true?
Sherwin-Williams (SHW) shares have been trading higher on buyout rumors. The paintmaker and retailer, which has a market cap of $8.5 billion and long-term debt of $292 million, has been the subject of rumors for the better part of a month now. The coatings industry is undergoing rapid consolidation the past 6 months and Sherwin, with its name recognition and pristine financials would be a delicious target for someone. Companies like Dow Chemical (DOW) have publicly announced their intentions to grow their coatings business by billion dollar increments and that can only be done through acquisitions. The recent Akzo Nobel buyout of ICI chemical served to further heat up the rumor mill. Dow had an interest in ICI but not at the price Nobel paid. Now that ICI is gone, could a bid for Sherwin be coming?
However, Sherwin may not be a takeout candidate, but instead an acquirer,based on recent actions. The company recently bought Spokane, Wash.-based Columbia Paint & Coatings Co. after completing the purchase of Philadelphia based MA Bruder & Sons. The purchases followed Sherwin-Williams' CEO Christopher M. Connor's comments earlier in the year that the company would continue to expand in the "do-it-yourself" market through acquisitions.
Sherwin-Williams (SHW) shares have been trading higher on buyout rumors. The paintmaker and retailer, which has a market cap of $8.5 billion and long-term debt of $292 million, has been the subject of rumors for the better part of a month now. The coatings industry is undergoing rapid consolidation the past 6 months and Sherwin, with its name recognition and pristine financials would be a delicious target for someone. Companies like Dow Chemical (DOW) have publicly announced their intentions to grow their coatings business by billion dollar increments and that can only be done through acquisitions. The recent Akzo Nobel buyout of ICI chemical served to further heat up the rumor mill. Dow had an interest in ICI but not at the price Nobel paid. Now that ICI is gone, could a bid for Sherwin be coming?
However, Sherwin may not be a takeout candidate, but instead an acquirer,based on recent actions. The company recently bought Spokane, Wash.-based Columbia Paint & Coatings Co. after completing the purchase of Philadelphia based MA Bruder & Sons. The purchases followed Sherwin-Williams' CEO Christopher M. Connor's comments earlier in the year that the company would continue to expand in the "do-it-yourself" market through acquisitions.
Friday's Upgrades and Downgrades
UPGRADES
Fresenius Medical FMS Bernstein Mkt Perform » Outperform
EchoStar DISH Oppenheimer Neutral » Buy
SAVVIS Comm SVVS Lehman Brothers Equal-weight » Overweight
Oriental Fincl Grp OFG Keefe Bruyette Mkt Perform » Outperform
Rightnow Tech RNOW RBC Capital Mkts Underperform » Sector Perform
SiRF Technology SIRF Credit Suisse Neutral » Outperform
KKR Financial KFN Bear Stearns Peer Perform » Outperform
Wal-Mart WMT Rochdale Securities Hold » Buy
Westell Tech WSTL Robert W. Baird Neutral » Outperform
Kindred Healthcare KND Wachovia Underperform » Mkt Perform
Prudential Plc PUK Bear Stearns Peer Perform » Outperform
Magna MGA CIBC Wrld Mkts Sector Perform » Sector Outperform
DOWNGRADES
Signature Bank SBNY Sterne Agee Buy » Hold
PetroChina PTR Bear Stearns Outperform » Peer Perform
Healthways HWAY Credit Suisse Outperform » Neutral
Statoil ASA STO Credit Suisse Outperform » Neutral
Alesco AFN Bear Stearns Outperform » Peer Perform
Fluor FLR Morgan Joseph Buy » Hold
Starbucks SBUX Banc of America Sec Neutral » Sell
ResMed RMD UBS Buy » Neutral
Gamestop GME UBS Buy » Neutral
Thursday, September 27, 2007
"Fast Money" for Friday
Friday's Picks
Jeff Macke recommended getting long Yahoo (YHOO) Open $26.27 and Palm (PALM). Open $16.40
Guy Adami liked KB Home (KBH). Open $24.71
Karen Finerman preferred Seacor Holdings (CKH). Open $93.83
Pete Najarian said Nordic American Tanker Shipping (NAT) is a buy. Open $38.60
Thursday's Results
Jeff Macke said sell Bear Stearns (BSC). Open $123 Close $121.15
Guy Adami liked NYSE Euronext (NYX). Open $78.60 Close $79.78
Karen Finerman thought BEA Systems (BEAS) is a buy. Open $13.33 Close $13.65
Pete Najarian preferred Isis Pharmaceuticals (ISIS). Open $15.10 Close $15.35
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 27-18 = 60%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 32-23 = 58%
Pete Najarian= 20-17 = 54%
Tim Seymore= 3-2 = 60%
Karen Finerman= 12-6 = 67%
Stacey Briere-Gilbert= 2-0 = 100%
Today's 52 Week Lows
RUTH Ruths Chris Steak Hse Inc 14.60
PTRY Pantry Inc 27.20
MGPI Mgp Ingredients Inc 11.18
LENB Lennar Corp 20.72
CYH Community Health Sys ... 30.71
CRFT Craftmade Internation ... 12.40
CMRG Casual Male Retail Gr ... 9.10
CHIC Charlotte Russe Hldg Inc 14.79
HB Hillenbrand Industrie ... 54.52
GSAT Globalstar Inc 7.48
GOT Gottschalks Inc 4.21
GMTN Gander Mountain Co 5.70
BLG Building Matls Hldg Corp 10.87
ARP American Reprographics Co 18.98
Thursday's Links
Financials, Sarcasm, The election, "Bloggystyle"
- Not sure if investing in financial is right for now? Looks like governments around the world do..
- I love sarcasm and this made me spit my coffee out..
- Here it is. The deciding issue of next years elections.
- I figured out what I like about Adam's blog aggregation. It is done with a topic in mind so you get reading from several different sources rather than just a shotgun article. For my money this is the best one out there currently
- Not sure if investing in financial is right for now? Looks like governments around the world do..
- I love sarcasm and this made me spit my coffee out..
- Here it is. The deciding issue of next years elections.
- I figured out what I like about Adam's blog aggregation. It is done with a topic in mind so you get reading from several different sources rather than just a shotgun article. For my money this is the best one out there currently
Third Avenue Shareholder Letter
I have money invested in only one mutual fund (actually my son does, in a coverdale) and that is in Martin Whitman's Third Avenue Value (TAVFX). Here is the most recent shareholder letter, well worth the read as it talks about "credit-worthiness".
Portions of the most recent letter are reprinted below.
"At July 31, about 21% of the Fund’s assets were in what are considered cash and equivalents (excluding the 1.3% represented by the investment in Nuveen Common). Of
this 21%, almost 58% was invested in United Kingdom Government issues, and a little over 42% was invested in U.S. Treasuries and similar instruments. Third Avenue has weighted its cash holdings toward the U.K. rather than the United States because TAVF obtains a better yield on U.K. instruments, and because of my belief that important parts of the U.S. economy, including the Federal Government, are likely to face a continued deterioration in credit-worthiness.
Absent violence in the streets (i.e., terrorism) and the continued existence of political stability, the U.S. will continue to be an attractive and relatively safe place for Outside Passive Minority Investor (“OPMI”) investment. But deteriorated credit-worthiness may well mean higher interest rates and a weaker dollar over the
long term. Thus, the Fund’s weighting toward U.K. cash equivalents.
At July 31, approximately 78.1% of Fund assets were invested in common stocks. Within the common stock portfolio, 54% of the market value were in non-North American issues, and only around 46% were in issues of companies whose princcompanies; 10% was a South Korean company; and 8% were Western European companies. An explanation as to
why the emphasis on overseas investments ought to be informative to TAVF shareholders.
Put simply, the Fund has invested in the equities of overseas companies with super strong financial positions for two reasons. First, the overseas common stocks, based
on TAVF’s cost basis, appear to be much cheaper than U.S. issues, measured by estimated discounts from readily ascertainable NAVs. Second, the overseas
common stocks appear to have much greater growth potential than their domestic
counterparts, measured by the probabilities that over the next five to ten years, it will be easier for the foreign companies to increase readily ascertainable NAVs by at least 15% compounded annually.
As bottom-up investors following a “safe and cheap*” approach, Third Avenue Management has always focused on credit-worthiness much more than almost any other
OPMIs. Thus, there exists for TAVF the strict discipline of not investing in any common stock knowingly unless the issuing company enjoys a super strong financial
position. This is in contrast to almost all conventional investors who emphasize a primacy of the income account, i.e., principal weight in an equity valuation goes to earnings from operations and/or cash flow from operations. Almost all other OPMIs seem to denigrate the importance of strong financial positions.
This tendency to downplay the importance of creditworthiness is prevalent also on the macro-level, probably even more so than for bottom-up investors. This attitude has been well summarized by Vice President Dick Cheney who is quoted as saying, “Deficits don’t matter”.
For the vast majority of people, the important economics statistics are Gross Domestic Product, employment and unemployment levels, corporate earnings, and productivity increases. Credit-worthiness is pretty much ignored.
Credit-worthiness is, in the final analysis, a function of two factors. First, how much indebtedness is being incurred via balance of payments deficits, other governmental borrowing, corporate borrowings and borrowings by consumers. Of itself, increasing indebtedness is not a huge problem, provided the use of funds created by the borrowing is used productively, i.e., to create wealth. Insofar as the use of proceeds do not result in wealth creation, or it creates only modest increases in wealth, i.e., there exists a negative multiplier, or a modest multiplier, the borrowing entity, sooner or later, has to face diminished credit-worthiness (except if the entity can sell assets on a massive scale).
The U.S. is incurring massive debts. By and large, the use of proceeds from incurring this debt seems to be only modestly productive or even counter productive. These
uses of proceeds seem to have non-positive, or even negative, multipliers. Non productive uses of proceeds include the following:
• By the U.S. government: massive expenditures in Iraq.
• By Consumers: massive expenditures for consumer
goods that depreciate rapidly.
• By Corporate America: Leveraged Buy Outs where
most of the proceeds from debt incurrence are used to
make cash payments to stockholders, rather than to use
the cash to build or acquire productive assets.
Given the gradual deterioration in U.S. creditworthiness, I think it is important to encourage foreign entities to acquire control of U.S. assets and U.S. companies. Foreigners can use the proceeds from providing finance to the U.S. in three ways:
1) Buy and hold U.S. debt instruments.
2) Acquire U.S. equities or assets as passive investors.
3) Acquire control positions in U.S. equities and
assets.
Insofar as increased amounts of debt instruments are held by foreigners, this seems likely to detract from U.S. credit-worthiness, sooner or later. This would not be the
case if the proceeds from U.S. borrowing were recycled into equity investments. Given the massive amounts of U.S. debt held off-shore, passive investing is probably of
limited use to creditors located in China and Japan.
