Have a safe holiday
Todd
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Todd Sullivan
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TGIF Randomosity!
7 hours ago
Tuesday, August 28, 2007
Vacation
ValuePlays is on vacation until Wednesday September 5th
Have a safe holiday
Todd
--
Sent via Empower HTML Mail Viewer For BlackBerry
Have a safe holiday
Todd
--
Sent via Empower HTML Mail Viewer For BlackBerry
Sunday, August 26, 2007
Top Stories Month To Date At VIN
Here they are 1-5, it is a Buffett buffet...........
1- Risk Arbitrage/ Special Situations Look Attractive
2- Buffett On The Market
3- Gannon On Investing: On Berkshire Hathaway's Holdings
4- Warren Buffett Buys Bank Of America Corp., Dow Jones & Co., Adds to US Bancorp, Sells H&R Block
5- Mohnish Pabrai 13F
1- Risk Arbitrage/ Special Situations Look Attractive
2- Buffett On The Market
3- Gannon On Investing: On Berkshire Hathaway's Holdings
4- Warren Buffett Buys Bank Of America Corp., Dow Jones & Co., Adds to US Bancorp, Sells H&R Block
5- Mohnish Pabrai 13F
Saturday, August 25, 2007
This Weeks Notable Dividend Hikes
Notable Links: Weekend Edition
- I read his fist book and loved it. He has some wonderful insights into today's market.
- Excellent article on Bernanke
- He has made himself a billionaire buying things nobody else will invest in. See what he is buying now
- Can they catch iTunes?
- This is a great regular blog section. I read it daily
This Weeks Insider buys
Friday, August 24, 2007
Friday's 52 Week Lows
What is CNBC's Problem?
Just once I long to tune in a not have them tell me how bad things just might get.
We have had quarter after quarter, year after year of growth in both economic performance, corporate profits and jobs and if you watch CNBC, there is a recession knocking on our doorstep any day now. The odd thing is it has been knocking since last year and despite that we just keep chugging along. I could see this if we were at 1% or lower GDP growth but we are at 3% plus! Expectations, which have been essentially met to date do not call for anything close to a recession anytime soon. Why are you so convinced it is going to happen? Is it the "bad news sells" theory?
Stop telling me how bad it can get please. How about a neat little switch and tell me had good things can get now that the credit crisis you were so sure would sink us all last week didn't. We all did not lose our homes and the was no massive run on the banks. It wasn't 1929 all over. Of course you can always fall back on old faithful, housing. But here is the thing, housing is only 4% of GDP, it just will not (and to date had not) matter as much as you want us to think.
Oh, but you are saying today, what about all those housing related job cuts? Sure is makes for a good tale except when you consider employment keeps rising and the job cuts have been happening for 6 months now. Somebody is hiring them. You seem to forget that we could not get enough of these guys when housing was booming so now that it has slowed down, demand for them seems to equal the supply. Problem? Can anyone find me a carpenter or plumber who cannot find work? Me either.
So what is next week's catastrophe in waiting? China? Iran? Oil? Another hurricane? What, what is going to end our world next week? Just because you got caught up in the euphoria at the turn of the century and bought into the "new paradigm" that said earnings are really not that important, let's not crap on everything now "just in case" things do turn south you can say "we told you so". Your negativity has proven wrong for the better part if 4 years now, let's get past it.
Tonight you can watch "Against the Tide: The Battle for New Orleans" or "American Greed". You won't see "American Ingenuity" or "American Successes" anywhere on the network...
The more this goes on the more I wish for Murdoch to get things rolling with his network. Please Ruppert? Please...? Yes I am begging..
We have had quarter after quarter, year after year of growth in both economic performance, corporate profits and jobs and if you watch CNBC, there is a recession knocking on our doorstep any day now. The odd thing is it has been knocking since last year and despite that we just keep chugging along. I could see this if we were at 1% or lower GDP growth but we are at 3% plus! Expectations, which have been essentially met to date do not call for anything close to a recession anytime soon. Why are you so convinced it is going to happen? Is it the "bad news sells" theory?
Stop telling me how bad it can get please. How about a neat little switch and tell me had good things can get now that the credit crisis you were so sure would sink us all last week didn't. We all did not lose our homes and the was no massive run on the banks. It wasn't 1929 all over. Of course you can always fall back on old faithful, housing. But here is the thing, housing is only 4% of GDP, it just will not (and to date had not) matter as much as you want us to think.
Oh, but you are saying today, what about all those housing related job cuts? Sure is makes for a good tale except when you consider employment keeps rising and the job cuts have been happening for 6 months now. Somebody is hiring them. You seem to forget that we could not get enough of these guys when housing was booming so now that it has slowed down, demand for them seems to equal the supply. Problem? Can anyone find me a carpenter or plumber who cannot find work? Me either.
So what is next week's catastrophe in waiting? China? Iran? Oil? Another hurricane? What, what is going to end our world next week? Just because you got caught up in the euphoria at the turn of the century and bought into the "new paradigm" that said earnings are really not that important, let's not crap on everything now "just in case" things do turn south you can say "we told you so". Your negativity has proven wrong for the better part if 4 years now, let's get past it.
Tonight you can watch "Against the Tide: The Battle for New Orleans" or "American Greed". You won't see "American Ingenuity" or "American Successes" anywhere on the network...
The more this goes on the more I wish for Murdoch to get things rolling with his network. Please Ruppert? Please...? Yes I am begging..
Now Is The Time For PMI's Spin
The litigation environment surrounding tobacco has not been this good in almost 20 years. Altria (MO) will take advantage of this to announce the PMI spin at the upcoming board meeting Aug. 29th.
The Illinois Supreme Court ordered a lower-court judge to stop pestering them for permission to reopen a failed lawsuit against Philip Morris USA over the company's light cigarettes because he did not like the outcome. In a 4-2 ruling the court demanded Circuit Judge Nicholas Byron stop asking the state's 5th District Appellate Court if he has authority to reopen the lawsuit apparently recognizing that the judge in the case ought not to try harder to get a favorable verdict for the plaintiffs than their lawyers.
In March 2003, Byron re-wrote current law and in a decision destined to be overturned issued a $10.1 billion judgment against Philip Morris USA, saying the company misled customers into believing they were buying a less harmful cigarette.
The Illinois Supreme Court then wisely overturned Byron's ruling. Why? The Federal Trade Commission allowed companies to characterize or label their cigarettes as "light" and "low tar," so Philip Morris could not be held liable under state law even if such terms could be found false or misleading.
In his typically understated style William Ohlemeyer, Philip Morris USA's vice president and associate general counsel, issued a one-sentence statement: "Philip Morris USA believes the Illinois Supreme Court reached the right result." Duh...
This is the very reason Altria is currently pushing for FDA regulation of tobacco. It effectively ends much of the potential litigation against tobacco companies in the future.
When the spin occurs I will hold shares in both companies and have no intention of selling either anytime soon.
The Illinois Supreme Court ordered a lower-court judge to stop pestering them for permission to reopen a failed lawsuit against Philip Morris USA over the company's light cigarettes because he did not like the outcome. In a 4-2 ruling the court demanded Circuit Judge Nicholas Byron stop asking the state's 5th District Appellate Court if he has authority to reopen the lawsuit apparently recognizing that the judge in the case ought not to try harder to get a favorable verdict for the plaintiffs than their lawyers.
In March 2003, Byron re-wrote current law and in a decision destined to be overturned issued a $10.1 billion judgment against Philip Morris USA, saying the company misled customers into believing they were buying a less harmful cigarette.
The Illinois Supreme Court then wisely overturned Byron's ruling. Why? The Federal Trade Commission allowed companies to characterize or label their cigarettes as "light" and "low tar," so Philip Morris could not be held liable under state law even if such terms could be found false or misleading.
In his typically understated style William Ohlemeyer, Philip Morris USA's vice president and associate general counsel, issued a one-sentence statement: "Philip Morris USA believes the Illinois Supreme Court reached the right result." Duh...
This is the very reason Altria is currently pushing for FDA regulation of tobacco. It effectively ends much of the potential litigation against tobacco companies in the future.
When the spin occurs I will hold shares in both companies and have no intention of selling either anytime soon.
Notable Links: Friday
- Another big thank you for the mention
- And another
- I love honesty. Don't' just tell me your successes but tell me what you missed to. These guys are great
- I am ashamed to see that somebody is actually arguing for lowering teacher standards in my state to appease minority applicant who can't wrise. No wonder kids can't today...
- More lead filled toys for our kids from China. Oh yeah, and even more
Friday's Upgrades and Downgrades
UPGRADES
InfoSpace INSP Wedbush Morgan Hold » Buy
UPS UPS Matrix Research Hold » Buy
Tyson Foods TSN Matrix Research Sell » Hold
Imax IMAX Roth Capital Hold » Buy
Tech Data TECD Citigroup Hold » Buy
Hana Biosciences HNAB Cantor Fitzgerald Hold » Buy
China Netcom CN UBS Sell » Neutral
DOWNGRADES
KVH Industries KVHI Needham & Co Buy » Hold
Cepheid CPHD Caris & Company Buy » Above Average
Talbots TLB Stifel Nicolaus Buy » Hold
KKR Denies IPO Delay: Hmmm, Bad News
“As evidenced by the recent filing of an amendment to the registration statement, we are continuing to work on the IPO and have not postponed,” a spokesman for K.K.R., David Lilly said Thursday.
The filing had a notable change to it. It is the firm said "The cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly. If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources in order to consummate pending transactions or finance future transactions."
"Such financing may be significantly more costly, with terms that may be significantly more restrictive, than financing that was, until recently, available to us in the public capital markets. More costly and restrictive financing may adversely impact the returns of our leveraged buyout transactions and, therefore, adversely affect our results of operations and financial condition." You can view the entire prospectus here
Translation? Business sucks right now and out results will reflect that.
Now both Blackstone (BX) down 28% and Fortress (FIG) down 43% went public earlier this year and buyers of shares of both have got creamed. Prior to the Blackstone IPO I posted that " If you believe in the "greater fool" theory then this would be an indication that these firm are at the top and the people in the know are cashing in." A few day later I wrote "Carl Ican, in an interview on CNBC yesterday said when asked about private equity "easy money and cheap deals are going away and this will severely impact earnings at private equity". When you add the specter of a tax increase from 15% to 35% on these entities, it is no wonder they are racing to cash in before we all realize they are due to earn much less in the immediate future."
In short, you would have to be a person of painfully little intellect to be waiting to invest in the KKR IPO (if it happens). I also cannot imagine I have a monopoly of this opinion either. That being said, what incentive does KKR have for hitting the trough now? Why not wait until at least Blackstone and Fortress are not dirty words to investors to make a run. One would think that when the current environment improves, any IPO would fetch much more money. Unless, unless, that is, things are only going to get worse.
What if KKR fully expects is tax rate to jump from 15% to 35% when congress gets back in session this fall? I would fully expect them to have someone's ear and probably have a good idea of what the anticipated outcome of it will be. If KKR pushes ahead now after what has happened to it's fellow PE buddies, it can only be becase they see things getting worse down the road.
Now I do not short stocks, I am not wired that way but if I did, the whole PE area looks to me like it may be a prime target.
The filing had a notable change to it. It is the firm said "The cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly. If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources in order to consummate pending transactions or finance future transactions."
"Such financing may be significantly more costly, with terms that may be significantly more restrictive, than financing that was, until recently, available to us in the public capital markets. More costly and restrictive financing may adversely impact the returns of our leveraged buyout transactions and, therefore, adversely affect our results of operations and financial condition." You can view the entire prospectus here
Translation? Business sucks right now and out results will reflect that.
Now both Blackstone (BX) down 28% and Fortress (FIG) down 43% went public earlier this year and buyers of shares of both have got creamed. Prior to the Blackstone IPO I posted that " If you believe in the "greater fool" theory then this would be an indication that these firm are at the top and the people in the know are cashing in." A few day later I wrote "Carl Ican, in an interview on CNBC yesterday said when asked about private equity "easy money and cheap deals are going away and this will severely impact earnings at private equity". When you add the specter of a tax increase from 15% to 35% on these entities, it is no wonder they are racing to cash in before we all realize they are due to earn much less in the immediate future."
In short, you would have to be a person of painfully little intellect to be waiting to invest in the KKR IPO (if it happens). I also cannot imagine I have a monopoly of this opinion either. That being said, what incentive does KKR have for hitting the trough now? Why not wait until at least Blackstone and Fortress are not dirty words to investors to make a run. One would think that when the current environment improves, any IPO would fetch much more money. Unless, unless, that is, things are only going to get worse.
What if KKR fully expects is tax rate to jump from 15% to 35% when congress gets back in session this fall? I would fully expect them to have someone's ear and probably have a good idea of what the anticipated outcome of it will be. If KKR pushes ahead now after what has happened to it's fellow PE buddies, it can only be becase they see things getting worse down the road.
Now I do not short stocks, I am not wired that way but if I did, the whole PE area looks to me like it may be a prime target.
"Fast Money" for Friday
Here are Friday's picks and records to date..
FRIDAY'S PICKS
Carter Worth liked General Motors (GM). Open $30.75
Guy Adami said Dell (DELL) is a buy. Open $27.24
Pete Najarian preferred Eli Lilly (LLY) for Cialis. Open $55.87
Jeff Macke recommended getting long Activision (ATVI). Open $18.57
NO PICKS FOR THURSDAY
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 19-12 Gain $35.62
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-18 Gain $3.60
Pete Najarian= 13-9 Gain $24.74
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84
Carter Worth=
FRIDAY'S PICKS
Carter Worth liked General Motors (GM). Open $30.75
Guy Adami said Dell (DELL) is a buy. Open $27.24
Pete Najarian preferred Eli Lilly (LLY) for Cialis. Open $55.87
Jeff Macke recommended getting long Activision (ATVI). Open $18.57
NO PICKS FOR THURSDAY
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 19-12 Gain $35.62
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-18 Gain $3.60
Pete Najarian= 13-9 Gain $24.74
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84
Carter Worth=
Thursday, August 23, 2007
Now It Is A $12 Billion Buyback (Or Less)
It looks like the Home Depot Supply unit sale that was scheduled to close today won't get done.
Home Depot (HD) said earlier this month that it was in talks with buyers Bain Capital, the Carlyle Group and Clayton Dubilier & Rice about a restructuring of the $10.3 billion all-cash deal that was to partially fund a $22.5 billion stock repurchase plan.
According to The Financial Times, the new terms would include a lower price designed to entice Merrill Lynch (MER), Lehman Brothers (LEH) and JPMorgan (JPM) to finance the deal amid the current issues in the credit markets. The report then went on to say that the banks appear unwilling to fund the deal, even under the new terms being worked out by Home Depot and the buyers.
Surprised? I hope not. Look at it this way, what has Home Depot done right this century? They are constantly shooting themselves in the foot and the real surprise should be that this deal did not fall apart sooner.
If they had just kept Supply and announced a modest $5 billion buyback when they announced this current destined to fail operation, they would be on their way to completing it and shares would most likely be in the $40 range they were when this plan was announced. Depending on market conditions then they could have added more and done this whole thing responsibly. By shooting for the moon, The Depot just adds this to the list of mess ups.
Home Depot (HD) said earlier this month that it was in talks with buyers Bain Capital, the Carlyle Group and Clayton Dubilier & Rice about a restructuring of the $10.3 billion all-cash deal that was to partially fund a $22.5 billion stock repurchase plan.
According to The Financial Times, the new terms would include a lower price designed to entice Merrill Lynch (MER), Lehman Brothers (LEH) and JPMorgan (JPM) to finance the deal amid the current issues in the credit markets. The report then went on to say that the banks appear unwilling to fund the deal, even under the new terms being worked out by Home Depot and the buyers.
Surprised? I hope not. Look at it this way, what has Home Depot done right this century? They are constantly shooting themselves in the foot and the real surprise should be that this deal did not fall apart sooner.
If they had just kept Supply and announced a modest $5 billion buyback when they announced this current destined to fail operation, they would be on their way to completing it and shares would most likely be in the $40 range they were when this plan was announced. Depending on market conditions then they could have added more and done this whole thing responsibly. By shooting for the moon, The Depot just adds this to the list of mess ups.
Thursday's 52 Week Lows
"The Most Influencial Blog" = Slander?
So, I write a post about the motives of folks I see defending Mr. Cramer from a Barron's article and somehow it gets twisted into an attack on James Altucher.
First things first. I have no ax to grind with Altucher. I love it when he links ValuePlays, it drives traffic to the blog.
Now that is done, let's get to the real point of the original post. The defenses of Cramer ranged from a flacid conspiracy theory involving Rupert Murdoch (the only thing missing from this idea was the Karl Rove or Dick Cheney link) to the show is really educational or the show is really just trying to get people to think a certain way. The conspiracy theory was so bad the writers of it should be ashamed and issue us a public apology.
Who is right? None of them probably. Like I said in the first post the show is so ambiguous that it cannot be specifically categorized. It is a little of this and a little of that and a whole lot of shtick to get ratings. BUT, when you tell people what to do you have to accept people tracking those picks ESPECIALLY when you do not do it yourself. Cramer could easily end this mess buy tracking buys and sells on the show, since he does not, others will try to do it for him and one must live with their conclusions.
So, why then try to defend the show? I mean who really cares what Barron's thinks of the show, really. It is not like they trash a stock you own and feel differently about and their opinion has an effect on your holdings. Barron's opinion of the show has no effect on anyones holdings.
I guess if Cramer was a friend or an associate you would want to rush to his defense. I would expect people to do that and that would be an honorable thing to do. But, if you are doing that in a post, shouldn't you disclose that is the reason you are doing it? If you are going to try to defend a person against another due to a personal affiliation, it should be noted just as when we talk about stock we either own or do not own. If we know an association exists here and it is hidden, how then can we trust other disclosures you may or may not make?
My theory was that this was a rather transparent (in my eyes) "attempt" to endear oneself to the folks at TheStreet.com and get traffic directed to their website via the "Daily Blogwatch". This is not to say that it would be successful, but that the defenses were an attempt to do just that. This was the only reason I could come to that blogs that disclose stock affiliations did not disclose the personal ones that lead to the Cramer defenses.
Simple? Hell no!! It would seems Mr. Altucher took the post as an insult and asked me to "apologize" here on my blog. I am sorry if he took it as an attack on him and like I have told him, it was not meant that way and based on the emails I have received from readers, he may be the only one who took it that way. He insists that he would never publish posts based on the scenario listed above. Ok. I have no reason to doubt him and still do not think I inferred that in the original post. He did say in a comment to the post that "Bill Alpert will not be linked to anytime soon". So, I guess that means ass kissing will not work but the message is "do not write anything negative about Cramer or TheStreet.com"? I do not remember anything negative about James in the Barron's piece.
Hell if I know. I guess time will tell. My writings for ValuePlays, The Stockmasters and 24/7 Wall St. have appeared on BlogWatch, as Altucher himself said in his comment to my original post, "countless times" (he is correct about that). If they disappear, readers can take from that what they want and if they continue to appear, I invite James to give me something that I will post here in which he can "rub my nose in it" any way he wants.
If my history proves anything I will gladly post writings that oppose me and I have gone so far as to ask for them as was the case with my Berkshire Hathaway (BRK.A) posts earlier in the summer.
We'll see.........
First things first. I have no ax to grind with Altucher. I love it when he links ValuePlays, it drives traffic to the blog.
Now that is done, let's get to the real point of the original post. The defenses of Cramer ranged from a flacid conspiracy theory involving Rupert Murdoch (the only thing missing from this idea was the Karl Rove or Dick Cheney link) to the show is really educational or the show is really just trying to get people to think a certain way. The conspiracy theory was so bad the writers of it should be ashamed and issue us a public apology.
Who is right? None of them probably. Like I said in the first post the show is so ambiguous that it cannot be specifically categorized. It is a little of this and a little of that and a whole lot of shtick to get ratings. BUT, when you tell people what to do you have to accept people tracking those picks ESPECIALLY when you do not do it yourself. Cramer could easily end this mess buy tracking buys and sells on the show, since he does not, others will try to do it for him and one must live with their conclusions.
So, why then try to defend the show? I mean who really cares what Barron's thinks of the show, really. It is not like they trash a stock you own and feel differently about and their opinion has an effect on your holdings. Barron's opinion of the show has no effect on anyones holdings.