Rather, those creditors ought to be encouraged to acquire control of U.S. companies and U.S. assets. If so, this might prove to be a bonanza for Third Avenue. Many of
the domestic companies in the TAVF portfolio appear to
be ideal take-over candidates.
Again, put simply, the U.S. has so far in the 21st Century achieved prosperity and paid for prosperity with a steadily deteriorating credit-worthiness. Macro factors point to a less optimistic outlook for the U.S. than for, say, Hong Kong or Mainland China. In spite of this, the U.S. remains the best place in the world to invest in individual securities for a bottom-up investor such as TAVF, other things being close to equal. These other things encompass businesses having strong financial positions; prices of common stocks reflecting meaningful discounts from NAVs, and that for the long term, there exists reasonably good prospects that such NAVs will increase by no less than 10% per annum compounded."
Marin J .Whitman
Portions of the most recent letter are reprinted below.
"At July 31, about 21% of the Fund’s assets were in what are considered cash and equivalents (excluding the 1.3% represented by the investment in Nuveen Common). Of
this 21%, almost 58% was invested in United Kingdom Government issues, and a little over 42% was invested in U.S. Treasuries and similar instruments. Third Avenue has weighted its cash holdings toward the U.K. rather than the United States because TAVF obtains a better yield on U.K. instruments, and because of my belief that important parts of the U.S. economy, including the Federal Government, are likely to face a continued deterioration in credit-worthiness.
Absent violence in the streets (i.e., terrorism) and the continued existence of political stability, the U.S. will continue to be an attractive and relatively safe place for Outside Passive Minority Investor (“OPMI”) investment. But deteriorated credit-worthiness may well mean higher interest rates and a weaker dollar over the
long term. Thus, the Fund’s weighting toward U.K. cash equivalents.
At July 31, approximately 78.1% of Fund assets were invested in common stocks. Within the common stock portfolio, 54% of the market value were in non-North American issues, and only around 46% were in issues of companies whose princcompanies; 10% was a South Korean company; and 8% were Western European companies. An explanation as to
why the emphasis on overseas investments ought to be informative to TAVF shareholders.
Put simply, the Fund has invested in the equities of overseas companies with super strong financial positions for two reasons. First, the overseas common stocks, based
on TAVF’s cost basis, appear to be much cheaper than U.S. issues, measured by estimated discounts from readily ascertainable NAVs. Second, the overseas
common stocks appear to have much greater growth potential than their domestic
counterparts, measured by the probabilities that over the next five to ten years, it will be easier for the foreign companies to increase readily ascertainable NAVs by at least 15% compounded annually.
As bottom-up investors following a “safe and cheap*” approach, Third Avenue Management has always focused on credit-worthiness much more than almost any other
OPMIs. Thus, there exists for TAVF the strict discipline of not investing in any common stock knowingly unless the issuing company enjoys a super strong financial
position. This is in contrast to almost all conventional investors who emphasize a primacy of the income account, i.e., principal weight in an equity valuation goes to earnings from operations and/or cash flow from operations. Almost all other OPMIs seem to denigrate the importance of strong financial positions.
This tendency to downplay the importance of creditworthiness is prevalent also on the macro-level, probably even more so than for bottom-up investors. This attitude has been well summarized by Vice President Dick Cheney who is quoted as saying, “Deficits don’t matter”.
For the vast majority of people, the important economics statistics are Gross Domestic Product, employment and unemployment levels, corporate earnings, and productivity increases. Credit-worthiness is pretty much ignored.
Credit-worthiness is, in the final analysis, a function of two factors. First, how much indebtedness is being incurred via balance of payments deficits, other governmental borrowing, corporate borrowings and borrowings by consumers. Of itself, increasing indebtedness is not a huge problem, provided the use of funds created by the borrowing is used productively, i.e., to create wealth. Insofar as the use of proceeds do not result in wealth creation, or it creates only modest increases in wealth, i.e., there exists a negative multiplier, or a modest multiplier, the borrowing entity, sooner or later, has to face diminished credit-worthiness (except if the entity can sell assets on a massive scale).
The U.S. is incurring massive debts. By and large, the use of proceeds from incurring this debt seems to be only modestly productive or even counter productive. These
uses of proceeds seem to have non-positive, or even negative, multipliers. Non productive uses of proceeds include the following:
• By the U.S. government: massive expenditures in Iraq.
• By Consumers: massive expenditures for consumer
goods that depreciate rapidly.
• By Corporate America: Leveraged Buy Outs where
most of the proceeds from debt incurrence are used to
make cash payments to stockholders, rather than to use
the cash to build or acquire productive assets.
Given the gradual deterioration in U.S. creditworthiness, I think it is important to encourage foreign entities to acquire control of U.S. assets and U.S. companies. Foreigners can use the proceeds from providing finance to the U.S. in three ways:
1) Buy and hold U.S. debt instruments.
2) Acquire U.S. equities or assets as passive investors.
3) Acquire control positions in U.S. equities and
assets.
Insofar as increased amounts of debt instruments are held by foreigners, this seems likely to detract from U.S. credit-worthiness, sooner or later. This would not be the
case if the proceeds from U.S. borrowing were recycled into equity investments. Given the massive amounts of U.S. debt held off-shore, passive investing is probably of
limited use to creditors located in China and Japan.
Rather, those creditors ought to be encouraged to acquire control of U.S. companies and U.S. assets. If so, this might prove to be a bonanza for Third Avenue. Many of
the domestic companies in the TAVF portfolio appear to
be ideal take-over candidates.
Again, put simply, the U.S. has so far in the 21st Century achieved prosperity and paid for prosperity with a steadily deteriorating credit-worthiness. Macro factors point to a less optimistic outlook for the U.S. than for, say, Hong Kong or Mainland China. In spite of this, the U.S. remains the best place in the world to invest in individual securities for a bottom-up investor such as TAVF, other things being close to equal. These other things encompass businesses having strong financial positions; prices of common stocks reflecting meaningful discounts from NAVs, and that for the long term, there exists reasonably good prospects that such NAVs will increase by no less than 10% per annum compounded."
Marin J .Whitman
Does the GM Deal Reshape Healthcare?
Getting the UAW to take control of it's healthcare may be the turning point for the US. Good for GM (GM)
GM is going to fund a $35 billion health care fund that will finally take all present and future health cost away from the auto maker. Why do you care? Right now $3,000 to $5,000 of the cost of an auto you buy from GM is the cost of it's healthcare program. Can you imagine what type of value or additional options or improved quality we may get now that the cost is gone? Is it any wonder they cannot provide the types of autos to Japanese do whose similar costs are just a fraction of that?
More importantly, GM may have started a sea-change without knowing it. What company sponsored health plans have done is taken the free market out of the equation. When that is done, waste and inefficiency reign. If GM is not footing the bill, anyone want to bet the UAW will take a much closer look at where the money is going? Do we really doubt that "concern" will inevitably trickle down to the rank and file?
Why are we not able to shop for health insurance like we are for auto insurance? Why do us healthy people who have almost no claims pay as much as those who are 300 pounds overweight, smoke, eat lousy drink too much and have astronomical medical bills? Ought it not be more correlated to the frequency of our claims? Why does a company pay as much for insurance for a couple as they do for a family of 5, just because they are both a family?
If we want to get healthcare costs down, let the market in. It works everywhere else and this GM deal may have opened that door, at least we can hope.
GM is going to fund a $35 billion health care fund that will finally take all present and future health cost away from the auto maker. Why do you care? Right now $3,000 to $5,000 of the cost of an auto you buy from GM is the cost of it's healthcare program. Can you imagine what type of value or additional options or improved quality we may get now that the cost is gone? Is it any wonder they cannot provide the types of autos to Japanese do whose similar costs are just a fraction of that?
More importantly, GM may have started a sea-change without knowing it. What company sponsored health plans have done is taken the free market out of the equation. When that is done, waste and inefficiency reign. If GM is not footing the bill, anyone want to bet the UAW will take a much closer look at where the money is going? Do we really doubt that "concern" will inevitably trickle down to the rank and file?
Why are we not able to shop for health insurance like we are for auto insurance? Why do us healthy people who have almost no claims pay as much as those who are 300 pounds overweight, smoke, eat lousy drink too much and have astronomical medical bills? Ought it not be more correlated to the frequency of our claims? Why does a company pay as much for insurance for a couple as they do for a family of 5, just because they are both a family?
If we want to get healthcare costs down, let the market in. It works everywhere else and this GM deal may have opened that door, at least we can hope.
Wal-Mart and India: Big
Events are happening in India with Wal-Mart (WMT) that folks seem to be not noticing and if you are buying shares to accumulate, that is good because once the scope of this is recognized, shares may never look back.
Bharti Enterprises and Wal-Mart are confident their Indian joint venture is supported in the country and say it will help usher in the future of Indian retail. "I think it's a big change for India, the move from mom-and-pop to organized retail," said Raj Jain, head of Wal-Mart's India operations. "I think most people understand that it is a necessary evolution which has to go through for everybody to benefit from and for the economy.
Bharti Chairman Sunil Bharti Mittal echoed those comments. "Farmers want this, the customers want a better experience and to save money. They want it -- which means the country wants it."
The joint venture called Bharti Wal-Mart Private Limited, is scheduled to open its first store by the end of next year. It will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses.
The question is, what is the potential? Consider that large retail companies make up only 3% of India's $350 billion retail market. India allows foreign single-brand retailers to hold up to 51 percent in local joint ventures, while multiple-brand retailers like Wal-Mart are limited to cash-and-carry and franchise deals.
Wal-Mart is in good company and has strong support internationally as suppliers ranging from Unilever (UL) and Procter & Gamble Co (PG) who "know the game", to small local suppliers that make only one product are eager to work with the joint venture, Mittal said.
In essence, Wal-Mart is positioning itself to be the portal for goods going into the country. Once the JV is operating, the economies of scale Wal-Mart and distribution abilities can and will employ will instantly transform them into the preferred retailer for the nation. International sales for Wal-Mart are growing 16% this year and this partnership will cause that to explode.
It is a year out which is why is not getting much notice now. The thing is, if you wait until it does, you will be paying much more for a share of that growth than you are now.
Bharti Enterprises and Wal-Mart are confident their Indian joint venture is supported in the country and say it will help usher in the future of Indian retail. "I think it's a big change for India, the move from mom-and-pop to organized retail," said Raj Jain, head of Wal-Mart's India operations. "I think most people understand that it is a necessary evolution which has to go through for everybody to benefit from and for the economy.