I guess if Cramer was a friend or an associate you would want to rush to his defense. I would expect people to do that and that would be an honorable thing to do. But, if you are doing that in a post, shouldn't you disclose that is the reason you are doing it? If you are going to try to defend a person against another due to a personal affiliation, it should be noted just as when we talk about stock we either own or do not own. If we know an association exists here and it is hidden, how then can we trust other disclosures you may or may not make?
My theory was that this was a rather transparent (in my eyes) "attempt" to endear oneself to the folks at TheStreet.com and get traffic directed to their website via the "Daily Blogwatch". This is not to say that it would be successful, but that the defenses were an attempt to do just that. This was the only reason I could come to that blogs that disclose stock affiliations did not disclose the personal ones that lead to the Cramer defenses.
Simple? Hell no!! It would seems Mr. Altucher took the post as an insult and asked me to "apologize" here on my blog. I am sorry if he took it as an attack on him and like I have told him, it was not meant that way and based on the emails I have received from readers, he may be the only one who took it that way. He insists that he would never publish posts based on the scenario listed above. Ok. I have no reason to doubt him and still do not think I inferred that in the original post. He did say in a comment to the post that "Bill Alpert will not be linked to anytime soon". So, I guess that means ass kissing will not work but the message is "do not write anything negative about Cramer or TheStreet.com"? I do not remember anything negative about James in the Barron's piece.
Hell if I know. I guess time will tell. My writings for ValuePlays, The Stockmasters and 24/7 Wall St. have appeared on BlogWatch, as Altucher himself said in his comment to my original post, "countless times" (he is correct about that). If they disappear, readers can take from that what they want and if they continue to appear, I invite James to give me something that I will post here in which he can "rub my nose in it" any way he wants.
If my history proves anything I will gladly post writings that oppose me and I have gone so far as to ask for them as was the case with my Berkshire Hathaway (BRK.A) posts earlier in the summer.
We'll see.........
Notable Links: Thursday
- Thank you to Andrew Ross Sorkin and his excellent Dealbook column at The New York Times for a mention yesterday. I had wanted to email Mr. Sorkin to thank him personally but could not find an address. Does anyone know it so I can get in touch? You may email it to me a valueplays@gmail.com
- If you do not believe me that this is a great buying opportunity, listen to one of the all time greats
- For those about to rock, we salute you
- I love playing in these store but have never bought anything in them
- A calming voice in irrational times
- Good. He should get more time for being so magnificently moronic aside from the abhorrent behavior
Milk Prices Expected To Fall: Really?
There was a report out yesterday that said milk prices are expected to fall this year and next. The only thing is, the reason they give just do not make a whole lot of sense.
The USDA, in its survey of 30 cities spread across the country, reported an average price in August of $3.87 per gallon of whole milk, an increase of 1.8 % over July's $3.80. So, what reasons are bring given for the upcoming decline?
Feed
After a rapid rise this year in cattle feed cost due to the cost of corn because of ethanol production, this cost is expected to level out and then begin to ease later this year and next. Why? The demand for corn for ethanol is still increasing and even this year's crop (the largest in 50 years) did not cause corn prices to fall very much. What would happen if next years crop was a bust? Even if next years crop is just ok, with the built in demand for corn, prices would explode. We just had record corn prices this year and everything went perfectly for the farmers of it. We should not expect these conditions to be the norm. We know that ethanol mandates are going to be increased this fall when congress gets back together so we can bank on an increase in demand from that industry.
Supply
With high prices this year, dairy farmers are working overtime to take advantage of the market and large supply is coming on line. We also have had reports of demand destruction because of the high price currently. If this record supply comes on line and drives down prices, we will see demand pick back up and that should take up slack in the system that would prices down.
Not much is being said about the increasing demand for "organic milk". Consumers want the product and as more dairy farmers switch to producing an organic product, that in and of itself will decrease the supply of regular milk, driving up the price for it to consumers. The irony here is that this very scenario may cause a decrease in organic milk prices that in most places exceed $5 a gallon.
In short, I think any prediction of milk price significantly receding from the historically high levels are more "hope" than an economically sound argument. When you have a record crop in the main item responsible for the increase (corn) produced under perfect conditions, you must assume some disruption in that paradigm next year. If you are at record high prices under perfect conditions, you must entertain the notion or not a price decrease but an increase if those condition deteriorate.
Recently companies like Starbucks (SBUX), Kraft (KFT) and JM Smucker (SJM) reported earnings and all said raising dairy costs were affecting earnings. I would be extremely hesitant to take any prediction of a price decrease to heart and even more hesitant to make an investing decision on it.
Just too many variables that depend on mother nature..
The USDA, in its survey of 30 cities spread across the country, reported an average price in August of $3.87 per gallon of whole milk, an increase of 1.8 % over July's $3.80. So, what reasons are bring given for the upcoming decline?
Feed
After a rapid rise this year in cattle feed cost due to the cost of corn because of ethanol production, this cost is expected to level out and then begin to ease later this year and next. Why? The demand for corn for ethanol is still increasing and even this year's crop (the largest in 50 years) did not cause corn prices to fall very much. What would happen if next years crop was a bust? Even if next years crop is just ok, with the built in demand for corn, prices would explode. We just had record corn prices this year and everything went perfectly for the farmers of it. We should not expect these conditions to be the norm. We know that ethanol mandates are going to be increased this fall when congress gets back together so we can bank on an increase in demand from that industry.
Supply
With high prices this year, dairy farmers are working overtime to take advantage of the market and large supply is coming on line. We also have had reports of demand destruction because of the high price currently. If this record supply comes on line and drives down prices, we will see demand pick back up and that should take up slack in the system that would prices down.
Not much is being said about the increasing demand for "organic milk". Consumers want the product and as more dairy farmers switch to producing an organic product, that in and of itself will decrease the supply of regular milk, driving up the price for it to consumers. The irony here is that this very scenario may cause a decrease in organic milk prices that in most places exceed $5 a gallon.
In short, I think any prediction of milk price significantly receding from the historically high levels are more "hope" than an economically sound argument. When you have a record crop in the main item responsible for the increase (corn) produced under perfect conditions, you must assume some disruption in that paradigm next year. If you are at record high prices under perfect conditions, you must entertain the notion or not a price decrease but an increase if those condition deteriorate.
Recently companies like Starbucks (SBUX), Kraft (KFT) and JM Smucker (SJM) reported earnings and all said raising dairy costs were affecting earnings. I would be extremely hesitant to take any prediction of a price decrease to heart and even more hesitant to make an investing decision on it.
Just too many variables that depend on mother nature..
Bernanke's Move: It Worked
There was a ton of gnashing teeth and sweaty palms after Bernanke refused to lower the Fed Funds rate last week. It would seem he once again made the perfect play.
Rather than cave to the market suffering from a self induced wound, Ben lowered the discount rate for lenders. This allowed those who did not point the gun at themselves when they pulled the trigger to do what was necessary to provide the necessary liquidity. Today Citigroup (C), Bank of America (BAC), Wachovia (WAC), JP Morgan Chase (JPM) took advantage of the lower rate to take over $2 billion from the Fed. This provided credit in tightening markets and did exactly what Ben wanted, it let the market restore order to the system and did not eliminate the necessary suffering of those who had it coming.
Now news comes out last night that Bank of America has invested $2 billion in a convertible preferred security with Countrywide (CFC). This is identical to the situation I spoke of when I said the only way Warren Buffett would get involved with this would be in a "private transaction they issue Buffett debt or preferred convertibles to provide a specific lender with necessary liquidity." It wasn't Buffett who made the investment but the instrument was the same. It was really the only way it could have been done and not caused a run in the stock. The preferred let's Bank of America buy common shares at $18 which is a nice immediate gain seeing as shares jumped to $26 after hours on the news. Not bad...
Tomorrow will be bullish for financials as the sentiment will go from panic to optimism. Thanks to Ben..
The real beauty here? He still has the rate cut card in his pocket should the economy begin to deteriorate.
Rather than cave to the market suffering from a self induced wound, Ben lowered the discount rate for lenders. This allowed those who did not point the gun at themselves when they pulled the trigger to do what was necessary to provide the necessary liquidity. Today Citigroup (C), Bank of America (BAC), Wachovia (WAC), JP Morgan Chase (JPM) took advantage of the lower rate to take over $2 billion from the Fed. This provided credit in tightening markets and did exactly what Ben wanted, it let the market restore order to the system and did not eliminate the necessary suffering of those who had it coming.
Now news comes out last night that Bank of America has invested $2 billion in a convertible preferred security with Countrywide (CFC). This is identical to the situation I spoke of when I said the only way Warren Buffett would get involved with this would be in a "private transaction they issue Buffett debt or preferred convertibles to provide a specific lender with necessary liquidity." It wasn't Buffett who made the investment but the instrument was the same. It was really the only way it could have been done and not caused a run in the stock. The preferred let's Bank of America buy common shares at $18 which is a nice immediate gain seeing as shares jumped to $26 after hours on the news. Not bad...
Tomorrow will be bullish for financials as the sentiment will go from panic to optimism. Thanks to Ben..
The real beauty here? He still has the rate cut card in his pocket should the economy begin to deteriorate.
Thursday's Upgrades and Downgrades
UPGRADES
Joy Global JOYG UBS Neutral » Buy
MoneyGram MGI Morgan Keegan Mkt Perform » Outperform
Massey Energy MEE UBS Neutral » Buy
OSI Pharm OSIP Wachovia Underperform » Mkt Perform
Countrywide CFC Wachovia Underperform » Mkt Perform
Wimm-Bill-Dann Foods WBD Citigroup Hold » Buy
Cooper Tire CTB Matrix Research Sell » Buy
Glu Mobile GLUU Banc of America Sec Neutral » Buy
Netease.com NTES Susquehanna Financial Neutral » Positive
Met-Pro Corp MPR Brean Murray Hold » Buy
ENI S.p.A. E Credit Suisse Neutral » Outperform
DOWNGRADES
Broadridge Financial BR JP Morgan Overweight » Neutral
Eaton Vance EV JP Morgan Overweight » Underweight
Wright Express WXS Morgan Keegan Outperform » Mkt Perform
Tween Brands TWB RBC Capital Mkts Outperform » Sector Perform
Cathay Bancorp CATY BMO Capital Markets Outperform » Market Perform
Talisman Energy TLM Matrix Research Buy » Hold
Doral Fincl DRL Soleil Hold » Sell
Pearson Plc PSO Deutsche Securities Buy » Hold
"Fast Money" for Thursday
Thursday's
No picks for today.
Wednesday's results
Jeff Macke recommended selling Take-Two Interactive (TTWO). Open $14.55 Close $14.26 Loss $.29
Pete Najarian likes Under Armour (UA). Open $66.91 Close $66.86 Loss $.05
Guy Adami preferred Target (TGT). Open $60.10 Close $63.58 Gain $3.48
Constance Hunter said Desarrolladora Homex (HXM) is a buy. Open $50.52 Close $52.84 Gain $1.84
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 19-12 Gain $35.62
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-18 Gain $3.60
Pete Najarian= 13-9 Gain $24.74
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84
=
Wednesday, August 22, 2007
Wednesday's 52 week Lows
As Mortgage Shops Keep Closing, Big Banks Look Better & Better
The past week has seen a slew of mortgage lender close the door or dramatically scale back operations due to tightening credit markets. So, who will benefit?
Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) look to be the best bets. Why? People, despite reports to the contrary are still buying homes and borrowing money. Their options are dwindling daily as to where they can get those loans, but they are still applying for and getting the them. In the past month despite the "credit crisis" two homes in my neighborhood have sold and a third is on the way. I doubt these are cash deals. The lenders who will have the liquidity to offer the most competitive rates will be the institutions that have depository bases and that is the aforementioned group.
Citigroup and Bank of America said today they drew $500 million from the Fed that in turn was loaned out at higher rates. That means they are printing money. The mortgage business is a very profitable one and banks have seen their profit margins and the multiples on their shares fall the last few years as that business went to the Countrywides (CFC) of the world. With that option closing rapidly for scores of borrowers, they will turn to institutions they can trust to be there. If you were buying a home now would you go to Countrywide with the possibility they may not be lending in 3 weeks? I know the chance is very small but it is still there and if you are buying a home, why risk it? Everyday we get news of another mortgage lender closing shop and any loans that were "in the works" go up in smoke with them. I know Citi, Bank of America and Wells Fargo will have no problem funding a loan and will be here long after I am gone so that is where I would be going were it I needed one.
It may be a bit late for this trend to make a difference in the current quarter but I would expect large changes here by the end of the year.
Expect a rate cut (a token one, but that will be enough for the street) before the end of the year and that will benefit financials. This loan trend should push earnings well above estimates. Now would be the time to be loading up on any of the three.
The best part? The current dividend yields of the three are all hovering around 5% so you will be paid a nice little return to sit back and wait for the stock price appreciation. Recently I picked up more Citigroup on two separate occasions and currently am looking at Bank of America.
Don't be one of those folks who look back at Christmas this year and curse themselves saying "if only I had bought back then". I won't.
Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) look to be the best bets. Why? People, despite reports to the contrary are still buying homes and borrowing money. Their options are dwindling daily as to where they can get those loans, but they are still applying for and getting the them. In the past month despite the "credit crisis" two homes in my neighborhood have sold and a third is on the way. I doubt these are cash deals. The lenders who will have the liquidity to offer the most competitive rates will be the institutions that have depository bases and that is the aforementioned group.
Citigroup and Bank of America said today they drew $500 million from the Fed that in turn was loaned out at higher rates. That means they are printing money. The mortgage business is a very profitable one and banks have seen their profit margins and the multiples on their shares fall the last few years as that business went to the Countrywides (CFC) of the world. With that option closing rapidly for scores of borrowers, they will turn to institutions they can trust to be there. If you were buying a home now would you go to Countrywide with the possibility they may not be lending in 3 weeks? I know the chance is very small but it is still there and if you are buying a home, why risk it? Everyday we get news of another mortgage lender closing shop and any loans that were "in the works" go up in smoke with them. I know Citi, Bank of America and Wells Fargo will have no problem funding a loan and will be here long after I am gone so that is where I would be going were it I needed one.
It may be a bit late for this trend to make a difference in the current quarter but I would expect large changes here by the end of the year.
Expect a rate cut (a token one, but that will be enough for the street) before the end of the year and that will benefit financials. This loan trend should push earnings well above estimates. Now would be the time to be loading up on any of the three.
The best part? The current dividend yields of the three are all hovering around 5% so you will be paid a nice little return to sit back and wait for the stock price appreciation. Recently I picked up more Citigroup on two separate occasions and currently am looking at Bank of America.
Don't be one of those folks who look back at Christmas this year and curse themselves saying "if only I had bought back then". I won't.
Wednesday's Notable Links
Here are todays links worth reading..
- Thanks again to the WSJ Online for another mention yesterday
- I agree
- If you were away for 8 days from the market you missed, well, not much really
- I spell scumbag , "VICK" now. What an awful human being. You know you are trash when OJ can now say "at least I ain't that guy"
- Thanks again to the WSJ Online for another mention yesterday
- I agree
- If you were away for 8 days from the market you missed, well, not much really
- I spell scumbag , "VICK" now. What an awful human being. You know you are trash when OJ can now say "at least I ain't that guy"
Wednesday's Upgrades and Downgrades
UPGRADES
Lowe's LOW UBS Sell » Buy
Lowe's LOW JP Morgan Neutral » Overweight
Campbell Soup CPB UBS Neutral » Buy
BJ's Wholesale BJ Lazard Capital Sell » Hold
Datalink DTLK Feltl & Co. Buy » Strong Buy
KongZhong KONG WR Hambrecht Sell » Hold
Manpower MAN Matrix Research Hold » Strong Buy
Capital One COF Calyon Securities Add » Buy
ASML Holding ASML Friedman Billings Mkt Perform » Outperform
Wrigley WWY Bear Stearns Underperform » Peer Perform
Vistaprint VPRT Bear Stearns Peer Perform » Outperform
National Semi NSM Lehman Brothers Equal-weight » Overweight
PDL BioPharma PDLI First Albany Neutral » Buy
DOWNGRADES
Estee Lauder EL Credit Suisse Outperform » Neutral
E*TRADE ETFC UBS Buy » Neutral
American Capital ACAS Jefferies & Co Buy » Hold
Cott COT Stifel Nicolaus Buy » Hold
Lindsay Manu LNN Boenning & Scattergood Market Outperform » Market Perform
Standard Pacific SPF Banc of America Sec Buy » Neutral
Hovnanian Entrpr HOV Banc of America Sec Buy » Neutral
Toll Brothers TOL Banc of America Sec Neutral » Sell
Still No Need For A Fed Cut
After watching former Goldman Sachs (GS) CEO and current Treasury Secretary Hank Paulson on CNBC Tuesday morning I got to wondering.
Paulson essentially said the the underlying economy is strong and that aside from lenders current paying the piper for "loose lending standards", things are good. He said the current situation will "extract a small toll on growth" but that economy will weather it just fine. So that got me to looking at some recent numbers to do a little checking.
Recent figures (May - July)
-Industrial production: Up 0.7% or a 2.8% annual rate.
-Personal consumption expenditures: Up at a 4.8% annual rate (July data is not yet out).
-Payrolls: have risen a 1.2% annual rate or an average of 135,000 per month.
-Second quarter real GDP was up at a 3.4% annual rate, and nonresidential investment was up at an 8.1% annual rate.
So, is anyone surprised that earnings forecasts for companies other than the financials have not been lowered?. Forecasts of earnings for the S&P 500 in aggregate for Q3 and 4 have not been lowered by any significance over the past few weeks despite the problems in credit markets the the stock markets gyrations. Current expectations call for about 5% growth in the Q3 and about 10% in the 4th.
Why then would we want the Fed to lower rates to save poor lenders? Banks like Wells Fargo (WFC) and M&T Bank (MTB), both of whom have conservative lending practices are not feeling the effects of "sub-prime defaults". They have no need for a fed bailout, it is only those lenders who thought lending $500,000 to a person without any verifiable income or any money to put down was a neat little idea.
I have stumped here repeatedly for the Fed to do nothing with the Fed funds rate and still hope they resist the calls from irresponsible lenders. Let them fail, maybe we will get more responsibility from lenders. Even if the Fed did lower the rate, 1/2%, this would have ZERO effect on those people with adjustable rate mortgages that are getting ready for a reset and will not be able to afford the new payment. ZERO. Those people, to be honest, are not much better than the lenders who gave them the loans in the first place. Rates have been rising steadily for the past year and they had plenty of chances to refi the mortgages last year before the bottom fell out of the market. If they didn't, well, too bad. Plese do not waste my tax dollars bailing these folks out. They are in a self induced predicament. What is more important now is getting the point home that if you lend money (or borrow) it and do not demonstrate a solid ability to pay it back, you are responsible for the outcome.
In response to those screaming for a Fed Funds cut, Richmond Federal Reserve President Jeffery Lacker said on Tuesday, "Financial market volatility, in and of itself, doesn't require a change in the target federal funds rate". He also referred to the Feds stated goal on maintaining inflation. "While the most recent months' figures have been encouraging, it is still too soon to be confident that the moderation we have been seeing represents a downward trend". The risk that inflation will fail to moderate, "is still relevant, although some recent reports have been encouraging" he said. Translation? Who cares how the market jumps all around, long term results are what we care about.
Inevitably these loan will be no good and the pain will be felt, let's just pull the band aid off fast and get it over rather than prolong the inevitable.
Then we can move on the the next manufactured crisis..
Paulson essentially said the the underlying economy is strong and that aside from lenders current paying the piper for "loose lending standards", things are good. He said the current situation will "extract a small toll on growth" but that economy will weather it just fine. So that got me to looking at some recent numbers to do a little checking.
Recent figures (May - July)
-Industrial production: Up 0.7% or a 2.8% annual rate.
-Personal consumption expenditures: Up at a 4.8% annual rate (July data is not yet out).
-Payrolls: have risen a 1.2% annual rate or an average of 135,000 per month.
-Second quarter real GDP was up at a 3.4% annual rate, and nonresidential investment was up at an 8.1% annual rate.
So, is anyone surprised that earnings forecasts for companies other than the financials have not been lowered?. Forecasts of earnings for the S&P 500 in aggregate for Q3 and 4 have not been lowered by any significance over the past few weeks despite the problems in credit markets the the stock markets gyrations. Current expectations call for about 5% growth in the Q3 and about 10% in the 4th.
Why then would we want the Fed to lower rates to save poor lenders? Banks like Wells Fargo (WFC) and M&T Bank (MTB), both of whom have conservative lending practices are not feeling the effects of "sub-prime defaults". They have no need for a fed bailout, it is only those lenders who thought lending $500,000 to a person without any verifiable income or any money to put down was a neat little idea.
I have stumped here repeatedly for the Fed to do nothing with the Fed funds rate and still hope they resist the calls from irresponsible lenders. Let them fail, maybe we will get more responsibility from lenders. Even if the Fed did lower the rate, 1/2%, this would have ZERO effect on those people with adjustable rate mortgages that are getting ready for a reset and will not be able to afford the new payment. ZERO. Those people, to be honest, are not much better than the lenders who gave them the loans in the first place. Rates have been rising steadily for the past year and they had plenty of chances to refi the mortgages last year before the bottom fell out of the market. If they didn't, well, too bad. Plese do not waste my tax dollars bailing these folks out. They are in a self induced predicament. What is more important now is getting the point home that if you lend money (or borrow) it and do not demonstrate a solid ability to pay it back, you are responsible for the outcome.
In response to those screaming for a Fed Funds cut, Richmond Federal Reserve President Jeffery Lacker said on Tuesday, "Financial market volatility, in and of itself, doesn't require a change in the target federal funds rate". He also referred to the Feds stated goal on maintaining inflation. "While the most recent months' figures have been encouraging, it is still too soon to be confident that the moderation we have been seeing represents a downward trend". The risk that inflation will fail to moderate, "is still relevant, although some recent reports have been encouraging" he said. Translation? Who cares how the market jumps all around, long term results are what we care about.
Inevitably these loan will be no good and the pain will be felt, let's just pull the band aid off fast and get it over rather than prolong the inevitable.
Then we can move on the the next manufactured crisis..
"Fast Money" for Wednesday
Here are today's picks and Tuesday's results...
TODAY'S PICKS
Jeff Macke recommended selling Take-Two Interactive (TTWO). Open $14.55
Pete Najarian likes Under Armour (UA). Open $66.91
Guy Adami preferred Target (TGT). Open $60.10
Constance Hunter said Desarrolladora Homex (HXM) is a buy. Open $50.60
TUESDAY'S RESULTS
Jeff Macke said sell Abercrombie & Fitch (ANF). Open $78.10 Close $79.38 Gain $1.28
Pete Najarian liked Atmel (ATML) due to unusual options activity. Open $4.86 Close $5.09 Gain $.23
Guy Adami preferred Freeport-McMoRan (FCX). Open $79.96 Close $81.29 Gain $1.33
Stacey Briere Gilbert also recommended buying Freeport-McMoRan (FCX). Open $79.96 Close $81.29 Gain $1.33
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 18-12 Gain $32.14
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-17 Gain $3.89
Pete Najarian= 13-8 Gain $24.79
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
TODAY'S PICKS
Jeff Macke recommended selling Take-Two Interactive (TTWO). Open $14.55
Pete Najarian likes Under Armour (UA). Open $66.91
Guy Adami preferred Target (TGT). Open $60.10
Constance Hunter said Desarrolladora Homex (HXM) is a buy. Open $50.60
TUESDAY'S RESULTS
Jeff Macke said sell Abercrombie & Fitch (ANF). Open $78.10 Close $79.38 Gain $1.28
Pete Najarian liked Atmel (ATML) due to unusual options activity. Open $4.86 Close $5.09 Gain $.23
Guy Adami preferred Freeport-McMoRan (FCX). Open $79.96 Close $81.29 Gain $1.33
Stacey Briere Gilbert also recommended buying Freeport-McMoRan (FCX). Open $79.96 Close $81.29 Gain $1.33
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 18-12 Gain $32.14
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-17 Gain $3.89
Pete Najarian= 13-8 Gain $24.79
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
Tuesday, August 21, 2007
Bartiromo "Back In the Saddle"
It would seem Maria is back doing what she does best, not trying to be Erin Burnett
Now it is only a day but Maria was back behind the desk at HQ this afternoon and gone were the incoherent and oddly timed giggles and high school antics that had me contemplating driving a letter opener into my temple when the show was on. You want to know something else? She is really good when is just herself.
Rather than looking like a bimbo on screen she now appears what she is, a financial newswomen. She asks intelligent questions and has seemed to cut down on the softball Q & A sessions she had been doing that had caused people to lose interest in her. Based on her history and how she started she clearly has the guts to do the job, the question is, does she still have the desire? Is she too close to the players to ask the really hard questions? She clearly does when the guest is a economist or commentator, we need her to do the same to the CEO she may know. Either that or let another person do the interview.
I want the Bartiromo who used to get knocked around on the floor of the exchange when she started and had the stones to give it back and stand there and tell folks to get out of the way. The Bartiromo of recent years mellowed way too much and the very recent version, let's just call it a bad dream.
She defined the female financial newswomen for years by being herself. Let's hope she just keeps doing that.
Now it is only a day but Maria was back behind the desk at HQ this afternoon and gone were the incoherent and oddly timed giggles and high school antics that had me contemplating driving a letter opener into my temple when the show was on. You want to know something else? She is really good when is just herself.
Rather than looking like a bimbo on screen she now appears what she is, a financial newswomen. She asks intelligent questions and has seemed to cut down on the softball Q & A sessions she had been doing that had caused people to lose interest in her. Based on her history and how she started she clearly has the guts to do the job, the question is, does she still have the desire? Is she too close to the players to ask the really hard questions? She clearly does when the guest is a economist or commentator, we need her to do the same to the CEO she may know. Either that or let another person do the interview.
I want the Bartiromo who used to get knocked around on the floor of the exchange when she started and had the stones to give it back and stand there and tell folks to get out of the way. The Bartiromo of recent years mellowed way too much and the very recent version, let's just call it a bad dream.
She defined the female financial newswomen for years by being herself. Let's hope she just keeps doing that.
Tuesday's 52 Week Lows
Marlboro Smokeless On Sale In October
With all the talk of the upcoming Phillip morrris International (PMI) spinoff from Altria (MO), we seem to have forgot the future of the Phillip Morris USA (PMU) debuts this October.
PMU said on Tuesday it would start selling Marlboro chewing tobacco in Atlanta this October. PMU, the largest cigarette maker with over 50% of the US market said it planned to sell original and wintergreen flavors and long-cut and fine-cut varieties of the product in the test market.
The product will sell for $3 per tin, between the highest-priced and lowest-priced products in Atlanta. PMU said it was using the Marlboro name since smokeless tobacco users believe the brand stands for "flavor and premium quality."
In late April I posted "Much has been said about the possibility of MO buying UST for the smokeless business. It will not happen. Why? Smokers are quite possibly the most brand loyal folks out there, chew users, not so much (I speak from experience, used to be one). What does MO have? The #1 brand of cigarettes with over 50% market share. If they introduce a new product, it will be accepted much like the instant acceptance a new Budweiser product gets by beer drinkers. It will receive a trial by chew users who will be inclined to like it as it will be perceived as being a quality product. They will have no problems abandoning their current product to try the new Altria one. The cost/benefit of a self-produced product vs. an acquired product is huge for us shareholders as it leaves billions to be returned to us."
I love the idea of a Marlboro branded chew product. I have very little doubt it will be an immediate hit. Several people I know who chew are excited about the product and are definitely going to give it a test when it is available.
With smoking rates in decline, a new product with the Marlboro brand label will be a big boost to Altria's (and us shareholders) coffers.
With the anticipated success of this product, a fat dividend increase, a big share repurchse, and the PMI spin all expected soon, it looks to be a very exciting fall for shareholders.
PMU said on Tuesday it would start selling Marlboro chewing tobacco in Atlanta this October. PMU, the largest cigarette maker with over 50% of the US market said it planned to sell original and wintergreen flavors and long-cut and fine-cut varieties of the product in the test market.
The product will sell for $3 per tin, between the highest-priced and lowest-priced products in Atlanta. PMU said it was using the Marlboro name since smokeless tobacco users believe the brand stands for "flavor and premium quality."
In late April I posted "Much has been said about the possibility of MO buying UST for the smokeless business. It will not happen. Why? Smokers are quite possibly the most brand loyal folks out there, chew users, not so much (I speak from experience, used to be one). What does MO have? The #1 brand of cigarettes with over 50% market share. If they introduce a new product, it will be accepted much like the instant acceptance a new Budweiser product gets by beer drinkers. It will receive a trial by chew users who will be inclined to like it as it will be perceived as being a quality product. They will have no problems abandoning their current product to try the new Altria one. The cost/benefit of a self-produced product vs. an acquired product is huge for us shareholders as it leaves billions to be returned to us."
I love the idea of a Marlboro branded chew product. I have very little doubt it will be an immediate hit. Several people I know who chew are excited about the product and are definitely going to give it a test when it is available.
With smoking rates in decline, a new product with the Marlboro brand label will be a big boost to Altria's (and us shareholders) coffers.
With the anticipated success of this product, a fat dividend increase, a big share repurchse, and the PMI spin all expected soon, it looks to be a very exciting fall for shareholders.
Tuesday's Notable Links
Here are todays links of note...
- Have you ever got burned by an "analyst call" that did not work out? Take this advice
- After a Thornburg (TMA) Co-Founder said on CNBC that mortgage markets other than deposit backed are almost at a standstill and they cannot give guidance because of the business uncertainty, here is a gusty analyst call.. Yes, this is dripping with sarcasm.
- When things get crazy it always makes sense to Remember A Classic Theory
- Diet Coke brags it is only 1% crap that is bad for you
- Some Random Thoughts by Adam Warner about Bernanke and Cramer.
- Have you ever got burned by an "analyst call" that did not work out? Take this advice
- After a Thornburg (TMA) Co-Founder said on CNBC that mortgage markets other than deposit backed are almost at a standstill and they cannot give guidance because of the business uncertainty, here is a gusty analyst call.. Yes, this is dripping with sarcasm.
- When things get crazy it always makes sense to Remember A Classic Theory
- Diet Coke brags it is only 1% crap that is bad for you
- Some Random Thoughts by Adam Warner about Bernanke and Cramer.
Buffett Rumors: What 's Likely?
It is Buffett rumor time again. Every he did a CNBC interview and said that "opportunities would arise" from the current state of affairs, pundits have been having Berkshire Hathaway (BRK.A)_buying every mortgage lender out there. Ignore them
Why? Can anyone name the last time Buffett bought shares in a company on the open markets when people thought he would? Me either. Shares of Countrywide (CFC)jumped 10% yesterday when the Wall St. Journal simply opined that he may be a buyer or parts of the company. No facts, just an opinion. How large would the premium be for Buffett if word got out he was actually buying the company or made an offer for it? That fact alone eliminates an open market purchase of the lender.
What is likely? Buffett will probably buy dirt cheap mortgage backed securities he deems risk advantaged. What I would expect to be announced would be Buffett taking a multi billion dollar bet on mortgages perhaps in a private transaction they issue Buffett debt or preferred convertibles to provide a specific lender with necessary liquidity. During the Enron induced energy company meltdown at the turn of the century, Buffet made bets with convertible securities that turned out to be very profitable investments.
I just cannot imagine Buffett making any open market purchase. I would be very surprised on the other hand if he was not somehow involved in the cleaning up of this mess.
Why? Can anyone name the last time Buffett bought shares in a company on the open markets when people thought he would? Me either. Shares of Countrywide (CFC)jumped 10% yesterday when the Wall St. Journal simply opined that he may be a buyer or parts of the company. No facts, just an opinion. How large would the premium be for Buffett if word got out he was actually buying the company or made an offer for it? That fact alone eliminates an open market purchase of the lender.
What is likely? Buffett will probably buy dirt cheap mortgage backed securities he deems risk advantaged. What I would expect to be announced would be Buffett taking a multi billion dollar bet on mortgages perhaps in a private transaction they issue Buffett debt or preferred convertibles to provide a specific lender with necessary liquidity. During the Enron induced energy company meltdown at the turn of the century, Buffet made bets with convertible securities that turned out to be very profitable investments.
I just cannot imagine Buffett making any open market purchase. I would be very surprised on the other hand if he was not somehow involved in the cleaning up of this mess.
Tuesday's Upgrades and Downgrades
UPGRADES
Anheuser-Busch BUD AG Edwards Hold » Buy
National City NCC BMO Capital Markets Underperform » Market Perform
Huntington Banc HBAN FTN Midwest Neutral » Buy
UCBH Holdings UCBH FTN Midwest Neutral » Buy
Lamar Advertising LAMR Stifel Nicolaus Hold » Buy
Universal Compression Ptnrs UCLP Wachovia Mkt Perform » Outperform
Dollar Tree DLTR Wachovia Mkt Perform » Outperform
Amerigroup AGP Jefferies & Co Hold » Buy
First Solar FSLR Deutsche Securities Hold » Buy
Darden Restaurants DRI CIBC Wrld Mkts Sector Perform » Sector Outperform
DOWNGRADES
Seacoast Banking SBCF Stifel Nicolaus Hold » Sell
Brookdale Senior Living BKD Stifel Nicolaus Buy » Hold
USG Corp USG Matrix Research Buy » Sell
"Fast Money" for Tuesday
Here are Tuesday's picks and Monday's results.
Picks for Tuesday
Jeff Macke said sell Abercrombie & Fitch (ANF). Open $78.10
Pete Najarian liked Atmel (ATML) due to unusual options activity. Open $4.86
Guy Adami preferred Freeport-McMoRan (FCX). Open $79.96
Stacey Briere Gilbert also recommended buying Freeport-McMoRan (FCX). Open $79.96
MONDAY'S PICKS
Jeff Macke said Whole Foods Market (WFMI) is a buy. Open $44.30 Close $43.47 Loss $.83
Karen Finerman liked Trinity Industries (TRN) for the railroads. Open $33.27 close $33.60 Gain $.33
Guy Adami preferred Deere & Co (DE).Open $124.61 Close $128.27 Gain $3.66
Pete Najarian recommended Citigroup (C) as a big bank. Open $48.81 Close $48.39 Loss $.42
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 17-12 Gain $30.81
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 20-17 Gain $2.61
Pete Najarian= 12-8 Gain $24.56
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Gilbert= 1-0 Gain $.29
Picks for Tuesday
Jeff Macke said sell Abercrombie & Fitch (ANF). Open $78.10
Pete Najarian liked Atmel (ATML) due to unusual options activity. Open $4.86
Guy Adami preferred Freeport-McMoRan (FCX). Open $79.96
Stacey Briere Gilbert also recommended buying Freeport-McMoRan (FCX). Open $79.96
MONDAY'S PICKS
Jeff Macke said Whole Foods Market (WFMI) is a buy. Open $44.30 Close $43.47 Loss $.83
Karen Finerman liked Trinity Industries (TRN) for the railroads. Open $33.27 close $33.60 Gain $.33
Guy Adami preferred Deere & Co (DE).Open $124.61 Close $128.27 Gain $3.66
Pete Najarian recommended Citigroup (C) as a big bank. Open $48.81 Close $48.39 Loss $.42
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 17-12 Gain $30.81
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 20-17 Gain $2.61
Pete Najarian= 12-8 Gain $24.56
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Gilbert= 1-0 Gain $.29
Monday, August 20, 2007
Monday's 52 Week lows
Notable Items- Monday's Links
Here are links to items of interest...
- Every wonder where the person calling you on your cell phone is? Blackberry users will know soon enough.
- Thank you to the WSJ Online for quoting me last week
- Whitney Tilson, whose reasoning I just love has a great article about the current market conditions
- Last week I wrote about Warren Buffett's comments on lenders and their current situation. Here is the video of those comments
- Is it just me or is it embarrassingly early to be selling refurbished iPhones?
- Every wonder where the person calling you on your cell phone is? Blackberry users will know soon enough.
- Thank you to the WSJ Online for quoting me last week
- Whitney Tilson, whose reasoning I just love has a great article about the current market conditions
- Last week I wrote about Warren Buffett's comments on lenders and their current situation. Here is the video of those comments
- Is it just me or is it embarrassingly early to be selling refurbished iPhones?
Lowe's Earnings: Maybe It Is Not The Shopper?
In contrast the Home Depot's (HD) earnings last week, Lowes (LOW) reported today and the news was generally good.
Earnings rose 9% to $1.02 billion, or 67 cents a share, in Q2, up from $935 million, or 60 cents a share last year. Analysts had expected 61 cents a share, according to estimates. Sales also rose 5.8% to $14.2 billion due to the opening of 26 new stores. Sales at stores open at least a year fell 2.6%, in line with the company's expectations of a drop of as much as 3 percent. This is in contrast to the 15% decline in earnings at Home Depot.
Lowe's called the current environment "challenging" as the U.S. housing market depressed results in some areas, but said it had gained market share in 15 of 20 product categories (they did the same last quarter also). During a conference call Chairman Robert Niblock said, "There are signs of improvement in certain areas of the country,". The U.S. Northeast, he said was showing signs of improving sales in big-ticket installations. U.S. markets where housing hadn't accelerated much in recent years delivered positive same-store sales, Lowe's said. This is big. It means that in non-bubble areas they are thing are not desperate and Lowes in making big progress.
When one looks at this report one would be inclined to think we may be bottoming and there is light at the end of the tunnel while a look at the Home Depot call would lead one to think we are in a free fall. While I am not a buyer of either company right now, this earnings reports does cement in my opinion that Home Depot is years away from being a potential investment.
Lowes is managing through these tough times and taking market share from Home Depot quarter after quarter. When housing does turn around, Lowes will be in much better shape. When you look at the two you have to conclude Home Depot is just a mess and they aren't doing anything to lead one to think things will get any better anytime soon.
Lowes proved today that is is not necessarily the shopper but where the shopper decides to shop.
Earnings rose 9% to $1.02 billion, or 67 cents a share, in Q2, up from $935 million, or 60 cents a share last year. Analysts had expected 61 cents a share, according to estimates. Sales also rose 5.8% to $14.2 billion due to the opening of 26 new stores. Sales at stores open at least a year fell 2.6%, in line with the company's expectations of a drop of as much as 3 percent. This is in contrast to the 15% decline in earnings at Home Depot.
Lowe's called the current environment "challenging" as the U.S. housing market depressed results in some areas, but said it had gained market share in 15 of 20 product categories (they did the same last quarter also). During a conference call Chairman Robert Niblock said, "There are signs of improvement in certain areas of the country,". The U.S. Northeast, he said was showing signs of improving sales in big-ticket installations. U.S. markets where housing hadn't accelerated much in recent years delivered positive same-store sales, Lowe's said. This is big. It means that in non-bubble areas they are thing are not desperate and Lowes in making big progress.
When one looks at this report one would be inclined to think we may be bottoming and there is light at the end of the tunnel while a look at the Home Depot call would lead one to think we are in a free fall. While I am not a buyer of either company right now, this earnings reports does cement in my opinion that Home Depot is years away from being a potential investment.
Lowes is managing through these tough times and taking market share from Home Depot quarter after quarter. When housing does turn around, Lowes will be in much better shape. When you look at the two you have to conclude Home Depot is just a mess and they aren't doing anything to lead one to think things will get any better anytime soon.
Lowes proved today that is is not necessarily the shopper but where the shopper decides to shop.
Why Do Democrats Hate Wal-Mart?
Did not see this anywhere in the MSM (mainstream media) last week but Democratic Presidential advisers are taking positions with an anti Wal-Mart (WMT) group. Surprised?
Wakeupwalmart.com has hired Meghan Scott, who previously worked on John Edwards’s presidential campaign is expected to be named "deputy campaign manager" of the organization and will be assisted by Nick Baldick, Jeremy Van Ess and Richie Ros. "Who are those guys?" you ask. Baldick was the national campaign manager for John Edwards’s presidential campaign in 2003 and early 2004. Van Ess worked on the presidential campaigns of John Kerry and Edwards and was chief speechwriter for Harry Reid, the current Senate majority leader. Ross ran the 2005 California gubernatorial campaign of Lt. Gov. Cruz Bustamante. Apparently hiring people from losing political organizations is a recipe for success now? What no one from Jimmy Carter's camp was available?
The organization, Wakeupwalmart, ironically was started by the United Food & Commercial Workers Union in 2005 when efforts by the Union to organize Wal-Mart workers failed. People who actually work at Wal-Mart have no affiliation with it. It oddly enough has no current plans to attempt to organize workers at Target (TGT), Kohl's (KSS) or Macy's (M) despite workers at those organizations faring no better (and in some areas worse) than Wal-Mart employees in term of wages or benefits.