Bharti Chairman Sunil Bharti Mittal echoed those comments. "Farmers want this, the customers want a better experience and to save money. They want it -- which means the country wants it."
The joint venture called Bharti Wal-Mart Private Limited, is scheduled to open its first store by the end of next year. It will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses.
The question is, what is the potential? Consider that large retail companies make up only 3% of India's $350 billion retail market. India allows foreign single-brand retailers to hold up to 51 percent in local joint ventures, while multiple-brand retailers like Wal-Mart are limited to cash-and-carry and franchise deals.
Wal-Mart is in good company and has strong support internationally as suppliers ranging from Unilever (UL) and Procter & Gamble Co (PG) who "know the game", to small local suppliers that make only one product are eager to work with the joint venture, Mittal said.
In essence, Wal-Mart is positioning itself to be the portal for goods going into the country. Once the JV is operating, the economies of scale Wal-Mart and distribution abilities can and will employ will instantly transform them into the preferred retailer for the nation. International sales for Wal-Mart are growing 16% this year and this partnership will cause that to explode.
It is a year out which is why is not getting much notice now. The thing is, if you wait until it does, you will be paying much more for a share of that growth than you are now.
Thursday's Upgrades and Downgrades
UPGRADES
Tempur-Pedic TPX Stifel Nicolaus Hold » Buy
Celanese CE BB&T Capital Mkts Hold » Buy
Pixelworks PXLW Jefferies & Co Underperform » Hold
American Eagle AEO Wachovia Mkt Perform » Outperform
Office Depot ODP JP Morgan Neutral » Overweight
CIT Group CIT Credit Suisse Neutral » Outperform
CVS Corp CVS JP Morgan Neutral » Overweight
DOWNGRADES
Vonage VG Stanford Research Hold » Sell
Tesoro Petroleum TSO Credit Suisse Outperform » Neutral
Resources Connect RECN Stifel Nicolaus Buy » Hold
Health Care Ppty HCP UBS Buy » Neutral
Resources Connect RECN Robert W. Baird Outperform » Neutral
Alon USA Energy ALJ Credit Suisse Outperform » Neutral
CNOOC Ltd CEO Bear Stearns Peer Perform » Underperform
Resources Connect RECN Bear Stearns Outperform » Peer Perform
Agrium AGU CIBC Wrld Mkts Sector Outperform » Sector Perform
Statoil ASA STO JP Morgan Overweight » Neutral
Resources Connect RECN JMP Securities Mkt Outperform » Mkt Perform
Resources Connect RECN Piper Jaffray Outperform » Market Perform
Health Care Ppty HCP Friedman Billings Outperform » Mkt Perform
Under Armour UA UBS Buy » Neutral
VeriSign VRSN Credit Suisse Outperform » Neutral
Walgreen WAG JP Morgan Overweight » Neutral
Staples SPLS JP Morgan Neutral » Underweight
Wednesday, September 26, 2007
"Fast Money" for Thursday
I have changed the tracking to a simple "Success %" rather than the dollar amount since the different prices in stocks makes a simple dollar result meaningless.
Thursday's Picks
Jeff Macke said sell Bear Stearns (BSC). Open $123
Guy Adami liked NYSE Euronext (NYX). Open $78.60
Karen Finerman thought BEA Systems (BEAS) is a buy. Open $13.33
Pete Najarian preferred Isis Pharmaceuticals (ISIS). Open $15.10
Wednesday's Picks
Jeff Macke liked eBay (EBAY). Open $39.07 Close $39.18
Guy Adami recommended USEC Corp (USU). Open $10.36 Close $10.95
Karen Finerman preferred Comverse Technology (CMVT.PK). Open $20.41 Close $20.22
Pete Najarian said buy Digital River (DRIV). Open $44.73 Close $44.55
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 26-18 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 31-23 = 57%
Pete Najarian= 19-17 = 52%
Tim Seymore= 3-2 = 60%
Karen Finerman= 11-6 = 64%
Stacey Briere-Gilbert= 2-0 = 100%
Thursday's Picks
Jeff Macke said sell Bear Stearns (BSC). Open $123
Guy Adami liked NYSE Euronext (NYX). Open $78.60
Karen Finerman thought BEA Systems (BEAS) is a buy. Open $13.33
Pete Najarian preferred Isis Pharmaceuticals (ISIS). Open $15.10
Wednesday's Picks
Jeff Macke liked eBay (EBAY). Open $39.07 Close $39.18
Guy Adami recommended USEC Corp (USU). Open $10.36 Close $10.95
Karen Finerman preferred Comverse Technology (CMVT.PK). Open $20.41 Close $20.22
Pete Najarian said buy Digital River (DRIV). Open $44.73 Close $44.55
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 26-18 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 31-23 = 57%
Pete Najarian= 19-17 = 52%
Tim Seymore= 3-2 = 60%
Karen Finerman= 11-6 = 64%
Stacey Briere-Gilbert= 2-0 = 100%
Today's 52 Week Lows
It seems every biofuel producer is near a 52 week low EXCEPT ADM..
VSE Verasun Energy Corp 10.75
USBE US Bioenergy Corp 8.25
WOS Wolseley Plc 16.38
WNS Wns Holdings Ltd 16.56
WERN Werner Enterprises Inc 17.12
TMS Thomson 14.62
THRX Theravance Inc 24.90
SPLS Staples Inc 21.39
SPF Standard Pacific Corp 6.02
RHI Robert Half Internati ... 29.60
RECN Resources Connection Inc 22.36
RCRC Rc2 Corp 27.01
RAIL Freightcar Amer Inc 38.93
PTRY Pantry Inc 28.58
PEIX Pacific Ethanol Inc 8.54
MSSR Mccormick & Schmicks ... 19.69
MRLN Marlin Business Svcs Corp 14.63
MNI McClatchy Newspapers, Inc 19.71
MGPI Mgp Ingredients Inc 11.55
GPRE Green Plains Renewabl ... 10.84
BIOF Biofuel Energy Corp 5.50
CC Circuit City Stores, ... 7.92
CAO Csk Auto Corp 10.53
CALC California Coastal Cm ... 12.40
AVR Aventine Renewable Energy 10.36
BGP Borders Group, Inc 12.27
VSE Verasun Energy Corp 10.75
USBE US Bioenergy Corp 8.25
WOS Wolseley Plc 16.38
WNS Wns Holdings Ltd 16.56
WERN Werner Enterprises Inc 17.12
TMS Thomson 14.62
THRX Theravance Inc 24.90
SPLS Staples Inc 21.39
SPF Standard Pacific Corp 6.02
RHI Robert Half Internati ... 29.60
RECN Resources Connection Inc 22.36
RCRC Rc2 Corp 27.01
RAIL Freightcar Amer Inc 38.93
PTRY Pantry Inc 28.58
PEIX Pacific Ethanol Inc 8.54
MSSR Mccormick & Schmicks ... 19.69
MRLN Marlin Business Svcs Corp 14.63
MNI McClatchy Newspapers, Inc 19.71
MGPI Mgp Ingredients Inc 11.55
GPRE Green Plains Renewabl ... 10.84
BIOF Biofuel Energy Corp 5.50
CC Circuit City Stores, ... 7.92
CAO Csk Auto Corp 10.53
CALC California Coastal Cm ... 12.40
AVR Aventine Renewable Energy 10.36
BGP Borders Group, Inc 12.27
Buffett Buying Into Bear Sterns?
Bear Sterns (BSC), is spiking 10% on news Berkshire Hathaway's (BRK.A) Warren Buffett is considering a 20% stake in the broker. True or rumor?
Sounds to me like the Countrywide (CFC) rumors a month ago. IF Warren is buying into Bear, it will not be with a purchase of common stock. Now that the news is out he just cannot do it. A 10% jump already illustrates the impossibility he faces in doing anything in public. What he may do is what I postured would be (and eventually was)a potential for Countrywide, although not by Buffett. A private transaction in which he injected liquidity into the broker and in return receive a convertible security that pays a nice fat dividend, at this point probably around 7.5%.
Gone are the days we can follow Buffett before he makes his moves. If Buffett was going to buy common shares, it would have been done already and we would not know about it until the SEC filing much much later.
If I was going to bet, this is just more smoke...
Sounds to me like the Countrywide (CFC) rumors a month ago. IF Warren is buying into Bear, it will not be with a purchase of common stock. Now that the news is out he just cannot do it. A 10% jump already illustrates the impossibility he faces in doing anything in public. What he may do is what I postured would be (and eventually was)a potential for Countrywide, although not by Buffett. A private transaction in which he injected liquidity into the broker and in return receive a convertible security that pays a nice fat dividend, at this point probably around 7.5%.
Gone are the days we can follow Buffett before he makes his moves. If Buffett was going to buy common shares, it would have been done already and we would not know about it until the SEC filing much much later.
If I was going to bet, this is just more smoke...
Target Get's Into Lead Paint Recall Game, More "Thomas" Recalls
Target (TGT) announced today that it is recalling 350,000 toy lawn and garden tools and chairs due to lead paint. Unlike Mattel (MAT), they did not immediately issue the Chinese an apology.
Details are not forthcoming yet (no word on the Target website as of 3pm) but in what is shaping up to become an election year issue, is there a toy that says "Made In China" you would buy for your kid? Ironically, I was in a Target last week and witnessed mothers in the baby section (actually I was eavesdropping). They were talking and looking at toys and for these three moms, the decision to buy or not was simple. If it said "Made In China", it went back on the shelf. "Why risk it" was the consensus among them. Sooner or later a toy maker is going to make a killing bringing out the "Made In the USA" logo and running it in commercials. At this point people would easily pay a few bucks more for the products than say, burying their child?
Additionally, RC2 Corp. (RCRC) announced they are recalling an additional 200,000 Thomas the Tank Engine toys. No word yet as to whether an apology to China is coming or not.
Mattel is sure to issue an apology for both of them.............cowards
Details are not forthcoming yet (no word on the Target website as of 3pm) but in what is shaping up to become an election year issue, is there a toy that says "Made In China" you would buy for your kid? Ironically, I was in a Target last week and witnessed mothers in the baby section (actually I was eavesdropping). They were talking and looking at toys and for these three moms, the decision to buy or not was simple. If it said "Made In China", it went back on the shelf. "Why risk it" was the consensus among them. Sooner or later a toy maker is going to make a killing bringing out the "Made In the USA" logo and running it in commercials. At this point people would easily pay a few bucks more for the products than say, burying their child?
Additionally, RC2 Corp. (RCRC) announced they are recalling an additional 200,000 Thomas the Tank Engine toys. No word yet as to whether an apology to China is coming or not.