It would seem their "outrage" at "suffering workers" is limited to those workers at politically appealing targets, not necessarily workers being taken advantage of. Are there any lower paid workers than those at fast food locations? Where are the commercials alerting us to the plight of those "disadvantaged" folks? I am sure those at Wakeup find it odd and it is apparently the reason that their efforts have failed when you consider a new Wal-Mart in Livonia, Michigan that will employee 530 workers recently had 5,000 people apply for these abhorrent, underpaid, undesirable, slave labor positions. Who is kidding who?
Said Ms. Scott, “We are going to fight to ensure that Wal-Mart becomes a responsible organization,” she said. If only she looked at her own organization first.
Do Democrats really wonder why they get the "anti-business" tag?? Do they really?
Wakeupwalmart.com has hired Meghan Scott, who previously worked on John Edwards’s presidential campaign is expected to be named "deputy campaign manager" of the organization and will be assisted by Nick Baldick, Jeremy Van Ess and Richie Ros. "Who are those guys?" you ask. Baldick was the national campaign manager for John Edwards’s presidential campaign in 2003 and early 2004. Van Ess worked on the presidential campaigns of John Kerry and Edwards and was chief speechwriter for Harry Reid, the current Senate majority leader. Ross ran the 2005 California gubernatorial campaign of Lt. Gov. Cruz Bustamante. Apparently hiring people from losing political organizations is a recipe for success now? What no one from Jimmy Carter's camp was available?
The organization, Wakeupwalmart, ironically was started by the United Food & Commercial Workers Union in 2005 when efforts by the Union to organize Wal-Mart workers failed. People who actually work at Wal-Mart have no affiliation with it. It oddly enough has no current plans to attempt to organize workers at Target (TGT), Kohl's (KSS) or Macy's (M) despite workers at those organizations faring no better (and in some areas worse) than Wal-Mart employees in term of wages or benefits.
It would seem their "outrage" at "suffering workers" is limited to those workers at politically appealing targets, not necessarily workers being taken advantage of. Are there any lower paid workers than those at fast food locations? Where are the commercials alerting us to the plight of those "disadvantaged" folks? I am sure those at Wakeup find it odd and it is apparently the reason that their efforts have failed when you consider a new Wal-Mart in Livonia, Michigan that will employee 530 workers recently had 5,000 people apply for these abhorrent, underpaid, undesirable, slave labor positions. Who is kidding who?
Said Ms. Scott, “We are going to fight to ensure that Wal-Mart becomes a responsible organization,” she said. If only she looked at her own organization first.
Do Democrats really wonder why they get the "anti-business" tag?? Do they really?
Monday's Upgrades and Downgrades
Here are the calls
UPGRADES
Flowserve FLS RBC Capital Mkts Sector Perform » Outperform
Taiwan Semi TSM UBS Neutral » Buy
NN Inc NNBR BB&T Capital Mkts Hold » Buy
Clear Channel Outdoor CCO Bear Stearns Peer Perform » Outperform
JB Hunt Trans JBHT Wachovia Mkt Perform » Outperform
Lamar Advertising LAMR Bear Stearns Peer Perform » Outperform
Melco PBL Entertainment MPEL Citigroup Hold » Buy
CenterPoint CNP Citigroup Hold » Buy
Agrium AGU CIBC Wrld Mkts Sector Perform » Sector Outperform
Orbitz OWW Soleil Hold » Buy
Sharper Image SHRP BMO Capital Markets Underperform » Market Perform
Autodesk ADSK Bear Stearns Peer Perform » Outperform
SAP AG SAP JP Morgan Underweight » Overweight
Blockbuster BBI JP Morgan Neutral » Overweight
CACI Intl CAI JP Morgan Underweight » Overweight
Home Depot HD UBS Sell » Neutral
Abercrombie ANF Friedman Billings Mkt Perform » Outperform
Nice Systems NICE Friedman Billings Mkt Perform » Outperform
Kohl's KSS Deutsche Securities Hold » Buy
Countrywide CFC Banc of America Sec Sell » Neutral
DOWNGRADES
Gerdau AmeriSteel GNA Soleil Buy » Hold
McGraw-Hill MHP JP Morgan Overweight » Neutral
Wild Oats Mkts OATS Bear Stearns Outperform » Peer Perform
WNS WNS JP Morgan Overweight » Neutral
Huaneng Power HNP Citigroup Buy » Sell
SL Green Rlty SLG UBS Buy » Neutral
Boston Prpts BXP UBS Buy » Neutral
Darden Restaurants DRI Bear Stearns Outperform » Peer Perform
ChoicePoint CPS Sun Trust Rbsn Humphrey Neutral » Reduce
Curtiss-Wright CW CIBC Wrld Mkts Sector Outperform » Sector Perform
UPGRADES
Flowserve FLS RBC Capital Mkts Sector Perform » Outperform
Taiwan Semi TSM UBS Neutral » Buy
NN Inc NNBR BB&T Capital Mkts Hold » Buy
Clear Channel Outdoor CCO Bear Stearns Peer Perform » Outperform
JB Hunt Trans JBHT Wachovia Mkt Perform » Outperform
Lamar Advertising LAMR Bear Stearns Peer Perform » Outperform
Melco PBL Entertainment MPEL Citigroup Hold » Buy
CenterPoint CNP Citigroup Hold » Buy
Agrium AGU CIBC Wrld Mkts Sector Perform » Sector Outperform
Orbitz OWW Soleil Hold » Buy
Sharper Image SHRP BMO Capital Markets Underperform » Market Perform
Autodesk ADSK Bear Stearns Peer Perform » Outperform
SAP AG SAP JP Morgan Underweight » Overweight
Blockbuster BBI JP Morgan Neutral » Overweight
CACI Intl CAI JP Morgan Underweight » Overweight
Home Depot HD UBS Sell » Neutral
Abercrombie ANF Friedman Billings Mkt Perform » Outperform
Nice Systems NICE Friedman Billings Mkt Perform » Outperform
Kohl's KSS Deutsche Securities Hold » Buy
Countrywide CFC Banc of America Sec Sell » Neutral
DOWNGRADES
Gerdau AmeriSteel GNA Soleil Buy » Hold
McGraw-Hill MHP JP Morgan Overweight » Neutral
Wild Oats Mkts OATS Bear Stearns Outperform » Peer Perform
WNS WNS JP Morgan Overweight » Neutral
Huaneng Power HNP Citigroup Buy » Sell
SL Green Rlty SLG UBS Buy » Neutral
Boston Prpts BXP UBS Buy » Neutral
Darden Restaurants DRI Bear Stearns Outperform » Peer Perform
ChoicePoint CPS Sun Trust Rbsn Humphrey Neutral » Reduce
Curtiss-Wright CW CIBC Wrld Mkts Sector Outperform » Sector Perform
Sunday, August 19, 2007
Barron's Piece on Cramer: Be Wary of Those Defending Him
So, Barron's did a piece on Mr. Cramer this weekend and the jist of it was that it was not a flattering portrayal. Some blogs have rushed to Cramer's defense but before you buy into their reasoning, check their motives.
First, as is my standing policy I will not name folks but readers who do their homework can come to their own conclusions.
Now, Cramer. As I have said here countless times I am not a fan of his bi-polar trading style and when you constantly shout to people how great you are, you then become a rather loud target. That being said, when he talks about the market and it's machinations, there are not very many folks better. I wish he would stick to that but it probably would not be very much of a show and rating are what CNBC wants. Also, he recent rant and then love fest with Bernanke over rates may go down and the most embarrassing episode in TV history, although I doubt he sees it.
The Barron's piece. I think that Cramer's show is purposely vague enough so that the picks cannot be tracked and if they are, there is enough ambiguity there allow to for a defense. Barron's had a well written piece that did the best job I have seen to date tracking his picks. I will neither say they are right or wrong because of the reason I gave before, the show is just too ambiguous to really say. The piece was very well done though.
The defenders...
Some blogs have rushed to attack Barron's and defend Cramer, why?
One defense is the conspiracy theory. Barron's is owned by Dow Jones (DJ) which was just purchased by Rupert Murdoch's News Corp. (NWS). The infantile theory says that with Murdoch starting a business news channel soon, (the rumor has been around for a few years now) Barron's writers and editors, wanting to "get in good" with him attacked CNBC's star. What, are they serious? Why make the attack now? Why not wait until the channel was actually announced and being launched? Any effect an attack would have now will dissipate and be forgotten by the time the channel actual debuts. Also, does anyone really think that Murdoch built the multi billion dollar empire he has by being duped by such transparent sucking up if that is what it was?
Do people out there honestly think Murdoch spent $5 billion for Dow Jones and does not know the players there? He just woke up one morning and decided to make a go of it because he had some extra cash in his wallet ? This whole line of thinking is really pretty sad and should eliminate whatever comes after it in a Cramer defense because if the writer of it actually believes it, any other reasoning they may have on the subject is probably equally as flawed. This reasoning is about as likely as Sam Giancana and the Chicago Mafia actually killing Kennedy. What is much more likely is that Cramer's antics the past few weeks have people looking to knock him down a peg or two.
The "show is educational" defense. Yes it is. But, when you dance around and tell people to "buy" and "sell", you now are giving investing advice and when those people are calling because they do not know the answer and are asking you for it, you cannot fall back on the "do your homework" excuse. If they could, they would not be calling you. What would you tell your broker (if you have one) if he said that to you? If you want it to be purely educational, stop telling people what to do.
So, why the defenders? Ass kissing, pure and simple. The most influential site out there today for driving traffic to your stock blog is James Altucher's "Daily Blog Watch". "Blog Watch" is part of..... drum roll please....James Cramer's, The Street.com. A defense of Cramer is an attempt to "get you in good" with the folks there, get your blog listed there more and drive more traffic to you. Politics, Simple.
When it comes to the Cramer thing in the blogsphere, take everything written with a huge grain of salt. Much of it is very intertwined and what may appear as an honest defense of Cramer is more likely an attempt to defend a friend or endear oneself to an influential site.
Now, neither of those are bad things, but let's try to be honest about our motives, can we? If we are doing either one of those, lets "disclose" it. If we have a relationship with Cramer or The Street.com or Mr. Altucher, tell people so they are able to put your "defense" in the proper framework.
If we disclose our stock affiliations when we write about them, ought we not disclose the other ones we write about?
First, as is my standing policy I will not name folks but readers who do their homework can come to their own conclusions.
Now, Cramer. As I have said here countless times I am not a fan of his bi-polar trading style and when you constantly shout to people how great you are, you then become a rather loud target. That being said, when he talks about the market and it's machinations, there are not very many folks better. I wish he would stick to that but it probably would not be very much of a show and rating are what CNBC wants. Also, he recent rant and then love fest with Bernanke over rates may go down and the most embarrassing episode in TV history, although I doubt he sees it.
The Barron's piece. I think that Cramer's show is purposely vague enough so that the picks cannot be tracked and if they are, there is enough ambiguity there allow to for a defense. Barron's had a well written piece that did the best job I have seen to date tracking his picks. I will neither say they are right or wrong because of the reason I gave before, the show is just too ambiguous to really say. The piece was very well done though.
The defenders...
Some blogs have rushed to attack Barron's and defend Cramer, why?
One defense is the conspiracy theory. Barron's is owned by Dow Jones (DJ) which was just purchased by Rupert Murdoch's News Corp. (NWS). The infantile theory says that with Murdoch starting a business news channel soon, (the rumor has been around for a few years now) Barron's writers and editors, wanting to "get in good" with him attacked CNBC's star. What, are they serious? Why make the attack now? Why not wait until the channel was actually announced and being launched? Any effect an attack would have now will dissipate and be forgotten by the time the channel actual debuts. Also, does anyone really think that Murdoch built the multi billion dollar empire he has by being duped by such transparent sucking up if that is what it was?
Do people out there honestly think Murdoch spent $5 billion for Dow Jones and does not know the players there? He just woke up one morning and decided to make a go of it because he had some extra cash in his wallet ? This whole line of thinking is really pretty sad and should eliminate whatever comes after it in a Cramer defense because if the writer of it actually believes it, any other reasoning they may have on the subject is probably equally as flawed. This reasoning is about as likely as Sam Giancana and the Chicago Mafia actually killing Kennedy. What is much more likely is that Cramer's antics the past few weeks have people looking to knock him down a peg or two.
The "show is educational" defense. Yes it is. But, when you dance around and tell people to "buy" and "sell", you now are giving investing advice and when those people are calling because they do not know the answer and are asking you for it, you cannot fall back on the "do your homework" excuse. If they could, they would not be calling you. What would you tell your broker (if you have one) if he said that to you? If you want it to be purely educational, stop telling people what to do.
So, why the defenders? Ass kissing, pure and simple. The most influential site out there today for driving traffic to your stock blog is James Altucher's "Daily Blog Watch". "Blog Watch" is part of..... drum roll please....James Cramer's, The Street.com. A defense of Cramer is an attempt to "get you in good" with the folks there, get your blog listed there more and drive more traffic to you. Politics, Simple.
When it comes to the Cramer thing in the blogsphere, take everything written with a huge grain of salt. Much of it is very intertwined and what may appear as an honest defense of Cramer is more likely an attempt to defend a friend or endear oneself to an influential site.
Now, neither of those are bad things, but let's try to be honest about our motives, can we? If we are doing either one of those, lets "disclose" it. If we have a relationship with Cramer or The Street.com or Mr. Altucher, tell people so they are able to put your "defense" in the proper framework.
If we disclose our stock affiliations when we write about them, ought we not disclose the other ones we write about?
ValuePlays Most Read Posts- Last Week
Here are the most read posts for the past week. It would seem people love reading about Mr.Lampert.
1- Lampert Gobbling Up Sears Shares. Symbols SHLD, HD
2- This Is Great Symbols SHLD, DOW, GS, C, SHW, MO
3- Thinking Like Lampert Symbols SHLD, C
4- Note To Lampert: Let People Know About Land's End Symbols SHLD
5- Another Starbucks Competitor: Proctor & Gamble Symbols SBUX, PG, MCD, COST, KR, WMT, CVS
1- Lampert Gobbling Up Sears Shares. Symbols SHLD, HD
2- This Is Great Symbols SHLD, DOW, GS, C, SHW, MO
3- Thinking Like Lampert Symbols SHLD, C
4- Note To Lampert: Let People Know About Land's End Symbols SHLD
5- Another Starbucks Competitor: Proctor & Gamble Symbols SBUX, PG, MCD, COST, KR, WMT, CVS
"Fast Money" for Monday
Here are Friday's results and Monday's picks
MONDAY'S PICKS
Jeff Macke said Whole Foods Market (WFMI) is a buy. Open $44.30
Karen Finerman liked Trinity Industries (TRN) for the railroads. Open $33.27
Guy Adami preferred Deere & Co (DE).Open $124.61
Pete Najarian recommended Citigroup (C) as a big bank. Open $48.81
FRIDAY'S RESULTS
Jeff Macke likes General Motors (GM) because he thinks the stock has bottomed. Open $30.77 CLOSE $30.55 Loss $.22
Pete Najarian likes Thornburg Mortgage (TMA) and suggests it might be a takeover target. Open $12.38 CLOSE $15.04 Gain $2.66
Guy Adami prefers Network Appliance (NTAP) because he feels this name has performed well in a difficult tape. Open $25.27 CLOSE $25.98 Gain $.61
Eric Bolling recommends buying the Financial Select Sector SPDR (XLF) because he thinks the financials have bottomed. Open $33.15 CLOSE $34.50 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 week)
Adami= 16-12 Gain $27.15
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 20-16 Gain $3.24
Pete Najarian= 12-7 Gain $24.98
Seymore= 3-2 Loss $.49
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
MONDAY'S PICKS
Jeff Macke said Whole Foods Market (WFMI) is a buy. Open $44.30
Karen Finerman liked Trinity Industries (TRN) for the railroads. Open $33.27
Guy Adami preferred Deere & Co (DE).Open $124.61
Pete Najarian recommended Citigroup (C) as a big bank. Open $48.81
FRIDAY'S RESULTS
Jeff Macke likes General Motors (GM) because he thinks the stock has bottomed. Open $30.77 CLOSE $30.55 Loss $.22
Pete Najarian likes Thornburg Mortgage (TMA) and suggests it might be a takeover target. Open $12.38 CLOSE $15.04 Gain $2.66
Guy Adami prefers Network Appliance (NTAP) because he feels this name has performed well in a difficult tape. Open $25.27 CLOSE $25.98 Gain $.61
Eric Bolling recommends buying the Financial Select Sector SPDR (XLF) because he thinks the financials have bottomed. Open $33.15 CLOSE $34.50 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 week)
Adami= 16-12 Gain $27.15
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 20-16 Gain $3.24
Pete Najarian= 12-7 Gain $24.98
Seymore= 3-2 Loss $.49
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Saturday, August 18, 2007
Notable Dividend Increases
This Weeks Insider Buys
Here are the largest aggregate insider purchases by dollar amount for the week ending yesterday.
1- RPC (RES)= $19,236,000
2- Equity One (EQY)= $12,157,000
3- Lion Gate Entertainment (LGF)= $4,677,000
4- Panera Bread (PNRA)= $3,595,000
5- Chesapeake Energy (CHK)= $3,344,000
6- Barnes & Noble (BKS)= $3,264,000
1- RPC (RES)= $19,236,000
2- Equity One (EQY)= $12,157,000
3- Lion Gate Entertainment (LGF)= $4,677,000
4- Panera Bread (PNRA)= $3,595,000
5- Chesapeake Energy (CHK)= $3,344,000
6- Barnes & Noble (BKS)= $3,264,000
Friday, August 17, 2007
Friday's 52 Week Lows
230 point up days make for a very short 52 week low list. My condolences if you made this one.
XNL Xethanol Corp
FOOD Vaughan Foods Inc
PWX Providence and Worcester Railroad
ALOY Alloy Inc
ARII American Railcar Inds Inc
CLZR Candela Laser Corporation
CGM Congoleum Corporation
HSOA Home Solutions Amer Inc
HEPH Hollis-Eden Pharmaceuticals
XNL Xethanol Corp
FOOD Vaughan Foods Inc
PWX Providence and Worcester Railroad
ALOY Alloy Inc
ARII American Railcar Inds Inc
CLZR Candela Laser Corporation
CGM Congoleum Corporation
HSOA Home Solutions Amer Inc
HEPH Hollis-Eden Pharmaceuticals
What Is Wrong with Bartiromo?
Has Maria gotten a new prescription from her doctor?
Am I the only one wondering what has gotten in CNBC's Maria Bartiromo? Almost overnight she has gone from serious newscaster to a giddy pre-pubescent teenager at her first dance giggling and wiggling all over the place. I keep waiting for Dylan Rattigan to backhand her and tell her to get her shit together.
The skeptic in me thinks she got wind of the poll that the NY Post (I think it was them) ran that showed she painfully lagged the much younger Erin Burnett in popularity on the network. It would seem the "Money Honey" was old news and viewers en-mass were drawn to Burnett's more playful banter with her co-hosts. Bartiromo, who is no dummy and broke ground in this medium must have decided that was the way to go and now is about as irritating as a human being can be. She is either off her Ritalin or is taking something quite effective at putting a whole lot of jump in her step.
Trying to watch her as she hops all over the place is like watching Paula Abdul during American Idol and unfortunately for Bartiromo, she is just about as coherent. While not a huge fan of Ratigan, I actually feel sorry for him. When she gets going now he just gets a blank stare on his face like a Labrador being read "War and Peace" as he wonders who the hell he pissed off to get this choice assignment. He looks like he is almost wishing to get assaulted by a bystander so he can get off camera with her. Poor bastard.
The real shame of it all? There was nothing wrong with Bartiromo to begin with. I For one appreciated her style and enjoyed her segments. Now, I keep hoping for a blackout when she is on. I swear to god if I hear her giggle one more time at absolutely nothing I am going to have a stroke.
It is painful watching someone fight the inevitable aging we all go through. she is not handling this well at all. Maria, go back to what you did before.
At least then you had your dignity...
Am I the only one wondering what has gotten in CNBC's Maria Bartiromo? Almost overnight she has gone from serious newscaster to a giddy pre-pubescent teenager at her first dance giggling and wiggling all over the place. I keep waiting for Dylan Rattigan to backhand her and tell her to get her shit together.
The skeptic in me thinks she got wind of the poll that the NY Post (I think it was them) ran that showed she painfully lagged the much younger Erin Burnett in popularity on the network. It would seem the "Money Honey" was old news and viewers en-mass were drawn to Burnett's more playful banter with her co-hosts. Bartiromo, who is no dummy and broke ground in this medium must have decided that was the way to go and now is about as irritating as a human being can be. She is either off her Ritalin or is taking something quite effective at putting a whole lot of jump in her step.
Trying to watch her as she hops all over the place is like watching Paula Abdul during American Idol and unfortunately for Bartiromo, she is just about as coherent. While not a huge fan of Ratigan, I actually feel sorry for him. When she gets going now he just gets a blank stare on his face like a Labrador being read "War and Peace" as he wonders who the hell he pissed off to get this choice assignment. He looks like he is almost wishing to get assaulted by a bystander so he can get off camera with her. Poor bastard.
The real shame of it all? There was nothing wrong with Bartiromo to begin with. I For one appreciated her style and enjoyed her segments. Now, I keep hoping for a blackout when she is on. I swear to god if I hear her giggle one more time at absolutely nothing I am going to have a stroke.
It is painful watching someone fight the inevitable aging we all go through. she is not handling this well at all. Maria, go back to what you did before.
At least then you had your dignity...
FTC: Time To Get New Laywers
How did the FTC lose this one? How?
First, bringing the suit to stop the Whole Food (WFMI) and Wild Oats (OATS) merger on "anti-trust" grounds was moronic especially when you consider the #1 "organic food" seller in the US after the merger is complete will not be the combined entity but will still be Wal-Mart (WMT). But, they filed it anyway so let's go from there.
Then we had Whole Foods CEO John Mackey in what can only be described as an acid induced rant saying in an email to his board that the merger would help Whole Foods eliminate "almost forever" the threat that a rival could enter the organic space. He then went on to say the merger would allow for Whole Foods increase prices to customers and pressure suppliers (local farms) to lower costs. they email went even further to say that buying Wild Oats would help the company avoid "nasty price wars" in a number of markets and the deal would help deter a big chain such as Kroger from creating a competing natural-foods powerhouse.
Then, as if that was not enough. Mackey decided to join a Yahoo message board and continue the rants. He trashed Wild Oats in an attempt to lower it's share price before the merger was announced. The posts are currently under investigation by the SEC and I would be suprised if he was not formally admonished for them.
In short, we have the CEO of a company in internal emails saying a proposed merger would help them raise consumer prices, pressure suppliers and eliminate potential competition. Isn't that exactly what the FTC had to prove? How could they lose this one? To top it off, the FTC itself is currently under investigation because internal documents they released that should have had redacted information about Whole Foods "trade secrets" turn out to be, well, not redacted.
Not only will the FTC lose a case that Mackey handed them on a silver platter but they will end up getting sued and lose again in the process.
Whoever lead the charge on this one should be encouraged "to pursue other opportunities".
First, bringing the suit to stop the Whole Food (WFMI) and Wild Oats (OATS) merger on "anti-trust" grounds was moronic especially when you consider the #1 "organic food" seller in the US after the merger is complete will not be the combined entity but will still be Wal-Mart (WMT). But, they filed it anyway so let's go from there.
Then we had Whole Foods CEO John Mackey in what can only be described as an acid induced rant saying in an email to his board that the merger would help Whole Foods eliminate "almost forever" the threat that a rival could enter the organic space. He then went on to say the merger would allow for Whole Foods increase prices to customers and pressure suppliers (local farms) to lower costs. they email went even further to say that buying Wild Oats would help the company avoid "nasty price wars" in a number of markets and the deal would help deter a big chain such as Kroger from creating a competing natural-foods powerhouse.
Then, as if that was not enough. Mackey decided to join a Yahoo message board and continue the rants. He trashed Wild Oats in an attempt to lower it's share price before the merger was announced. The posts are currently under investigation by the SEC and I would be suprised if he was not formally admonished for them.
In short, we have the CEO of a company in internal emails saying a proposed merger would help them raise consumer prices, pressure suppliers and eliminate potential competition. Isn't that exactly what the FTC had to prove? How could they lose this one? To top it off, the FTC itself is currently under investigation because internal documents they released that should have had redacted information about Whole Foods "trade secrets" turn out to be, well, not redacted.
Not only will the FTC lose a case that Mackey handed them on a silver platter but they will end up getting sued and lose again in the process.
Whoever lead the charge on this one should be encouraged "to pursue other opportunities".
Bernanke: Another Brilliant Move
Bernanke moved today and unlike the chorus of calls for a Fed Funds Rate cut we have heard, he moved both to calm markets and keep rates steady.
Saying, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets."
Then they said "To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained."
What didn't they do? Lower the Fed target rate so Bernanke keep pressure on inflation. What he DID do was lower the borrowing rate for banks so that currently tight credit markets will loosen. Lenders like Washington Mutual (WM), Countrywide (CFC) and Thornburg Mortgage (TMA) will now have the systemic liquidity they need to continue loaning and functioning.
The move is also significant because it signals to the market that the Fed will not bail out poor lending practices but will prevent the market from seizing due to it and will protect the innocent from being swept away by the turmoil.
Now there are plenty of folks out there saying "he listened to us and lowered rates" but the reality is just the opposite. Nobody called for this particular move and if anything, those folks calling for Bernanke to resist a Fed Funds rate cut are in the correct camp. He did not give in the the market and this is good. What is even better is that the market now can be assured he will move to prevent the "crash" everyone feared was inevitable but will not, and this is even more important, subsidize idiocy.
I have been saying since he was appointed based on his past statements and actions that he will go down ad the best Fed leader of my generation. Today's action makes that case even stronger.
Saying, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets."
Then they said "To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained."
What didn't they do? Lower the Fed target rate so Bernanke keep pressure on inflation. What he DID do was lower the borrowing rate for banks so that currently tight credit markets will loosen. Lenders like Washington Mutual (WM), Countrywide (CFC) and Thornburg Mortgage (TMA) will now have the systemic liquidity they need to continue loaning and functioning.
The move is also significant because it signals to the market that the Fed will not bail out poor lending practices but will prevent the market from seizing due to it and will protect the innocent from being swept away by the turmoil.
Now there are plenty of folks out there saying "he listened to us and lowered rates" but the reality is just the opposite. Nobody called for this particular move and if anything, those folks calling for Bernanke to resist a Fed Funds rate cut are in the correct camp. He did not give in the the market and this is good. What is even better is that the market now can be assured he will move to prevent the "crash" everyone feared was inevitable but will not, and this is even more important, subsidize idiocy.
I have been saying since he was appointed based on his past statements and actions that he will go down ad the best Fed leader of my generation. Today's action makes that case even stronger.
Friday's Upgrades and Downgrades
UPGRADES
CSK Auto CAO Kevin Dann Hold » Buy
Washington Mutual WM Punk, Ziegel & Co Mkt Perform » Buy
Ultrapertol ULTR UBS Neutral » Buy
Network Appliance NTAP AG Edwards Hold » Buy
Network Appliance NTAP Caris & Company Above Average » Buy
Navigant Consult NCI Piper Jaffray Market Perform » Outperform
Ansoft ANST Boenning & Scattergood Market Perform » Market Outperform
Terra Industries TRA Matrix Research Hold » Strong Buy
DOWNGRADES
Woodward Governor WGOV Matrix Research Buy » Hold
Acusphere ACUS Susquehanna Financial Positive » Neutral
Dover Downs Gaming DDE KeyBanc Capital Mkts / McDonald Buy » Hold
Meruelo Maddux MMPI UBS Neutral » Sell
"Fast Money" for Friday
Here are Friday's picks and records to date:
Friday's Picks
Jeff Macke likes General Motors (GM) because he thinks the stock has bottomed. Open $30.77
Pete Najarian likes Thornburg Mortgage (TMA) and suggests it might be a takeover target. Open $12.38
Guy Adami prefers Network Appliance (NTAP) because he feels this name has performed well in a difficult tape. Open $25.27
Eric Bolling recommends buying the Financial Select Sector SPDR (XLF) because he thinks the financials have bottomed. Open $33.15
Thursday's Results
Pete Najarian said to short E*Trade (ETFC). Open $13.91 Close $13.55 Gain $.36
For the third day in a row Guy Adami recommended shorting The Dow with Short Dow 30 Proshares (DOG). Open $61.78 Close $61.60 Loss $.18
Tim Seymour liked buying Mobile TeleSystems OJSC (MBT). Open $58.70 Close $56.04 Loss $2.66
Jeff Macke didn't "want to buy a darn thing in this tape".
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 15-12 Gain $26.54
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-15 Gain $3.46
Pete Najarian= 11-7 Gain $22.32
Seymore= 3-2 Loss $.49
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Friday's Picks
Jeff Macke likes General Motors (GM) because he thinks the stock has bottomed. Open $30.77
Pete Najarian likes Thornburg Mortgage (TMA) and suggests it might be a takeover target. Open $12.38
Guy Adami prefers Network Appliance (NTAP) because he feels this name has performed well in a difficult tape. Open $25.27
Eric Bolling recommends buying the Financial Select Sector SPDR (XLF) because he thinks the financials have bottomed. Open $33.15
Thursday's Results
Pete Najarian said to short E*Trade (ETFC). Open $13.91 Close $13.55 Gain $.36
For the third day in a row Guy Adami recommended shorting The Dow with Short Dow 30 Proshares (DOG). Open $61.78 Close $61.60 Loss $.18
Tim Seymour liked buying Mobile TeleSystems OJSC (MBT). Open $58.70 Close $56.04 Loss $2.66
Jeff Macke didn't "want to buy a darn thing in this tape".
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 15-12 Gain $26.54
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-15 Gain $3.46
Pete Najarian= 11-7 Gain $22.32
Seymore= 3-2 Loss $.49
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Thursday, August 16, 2007
Thursday's 52 Week Lows
More big names made the list today..
WYE Wyeth
WPSC Wheeling Pittsburgh Corp
THC Tenet Healthcare Corp
TYC Tyco
SHRP Sharper Image Corporation
SHOO Steven Madden Ltd
PFE Pfizer Inc
ODP Office Depot, Inc
NWL Newell Rubbermaid Inc
NMX Nymex Holdings Inc
MOT Motorola, Inc
MCO Moodys Corp
M Macys Inc
KSS Kohl's Corporation
HRB H&R Block, Inc
HOG Harley-Davidson, Inc
HD Home Depot, Inc
FL Foot Locker Inc
CTAS Cintas Corporation
BX Blackstone Group L P
BC Brunswick Corporation
BBY Best Buy Co., Inc
AMGN Amgen Inc
AMD Advanced Micro Devices
WYE Wyeth
WPSC Wheeling Pittsburgh Corp
THC Tenet Healthcare Corp
TYC Tyco
SHRP Sharper Image Corporation
SHOO Steven Madden Ltd
PFE Pfizer Inc
ODP Office Depot, Inc
NWL Newell Rubbermaid Inc
NMX Nymex Holdings Inc
MOT Motorola, Inc
MCO Moodys Corp
M Macys Inc
KSS Kohl's Corporation
HRB H&R Block, Inc
HOG Harley-Davidson, Inc
HD Home Depot, Inc
FL Foot Locker Inc
CTAS Cintas Corporation
BX Blackstone Group L P
BC Brunswick Corporation
BBY Best Buy Co., Inc
AMGN Amgen Inc
AMD Advanced Micro Devices
This Is Great
If you are like me and have 20 or more years before you plan on touching your investments, times like this make you giddy.
The DOW is back down to 12,500 and now at levels seen since April and another day or two of this will give us levels back to November 2006. Why then is this great?
1- The economy is still strong and growing. Profits are still rising at a double digit rate and unemployment is at historically low levels. GDP for Q2 will be revised up and there is no recession on the horizon.
2- Cash rich companies are buying back shares in unprecedented numbers.
3- Over 50% of S&P 500 companies profits come from overseas where economies are surging.
What does it mean? The underlying fundamentals are strong which means eventually share prices are going to turn around. What we have is a credit problem and when traders cannot sell off this debt, they sell what they can which is shares companies like in Goldman Sachs (GS), Dow Chemical (DOW) and Altria (MO). I mean, if we look at it logically are the events of the last month going to stop people from smoking OR will it effect Altria's balance sheet which is laughingly unlevered? No.
So, are my picks down? Yup, so what?!? Paper losses mean nothing to me, purchase prices do at this point in my investing career. Market disturbances like this that cause mis-pricing of equities like we see now are great for me. What I am busy doing now is lowering my cost basis for recent purchases like Goldman, Wal-Mart (WMT) and Citigroup (C). The last time I could have bought shares of Goldman and Dow Chemical at these levels was Sept. 2006, Citigroup , February of 2006 and you have to go back to March of 2006 to buy Sears Holdings (SHLD) at these prices. The sale price if Sears now is so low that Chairman Eddie Lampert is tripping over himself to buyback shares. He has bought as many shares back in the last month as he had almost the entire last year!
In short, the world is not coming to an end and the economy is still very strong. Keep buying...
You know, if Buffett and Lampert are buying more shares every quarter, why aren't you?
The DOW is back down to 12,500 and now at levels seen since April and another day or two of this will give us levels back to November 2006. Why then is this great?
1- The economy is still strong and growing. Profits are still rising at a double digit rate and unemployment is at historically low levels. GDP for Q2 will be revised up and there is no recession on the horizon.
2- Cash rich companies are buying back shares in unprecedented numbers.
3- Over 50% of S&P 500 companies profits come from overseas where economies are surging.
What does it mean? The underlying fundamentals are strong which means eventually share prices are going to turn around. What we have is a credit problem and when traders cannot sell off this debt, they sell what they can which is shares companies like in Goldman Sachs (GS), Dow Chemical (DOW) and Altria (MO). I mean, if we look at it logically are the events of the last month going to stop people from smoking OR will it effect Altria's balance sheet which is laughingly unlevered? No.
So, are my picks down? Yup, so what?!? Paper losses mean nothing to me, purchase prices do at this point in my investing career. Market disturbances like this that cause mis-pricing of equities like we see now are great for me. What I am busy doing now is lowering my cost basis for recent purchases like Goldman, Wal-Mart (WMT) and Citigroup (C). The last time I could have bought shares of Goldman and Dow Chemical at these levels was Sept. 2006, Citigroup , February of 2006 and you have to go back to March of 2006 to buy Sears Holdings (SHLD) at these prices. The sale price if Sears now is so low that Chairman Eddie Lampert is tripping over himself to buyback shares. He has bought as many shares back in the last month as he had almost the entire last year!
In short, the world is not coming to an end and the economy is still very strong. Keep buying...
You know, if Buffett and Lampert are buying more shares every quarter, why aren't you?
Buffett to Lenders: "It's Their Problem"
"If lenders lent money that they are not going to get paid back, that's their problem, frankly", said Berkshire Hathaway's (BRK.A)Warren Buffett yesterday. Finally, somebody gets it and is not calling for the Fed to bail lenders out.
Last week I said "The Fed will not bail out lenders that made dumb loans and now are in trouble. Bernanke is going to let the market work (as he should) and it is already taking care of things. Bad credit is harder to get, and hopefully credit standards return to what they should be. Both of these are good things long term."
Back in March I posted abut the loose lending practices that have gotten lender in the mess they are in today. In it I detailed the "No Documentation" loan types that had proliferated the past few years and said:
"What is shocking is the justifications they give for those who these loans "may be right for". You are buying a house, you are borrowing money from a bank to do so. The expectation is that you will need to have money to put down on it and actually be able to demonstrate an ability to pay the bank back. The phrase "take my word for it" should never enter the conversation. It did though and that is the genesis of the current situation. When buying a $500,000 house involved less paperwork than buying a Ford Escort, red flags ought to have been going up.
In 2005 and 2006 the number of both mortgage brokers and real estate agents hit historic highs. A mortgage is a commodity, give me a price and a rate and I will choose a broker. There is very little a broker can do to distinguish themselves from each other. With so many brokers and a limited number of qualified mortgage applicants, brokers had to find new applicants. The only place for them to go was the pool of people who under the current rules not only did not qualify for a mortgage would not receive credit from a bookie were they to ask. The new motto was "If they don't fit under the current set of rules, change the rules". So they did. What they failed to realize was, the rules were there for a reason, they worked. We are now realizing that people who do not want to provide proof of what they do for a living, how they earn income, what that income actually is or where their down payment is coming from are not doing so out of some symbolic "privacy concern", but because what they are saying is quite frankly, bull. Who has trouble "verifying income"? Crack dealers? Illegal immigrants working under the table and not paying taxes? Contractors who cheat on their taxes? If you want my money, prove you can pay it back or take a walk and let the next person in line step up, unless of course the line is small, the others are just like you and we really need to give you the money... thus the mortgage industry dilemma the past few years. Like I have said more than a few times before, the surprise here is not that this happened, it is that it did not happen sooner."
Maybe additional calmer heads will come out and stop calling on the Fed to bail out idiots and drown out the Jim Cramers of the world who are running around screeching like an 18 year old girl who got ketchup on their prom dress. Yes things may get worse but as Buffett also said yesterday "there will be real opportunities then"...
Translation? Get ready to buy
Last week I said "The Fed will not bail out lenders that made dumb loans and now are in trouble. Bernanke is going to let the market work (as he should) and it is already taking care of things. Bad credit is harder to get, and hopefully credit standards return to what they should be. Both of these are good things long term."
Back in March I posted abut the loose lending practices that have gotten lender in the mess they are in today. In it I detailed the "No Documentation" loan types that had proliferated the past few years and said:
"What is shocking is the justifications they give for those who these loans "may be right for". You are buying a house, you are borrowing money from a bank to do so. The expectation is that you will need to have money to put down on it and actually be able to demonstrate an ability to pay the bank back. The phrase "take my word for it" should never enter the conversation. It did though and that is the genesis of the current situation. When buying a $500,000 house involved less paperwork than buying a Ford Escort, red flags ought to have been going up.
In 2005 and 2006 the number of both mortgage brokers and real estate agents hit historic highs. A mortgage is a commodity, give me a price and a rate and I will choose a broker. There is very little a broker can do to distinguish themselves from each other. With so many brokers and a limited number of qualified mortgage applicants, brokers had to find new applicants. The only place for them to go was the pool of people who under the current rules not only did not qualify for a mortgage would not receive credit from a bookie were they to ask. The new motto was "If they don't fit under the current set of rules, change the rules". So they did. What they failed to realize was, the rules were there for a reason, they worked. We are now realizing that people who do not want to provide proof of what they do for a living, how they earn income, what that income actually is or where their down payment is coming from are not doing so out of some symbolic "privacy concern", but because what they are saying is quite frankly, bull. Who has trouble "verifying income"? Crack dealers? Illegal immigrants working under the table and not paying taxes? Contractors who cheat on their taxes? If you want my money, prove you can pay it back or take a walk and let the next person in line step up, unless of course the line is small, the others are just like you and we really need to give you the money... thus the mortgage industry dilemma the past few years. Like I have said more than a few times before, the surprise here is not that this happened, it is that it did not happen sooner."
Maybe additional calmer heads will come out and stop calling on the Fed to bail out idiots and drown out the Jim Cramers of the world who are running around screeching like an 18 year old girl who got ketchup on their prom dress. Yes things may get worse but as Buffett also said yesterday "there will be real opportunities then"...
Translation? Get ready to buy
Thursday's Upgrades and Downgrades
UPGRADES
Intel INTC Credit Suisse Underperform » Outperform
Commercial Metals CMC CIBC Wrld Mkts Sector Perform » Sector Outperform
MFA Mortgage MFA JP Morgan Neutral » Overweight
CBL & Assoc CBL JP Morgan Neutral » Overweight
Emergency Medical Services EMS Jefferies & Co Hold » Buy
Dril-Quip DRQ Jefferies & Co Hold » Buy
AEterna Zentaris AEZS RBC Capital Mkts Sector Perform » Outperform
MasterCard MA AG Edwards Hold » Buy
Universal Technical Institute UTI Sun Trust Rbsn Humphrey Neutral » Buy
JDS Uniphase JDSU BMO Capital Markets Underperform » Market Perform
Perot Systems PER Stifel Nicolaus Hold » Buy
Tessera Tech TSRA Matrix Research Hold » Buy
Koppers Holdings KOP Matrix Research Buy » Strong Buy
Penn Natl Gaming PENN Nollenberger Capital Neutral » Buy
DOWNGRADES
MFA Mortgage MFA Bear Stearns Outperform » Peer Perform
Thornburg Mortg TMA AG Edwards Hold » Sell
KKR Financial KFN Friedman Billings Outperform » Mkt Perform
Quest Diagnostics DGX Matrix Research Buy » Hold
Orbcomm ORBC Cowen & Co Outperform » Neutral
Midland Co MLAN KeyBanc Capital Mkts / McDonald Buy » Hold
"Fast Money" for Thursday
Here are Thursday's picks and Wednesday's results
Thursday's Picks
Pete Najarian said to short E*Trade (ETFC). Open $13.91
For the third day in a row Guy Adami recommended shorting The Dow with Short Dow 30 Proshares (DOG). Open $61.78
Tim Seymour liked buying Mobile TeleSystems OJSC (MBT). Open $58.70
Jeff Macke didn't "want to buy a darn thing in this tape".