Mattel is sure to issue an apology for both of them.............cowards
Target And Thomas Recalls: Update And Links
Here is the necessary information
Thomas : click here
Target: These were actually made in Taiwan
Thomas : click here
Target: These were actually made in Taiwan
Wednesday's Links
More Charges, "Adult" kids, No need for reform?, Cheap Ethanol play
- How about they stand on their own feet when they say "I am an adult"
- Good, he cannot go away for long enough
- Why do we keep letting these clowns be in charge of our retirement?
- Ethanol companies are so cheap now, these guys have to be right
- How about they stand on their own feet when they say "I am an adult"
- Good, he cannot go away for long enough
- Why do we keep letting these clowns be in charge of our retirement?
- Ethanol companies are so cheap now, these guys have to be right
Why Dow Is Going To Saudi Arabia
How profitable could the JV in "The Kingdom" be for Dow?
The Saudi Aramco – Dow Chemical (DOW) joint venture at Ras Tanura will have a plastics processing zone, and area of petrochemical processing the Saudi's covet diversification to, hence the recent purchase of GE Plastics (GE). Saudi Arabia is one of the most sought after destinations for petrochemical investments because it offers the lowest priced ethane in the world.
According to Dev Corp International, which is involved in developing plastics projects in the Kingdom, land is not a problem and companies have a choice of setting up facilities either on the east or the west coast and options include Jubail, Yanbu and the Plastic Valley in King Abdullah Economic City near Rabigh.
How much is the savings doing business in Saudi Arabia?
Land is available for lease at $0.27/square metre/year, .
Power costs are as low as $0.03/KWh.
Funding should also not be a problem as soft loans are available from the Saudi Industrial Development Fund to cover up to 48% of the project cost. As the upcoming "white paper" from Dow will illustrate, the JV strategy enables the projects to be self-funded.
One chief concern that has been voiced was the availability of skilled labor for the facilities but the Saudi government is reported to have set up institutes to train operators. They have a goal of producing 300 skilled operators every year.
There is a worldwide rush to get into Saudi Arabia now and Dow is the first to get it's foot in the door in petrochemical processing and it is doing so on an unprecedented scale. What this will do is take the raw material costs which now stand at over 50% of Dow total cost structure and lower that dramatically, throwing more cash to the bottom line.
Based on recent history, that cash will be well taken care of for us shareholders.
The Saudi Aramco – Dow Chemical (DOW) joint venture at Ras Tanura will have a plastics processing zone, and area of petrochemical processing the Saudi's covet diversification to, hence the recent purchase of GE Plastics (GE). Saudi Arabia is one of the most sought after destinations for petrochemical investments because it offers the lowest priced ethane in the world.
According to Dev Corp International, which is involved in developing plastics projects in the Kingdom, land is not a problem and companies have a choice of setting up facilities either on the east or the west coast and options include Jubail, Yanbu and the Plastic Valley in King Abdullah Economic City near Rabigh.
How much is the savings doing business in Saudi Arabia?
Land is available for lease at $0.27/square metre/year, .
Power costs are as low as $0.03/KWh.
Funding should also not be a problem as soft loans are available from the Saudi Industrial Development Fund to cover up to 48% of the project cost. As the upcoming "white paper" from Dow will illustrate, the JV strategy enables the projects to be self-funded.
One chief concern that has been voiced was the availability of skilled labor for the facilities but the Saudi government is reported to have set up institutes to train operators. They have a goal of producing 300 skilled operators every year.
There is a worldwide rush to get into Saudi Arabia now and Dow is the first to get it's foot in the door in petrochemical processing and it is doing so on an unprecedented scale. What this will do is take the raw material costs which now stand at over 50% of Dow total cost structure and lower that dramatically, throwing more cash to the bottom line.
Based on recent history, that cash will be well taken care of for us shareholders.
Is Something Brewing With ADM?
Usually when you keep getting hints of something, there ends up being a certain level of truth to them. That what is going on with Arhcer Daniel's Midland (ADM).
Earlier this summer ADM made waves when in Brazil they announced they were "actively" seeking investment in the country's ethanol industry. Already producing bio-diesel there, a deal for ethanol would cement ADM's place as the worlds largest producer of the fuel.
A month ago ADM underwent a management reorganization that more aligned its structure in the mold of an oil company much like CEO Patricia Woertz's previous employer Chevron (CVX). How does the oil industry grow? Mergers and acquisitions.
Now we have Cosan (CZZ) Brazil's major ethanol producer saying "will start taking its first international steps, with possible investments in ethanol plants in the Caribbean, Mexico or even in the United States in the coming years". Why does this little tidbit matter, ADM is a minority shareholder in Cosan. Cosan's financial vice president, Paulo Diniz, said "it's impossible to be a global player in Brazil. You have to be present in the world's largest ethanol market, the United States,". He continued, "there's no company which is really a global renewable energy player, and at present, Cosan's condition to move into this position is unique,".
Cosan's seemingly "unlimited" capital raising capacity opens the possibility for acquisitions of "big companies," Diniz said. He added that the company could raise in the coming years up to $15 billion through subsequent stock offerings. "With our current structure we can even dream of big steps (large company acquisitions),".
HMMM.
We have the largest US player wanting to get into Brazil's market and the largest Brazilian player wanting in the US market and there is already a equity relationship between the two. What is to stop a merger of equals creating an ethanol powerhouse on a global scale?
Uh, Nothing???
Earlier this summer ADM made waves when in Brazil they announced they were "actively" seeking investment in the country's ethanol industry. Already producing bio-diesel there, a deal for ethanol would cement ADM's place as the worlds largest producer of the fuel.
A month ago ADM underwent a management reorganization that more aligned its structure in the mold of an oil company much like CEO Patricia Woertz's previous employer Chevron (CVX). How does the oil industry grow? Mergers and acquisitions.
Now we have Cosan (CZZ) Brazil's major ethanol producer saying "will start taking its first international steps, with possible investments in ethanol plants in the Caribbean, Mexico or even in the United States in the coming years". Why does this little tidbit matter, ADM is a minority shareholder in Cosan. Cosan's financial vice president, Paulo Diniz, said "it's impossible to be a global player in Brazil. You have to be present in the world's largest ethanol market, the United States,". He continued, "there's no company which is really a global renewable energy player, and at present, Cosan's condition to move into this position is unique,".
Cosan's seemingly "unlimited" capital raising capacity opens the possibility for acquisitions of "big companies," Diniz said. He added that the company could raise in the coming years up to $15 billion through subsequent stock offerings. "With our current structure we can even dream of big steps (large company acquisitions),".
HMMM.
We have the largest US player wanting to get into Brazil's market and the largest Brazilian player wanting in the US market and there is already a equity relationship between the two. What is to stop a merger of equals creating an ethanol powerhouse on a global scale?
Uh, Nothing???
Wednesday's Upgrades and Downgrades
UPGRADES
Hexcel HXL Wedbush Morgan Hold » Buy
Mattson MTSN Am Tech/JSA Research Sell » Neutral
ADTRAN ADTN Brean Murray Sell » Hold
Polycom PLCM Kaufman Bros Hold » Buy
Aaron Rents RNT Morgan Keegan Mkt Perform » Outperform
Gol Intelligent Airlines GOL JP Morgan Underweight » Neutral
Sonic Solutions SNIC JP Morgan Neutral » Overweight
1-800-FLOWERS FLWS CIBC Wrld Mkts Sector Perform » Sector Outperform
Westwood One WON Deutsche Securities Hold » Buy
Briggs & Stratton BGG Robert W. Baird Underperform » Neutral
DOWNGRADES
Sonus Pharm SNUS Punk, Ziegel & Co Buy » Mkt Perform
C-COR.net CCBL Ferris Baker Watts Buy » Neutral
Panacos Pharma PANC Caris & Company Above Average » Average
American Commercial Lines ACLI Cantor Fitzgerald Buy » Hold
Corn Products CPO BB&T Capital Mkts Buy » Hold
Arris ARRS Friedman Billings Outperform » Mkt Perform
Kellogg K Bear Stearns Outperform » Peer Perform
Dean Foods DF Bear Stearns Outperform » Peer Perform
Marsh McLennan MMC JP Morgan Overweight » Neutral
C-COR.net CCBL Friedman Billings Outperform » Mkt Perform
Michael Baker BKR Oppenheimer Buy » Neutral
Cadbury Schweppes CSG Bear Stearns Peer Perform » Underperform
Tuesday, September 25, 2007
"Fast Money" for Wednesday
Wednesday's Picks
Jeff Macke liked eBay (EBAY). Open $39.07
Guy Adami recommended USEC Corp (USU). Open $10.36
Karen Finerman preferred Comverse Technology (CMVT.PK). Open $20.41
Pete Najarian said buy Digital River (DRIV). Open $44.73
TUESDAY'S PICKS
Jeff Macke expects a pull back and recommends Short Dow30 ProShares (DOG). Open $58.03 Close $57.25 Loss $.78
Guy Adami said buy Pfizer (PFE). Open $24.42 Close $24.24 Loss $.18
Karen Finerman preferred NYMEX (NMX).Open $125.10 Close $125.70 Gain $.60
Pete Najarian liked ValueClick (VCLK). Open $22.00 Close $24.85 Gain $2.85
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)
Guy Adami= 25-18 Gain $40.86
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 30-23 Gain $9.18
Pete Najarian= 19-16 Gain $27.74
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 11-5 Gain $4.71
Stacey Briere-Gilbert= 2-0 Gain $1.61
Today's 52 Week Low's
WERN Werner Enterprises Inc 17.09
WCC Wesco Intl Inc 39.64
UFPI Universal Forest Products 31.79
TUES Tuesday Morning Corp 9.36
TMS Thomson 14.76
SPLS Staples Inc 21.57
SPF Standard Pacific Corp 6.30
SHLD Sears Hldgs Corp 125.12
RAIL Freightcar Amer Inc 38.34
PTRY Pantry Inc 28.70
PEIX Pacific Ethanol Inc 8.71
MSSR Mccormick & Schmicks ... 19.30
MNI McClatchy Newspapers, Inc 19.94
LAMR Lamar Advertising Com ... 48.13
KND Kindred Healthcare Inc 17.77
DHI D.R. Horton, Inc 13.37
DF Dean Foods Co New 25.03
ISCA International Speedwa ... 45.69
IMN Imation Corp 24.06
IIIN Insteel Industries, Inc 15.27
HZO Marinemax Inc 15.02
HVTA Haverty Furniture Inc 9.85
HTLD Heartland Express Inc 14.21
CC Circuit City Stores, ... 7.93
CAO Csk Auto Corp 10.90
CALC California Coastal Cm ... 12.68
CAKE The Cheesecake Factor ... 22.96
BSET Bassett Furniture Ind ... 10.94
BOW Bowater Incorporated 14.34
AVR Aventine Renewable Energy 10.28
AN AutoNation Inc 17.39
Tuesday's Links
Leaders, Sub-Prime, UN Scandal?, The MoveOn 25
- The top ten companies for producing leaders
- Remember those "rip off" sub-prime mortgages that are just terrible? If done right, they are actually the best for you
- Another thanks for the mention I just became aware of.-
- Hillary Clinton sides with Moveon.org over the US Military, only 1 of 25 Senators (all Democrats) to do so.