Wednesday's Results
Jeff Macke recommended covering if you’re short Home Depot (HD). Open $33.52 Close $33.36 Loss $.16
Pete Najarian told people to short Countrywide Financial (CFC). Open $24.46 Close $21.29 Gain $3.17
For the second day in a row, Guy Adami thought investors should bet against the Dow by buying the Short Dow30 Proshares (DOG). Open $60.98 Close $61.78 Gain $.80
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 15-11 Gain $26.72
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-15 Gain $3.46
Pete Najarian= 10-7 Gain $21.96
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Thursday's Picks
Pete Najarian said to short E*Trade (ETFC). Open $13.91
For the third day in a row Guy Adami recommended shorting The Dow with Short Dow 30 Proshares (DOG). Open $61.78
Tim Seymour liked buying Mobile TeleSystems OJSC (MBT). Open $58.70
Jeff Macke didn't "want to buy a darn thing in this tape".
Wednesday's Results
Jeff Macke recommended covering if you’re short Home Depot (HD). Open $33.52 Close $33.36 Loss $.16
Pete Najarian told people to short Countrywide Financial (CFC). Open $24.46 Close $21.29 Gain $3.17
For the second day in a row, Guy Adami thought investors should bet against the Dow by buying the Short Dow30 Proshares (DOG). Open $60.98 Close $61.78 Gain $.80
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 15-11 Gain $26.72
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-15 Gain $3.46
Pete Najarian= 10-7 Gain $21.96
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Wednesday, August 15, 2007
Wednesday's 52 Week Lows
Dow down 5% in 5 days......some big names are making the list now
WMT Wal-Mart Stores, Inc
USG USG Corporation
TE TECO Energy, Inc
SKX Skechers U S A Inc
SCT Scottish Re Group Limited
SCSS Select Comfort Corp
RAIL Freightcar Amer Inc
NWL Newell Rubbermaid Inc
NVS Novartis A G
MAS Masco Corporation
M Macys Inc
LIZ Liz Claiborne, Inc
LEH Lehman Brothers Holdings
HOG Harley-Davidson, Inc
FL Foot Locker Inc
DAL Delta Air Lines Inc Del
CHS Chico's FAS Inc
CFC Countrywide Financial
BOW Bowater Incorporated
AMD Advanced Micro Devices
WMT Wal-Mart Stores, Inc
USG USG Corporation
TE TECO Energy, Inc
SKX Skechers U S A Inc
SCT Scottish Re Group Limited
SCSS Select Comfort Corp
RAIL Freightcar Amer Inc
NWL Newell Rubbermaid Inc
NVS Novartis A G
MAS Masco Corporation
M Macys Inc
LIZ Liz Claiborne, Inc
LEH Lehman Brothers Holdings
HOG Harley-Davidson, Inc
FL Foot Locker Inc
DAL Delta Air Lines Inc Del
CHS Chico's FAS Inc
CFC Countrywide Financial
BOW Bowater Incorporated
AMD Advanced Micro Devices
Thinking Like Lampert
In mid May I wrote a post about selling my Citigroup shares to Sears Holdings (SHLD) Chairman and ESL leader Eddie Lampert.
In it I lamented the fact that I was thinking along the same lines as Lampert but did not stick to my guns and bailed on Citi (C) shares at the same time Lampert was buying them. I vowed not to make the same mistake again and re-entered my Citi position. This turned out to be a great test as recent events (has anyone heard anything about a credit market issue?) have caused my Citi position to drop from $54 to todays $45 (Lampert's original entry price was estimated to be around $54 a share). Rather than cutting my losses last week (August 9th) I picked up more shares at $47.57 in part of my vow not to make the same mistake twice and I do not mind getting paid a 4.6% and growing dividend to wait. At the same time I picked up more Sears Holdings shares some 30% off it's high from earlier this year at $130 and change.
I took a large amount of satisfaction in the news that Lampert boosted his stake in Citigroup by 63 percent during Q2. In a SEC filing, ESL Investments held 24.8 million Citigroup shares at the end Q2, up from 15.2 million shares during the first quarter. Compound this with the news of the additional $1.5 billion Sears share buyback plan announced Monday and it has been a very good couple weeks for my investment reasoning.
Since ESL was founded in 1988, Lampert has lost money only twice, in 1990 and 2002 (he followed the 2002 losses with 45% and 54% returns in 2003 and 2004) and has treated clients to annualized returns of 24%.
Based on his history, Lampert will not make any public proclamations about the job Citi CEO Chuck Prince is doing and whether or not he should keep it. He works behind the scenes and this is probably part of the reason he is almost always able to get the changes he wants enacted with little push back from management.
Time will tell how this works out I am very optimistic that based on his track record and my thinking along the same lines recently (after a very irritating lesson earlier in the year) that these investment will turn out very well indeed.
In it I lamented the fact that I was thinking along the same lines as Lampert but did not stick to my guns and bailed on Citi (C) shares at the same time Lampert was buying them. I vowed not to make the same mistake again and re-entered my Citi position. This turned out to be a great test as recent events (has anyone heard anything about a credit market issue?) have caused my Citi position to drop from $54 to todays $45 (Lampert's original entry price was estimated to be around $54 a share). Rather than cutting my losses last week (August 9th) I picked up more shares at $47.57 in part of my vow not to make the same mistake twice and I do not mind getting paid a 4.6% and growing dividend to wait. At the same time I picked up more Sears Holdings shares some 30% off it's high from earlier this year at $130 and change.
I took a large amount of satisfaction in the news that Lampert boosted his stake in Citigroup by 63 percent during Q2. In a SEC filing, ESL Investments held 24.8 million Citigroup shares at the end Q2, up from 15.2 million shares during the first quarter. Compound this with the news of the additional $1.5 billion Sears share buyback plan announced Monday and it has been a very good couple weeks for my investment reasoning.
Since ESL was founded in 1988, Lampert has lost money only twice, in 1990 and 2002 (he followed the 2002 losses with 45% and 54% returns in 2003 and 2004) and has treated clients to annualized returns of 24%.
Based on his history, Lampert will not make any public proclamations about the job Citi CEO Chuck Prince is doing and whether or not he should keep it. He works behind the scenes and this is probably part of the reason he is almost always able to get the changes he wants enacted with little push back from management.
Time will tell how this works out I am very optimistic that based on his track record and my thinking along the same lines recently (after a very irritating lesson earlier in the year) that these investment will turn out very well indeed.
Wednesday's Upgrades and Downgrades
Here are the calls
UPGRADES
Fossil FOSL Piper Jaffray Market Perform » Outperform
Methanex MEOH CIBC Wrld Mkts Sector Underperform » Sector Perform
Wash. Federal WFSL Friedman Billings Mkt Perform » Outperform
Allegheny Tech ATI Davenport Buy » Strong Buy
A.M. Castle CAS Davenport Buy » Strong Buy
Carpenter Tech CRS Davenport Buy » Strong Buy
RF Micro Device RFMD Charter Equity Mkt Perform » Buy
Domtar UFS DA Davidson Neutral » Buy
Insituform Tech INSU Morgan Joseph Sell » Hold
OmniVision OVTI Pacific Growth Equities Neutral » Buy
Lexmark LXK FTN Midwest Sell » Neutral
Leap Wireless LEAP Stanford Research Hold » Buy
DOWNGRADES
Northstar Realty NRF Lehman Brothers Overweight » Equal-weight
Newcastle Investment NCT Lehman Brothers Overweight » Equal-weight
KKR Financial KFN Lehman Brothers Overweight » Equal-weight
Arbor Realty Trust ABR Lehman Brothers Overweight » Equal-weight
Thornburg Mortg TMA Citigroup Hold » Sell
UBS AG UBS Credit Suisse Outperform » Neutral
Daktronics DAKT Janco Partners Accumulate » Mkt Perform
Pope & Talbot POP DA Davidson Neutral » Underperform
Sirenza Micro SMDI Morgan Keegan Outperform » Mkt Perform
Haverty Furniture HVT Morgan Keegan Outperform » Mkt Perform
Thornburg Mortg TMA Piper Jaffray Market Perform » Underperform
Thornburg Mortg TMA Jefferies & Co Hold » Underperform
Avery Dennison AVY Matrix Research Hold » Sell
UPGRADES
Fossil FOSL Piper Jaffray Market Perform » Outperform
Methanex MEOH CIBC Wrld Mkts Sector Underperform » Sector Perform
Wash. Federal WFSL Friedman Billings Mkt Perform » Outperform
Allegheny Tech ATI Davenport Buy » Strong Buy
A.M. Castle CAS Davenport Buy » Strong Buy
Carpenter Tech CRS Davenport Buy » Strong Buy
RF Micro Device RFMD Charter Equity Mkt Perform » Buy
Domtar UFS DA Davidson Neutral » Buy
Insituform Tech INSU Morgan Joseph Sell » Hold
OmniVision OVTI Pacific Growth Equities Neutral » Buy
Lexmark LXK FTN Midwest Sell » Neutral
Leap Wireless LEAP Stanford Research Hold » Buy
DOWNGRADES
Northstar Realty NRF Lehman Brothers Overweight » Equal-weight
Newcastle Investment NCT Lehman Brothers Overweight » Equal-weight
KKR Financial KFN Lehman Brothers Overweight » Equal-weight
Arbor Realty Trust ABR Lehman Brothers Overweight » Equal-weight
Thornburg Mortg TMA Citigroup Hold » Sell
UBS AG UBS Credit Suisse Outperform » Neutral
Daktronics DAKT Janco Partners Accumulate » Mkt Perform
Pope & Talbot POP DA Davidson Neutral » Underperform
Sirenza Micro SMDI Morgan Keegan Outperform » Mkt Perform
Haverty Furniture HVT Morgan Keegan Outperform » Mkt Perform
Thornburg Mortg TMA Piper Jaffray Market Perform » Underperform
Thornburg Mortg TMA Jefferies & Co Hold » Underperform
Avery Dennison AVY Matrix Research Hold » Sell
"Fast Money" for Wednesday
Here are todays calls and yesterday's results
Wednesday's Picks
Jeff Macke recommended covering if you’re short Home Depot (HD). Open $33.52
Pete Najarian told people to short Countrywide Financial (CFC). Open $24.46
For the second day in a row, Guy Adami thought investors should bet against the Dow by buying the Short Dow30 Proshares (DOG). Open $60.98
Tuesday's Results
Jeff Macke thought investors should buy the Retail HOLDRS (RTH). Open $99.75 Close $96.41 Loss $3.34
Pete Najarian recommended shorting Countrywide Financial (CFC). Open $26.61 close $24.46 Gain $2.15
Guy Adami preferred to get short the whole DJIA by buying the Short Dow30 Proshares (DOG). Open $60.17 Close $60.98 Gain $.81
Eric Bolling liked streetTRACKS Gold Trust (GLD). Open $66.26 Close $66.29 Gain $.03
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 14-11 Gain $25.92
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-14 Gain $3.62
Pete Najarian= 9-7 Gain $18.79
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Wednesday's Picks
Jeff Macke recommended covering if you’re short Home Depot (HD). Open $33.52
Pete Najarian told people to short Countrywide Financial (CFC). Open $24.46
For the second day in a row, Guy Adami thought investors should bet against the Dow by buying the Short Dow30 Proshares (DOG). Open $60.98
Tuesday's Results
Jeff Macke thought investors should buy the Retail HOLDRS (RTH). Open $99.75 Close $96.41 Loss $3.34
Pete Najarian recommended shorting Countrywide Financial (CFC). Open $26.61 close $24.46 Gain $2.15
Guy Adami preferred to get short the whole DJIA by buying the Short Dow30 Proshares (DOG). Open $60.17 Close $60.98 Gain $.81
Eric Bolling liked streetTRACKS Gold Trust (GLD). Open $66.26 Close $66.29 Gain $.03
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 14-11 Gain $25.92
Bolling= 9-11 Loss $15.26
John Najarian= 13-3 Gain $15.54
Macke= 20-14 Gain $3.62
Pete Najarian= 9-7 Gain $18.79
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Tuesday, August 14, 2007
Tuesday's 52 Week Lows
Here is the list that hit a new 52 week low
TRB Tribune Company
TMA Thornburg Mortgage
TBL The Timberland Company
SNY Sanofi Aventis
SPLS Staples Inc
POP Pope & Talbot, Inc
PMI The PMI Group, Inc
NYT New York Times Company
NXXI Nutrition 21 Inc
NVS Novartis A G
MCO Moodys Corp
JOE St. Joe Company
DAL Delta Air Lines Inc Del
CTRN Citi Trends Inc
ALU Alcatel-Lucent
TRB Tribune Company
TMA Thornburg Mortgage
TBL The Timberland Company
SNY Sanofi Aventis
SPLS Staples Inc
POP Pope & Talbot, Inc
PMI The PMI Group, Inc
NYT New York Times Company
NXXI Nutrition 21 Inc
NVS Novartis A G
MCO Moodys Corp
JOE St. Joe Company
DAL Delta Air Lines Inc Del
CTRN Citi Trends Inc
ALU Alcatel-Lucent
Home Depot: Supply Sale and Buyback Soon Dead
Home Depot (HD) released earnings today and it was just ugly. It also will lead to the death of the Supply division and a drastic reduction of the massive buyback that was announced because without one, the other cannot happen. Even if I am wrong and they do manage to sell Supply, it will be for such a reduced price that the buyback will still be reduced even father than already announced.
First, earnings. 2007 Q2 consolidated net earnings of $1.6 billion, or $0.81 per share, compared with $1.9 billion, or $0.90 per share, last year. Earnings from continuing operations in Q2 were $1.5 billion, or $0.77 per share, compared to fiscal 2006 Q2 earnings from continuing operations of $1.7 billion, or $0.82 per share. The Company is now breaking out results of HD Supply as a discontinued operation.
Sales for the Q2 were $22.2 billion, a 1.8 percent decrease from Q2 2006, reflecting negative same store sales of 5.2%.
HD reiterated in its outlook that it expects its EPS from continuing operations to decline by 12-15% for 2007 and EPS is expected to decline by 15-18% for 2007.
Home Depot said that it will "continue to assess financial market conditions, and the impact of any restructured HD Supply transaction to sell its supply business, or failure to complete that transaction, on its overall recapitalization plan and on the terms of the tender offer part of that plan."
CFO Carol Tome said the company had previously sized its recapitalization plan based on $10.3 billion of anticipated proceeds from the sale of HD Supply and $12 billion of debt finance to be raised "as soon as practical". "If we have no proceeds from HD Supply -- and I'm not saying that's the case -- but if that were to happen our recap would be reduced to $12 billion," said Chief Financial Officer Carol Tome.
Well, I would count on the reduction. Let's look at it. Supply profits fell $22 million last quarter so the sale price reduction the PE guys will want will be substantial. Also, they can walk away for $300 million if Home Depot does not want to play nice so they are in a position to push for a substantial price drop. They have Home Depot by the nuts. Does anyone care to wager when "as soon as practicable" will be for the $12 billion of debt? With Home Depot's credit rating dropping fast and looking to go lower and with debt markets becoming tighter, that $12 billion may not be "practicable" for years.
All in all Home Depot is in a self imposed mess trying to placate irrational investors. I bet they now long for the days when Nardelli ran things. He may have been unlikable and arrogant, but he got results. He doubled sales and the number of store operations while expanding into Mexico and China. Under him HD delivered more than 20 percent EPS growth for four consecutive years and more than quintupled its dividend to 90 cents a share.
From early 2003 to early 2006, Nardelli took HD shares from $21 to $43. When the bottom began to fall out of housing, HD dropped to $33 August of last year. When he left at the beginning of 2007, the stock was back at $40. Shares today sit at $33.
Be careful what you wish for...
First, earnings. 2007 Q2 consolidated net earnings of $1.6 billion, or $0.81 per share, compared with $1.9 billion, or $0.90 per share, last year. Earnings from continuing operations in Q2 were $1.5 billion, or $0.77 per share, compared to fiscal 2006 Q2 earnings from continuing operations of $1.7 billion, or $0.82 per share. The Company is now breaking out results of HD Supply as a discontinued operation.
Sales for the Q2 were $22.2 billion, a 1.8 percent decrease from Q2 2006, reflecting negative same store sales of 5.2%.
HD reiterated in its outlook that it expects its EPS from continuing operations to decline by 12-15% for 2007 and EPS is expected to decline by 15-18% for 2007.
Home Depot said that it will "continue to assess financial market conditions, and the impact of any restructured HD Supply transaction to sell its supply business, or failure to complete that transaction, on its overall recapitalization plan and on the terms of the tender offer part of that plan."
CFO Carol Tome said the company had previously sized its recapitalization plan based on $10.3 billion of anticipated proceeds from the sale of HD Supply and $12 billion of debt finance to be raised "as soon as practical". "If we have no proceeds from HD Supply -- and I'm not saying that's the case -- but if that were to happen our recap would be reduced to $12 billion," said Chief Financial Officer Carol Tome.
Well, I would count on the reduction. Let's look at it. Supply profits fell $22 million last quarter so the sale price reduction the PE guys will want will be substantial. Also, they can walk away for $300 million if Home Depot does not want to play nice so they are in a position to push for a substantial price drop. They have Home Depot by the nuts. Does anyone care to wager when "as soon as practicable" will be for the $12 billion of debt? With Home Depot's credit rating dropping fast and looking to go lower and with debt markets becoming tighter, that $12 billion may not be "practicable" for years.
All in all Home Depot is in a self imposed mess trying to placate irrational investors. I bet they now long for the days when Nardelli ran things. He may have been unlikable and arrogant, but he got results. He doubled sales and the number of store operations while expanding into Mexico and China. Under him HD delivered more than 20 percent EPS growth for four consecutive years and more than quintupled its dividend to 90 cents a share.
From early 2003 to early 2006, Nardelli took HD shares from $21 to $43. When the bottom began to fall out of housing, HD dropped to $33 August of last year. When he left at the beginning of 2007, the stock was back at $40. Shares today sit at $33.
Be careful what you wish for...
Wal-Mart: Can We Get A Lampert Buyback?
Yesterday I said the only thing I really cared about was the number of shares Wal-Mart (WMT) bought back in the last three months and a minimum of 22 million shares was the number I was looking for. The results were released today and the share count was reduce from 4,128,0000 shares to 4,102,000 in the last three months for a total 26 million share reduction.
Good, but for some reason I am not totally happy. The reason? They updated their full year guidance for earnings per share from continuing operations for 2008, which now is estimated to be between $3.05 and $3.13. This is down from the initial forecast of between $3.15 and $3.23 per share. Now, this is only a 3% reduction and the market is over reacting today to it like they have been everything else the past month but bad news is bad news.
Here is the thing. Wal-Mart still sits on $6 billion in cash. Why aren't they picking up shares like Eddie Lampert is at Sears Holdings (SHLD)? One would think that Lee Scott would want to announce anything but a EPS decrease at this point. Any goodwill he got at the annual meeting with the shareholder friendly announcements he made is just about wiped out today. Why not accelerate the share repurchases to avoid that announcement? It is not like shares have run up in value to level not seen before, we have seen these levels for the majority of the 21st century.
Wal-Mart announced a $15 billion repurchase plan in June. If they bought back another $6 billion in the remainder of this year, that would reduce the share count by.... 3%! Where have we seen that number before? Oh, yeah, it is equal to the earnings reduction announced today. They could have avoided today's announcement. Now, there is the possibility that Wal-Mart may be doing the old "reduce expectations and then beat them" game but based on it's history, that is not very likely.
I think I am staring to wish Lee Scott was not there again. It has been an 18 month turnaround that looks to have stalled.
Next batter...
Good, but for some reason I am not totally happy. The reason? They updated their full year guidance for earnings per share from continuing operations for 2008, which now is estimated to be between $3.05 and $3.13. This is down from the initial forecast of between $3.15 and $3.23 per share. Now, this is only a 3% reduction and the market is over reacting today to it like they have been everything else the past month but bad news is bad news.
Here is the thing. Wal-Mart still sits on $6 billion in cash. Why aren't they picking up shares like Eddie Lampert is at Sears Holdings (SHLD)? One would think that Lee Scott would want to announce anything but a EPS decrease at this point. Any goodwill he got at the annual meeting with the shareholder friendly announcements he made is just about wiped out today. Why not accelerate the share repurchases to avoid that announcement? It is not like shares have run up in value to level not seen before, we have seen these levels for the majority of the 21st century.
Wal-Mart announced a $15 billion repurchase plan in June. If they bought back another $6 billion in the remainder of this year, that would reduce the share count by.... 3%! Where have we seen that number before? Oh, yeah, it is equal to the earnings reduction announced today. They could have avoided today's announcement. Now, there is the possibility that Wal-Mart may be doing the old "reduce expectations and then beat them" game but based on it's history, that is not very likely.
I think I am staring to wish Lee Scott was not there again. It has been an 18 month turnaround that looks to have stalled.
Next batter...
Another Starbucks Competitor: Proctor & Gamble?
As if Starbucks (SBUX) did not have enough problems dealing with the competition for store traffic, now they have more competition for shelf space.
Proctor & Gamble (PG) and Dunkin' Donuts are teaming up to distribute Dunkin' Donuts coffee in big retailers nationwide. They will distribute the coffee through retailers such as Wal-Mart (WMT), Kroger (KR), Costco (COST), and even CVS Caremark (CVS) across the country.
The move for Dunkin', whose stores are mostly located in the Northeast is a great way to get it's product to people when they are not out AND introduce people to it in areas Dunkin' plans to expand to. It is yet another area that Starbucks is seeing it's hold on the US coffee market dwindle, fast. The impact here on Starbucks will be felt soon as grocery shoppers are far less likely to pay the premium Starbucks wants for it's coffee without the "Starbucks experience" that presumes to still go with it and will be sorely lacking inside a Kroger supermarket. They are far more likely to go for the alternative, a very good Dunkin' coffee that will be a fraction of the price (and they will probably have a coupon in their hand for it).
Is this a huge deal? Will it single handedly wreck the next quarter for Starbucks? No, and no. BUT, and this is a very big but, it is yet another area Starbucks used to have to itself that it now must share with a competitor. So far, Starbucks has not done very well adapting to the encroachment of it's turf by a competitor. They have had no effective answer to improved coffee offerings at McDonald's (MCD) and have watched customers defect to the convenience and affordability the Golden Arches offer. Now, it must share the space in grocery chains with another quality competitor also offering their product much more affordably.
Often, several little things add up to a big one. This is one of those times.
Proctor & Gamble (PG) and Dunkin' Donuts are teaming up to distribute Dunkin' Donuts coffee in big retailers nationwide. They will distribute the coffee through retailers such as Wal-Mart (WMT), Kroger (KR), Costco (COST), and even CVS Caremark (CVS) across the country.
The move for Dunkin', whose stores are mostly located in the Northeast is a great way to get it's product to people when they are not out AND introduce people to it in areas Dunkin' plans to expand to. It is yet another area that Starbucks is seeing it's hold on the US coffee market dwindle, fast. The impact here on Starbucks will be felt soon as grocery shoppers are far less likely to pay the premium Starbucks wants for it's coffee without the "Starbucks experience" that presumes to still go with it and will be sorely lacking inside a Kroger supermarket. They are far more likely to go for the alternative, a very good Dunkin' coffee that will be a fraction of the price (and they will probably have a coupon in their hand for it).
Is this a huge deal? Will it single handedly wreck the next quarter for Starbucks? No, and no. BUT, and this is a very big but, it is yet another area Starbucks used to have to itself that it now must share with a competitor. So far, Starbucks has not done very well adapting to the encroachment of it's turf by a competitor. They have had no effective answer to improved coffee offerings at McDonald's (MCD) and have watched customers defect to the convenience and affordability the Golden Arches offer. Now, it must share the space in grocery chains with another quality competitor also offering their product much more affordably.
Often, several little things add up to a big one. This is one of those times.
"Fast Money" For Tuesday
Here are today's picks and Monday's results.
TODAY'S PICKS
Jeff Macke thought investors should buy the Retail HOLDRS (RTH). Open $99.75
Pete Najarian recommended shorting Countrywide Financial (CFC). Open $26.61
Guy Adami preferred to get short the whole DJIA by buying the Short Dow30 Proshares (DOG). Open $60.17
Eric Bolling liked streetTRACKS Gold Trust (GLD). Open $66.26
MONDAY'S RESULTS
Jeff Macke liked Callaway Golf (ELY). Open $17.72 Close $17.78 Gain $.06
Pete Najarian preferred Ivanhoe Mines (IVN). Open $12.46 Close $12.75 Gain $.29
Guy Adami said Hilton (HLT) is a buy. Open $43.91 Close $44.25 Gain $1.34
Tim Seymour recommended US Steel (X). $86.66 Close $87.72 Gain $1.06
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 13-11 Gain $25.11
Bolling= 9-10 Loss $15.29
John Najarian= 13-3 Gain $15.54
Macke= 20-13 Gain $6.96
Pete Najarian= 8-7 Gain $16.64
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
TODAY'S PICKS
Jeff Macke thought investors should buy the Retail HOLDRS (RTH). Open $99.75
Pete Najarian recommended shorting Countrywide Financial (CFC). Open $26.61
Guy Adami preferred to get short the whole DJIA by buying the Short Dow30 Proshares (DOG). Open $60.17
Eric Bolling liked streetTRACKS Gold Trust (GLD). Open $66.26
MONDAY'S RESULTS
Jeff Macke liked Callaway Golf (ELY). Open $17.72 Close $17.78 Gain $.06
Pete Najarian preferred Ivanhoe Mines (IVN). Open $12.46 Close $12.75 Gain $.29
Guy Adami said Hilton (HLT) is a buy. Open $43.91 Close $44.25 Gain $1.34
Tim Seymour recommended US Steel (X). $86.66 Close $87.72 Gain $1.06
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 13-11 Gain $25.11
Bolling= 9-10 Loss $15.29
John Najarian= 13-3 Gain $15.54
Macke= 20-13 Gain $6.96
Pete Najarian= 8-7 Gain $16.64
Seymore= 3-1 Gain $2.15
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Tuesday's Upgrades and Downgrades
UPGRADES
Qwest Q Lehman Brothers Equal-weight » Overweight
Aspen Insurance AHL Credit Suisse Neutral » Outperform
Websense WBSN JP Morgan Underweight » Overweight
RF Micro Device RFMD Citigroup Hold » Buy
Assured Guaranty AGO Citigroup Hold » Buy
Gap Inc GPS CL King Neutral » Strong Buy
Weyerhaeuser WY McAdams,Wright,Ragen Hold » Buy
Charlotte Russe CHIC B. Riley & Co Neutral » Buy
Top Tankers TOPT Cantor Fitzgerald Hold » Buy
Precision Drilling PDS RBC Capital Mkts Sector Perform » Outperform
Amgen AMGN Bernstein Mkt Perform » Outperform
Comerica CMA Deutsche Securities Sell » Hold
CF Industries CF Citigroup Hold » Buy
Dreamworks Animation DWA Sanders Morris Harris Neutral » Buy
EDS EDS UBS Sell » Neutral
Kellwood KWD Morgan Keegan Underperform » Mkt Perform
BEA Systems BEAS Bear Stearns Peer Perform » Outperform
DOWNGRADES
Alexza Pharma ALXA JMP Securities Mkt Outperform » Mkt Perform
Thornburg Mortg TMA Friedman Billings Mkt Perform » Underperform
Thornburg Mortg TMA RBC Capital Mkts Sector Perform » Underperform
Physicians Formula FACE Wachovia Outperform » Mkt Perform
Thornburg Mortg TMA Credit Suisse Neutral » Underperform
ADA-ES ADES Canaccord Adams Buy » Hold
Alnylam Pharmaceuticals ALNY Needham & Co Buy » Hold
Diebold DBD KeyBanc Capital Mkts / McDonald Buy » Hold
World Fuel Svcs INT Calyon Securities Buy » Add
Monday, August 13, 2007
Sphere Added: Check It Out
I have added a great little item. Simply look for the "Sphere: Related Content" link after each post. A window will pop up giving you links to other posts on the net about the same topic as my post. It is a great way to see other commentary from other bloggers and from mainstream media.
Monday's 52 Week Lows
Wal-Mart Earnings: What To Look For
Wal-Mart (WMT) releases earnings before the bell Tuesday and there really is only one thing I want to know.
First the "skinny" as they say. First Call estimates are $0.77 EPS and $92.75 Billion in revenues. Next quarter's expectations are $0.68 EPS and $92.25 Billion, and fiscal January 2008 estimates are $3.16 EPS and $378.3 Billion revenues. July same store sales were released last week so much of the actual sales and assumed earnings data should already be reflected in the price of shares.
What to look for? How many shares did CEO Lee Scott and Co. repurchase since the $15 billion buyback was announced in June? I had called repeatedly for Lee to be let go to "pursue other opportunities" until the shareholders meeting at which the buyback and the store growth plans were announced. Now I am in a holding pattern.
So, the thing that needs to be known now is, are they following through with the plans? Wal-Mart stock sits about where it was 5 years ago so there will be no excuse about "value" and Wal-Mart sits on $6.5 billion in cash so the funds are there. I would like to see at least a billion dollars (about 22 million shares) in repurchases since the buyback was announced. Anything less would be very disappointing and one would have to wonder if the plans were just announced to buy Lee Scott more time. In short, Lee now has no excuses to be doing anything but shareholder friendly actions.
First the "skinny" as they say. First Call estimates are $0.77 EPS and $92.75 Billion in revenues. Next quarter's expectations are $0.68 EPS and $92.25 Billion, and fiscal January 2008 estimates are $3.16 EPS and $378.3 Billion revenues. July same store sales were released last week so much of the actual sales and assumed earnings data should already be reflected in the price of shares.
What to look for? How many shares did CEO Lee Scott and Co. repurchase since the $15 billion buyback was announced in June? I had called repeatedly for Lee to be let go to "pursue other opportunities" until the shareholders meeting at which the buyback and the store growth plans were announced. Now I am in a holding pattern.
So, the thing that needs to be known now is, are they following through with the plans? Wal-Mart stock sits about where it was 5 years ago so there will be no excuse about "value" and Wal-Mart sits on $6.5 billion in cash so the funds are there. I would like to see at least a billion dollars (about 22 million shares) in repurchases since the buyback was announced. Anything less would be very disappointing and one would have to wonder if the plans were just announced to buy Lee Scott more time. In short, Lee now has no excuses to be doing anything but shareholder friendly actions.
Harley Davidson: "Below MSRP"
We took a quick vacation this past weekend and brought the kids to Storyland in Glenn, NH. If you've never done it and have pre-teen kids, do it, it is a wonderful place.
Anyway, on the way back home we stopped in Meredith, NH to have lunch at Hart's Turkey Farm (another great place). Now, for those of you not familiar with the NH geography, Meredith is right next to Laconia, which is essentially the center of the Harley universe in New England. Laconia is famous for two things, "Bike Week" and well, "Bike Week". My sons and I sauntered over to the massive Harley Davidson (HOG) dealership for a stroll and to look at all the bikes. One thing immediately struck me. Evey single bike in the store, almost 100 had the same tag on it "Priced Below MSRP".
I casually asked a salesperson, "What is going on, why is everything on sale"? He replied "can't move 'em and the new models are coming out". HMMMM
When I asked why he though they were not selling he replied that most people had been upgrading the last few years with two things, house money (home equity) or Harley financing which is now getting harder to get and much more expensive. He said that because of this people are either sticking with the bikes they have much longer and those who are buying, are buying cheaper, lower margin bikes. For instance, a bike that was selling for $10,000 last year was being offered below $8,000 yesterday. Both of these are very bad for Harley.
When I asked what would happen if he can't move the old models when the new ones come out, he said that they will just cut back the new model orders. Even worse for Harley.
Earlier this year when shares were at $70 I recommended waiting until they reached the mid $50's to buy. Based on my weekend visit, they may go lower still. This is a great company that makes a one of a kind product, but, people are not buying it now and that will hurt. I think we may see share prices in the $40's before the year is out.
Be patient and you may get a fantastic buy, later...
Anyway, on the way back home we stopped in Meredith, NH to have lunch at Hart's Turkey Farm (another great place). Now, for those of you not familiar with the NH geography, Meredith is right next to Laconia, which is essentially the center of the Harley universe in New England. Laconia is famous for two things, "Bike Week" and well, "Bike Week". My sons and I sauntered over to the massive Harley Davidson (HOG) dealership for a stroll and to look at all the bikes. One thing immediately struck me. Evey single bike in the store, almost 100 had the same tag on it "Priced Below MSRP".
I casually asked a salesperson, "What is going on, why is everything on sale"? He replied "can't move 'em and the new models are coming out". HMMMM
When I asked why he though they were not selling he replied that most people had been upgrading the last few years with two things, house money (home equity) or Harley financing which is now getting harder to get and much more expensive. He said that because of this people are either sticking with the bikes they have much longer and those who are buying, are buying cheaper, lower margin bikes. For instance, a bike that was selling for $10,000 last year was being offered below $8,000 yesterday. Both of these are very bad for Harley.
When I asked what would happen if he can't move the old models when the new ones come out, he said that they will just cut back the new model orders. Even worse for Harley.
Earlier this year when shares were at $70 I recommended waiting until they reached the mid $50's to buy. Based on my weekend visit, they may go lower still. This is a great company that makes a one of a kind product, but, people are not buying it now and that will hurt. I think we may see share prices in the $40's before the year is out.
Be patient and you may get a fantastic buy, later...
Lampert Gobbling Up Sears Shares
Sears Holdings (SHLD)chairman Eddie Lampert was a busy buyer last month Sears said it spent $800 million in the last month buying back stock and said its board approved an additional $1.5 billion repurchase plan. The company bought back $1.5 billion in stock during the second quarter at an average price of $153.
A $3 billion total buyback, big deal. Well, it is really. $3 billion represent 15% of Sears Holdings current market cap and that is a very big deal. Also, unlike the massive buyback announced at Home Depot (HD), Sears can accomplish it's plans with the cash it has sitting in the bank. There will be no need to tap currently the restrictive equity markets for cash. We can be as certain as we can be that these shares will be repurchased. Based on Lampert's history, it will be sooner rather than later.
Retail is hurting currently and Sears share price is suffering. But, ever the value investor, Lampert is taking Buffett's advice and "buying fear". Eventually thing will turn around and Lampert is using this weakness to buy shares at a discount.
It is important to note that last fall and winter when shares were in the $180's Lampert sat on his hands and did not repurchase shares. Now that prices have dropped, he is jumping in big time.
Have patience shareholders.
A $3 billion total buyback, big deal. Well, it is really. $3 billion represent 15% of Sears Holdings current market cap and that is a very big deal. Also, unlike the massive buyback announced at Home Depot (HD), Sears can accomplish it's plans with the cash it has sitting in the bank. There will be no need to tap currently the restrictive equity markets for cash. We can be as certain as we can be that these shares will be repurchased. Based on Lampert's history, it will be sooner rather than later.
Retail is hurting currently and Sears share price is suffering. But, ever the value investor, Lampert is taking Buffett's advice and "buying fear". Eventually thing will turn around and Lampert is using this weakness to buy shares at a discount.
It is important to note that last fall and winter when shares were in the $180's Lampert sat on his hands and did not repurchase shares. Now that prices have dropped, he is jumping in big time.
Have patience shareholders.
Last Weeks Insider Buys
Monday's Upgrades and Downgrades
Here are this mornings analyst calls
UPGRADES
Sempra Energy SRE Deutsche Securities Hold » Buy
EarthLink ELNK CIBC Wrld Mkts Sector Underperform » Sector Perform
Innophos Holdings IPHS Bear Stearns Peer Perform » Outperform
Overseas Shipholding OSG Credit Suisse Neutral » Outperform
Textron TXT Credit Suisse Neutral » Outperform
Compass Minerals Intl CMP JP Morgan Neutral » Overweight
Sealed Air SEE Banc
of America Sec Neutral » Buy
Pactiv Corp PTV Banc of America Sec Neutral » Buy
CryptoLogic CRYP CIBC Wrld Mkts Sector Underperform » Sector Perform
CIT Group CIT CIBC Wrld Mkts Sector Perform » Sector Outperform
Energizer ENR Sun Trust Rbsn Humphrey Neutral » Buy
DOWNGRADES
Century Casinos CNTY Roth Capital Buy » Hold
Sirenza Micro SMDI CIBC Wrld Mkts Sector Outperform » Sector Perform
DR Horton DHI JP Morgan Overweight » Neutral
AMB Property AMB Citigroup Hold » Sell
ProLogis PLD Citigroup Hold » Sell
Hawaiian Electric HE Lehman Brothers Equal-weight » Underweight
Ruddick Corp RDK Friedman Billings Outperform » Mkt Perform
UPGRADES
Sempra Energy SRE Deutsche Securities Hold » Buy
EarthLink ELNK CIBC Wrld Mkts Sector Underperform » Sector Perform
Innophos Holdings IPHS Bear Stearns Peer Perform » Outperform
Overseas Shipholding OSG Credit Suisse Neutral » Outperform
Textron TXT Credit Suisse Neutral » Outperform
Compass Minerals Intl CMP JP Morgan Neutral » Overweight
Sealed Air SEE Banc
of America Sec Neutral » Buy
Pactiv Corp PTV Banc of America Sec Neutral » Buy
CryptoLogic CRYP CIBC Wrld Mkts Sector Underperform » Sector Perform
CIT Group CIT CIBC Wrld Mkts Sector Perform » Sector Outperform
Energizer ENR Sun Trust Rbsn Humphrey Neutral » Buy
DOWNGRADES
Century Casinos CNTY Roth Capital Buy » Hold
Sirenza Micro SMDI CIBC Wrld Mkts Sector Outperform » Sector Perform
DR Horton DHI JP Morgan Overweight » Neutral
AMB Property AMB Citigroup Hold » Sell
ProLogis PLD Citigroup Hold » Sell
Hawaiian Electric HE Lehman Brothers Equal-weight » Underweight
Ruddick Corp RDK Friedman Billings Outperform » Mkt Perform
"Fast Money" for Monday
Here are today's picks and Friday's results
Monday's Picks
Jeff Macke liked Callaway Golf (ELY). Open $17.72
Pete Najarian preferred Ivanhoe Mines (IVN). Open $12.46
Guy Adami said Hilton (HLT) is a buy. Open $43.91
Tim Seymour recommended US Steel (X). $86.66
Friday's Results
Jeff Macke liked Berkshire Hathaway (BRK) for Warren Buffet. Open $3,643
(a note: this pick will be treated as a $36.43 stock, otherwise any move in it will skew the tracking for Macke way off either up or down) Close $3,625 Loss $.18.
Pete Najarian recommended buying stock in NASDAQ (NDAQ). Open $32.56 Close $31.18 Loss $1.38
Guy Adami thought GlaxoSmithKline (GSK) is a buy. Open $52.45 Close $52.06 Loss $.39
Eric Bolling preferred Hewlett Packard (HPQ). $47.02 Close $47.21 Loss $.19
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-11 Gain $23.77
Bolling= 9-10 Loss $15.29
John Najarian= 13-3 Gain $15.54
Macke= 19-13 Gain $6.90
Pete Najarian= 7-7 Gain $16.33
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Monday's Picks
Jeff Macke liked Callaway Golf (ELY). Open $17.72
Pete Najarian preferred Ivanhoe Mines (IVN). Open $12.46
Guy Adami said Hilton (HLT) is a buy. Open $43.91
Tim Seymour recommended US Steel (X). $86.66
Friday's Results
Jeff Macke liked Berkshire Hathaway (BRK) for Warren Buffet. Open $3,643
(a note: this pick will be treated as a $36.43 stock, otherwise any move in it will skew the tracking for Macke way off either up or down) Close $3,625 Loss $.18.