- The top ten companies for producing leaders
- Remember those "rip off" sub-prime mortgages that are just terrible? If done right, they are actually the best for you
- Another thanks for the mention I just became aware of.-
- Hillary Clinton sides with Moveon.org over the US Military, only 1 of 25 Senators (all Democrats) to do so.
Is Lowe's Setting Us Up?
Did you ever read something that just did not jive with what you were witnessing?
Yesterday, Lowe’s (LOW), the second-largest home improvement chain after Home Depot (HD), said it now expected profit for the year ending in February to be at the low end or below a forecast of $1.97 to $2.01 a share it gave in August. Currently, analysts expect a profit of $1.99 a share equal to last year. The result of that warning was a 3% haircut for shares after hours yesterday and continued weakness this morning with share opening down 5%. A bit of an overreaction to a company essentially reaffirming estimates albeit at the low end?
They cited "drier" than normal conditions in much of the country that were keeping people from purchasing lawn and garden accessories. Makes sense. Except, I live in the Northeast and we have had probably 3 rainy days since July 4th and are currently under "drought" watering conditions. Yet, despite this, the local Lowe's I was at this weekend was just a busy as usual. Now obviously you cannot extrapolate the entire chain from one location but that location in experiencing the very conditions they gave for the potential shortfall. Odd. This warning is also odd in that earlier this year Lowe's told us they were seeing "improving" conditions in many areas. Just does not add up.
They also backed expectations of average growth of 12 percent to 15 percent in profit per share each year from 2008 through 2010, while total sales rise 8 percent to 11 percent a year during that time.
What to think? Lowe's is giving us the worst case scenario. What is most likely to happen is a meet or more likely beat of these lowered expectations. Between the two chains (HD & LOW) Lowe's is by far the better run and better situated to capitalize on any improvement. Having spent the last three years stealing market share from home depot every quarter, Lowe's will see result catapult when things settle.
This may be a tremendous time to buy shres...
Yesterday, Lowe’s (LOW), the second-largest home improvement chain after Home Depot (HD), said it now expected profit for the year ending in February to be at the low end or below a forecast of $1.97 to $2.01 a share it gave in August. Currently, analysts expect a profit of $1.99 a share equal to last year. The result of that warning was a 3% haircut for shares after hours yesterday and continued weakness this morning with share opening down 5%. A bit of an overreaction to a company essentially reaffirming estimates albeit at the low end?
They cited "drier" than normal conditions in much of the country that were keeping people from purchasing lawn and garden accessories. Makes sense. Except, I live in the Northeast and we have had probably 3 rainy days since July 4th and are currently under "drought" watering conditions. Yet, despite this, the local Lowe's I was at this weekend was just a busy as usual. Now obviously you cannot extrapolate the entire chain from one location but that location in experiencing the very conditions they gave for the potential shortfall. Odd. This warning is also odd in that earlier this year Lowe's told us they were seeing "improving" conditions in many areas. Just does not add up.
They also backed expectations of average growth of 12 percent to 15 percent in profit per share each year from 2008 through 2010, while total sales rise 8 percent to 11 percent a year during that time.
What to think? Lowe's is giving us the worst case scenario. What is most likely to happen is a meet or more likely beat of these lowered expectations. Between the two chains (HD & LOW) Lowe's is by far the better run and better situated to capitalize on any improvement. Having spent the last three years stealing market share from home depot every quarter, Lowe's will see result catapult when things settle.
This may be a tremendous time to buy shres...
50 Million Feebies? Not Good.
Why would you give away one of the most popular items available today? Maybe it is the only way to get people into your stores?
From Oct. 2 to Nov. 7, Starbucks (SBUX) more than 10,000 U.S. stores will hand out about 1.5 million "Song of the Day" cards each day. The cards can be redeemed at Apple's (APPL) online iTunes Store.
Thirty-seven artists with featured songs include Paul McCartney and Joni Mitchell - the first two to sign on with Starbucks' Hear Music label - along with Joss Stone, Dave Matthews, John Mayer, Annie Lennox and Band of Horses.
Starbucks and Apple recently announced they will allow users of Apple's iPhone and new iPod Touch to directly download songs playing in a Starbucks to their iPods. A Starbucks icon will light up on the iPhone or Touch whenever a user is within range of a Starbucks shop's Wi-Fi signal. Great, but, why give it away?
Why is this bad news? If you are the #1 coffee chain and are going into business with a company that has a product essentially in a category of one, why give it away? The very first thing that comes to my mind is that Starbucks has seen further deterioration of already anemic store traffic. There ought to be a natural curiosity of the new service that would cause an increase in traffic as people come in to check it out without cutting 99 cents of what they make on a cup of coffee. Unless, unless, traffic has fallen so much recently that Starbucks is in fear of an earnings miss and is pulling out all the stops to generate whatever revenue it can for the quarter.
Starbucks is already on record saying "meeting the high end of earnings expectations will be challenging" and this action illustrates that it just might be more challenging than they are even admitting.
Both Apple and Starbucks rarely give anything away, for Starbucks to do it now smells a little like desperation.
From Oct. 2 to Nov. 7, Starbucks (SBUX) more than 10,000 U.S. stores will hand out about 1.5 million "Song of the Day" cards each day. The cards can be redeemed at Apple's (APPL) online iTunes Store.
Thirty-seven artists with featured songs include Paul McCartney and Joni Mitchell - the first two to sign on with Starbucks' Hear Music label - along with Joss Stone, Dave Matthews, John Mayer, Annie Lennox and Band of Horses.
Starbucks and Apple recently announced they will allow users of Apple's iPhone and new iPod Touch to directly download songs playing in a Starbucks to their iPods. A Starbucks icon will light up on the iPhone or Touch whenever a user is within range of a Starbucks shop's Wi-Fi signal. Great, but, why give it away?
Why is this bad news? If you are the #1 coffee chain and are going into business with a company that has a product essentially in a category of one, why give it away? The very first thing that comes to my mind is that Starbucks has seen further deterioration of already anemic store traffic. There ought to be a natural curiosity of the new service that would cause an increase in traffic as people come in to check it out without cutting 99 cents of what they make on a cup of coffee. Unless, unless, traffic has fallen so much recently that Starbucks is in fear of an earnings miss and is pulling out all the stops to generate whatever revenue it can for the quarter.
Starbucks is already on record saying "meeting the high end of earnings expectations will be challenging" and this action illustrates that it just might be more challenging than they are even admitting.
Both Apple and Starbucks rarely give anything away, for Starbucks to do it now smells a little like desperation.
Gap Keeps Looking Better
With all the talk about lately, Gap (GPS) made a hire that may eventually transform the listless retailer.
The designer Todd Oldham, whose products revitalized retailers like Target and La-Z-Boy was hired to hopefully do the same for Old Navy. He has agreed to oversee clothing design and eventually create a line of merchandise for the chain sold under his name, which currently appears on items from flower arrangements at FTD to a fashion show on MTV.
Old Navy it seems has finally realized it target market and said that Mr. Oldham would focus on shoppers in their 20s, after years of the chain "trying to be all things to all people," said Dawn Robertson, the president of Old Navy.
How important is this for Old Navy? Consider Old Navy whose had sales of nearly $7 billion last year, is bigger than both Gap and Banana Republic. Ms. Robertson said Mr. Oldham’s clothing for Old Navy would be "modern and relevant," adding that "it will be an important part of our turnaround."
This is big for Gap. In an environment in which we may be seeing a slowdown, people will need a reason to go to Old Navy. Mr. Oldham, with his name recognition, will give the much coveted young shopped that very reason and given his past successes, thee is no reason to expect anything but that here. Should we rush out and buy Gap shares now? Not yet. CEO Glen Murphy has not really given us his "vision" of where he wants to take the company so for that reason, I would hold off. Gap still has too much cash on hand, too many stores, and needs to buy back more shares. Until we know what will happen there, anything is guesswork. But, and this is a big but, if this is indicative of what he plans to do on the retail front, it is a very promising development.
Gap shares are becoming extremely enticing but I just cannot pull the trigger yet with the unanswered questions I have. Just need more answers...
The designer Todd Oldham, whose products revitalized retailers like Target and La-Z-Boy was hired to hopefully do the same for Old Navy. He has agreed to oversee clothing design and eventually create a line of merchandise for the chain sold under his name, which currently appears on items from flower arrangements at FTD to a fashion show on MTV.
Old Navy it seems has finally realized it target market and said that Mr. Oldham would focus on shoppers in their 20s, after years of the chain "trying to be all things to all people," said Dawn Robertson, the president of Old Navy.
How important is this for Old Navy? Consider Old Navy whose had sales of nearly $7 billion last year, is bigger than both Gap and Banana Republic. Ms. Robertson said Mr. Oldham’s clothing for Old Navy would be "modern and relevant," adding that "it will be an important part of our turnaround."
This is big for Gap. In an environment in which we may be seeing a slowdown, people will need a reason to go to Old Navy. Mr. Oldham, with his name recognition, will give the much coveted young shopped that very reason and given his past successes, thee is no reason to expect anything but that here. Should we rush out and buy Gap shares now? Not yet. CEO Glen Murphy has not really given us his "vision" of where he wants to take the company so for that reason, I would hold off. Gap still has too much cash on hand, too many stores, and needs to buy back more shares. Until we know what will happen there, anything is guesswork. But, and this is a big but, if this is indicative of what he plans to do on the retail front, it is a very promising development.
Gap shares are becoming extremely enticing but I just cannot pull the trigger yet with the unanswered questions I have. Just need more answers...
Tuesday's Upgrades and Downgrades
UPGRADES
Jo-Ann Stores JAS KeyBanc Capital Mkts Hold » Buy
Ventana Medical VMSI Caris & Company Average » Above Average
Cousins Prop CUZ Wachovia Mkt Perform » Outperform
Maxygen MAXY Stanford Research Hold » Buy
SL Green Rlty SLG KeyBanc Capital Mkts Hold » Buy
Ariba ARBA Cowen & Co Underperform » Outperform
Motorola MOT RBC Capital Mkts Sector Perform » Outperform
Susser SUSS JP Morgan Neutral » Overweight
EMC Corp EMC Citigroup Hold » Buy
Optium OPTM Jefferies & Co Hold » Buy
DOWNGRADES
Mattson MTSN CIBC Wrld Mkts Sector Perform » Sector Underperform
Cubic CUB BB&T Capital Mkts Hold » Underweight
Dime Community DCOM Stifel Nicolaus Hold » Sell
F5 Networks FFIV Nollenberger Capital Buy » Neutral
Foundry Ntwks FDRY Nollenberger Capital Buy » Neutral
Kyphon KYPH Piper Jaffray Outperform » Market Perform
LDK Solar LDK CIBC Wrld Mkts Sector Outperform » Sector Perform
Sirtris Pharma SIRT JP Morgan Overweight » Neutral
Rockwell Automation ROK JP Morgan Overweight » Neutral
Red Hat RHT Credit Suisse Outperform » Neutral
Reliance Steel RS UBS Buy » Neutral
Monday, September 24, 2007
"Fast Money" for Tuesday
TUESDAY'S PICKS
Jeff Macke expects a pull back and recommends Short Dow30 ProShares (DOG). open $58.03
Guy Adami said buy Pfizer (PFE). Open $24.42
Karen Finerman preferred NYMEX (NMX).Open $125.10
Pete Najarian liked ValueClick (VCLK). Open $22.00
MONDAY'S RESULTS
Jeff Macke recommended selling General Motors (GM). Open $34.94 Close $34.74 Gain $.20
Karen Finerman liked NYSE Euronext (NYX). Open $76.05 Close $77.81 Gain $1.76
Pete Najarian preferred BJ Services (BJS). Open $27.81 Close $27.67 Loss $.15
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)
Guy Adami= 25-17 Gain $41.04
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 30-22 Gain $9.96
Pete Najarian= 18-16 Gain $24.89
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 10-5 Gain $4.11
Stacey Briere-Gilbert= 2-0 Gain $1.61
Monday's 52 Week Low's
WOS Wolseley Plc 16.43
WERN Werner Enterprises Inc 17.30
USBE US Bioenergy Corp 9.01
SEH Spartech Corporation 16.54
RYL The Ryland Group, Inc 22.64
PLCE Childrens Pl Retail S ... 24.79
PIR Pier 1 Imports, Inc 5.41
PEIX Pacific Ethanol Inc 9.25
MTH Meritage Homes Corp 15.45
MNI McClatchy Newspapers, Inc 20.30
ISCA International Speedwa ... 46.12
CC Circuit City Stores, ... 8.11
BGP Borders Group, Inc 13.50
HHS Harte-Hanks Communica ... 21.11
HAR Harman International ... 79.85
GPRE Green Plains Renewabl ... 13.02
In Defense of Starbucks
I have spent the better part of a year now detailing the missteps of management at Starbucks (SBUX) and predicting their current predicament but, I have to come to their defense on this one.
The National Labor Relations Board has accused Starbucks of illegal anti-union activity at a store in Michigan. This is the second charge it has received in the past month and the company is currently on trial in New York on charges of union-busting efforts involving the International Workers of the World. Business Week recently took a look at Starbuck's situation and compared them to Wal-Mart (WMT). Not good for a company that has long ridden the "good corporate citizen of the world" train. Here is the thing, they actually earned that title and deserve it. While I have been a bit vehement in my criticism of their business moves (or lack thereof), Starbucks does treat its workers very well.
Should Starbucks be fighting union activity? Hell yes! Can anyone think of anything positive unions have contributed to their workers since the 1940's other than predictable layoffs, salary cuts and the eventual destruction of the businesses their "workers" are employed by? For proof one need look no further that the US Auto and Airline industries for proof. Both industries, totally unionized and strapped with impossible labor costs are perennially doomed watching one or more of its members battle with bankruptcy. The UAW has seen its ranks decimated and hundreds of thousands of its workers lose their job because they view the employer as the enemy, not a partner. In negotiations they either "win" or "lose". The problem? when they think they "win", they actually lose more long term.
So yes, Starbucks and Wal-Mart ought to fight the unions with every once of corporate soul they have. Not just for shareholders, not for management but for the soon to be unemployed workers they will layoff if the unions find their way into their businesses.
What unions today fail to realize is that management has a fiduciary duty to its shareholders. That means keeping labor costs in line. If the unions do "win" and get in to either location, they will get their salary increases to ridiculous levels, there will just be a whole lot less people getting a check each week. How is that good?
Just ask GM (GM). They will lose about $100 million a day when workers walk out today.... GO UNIONS!!!
The National Labor Relations Board has accused Starbucks of illegal anti-union activity at a store in Michigan. This is the second charge it has received in the past month and the company is currently on trial in New York on charges of union-busting efforts involving the International Workers of the World. Business Week recently took a look at Starbuck's situation and compared them to Wal-Mart (WMT). Not good for a company that has long ridden the "good corporate citizen of the world" train. Here is the thing, they actually earned that title and deserve it. While I have been a bit vehement in my criticism of their business moves (or lack thereof), Starbucks does treat its workers very well.
Should Starbucks be fighting union activity? Hell yes! Can anyone think of anything positive unions have contributed to their workers since the 1940's other than predictable layoffs, salary cuts and the eventual destruction of the businesses their "workers" are employed by? For proof one need look no further that the US Auto and Airline industries for proof. Both industries, totally unionized and strapped with impossible labor costs are perennially doomed watching one or more of its members battle with bankruptcy. The UAW has seen its ranks decimated and hundreds of thousands of its workers lose their job because they view the employer as the enemy, not a partner. In negotiations they either "win" or "lose". The problem? when they think they "win", they actually lose more long term.
So yes, Starbucks and Wal-Mart ought to fight the unions with every once of corporate soul they have. Not just for shareholders, not for management but for the soon to be unemployed workers they will layoff if the unions find their way into their businesses.
What unions today fail to realize is that management has a fiduciary duty to its shareholders. That means keeping labor costs in line. If the unions do "win" and get in to either location, they will get their salary increases to ridiculous levels, there will just be a whole lot less people getting a check each week. How is that good?
Just ask GM (GM). They will lose about $100 million a day when workers walk out today.... GO UNIONS!!!
Monday's Links
Lobbyists, UN, Killing gays ok at Columbia, Oil
- Not every time an industry lobbies congress does it work.
- Another UN scandal, who would have thought? Please detect the heavy sarcasm
- You can kill gays for being gay and get invited to Columbia University, ask them to keep quiet about it, and you get banned
- Another take similar to mine on the state of oil short term
- Not every time an industry lobbies congress does it work.
- Another UN scandal, who would have thought? Please detect the heavy sarcasm
- You can kill gays for being gay and get invited to Columbia University, ask them to keep quiet about it, and you get banned
- Another take similar to mine on the state of oil short term
Sprint Nextel Merger "Almost Done"
More than two years after the acquisition that formed Sprint Nextel (S), the now nation's third-largest wireless provider(down from #2) is about 80 percent done with integrating the two sides together, the company's CEO Gary Forsee said last week. Let's just ignore the fact that almost 3 year to complete the merger is just way too long.
"We have a big opportunity in front of us," said Forsee in the meeting with analysts. He said the company should see profit margins improve as it begins next year to pare down its two wireless networks to one.
Sprint bought Nextel in August 2005 and has struggled with merging the two systems. Technical problems and a required swap of frequencies used by Nextel's press to talk network hurt call quality and customer service fiascos lead hundreds of thousands of customers to drop the service.
This year, the company began finally selling hybrid phones that work on both the Nextel network and Sprint's regular CDMA network, and it expects to have 2 million of the devices operating by the end of the year. Next year they will begin switching Nextel customers over to the CDMA network with a new press-to-talk system called QChat, which will go into widespread testing in Q4.
"We believe there's a lot of growth opportunity in push-to-talk," he said.
Sprint says having all their customers on one network will save money on operational costs and reduce investment in new cell sites and other support infrastructure.
All this is good and well but what Sprint needs to address is the fact its current customers are just not very happy. Sprint will make more than a dime a share when the network is combined and the cost savings alone will make for an improvement in results but they have yet to stop the exodus of customers to other providers. It is not the network issue(s) making them do it, it is the treatment they get when they call Sprint that is making them flee. Sprint's firing of customers was a PR fiasco and likely gave more than a few potential customers serious pause about joining Sprint. There are plenty of providers out there for people to choose from, having an adversarial relationship with them is not the way to grow. this is the reason they have fallen far behind rivals AT&T (T) and Verizon (VZ).
Until that issue is fixed, any upside and real improvement for Sprint will be put off indefinitely.
"We have a big opportunity in front of us," said Forsee in the meeting with analysts. He said the company should see profit margins improve as it begins next year to pare down its two wireless networks to one.
Sprint bought Nextel in August 2005 and has struggled with merging the two systems. Technical problems and a required swap of frequencies used by Nextel's press to talk network hurt call quality and customer service fiascos lead hundreds of thousands of customers to drop the service.
This year, the company began finally selling hybrid phones that work on both the Nextel network and Sprint's regular CDMA network, and it expects to have 2 million of the devices operating by the end of the year. Next year they will begin switching Nextel customers over to the CDMA network with a new press-to-talk system called QChat, which will go into widespread testing in Q4.
"We believe there's a lot of growth opportunity in push-to-talk," he said.
Sprint says having all their customers on one network will save money on operational costs and reduce investment in new cell sites and other support infrastructure.
All this is good and well but what Sprint needs to address is the fact its current customers are just not very happy. Sprint will make more than a dime a share when the network is combined and the cost savings alone will make for an improvement in results but they have yet to stop the exodus of customers to other providers. It is not the network issue(s) making them do it, it is the treatment they get when they call Sprint that is making them flee. Sprint's firing of customers was a PR fiasco and likely gave more than a few potential customers serious pause about joining Sprint. There are plenty of providers out there for people to choose from, having an adversarial relationship with them is not the way to grow. this is the reason they have fallen far behind rivals AT&T (T) and Verizon (VZ).
Until that issue is fixed, any upside and real improvement for Sprint will be put off indefinitely.
Goldman Sachs Pragmatism
Another day of digestion of Goldman Sachs (GS) blowout quarter sheds some light.
When the world was running around talking of the "subprime meltdown" and the "freezing of credit markets" Goldman quietly looked at the situation and placed their bets accordingly. Rather than dumping positions or just sitting tight and riding out the storm and taking huge losses like Morgan Stanley (MS), Lehman (LEH) and Bear Sterns (BSC), Goldman jumped on, rode the wave down and collected the profits.
The question for shareholders of these companies might not be "why is Goldman so good" but "what the heck were you guys doing?"
Now, the media has pumped up Goldman's move as "stunning", "bold" and "breathtaking" and implied they bet the farm on this. The reality is just the opposite. One of the metrics investment banks use to estimate the market risk on a their balance sheet is called Value at Risk, or VaR. This indicator for Goldman moved up only 5% in Q3 vs Q2. If Goldman was placing huge bets in volatile markets like the short trade in mortgages, VaR would have been expected to move up by much more. Since it didn't, we must conclude that these bets were neither "bold" or "breathtaking", just simply "savvy".
Now the latest report out is that Goldman has $69 billion in short term debt it must rollover in relatively soon and the new debt it takes on will invariably be more expensive, hurting earnings. Here is the thing though, if the analyst who wrote this knows this, and now we know it, is there a chance in hell Goldman doesn't? Also, if we know this now do we really think Goldman has not been aware of it for a whole lot longer? Based on their history, do we really think they have not already taken steps to offset that increase? Me either...
This is one group of people I am not willing to bet against.
When the world was running around talking of the "subprime meltdown" and the "freezing of credit markets" Goldman quietly looked at the situation and placed their bets accordingly. Rather than dumping positions or just sitting tight and riding out the storm and taking huge losses like Morgan Stanley (MS), Lehman (LEH) and Bear Sterns (BSC), Goldman jumped on, rode the wave down and collected the profits.
The question for shareholders of these companies might not be "why is Goldman so good" but "what the heck were you guys doing?"
Now, the media has pumped up Goldman's move as "stunning", "bold" and "breathtaking" and implied they bet the farm on this. The reality is just the opposite. One of the metrics investment banks use to estimate the market risk on a their balance sheet is called Value at Risk, or VaR. This indicator for Goldman moved up only 5% in Q3 vs Q2. If Goldman was placing huge bets in volatile markets like the short trade in mortgages, VaR would have been expected to move up by much more. Since it didn't, we must conclude that these bets were neither "bold" or "breathtaking", just simply "savvy".
Now the latest report out is that Goldman has $69 billion in short term debt it must rollover in relatively soon and the new debt it takes on will invariably be more expensive, hurting earnings. Here is the thing though, if the analyst who wrote this knows this, and now we know it, is there a chance in hell Goldman doesn't? Also, if we know this now do we really think Goldman has not been aware of it for a whole lot longer? Based on their history, do we really think they have not already taken steps to offset that increase? Me either...
This is one group of people I am not willing to bet against.
Monday's Upgrades and Downgrades
UPGRADES
Diamond Foods DMND BB&T Capital Mkts Hold » Buy
Buckeye Partners BPL Deutsche Securities Hold » Buy
PMI Group PMI Piper Jaffray Market Perform » Outperform
The Mosaic Co. MOS Citigroup Sell » Hold
Diana Shipping DSX Bear Stearns Peer Perform » Outperform
Mattel MAT Oppenheimer Neutral » Buy
Targa Resources NGLS Wachovia Mkt Perform » Outperform
PNM Resources PNM Jefferies & Co Hold » Buy
DOWNGRADES
SCP Pool POOL Wedbush Morgan Buy » Hold
SCP Pool POOL Morgan Keegan Outperform » Mkt Perform
Topps TOPP Morgan Joseph Buy » Hold
Sanderson Farms SAFM Stifel Nicolaus Buy » Hold
Canadian Natl Rail CNI Stifel Nicolaus Buy » Hold
Diamond Offshore DO Calyon Securities Buy » Add
Transocean RIG Calyon Securities Buy » Add
Weatherford WFT Calyon Securities Buy » Add
ExpressJet XJT Soleil Hold » Sell
Buckeye GP Hldgs BGH Deutsche Securities Buy » Hold
Circuit City CC Bear Stearns Outperform » Peer Perform
Family Dollar FDO JP Morgan Neutral » Underweight
Sunday, September 23, 2007
"Fast Money" for Monday
MONDAY'S PICKS
Jeff Macke recommended selling General Motors (GM). Open $34.94
Karen Finerman liked NYSE Euronext (NYX). Open $76.05
Pete Najarian preferred BJ Services (BJS). Open $27.81
FRIDAY'S PICKS
Jeff Macke recommended Activision (ATVI). Open $20.96 Close $20.93 Loss $.03
Guy Adami said Oracle (ORCL) is a raging buy. Open $21.04 Close $21.97 Gain $.93
Pete Najarian preferred Sohu.com (SOHU). Open $38.76 Close $40.01 Gain $1.25
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)
Guy Adami= 25-17 Gain $41.04
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 29-22 Gain $9.76
Pete Najarian= 18-15 Gain $25.04
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 9-5 Gain $3.25
Stacey Briere-Gilbert= 2-0 Gain $1.61
Saturday, September 22, 2007
The Weeks Top Stories At Value Investing News
Please visit these links at this great site...
2. Altria After The Spin. What Can Investor's Expect?
(via valueplays.blogspot.com)
3. David Dreman on Consuelo Mack WealthTrack
(via www.wealthtrack.com)
Mattel Bends Over For The Chinese
Thank You Sir, May I Have Another!!! Kevin Bacon, Animal house
"Mattel (MAT) takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," said Mattel executive Tom Debrowski. Oh do you?
I would personally love to see the "design flaw" that said "cover toys with deadly levels of lead paint". When I first heard it I thought it was a sarcastic joke. How much pressure are the Chinese putting on Mattel to cause them to publicly cane themselves? How high were the lead levels? Tests had found that lead levels in paint in recalled toys were as high as 110,000 parts per million, or nearly 200 times higher than the accepted safety ceiling of 600 parts per million. Now, it has been pointed out that only 13% of the 21 million toys were recalled due to lead paint but, the question must be asked, why did Mattel apologize for that?
This has to be without a doubt one of the most pathetic acts a corporation has ever done in the name of the almighty dollar. China, getting sick of being bashed most likely told Mattel to apologize or get your toys somewhere else. Rather than pay a few bucks more for a Elmo doll from Thailand, Mattel promptly caved.
It is nice to see that the apology they gave the producers of the toxic toys the same sincerity they gave us consumers whose children may have played with and been damaged by them. Sweet huh? This act really does mitigate the effects of any previous ones, doesn't it. This is like a beaten spouse saying "I deserved it, dinner is a 5pm not 5:15". Pathetic
At least to date the other company effected, RC2 (RCRC) has yet to ask forgiveness from the Chinese for the lead coated Thomas the Tank Engine toys they sent them earlier this summer.
Mattel, world's largest toy maker has been in China for 25 years and about 65 percent of its products are made in China. This summer it recalled 21 million toys made in China for various reason.
If you do not believe my reasoning for the apology take a look at this exchange.
Chinese product safety chief Li Changjiang publicly reminded Debrowski that "a large part of your annual profit ... comes from your factories in China. He then added, "I really hope that Mattel can learn lessons and gain experience from these incidents," adding that Mattel should "improve their control measures."
Or, grow some stones...
"Mattel (MAT) takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," said Mattel executive Tom Debrowski. Oh do you?
I would personally love to see the "design flaw" that said "cover toys with deadly levels of lead paint". When I first heard it I thought it was a sarcastic joke. How much pressure are the Chinese putting on Mattel to cause them to publicly cane themselves? How high were the lead levels? Tests had found that lead levels in paint in recalled toys were as high as 110,000 parts per million, or nearly 200 times higher than the accepted safety ceiling of 600 parts per million. Now, it has been pointed out that only 13% of the 21 million toys were recalled due to lead paint but, the question must be asked, why did Mattel apologize for that?
This has to be without a doubt one of the most pathetic acts a corporation has ever done in the name of the almighty dollar. China, getting sick of being bashed most likely told Mattel to apologize or get your toys somewhere else. Rather than pay a few bucks more for a Elmo doll from Thailand, Mattel promptly caved.
It is nice to see that the apology they gave the producers of the toxic toys the same sincerity they gave us consumers whose children may have played with and been damaged by them. Sweet huh? This act really does mitigate the effects of any previous ones, doesn't it. This is like a beaten spouse saying "I deserved it, dinner is a 5pm not 5:15". Pathetic
At least to date the other company effected, RC2 (RCRC) has yet to ask forgiveness from the Chinese for the lead coated Thomas the Tank Engine toys they sent them earlier this summer.
Mattel, world's largest toy maker has been in China for 25 years and about 65 percent of its products are made in China. This summer it recalled 21 million toys made in China for various reason.
If you do not believe my reasoning for the apology take a look at this exchange.
Chinese product safety chief Li Changjiang publicly reminded Debrowski that "a large part of your annual profit ... comes from your factories in China. He then added, "I really hope that Mattel can learn lessons and gain experience from these incidents," adding that Mattel should "improve their control measures."
Or, grow some stones...
ValuePlays: Most Read Posts
Here are the most read posts for the last 30 days...
1- What Is Verizon Up To?
2- Barron's Piece on Cramer: Be Wary of Those Defending Him
3- Marlboro Smokeless on Sale in October
4- Harley Davidson: "Below MSRP" Was A Bad Harbinger
5- Altria After The Spin: What Investor's Can Expect
1- What Is Verizon Up To?
2- Barron's Piece on Cramer: Be Wary of Those Defending Him
3- Marlboro Smokeless on Sale in October
4- Harley Davidson: "Below MSRP" Was A Bad Harbinger
5- Altria After The Spin: What Investor's Can Expect
This Weeks Insider Buys
"There is only one reason insiders buy shares, they feel the price is going up", Peter Lynch.
Zymogenetics (ZGEN)= $5,622,000
Halozyme Therapeutics (HALO)= $3,749,000
Barnes and Noble (BKS)= $3,295,000
General Growth Properties (GGP)= $2,888,000
World Acceptance Corp. (WRLD)= $1,544,000
Zymogenetics (ZGEN)= $5,622,000
Halozyme Therapeutics (HALO)= $3,749,000
Barnes and Noble (BKS)= $3,295,000
General Growth Properties (GGP)= $2,888,000
World Acceptance Corp. (WRLD)= $1,544,000
Friday, September 21, 2007
Friday's 52 Week Lows
A small list today.
TWC Time Warner Cable Inc 31.83
TRBN Trubion Pharmaceutica l 11.30
SVN Sun-Times Media Group Inc 2.56
KFY Korn Ferry Intl 16.35
JBSS John B Sanfilippo & Sons 7.92
FFHS First Franklin Corp 12.93
FFFD North Central Bancsha re 38.00
POOL Pool Corporation 24.85
PLCE Childrens Place Retail S 25.02
PEIX Pacific Ethanol Inc 9.80
TWC Time Warner Cable Inc 31.83
TRBN Trubion Pharmaceutica l 11.30
SVN Sun-Times Media Group Inc 2.56
KFY Korn Ferry Intl 16.35
JBSS John B Sanfilippo & Sons 7.92
FFHS First Franklin Corp 12.93
FFFD North Central Bancsha re 38.00
POOL Pool Corporation 24.85
PLCE Childrens Place Retail S 25.02
PEIX Pacific Ethanol Inc 9.80
1 Million Cribs Recalled Due To Infant Deaths
A stunning announcement for owners of GRACO & Simplicity cribs
WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC) is announcing today a voluntary recall with Simplicity Inc., of Reading, Pa., of about 1 million cribs. The drop-side can detach from the crib, which can create a dangerous gap and lead to the entrapment and suffocation of infants. CPSC is aware of two deaths in Simplicity manufactured cribs with older style hardware, including a 9-month-old child and a 6-month-old child, where the drop-side was installed upside down. CPSC is also aware of seven infant entrapments and 55 incidents in these cribs.
CPSC is also investigating the death of a 1-year-old child in a Simplicity crib with newer style hardware, in which the drop-side was installed upside down. CPSC is warning parents and caregivers to check all Simplicity cribs to make sure the drop-side is installed right side up.
The drop-side failures result from both the hardware and crib design, which allow consumers to unintentionally install the drop-side upside down. This, in turn, can weaken the hardware and cause the drop-side to detach from the crib. When the drop-side detaches, it creates a gap in which infants can become entrapped.
CPSC is also aware of two incidents that occurred when the drop-side was correctly installed with older style hardware, though the upside down installation greatly increases the risk of failure.
The recalled Simplicity crib models include: Aspen 3 in 1, Aspen 4 in 1, Nursery-in-a-Box, Crib N Changer Combo, Chelsea and Pooh 4 in 1. The recall also involves the following Simplicity cribs that used the Graco logo: Aspen 3 in 1, Ultra 3 in 1, Ultra 4 in1, Ultra 5 in 1, Whitney and the Trio.
The recalled cribs have one of the following model numbers, which can be found on the envelope attached to the mattress support and on the label attached to the headboard: 4600, 4605, 4705, 5000, 8000, 8324, 8800, 8740, 8910, 8994, 8050, 8750, 8760, and 8996.
The cribs, which were made in China, were sold in department stores, children’s stores and mass merchandisers nationwide from January 1998 through May 2007 for between $100 and $300.
As an immediate precaution, consumers should check to see if the drop-side is installed right side up. To do this, check to see that the slightly rounded rail with the decorative groove is installed at the top and the plain rail is on the bottom. Next, consumers should make sure the drop-side is securely attached to the tracks in all four corners
WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission (CPSC) is announcing today a voluntary recall with Simplicity Inc., of Reading, Pa., of about 1 million cribs. The drop-side can detach from the crib, which can create a dangerous gap and lead to the entrapment and suffocation of infants. CPSC is aware of two deaths in Simplicity manufactured cribs with older style hardware, including a 9-month-old child and a 6-month-old child, where the drop-side was installed upside down. CPSC is also aware of seven infant entrapments and 55 incidents in these cribs.
CPSC is also investigating the death of a 1-year-old child in a Simplicity crib with newer style hardware, in which the drop-side was installed upside down. CPSC is warning parents and caregivers to check all Simplicity cribs to make sure the drop-side is installed right side up.
The drop-side failures result from both the hardware and crib design, which allow consumers to unintentionally install the drop-side upside down. This, in turn, can weaken the hardware and cause the drop-side to detach from the crib. When the drop-side detaches, it creates a gap in which infants can become entrapped.
CPSC is also aware of two incidents that occurred when the drop-side was correctly installed with older style hardware, though the upside down installation greatly increases the risk of failure.
The recalled Simplicity crib models include: Aspen 3 in 1, Aspen 4 in 1, Nursery-in-a-Box, Crib N Changer Combo, Chelsea and Pooh 4 in 1. The recall also involves the following Simplicity cribs that used the Graco logo: Aspen 3 in 1, Ultra 3 in 1, Ultra 4 in1, Ultra 5 in 1, Whitney and the Trio.
The recalled cribs have one of the following model numbers, which can be found on the envelope attached to the mattress support and on the label attached to the headboard: 4600, 4605, 4705, 5000, 8000, 8324, 8800, 8740, 8910, 8994, 8050, 8750, 8760, and 8996.
The cribs, which were made in China, were sold in department stores, children’s stores and mass merchandisers nationwide from January 1998 through May 2007 for between $100 and $300.
As an immediate precaution, consumers should check to see if the drop-side is installed right side up. To do this, check to see that the slightly rounded rail with the decorative groove is installed at the top and the plain rail is on the bottom. Next, consumers should make sure the drop-side is securely attached to the tracks in all four corners
The Steve Jobs Subpoena: A Minefield
Apple's (APPL) CEO Steve Jobs has been subpoenaed to testify in a stock option backdating case brought by the SEC against Apple's former general counsel Nancy Heinen. Mr. Jobs and his lawyers will no doubt brush this news aside as "old news", but it is a perilous situation for him.
Jobs has danced around Apple's backdating mess, despite it being determined that he helped select the dates. Defenders have said he is innocent because he "didn't appreciate the accounting implications" of backdating. However, Apple's former CFO, Fred Anderson has said that Jobs misled him about board actions on stock option grants. This means that one of Jobs' former confidants is accusing him of lying on this issue. The company's official investigation pardoned him only because of his mindset about what he did (surprise!!!). It was the old "I did it but did not know it was wrong" excuse. Hard to believe it but it worked.
The subpoena creates a minefield for Jobs. Even though he is only a witness and not a target, the SEC's and Heinen's lawyers are sure to ask him questions that will require him to revisit previous statements and this time it will be under sworn testimony. I am guessing that the tone of the conversation this time will be a bit more contentious than the Apple "investigation" was.
Since Apple's defense of his conduct relies on the distinction between what he knew and thought, Jobs' testimony will be dissected for any discrepancies related to prior statements and what Heinen's lawyers believe to be the truth as told to them by their client.
The SEC is no doubt unhappy that a CEO was able to admit to backdating of options and still walk on the action. Does anyone think that this subpoena is not making them very happy to get more testimony from Jobs on the record?
Since Jobs is Apple and without him Apple is just another company, shareholders are going to want to keep close tabs on events here. It looks a bit to me like a set-up but, if Jobs is able to walk away from this unscathed, and he very well may, it will only serve to elevate his "God" like status in the cult that is Apple shareholders.
Either way, it will be interesting..
Jobs has danced around Apple's backdating mess, despite it being determined that he helped select the dates. Defenders have said he is innocent because he "didn't appreciate the accounting implications" of backdating. However, Apple's former CFO, Fred Anderson has said that Jobs misled him about board actions on stock option grants. This means that one of Jobs' former confidants is accusing him of lying on this issue. The company's official investigation pardoned him only because of his mindset about what he did (surprise!!!). It was the old "I did it but did not know it was wrong" excuse. Hard to believe it but it worked.
The subpoena creates a minefield for Jobs. Even though he is only a witness and not a target, the SEC's and Heinen's lawyers are sure to ask him questions that will require him to revisit previous statements and this time it will be under sworn testimony. I am guessing that the tone of the conversation this time will be a bit more contentious than the Apple "investigation" was.
Since Apple's defense of his conduct relies on the distinction between what he knew and thought, Jobs' testimony will be dissected for any discrepancies related to prior statements and what Heinen's lawyers believe to be the truth as told to them by their client.
The SEC is no doubt unhappy that a CEO was able to admit to backdating of options and still walk on the action. Does anyone think that this subpoena is not making them very happy to get more testimony from Jobs on the record?
Since Jobs is Apple and without him Apple is just another company, shareholders are going to want to keep close tabs on events here. It looks a bit to me like a set-up but, if Jobs is able to walk away from this unscathed, and he very well may, it will only serve to elevate his "God" like status in the cult that is Apple shareholders.
Either way, it will be interesting..
Friday's Links
A Monsterous Cramer flip flop, No way, The Juice, A Tear Jerker
- First Jim Cramer says a 1/2 point cut would be disastrous in this video, then after the 1/2 point cut, says it is wonderful. He is rapidly becoming irrelevant and just a side show.
- This can never happen
- And I thought Micheal Vick was the dumbest person on earth
- If this does not bring a tear to your eyes, you have no soul.
- First Jim Cramer says a 1/2 point cut would be disastrous in this video, then after the 1/2 point cut, says it is wonderful. He is rapidly becoming irrelevant and just a side show.
- This can never happen
- And I thought Micheal Vick was the dumbest person on earth
- If this does not bring a tear to your eyes, you have no soul.
Wal-Mart's New Ads: Simple and Brilliant
I have read a whole lot on Wal-Mart's (WMT) new ad campaign but until this morning had yet to see the ads. Personally, I thought they were perfect.
Before we start the conversation, you can view one of the ads here.
What Wal-Mart does with the ads is remind you what you can do with the money you save at their stores. Rather than the previous ad campaign that only told you they had "low prices" they are now saying "look at the fun things you can do with the money you save". The images of a family vacation with the kids is sure to spur memories in people of their childhood and the desire to create similar memories with their kids.
It also is going to inspire people to want to save a little cash to enable them to do one or two more things on that vacation. Wal-Mart is telling us that if we shop there we can do just that.
What they have done is turned a logical ad campaign that said shop here because it "makes sense to save money" into an emotional one. Now the message is shop here so you can have "more fun and do more with your kids" with the money you save. I found myself smiling during the commercial and that is exactly what Wal-Mart needs. When it comes to money, emotion controls the overwhelming majority of peoples spending habits, not logic.
That is why this campaign will be a winner..
Before we start the conversation, you can view one of the ads here.
What Wal-Mart does with the ads is remind you what you can do with the money you save at their stores. Rather than the previous ad campaign that only told you they had "low prices" they are now saying "look at the fun things you can do with the money you save". The images of a family vacation with the kids is sure to spur memories in people of their childhood and the desire to create similar memories with their kids.
It also is going to inspire people to want to save a little cash to enable them to do one or two more things on that vacation. Wal-Mart is telling us that if we shop there we can do just that.
What they have done is turned a logical ad campaign that said shop here because it "makes sense to save money" into an emotional one. Now the message is shop here so you can have "more fun and do more with your kids" with the money you save. I found myself smiling during the commercial and that is exactly what Wal-Mart needs. When it comes to money, emotion controls the overwhelming majority of peoples spending habits, not logic.
That is why this campaign will be a winner..
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