Pete Najarian recommended buying stock in NASDAQ (NDAQ). Open $32.56 Close $31.18 Loss $1.38
Guy Adami thought GlaxoSmithKline (GSK) is a buy. Open $52.45 Close $52.06 Loss $.39
Eric Bolling preferred Hewlett Packard (HPQ). $47.02 Close $47.21 Loss $.19
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-11 Gain $23.77
Bolling= 9-10 Loss $15.29
John Najarian= 13-3 Gain $15.54
Macke= 19-13 Gain $6.90
Pete Najarian= 7-7 Gain $16.33
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Sunday, August 12, 2007
Lead Paint Litigation Update
Here is the latest update on lead paint proceeding affecting Sherwin Williams (SHW) and NL Industires (NL)
From Jane Genova's Law and More
This post is derived from LexisNexis Mealey's Litigation Report on Lead, Volume 16, Issue # 10, August 2007. Since so many lead-litigation issues, including the ones associated to Chinese imports of children's toys and trinkets, are emerging, I am going to focus this post only on the public nuisance class action ones. I will post on the other important issues later.
Documents associated with this litigation are available from LexisNexis Legal News, or by directly contacting James Cordrey, Legal Editor, James.cordrey@lexisnexis.com, 610-205-1125.
On behalf of readers, I want to thank Mr. Cordrey of LexisNexis for doing such a comprehensive job of tracking developments in lead litigation and providing these updates.
CALIFORNIA:
No surprise, it appears that the landmark April 4th contingency ruling by Judge Jack Komar in County of Santa Clara, et al. v Atlantic Richfield Co., et al. No. 1-00-CV-788657, Calif. Super, Santa Clara Co. isn't going to go down without a fight from the plaintiff.
On June 29th, the California Association of Counties filed an amicus brief in the suit that had been filed against the former lead paint/pigment industry players by a number of CA counties. In that brief they contended that public nuisance actions provide a important function in maintaining the public health.
Specifically, the argument presented by the organizations is:
"Given the importance of public nuisance actions to address both large- and small-scale harms to the public, this court should reverse the trial court's ruling, which would have the practical impact of significantly limiting or eliminating all together the ability of cities and counties to bring public nuisance actions."
In addition, they contend that Judge Komar's decision to abolish contingency fee agreements does not consider the unique aspects of People ex rel. Clancy v. Superior Court [1985] 39 Cal. 3d 740, 743 Shepardize. In that case, Clancy was disqualified based on the egregious, case-specific facts. As a result, the group concludes, the disqualification is not required under case law merely because financial assistance to the government has made the litigation economically feasible.
The economic argument being used is one of "realities" regarding resources. Specifically, the brief contends:
"Regardless of the number of public lawyers available to a public entity, it would be virtually impossible for any city or county in this state to match the resources at the disposal of Atlantic Richfield's counsel and its 625 lawyers"
WISCONSIN:
Another no surprise is that the plaintiff in City of Milwaukee v. NL Industries Inc. No 01-CV-3066, Wis Cir., Milwaukee Co, filed a memo on July 12. That memo supported a motion to change the June 22 special verdict which found the NL Industries do not intentionally cause a public nuisance. The key argument is that the record lacks evidence to support that verdict.
Specifically, the city of Milwaukee contends that errors in they jury instructions warrant changing the verdict. It asks that NL Industries be found to have:
"intentionally caused the public nuisance in this case because NL knew, or was substantially certain, that its sales of - and conduct in - promoting lead paint and pigment were harming children and causing a public health threat."
OHIO:
On August 1, the Ohio Supreme Court ruled that Governor Ted Strickland's veto of a bill prohibiting public nuisance lawsuits against the former lead paint/pigment industry parties was invalid. That was because the 10-day waiting period under which the governor was permitted to take action had passed. State ex rel. The Ohio General Assembly, et al. v. Jennifer Brunner No. 07-0209, Ohio Sup.
The legal team representing Jennifer Brunner has 90 days from that decision to request a stay. If that stay is granted, then there could be a petition for a referendum to put the issue to voters
From Jane Genova's Law and More
This post is derived from LexisNexis Mealey's Litigation Report on Lead, Volume 16, Issue # 10, August 2007. Since so many lead-litigation issues, including the ones associated to Chinese imports of children's toys and trinkets, are emerging, I am going to focus this post only on the public nuisance class action ones. I will post on the other important issues later.
Documents associated with this litigation are available from LexisNexis Legal News, or by directly contacting James Cordrey, Legal Editor, James.cordrey@lexisnexis.com, 610-205-1125.
On behalf of readers, I want to thank Mr. Cordrey of LexisNexis for doing such a comprehensive job of tracking developments in lead litigation and providing these updates.
CALIFORNIA:
No surprise, it appears that the landmark April 4th contingency ruling by Judge Jack Komar in County of Santa Clara, et al. v Atlantic Richfield Co., et al. No. 1-00-CV-788657, Calif. Super, Santa Clara Co. isn't going to go down without a fight from the plaintiff.
On June 29th, the California Association of Counties filed an amicus brief in the suit that had been filed against the former lead paint/pigment industry players by a number of CA counties. In that brief they contended that public nuisance actions provide a important function in maintaining the public health.
Specifically, the argument presented by the organizations is:
"Given the importance of public nuisance actions to address both large- and small-scale harms to the public, this court should reverse the trial court's ruling, which would have the practical impact of significantly limiting or eliminating all together the ability of cities and counties to bring public nuisance actions."
In addition, they contend that Judge Komar's decision to abolish contingency fee agreements does not consider the unique aspects of People ex rel. Clancy v. Superior Court [1985] 39 Cal. 3d 740, 743 Shepardize. In that case, Clancy was disqualified based on the egregious, case-specific facts. As a result, the group concludes, the disqualification is not required under case law merely because financial assistance to the government has made the litigation economically feasible.
The economic argument being used is one of "realities" regarding resources. Specifically, the brief contends:
"Regardless of the number of public lawyers available to a public entity, it would be virtually impossible for any city or county in this state to match the resources at the disposal of Atlantic Richfield's counsel and its 625 lawyers"
WISCONSIN:
Another no surprise is that the plaintiff in City of Milwaukee v. NL Industries Inc. No 01-CV-3066, Wis Cir., Milwaukee Co, filed a memo on July 12. That memo supported a motion to change the June 22 special verdict which found the NL Industries do not intentionally cause a public nuisance. The key argument is that the record lacks evidence to support that verdict.
Specifically, the city of Milwaukee contends that errors in they jury instructions warrant changing the verdict. It asks that NL Industries be found to have:
"intentionally caused the public nuisance in this case because NL knew, or was substantially certain, that its sales of - and conduct in - promoting lead paint and pigment were harming children and causing a public health threat."
OHIO:
On August 1, the Ohio Supreme Court ruled that Governor Ted Strickland's veto of a bill prohibiting public nuisance lawsuits against the former lead paint/pigment industry parties was invalid. That was because the 10-day waiting period under which the governor was permitted to take action had passed. State ex rel. The Ohio General Assembly, et al. v. Jennifer Brunner No. 07-0209, Ohio Sup.
The legal team representing Jennifer Brunner has 90 days from that decision to request a stay. If that stay is granted, then there could be a petition for a referendum to put the issue to voters
Top Stories At Value Investing News
Here are the top stories for the week at one of my favorite sites, Value Investing News.
1- David Einhorn's Analysis of St. Joe's
2- Interview With Sardar Biglari
3- Note To Lampert: Let People Know About Land's End Valueplays
4- Buybacks vs. Dividend Poll Results
5- Bruce Berkowitz
Please visit the site at here for more stories
1- David Einhorn's Analysis of St. Joe's
2- Interview With Sardar Biglari
3- Note To Lampert: Let People Know About Land's End Valueplays
4- Buybacks vs. Dividend Poll Results
5- Bruce Berkowitz
Please visit the site at here for more stories
Friday, August 10, 2007
Wal-Mart 6 Month Results: Number Of Shoppers Rising
Half a year has gone by and Wal-Mart (WMT) released results yesterday.
26 week sales results at Wal-Mart stores are up 5.5%, Sam's Clubs are up 7.1% and the International operations are up 16.2%. Total sales results are up 8% vs. 2006. Not bad at all.
At Wal-Mart stores grocery sales were once again stronger than general merchandise sales. Perishables led the increase in grocery, with solid performance in dairy and bakery, as well as pharmacy. Electronics continued to show solitore sales gains over last year, with strength in TVs, computers, digital cameras and video games.
At Sam's Clubs sales have been driven by continued momentum with small business owners. Sales were driven by increases in average ticket. In addition to small business categories, other strengths included electronics, fresh food and grocery. As the month of August gets under way, the clubs are completing the transition from summer outdoor goods to a furniture gallery and back-to-college in many markets. A fall merchandise transition will begin in September.
Here is a small but very notable paragraph from the release "In comparable Wal-Mart stores, traffic was negative for the month. However, the trend improved for the third consecutive reporting period. The Central and West geographic regions of the Wal-Mart stores were strongest for the period." Why is it so meaningful? It means people are beginning to go back to Wal-Mart to shop and that is very good news for shareholders. With all the unwarranted negative publicity they have endured the past three years, Wal-Mart became a dirty word. It would seem now that it is beginning to wear off and when push come to shove, people's pocket book rules. Now that the image of Wal-Mart is slowly beginning to stand for "great prices on quality" rather than just "cheap", this trend should continue.
Wal-Mart is also doing it's usual masterful job with costs as "Fuel sales impacted the Sam’s Club sales figures for the four-week period ending August 3, 2007 by negative a 0.2 percentage point. Fuel sales had no impact on the total U.S. comparable store sales figures for the four-week period ending August 3, 2007."
26 week sales results at Wal-Mart stores are up 5.5%, Sam's Clubs are up 7.1% and the International operations are up 16.2%. Total sales results are up 8% vs. 2006. Not bad at all.
At Wal-Mart stores grocery sales were once again stronger than general merchandise sales. Perishables led the increase in grocery, with solid performance in dairy and bakery, as well as pharmacy. Electronics continued to show solitore sales gains over last year, with strength in TVs, computers, digital cameras and video games.
At Sam's Clubs sales have been driven by continued momentum with small business owners. Sales were driven by increases in average ticket. In addition to small business categories, other strengths included electronics, fresh food and grocery. As the month of August gets under way, the clubs are completing the transition from summer outdoor goods to a furniture gallery and back-to-college in many markets. A fall merchandise transition will begin in September.
Here is a small but very notable paragraph from the release "In comparable Wal-Mart stores, traffic was negative for the month. However, the trend improved for the third consecutive reporting period. The Central and West geographic regions of the Wal-Mart stores were strongest for the period." Why is it so meaningful? It means people are beginning to go back to Wal-Mart to shop and that is very good news for shareholders. With all the unwarranted negative publicity they have endured the past three years, Wal-Mart became a dirty word. It would seem now that it is beginning to wear off and when push come to shove, people's pocket book rules. Now that the image of Wal-Mart is slowly beginning to stand for "great prices on quality" rather than just "cheap", this trend should continue.
Wal-Mart is also doing it's usual masterful job with costs as "Fuel sales impacted the Sam’s Club sales figures for the four-week period ending August 3, 2007 by negative a 0.2 percentage point. Fuel sales had no impact on the total U.S. comparable store sales figures for the four-week period ending August 3, 2007."
Blockbuster: Now Can We Close The Stores?
Well, it seems Blockbuster (BBI) finally acknowledged the future. In a rumored $20 million deal, they are to acquire Movielink which is currently owned by several Hollywood studios.
Although one might ask Blockbuster, "what took so long?" Blockbusters is clearly the last one to this party. Cable companies like Cablevison (CVC) and Time Warner (TWC) have spent the last 3 years buiding video-on-demand services and signing up millions of customers. Apple (AAPL) has added movies to their iTunes service, Wal-Mart (WMT) opened a movies over the internet service, Amazon (AMZN) and Tivo (TIVO) launched the unBox and arch rival Netflix (NFLX) got into the download game in January.
Rather than hemorrhaging shareholder cash for the last two years, why wasn't this deal done then? It has been rumored forever it seems. How much of a lead could Blockbuster have over it's rivals had it not spent all this time trying to convince people they still want to go to the video store?
Will Blockbuster finally abandon the store model? They clearly do not have enough cash to continue on the current path and go in every direction. With almost 1,000 stores still around, there is still a ton of work to be done and as long as they have the stores cost around their neck, they can never truly compete with Netflix.
Although one might ask Blockbuster, "what took so long?" Blockbusters is clearly the last one to this party. Cable companies like Cablevison (CVC) and Time Warner (TWC) have spent the last 3 years buiding video-on-demand services and signing up millions of customers. Apple (AAPL) has added movies to their iTunes service, Wal-Mart (WMT) opened a movies over the internet service, Amazon (AMZN) and Tivo (TIVO) launched the unBox and arch rival Netflix (NFLX) got into the download game in January.
Rather than hemorrhaging shareholder cash for the last two years, why wasn't this deal done then? It has been rumored forever it seems. How much of a lead could Blockbuster have over it's rivals had it not spent all this time trying to convince people they still want to go to the video store?
Will Blockbuster finally abandon the store model? They clearly do not have enough cash to continue on the current path and go in every direction. With almost 1,000 stores still around, there is still a ton of work to be done and as long as they have the stores cost around their neck, they can never truly compete with Netflix.
Friday's Upgrades / Downgrades
Late Thursday and early Friday analyst calls
UPGRADES
LSI Logic LSI Wedbush Morgan Sell » Hold
Omrix Biopharma OMRI Oppenheimer Neutral » Buy
Kinder Morgan Mgmt KMR Sanders Morris Harris Neutral » Buy
Kinder Morgan Prtnrs KMP Sanders Morris Harris Neutral » Buy
Deluxe DLX Longbow Sell » Neutral
Cincinnati Fincl CINF AG Edwards Hold » Buy
Automatic Data ADP AG Edwards Hold » Buy
Verint Systems VRNT Morgan Keegan Mkt Perform » Outperform
Emmis Comms EMMS Bear Stearns Underperform » Peer Perform
Novacea NOVC Bear Stearns Peer Perform » Outperform
Quebecor World IQW RBC Capital Mkts Underperform » Sector Perform
Frontier Oil FTO Caris & Company Average » Above Average
Occulogix OCCX Caris & Company Below Average » Average
Alon USA Energy ALJ Caris & Company Above Average » Buy
Forest Labs FRX FTN Midwest Sell » Neutral
Noven Pharma NOVN Oppenheimer Neutral » Buy
Transocean RIG Matrix Research Buy » Strong Buy
DOWNGRADES
Argon ST STST BB&T Capital Mkts Buy » Hold
Xenoport XNPT Lazard Capital Buy » Hold
Intermec IN Bear Stearns Peer Perform » Underperform
Amer States Water AWR AG Edwards Buy » Hold
California Water CWT AG Edwards Buy » Hold
Aqua America WTR AG Edwards Buy » Hold
Universal Display PANL Maxim Group Buy » Hold
Wrigley WWY Davenport Buy » Neutral
Geo Group GEO Avondale Partners Mkt Outperform » Mkt Perform
Citi Trends CTRN Avondale Partners Mkt Outperform » Mkt Perform
AmeriCredit ACF Friedman Billings Outperform » Mkt Perform
UPGRADES
LSI Logic LSI Wedbush Morgan Sell » Hold
Omrix Biopharma OMRI Oppenheimer Neutral » Buy
Kinder Morgan Mgmt KMR Sanders Morris Harris Neutral » Buy
Kinder Morgan Prtnrs KMP Sanders Morris Harris Neutral » Buy
Deluxe DLX Longbow Sell » Neutral
Cincinnati Fincl CINF AG Edwards Hold » Buy
Automatic Data ADP AG Edwards Hold » Buy
Verint Systems VRNT Morgan Keegan Mkt Perform » Outperform
Emmis Comms EMMS Bear Stearns Underperform » Peer Perform
Novacea NOVC Bear Stearns Peer Perform » Outperform
Quebecor World IQW RBC Capital Mkts Underperform » Sector Perform
Frontier Oil FTO Caris & Company Average » Above Average
Occulogix OCCX Caris & Company Below Average » Average
Alon USA Energy ALJ Caris & Company Above Average » Buy
Forest Labs FRX FTN Midwest Sell » Neutral
Noven Pharma NOVN Oppenheimer Neutral » Buy
Transocean RIG Matrix Research Buy » Strong Buy
DOWNGRADES
Argon ST STST BB&T Capital Mkts Buy » Hold
Xenoport XNPT Lazard Capital Buy » Hold
Intermec IN Bear Stearns Peer Perform » Underperform
Amer States Water AWR AG Edwards Buy » Hold
California Water CWT AG Edwards Buy » Hold
Aqua America WTR AG Edwards Buy » Hold
Universal Display PANL Maxim Group Buy » Hold
Wrigley WWY Davenport Buy » Neutral
Geo Group GEO Avondale Partners Mkt Outperform » Mkt Perform
Citi Trends CTRN Avondale Partners Mkt Outperform » Mkt Perform
AmeriCredit ACF Friedman Billings Outperform » Mkt Perform
"Fast Money" For Friday
Here are Friday's picks and to date records.
Jeff Macke liked Berkshire Hathaway (BRK) for Warren Buffet. Open $3,643
(a note: this pick will be treated as a $36.43 stock, otherwise any move in it will skew the tracking for Macke way off either up or down)
Pete Najarian recommended buying stock in NASDAQ (NDAQ). Open $32.56
Guy Adami thought GlaxoSmithKline (GSK) is a buy. Open $52.45
Eric Bolling preferred Hewlett Packard (HPQ). $47.02
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-10 Gain $24.16
Bolling= 9-9 Loss $15.08
John Najarian= 13-3 Gain $15.54
Macke= 19-12 Gain $7.08
Pete Najarian= 7-6 Gain $17.71
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Jeff Macke liked Berkshire Hathaway (BRK) for Warren Buffet. Open $3,643
(a note: this pick will be treated as a $36.43 stock, otherwise any move in it will skew the tracking for Macke way off either up or down)
Pete Najarian recommended buying stock in NASDAQ (NDAQ). Open $32.56
Guy Adami thought GlaxoSmithKline (GSK) is a buy. Open $52.45
Eric Bolling preferred Hewlett Packard (HPQ). $47.02
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-10 Gain $24.16
Bolling= 9-9 Loss $15.08
John Najarian= 13-3 Gain $15.54
Macke= 19-12 Gain $7.08
Pete Najarian= 7-6 Gain $17.71
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Thursday, August 9, 2007
Thursday's 52 Week Lows
Blood on the street today... Time to buy!!
WWE World Wrestling Entmt Inc
WON Westwood One Inc
UWN Nevada Gold & Casinos Inc
TZOO Travelzoo Inc
TWC Time Warner Cable Inc
TDA Telephone & Data Sys Inc
TBL The Timberland Company
SHOO Steven Madden Ltd
SGA Saga Communications, Inc
PZZA Papa John's International
OGE Oklahoma Gas and Elec
NAPS Napster Inc
MKV Markel Corp
KEM KEMET Corp
INTU Intuit Inc
INSP Infospace Inc
GPS The Gap, Inc
DTG Dollar Thrifty Automo
BKS Barnes & Noble, Inc
WWE World Wrestling Entmt Inc
WON Westwood One Inc
UWN Nevada Gold & Casinos Inc
TZOO Travelzoo Inc
TWC Time Warner Cable Inc
TDA Telephone & Data Sys Inc
TBL The Timberland Company
SHOO Steven Madden Ltd
SGA Saga Communications, Inc
PZZA Papa John's International
OGE Oklahoma Gas and Elec
NAPS Napster Inc
MKV Markel Corp
KEM KEMET Corp
INTU Intuit Inc
INSP Infospace Inc
GPS The Gap, Inc
DTG Dollar Thrifty Automo
BKS Barnes & Noble, Inc
Google Steps In It
What is Google (GOOG) thinking?
Google announced they are going to start allowing people cited in news stories to respond and have their response posted to the news story. What? How many people are they going to have to hire to make sure the "responder" is actually the person cited in the article? How much time will lapse between the news story and the time the response hits? With our lives at a story a minute pace, if the response is not posted fast, the story become old news and the service almost irrelevant. Will they be editing the posts for vulgarity or other "unwanted content" and if they are, how many more people will be needed to do that?
Will Google be held liable if a fake responder gets by them and trashes someone and creates another whole story or disastrous events unfold due to the fake response? I guess the question to be asked is, "what good for Google can come out of this?"
They already have message boards for people who like to engage in the online back and forth so there won't be the additional page views generated to justify the tremendous costs this will entail.
Maybe they are trying to save Whole Foods (WFMI) CEO Mackey some time?
Google announced they are going to start allowing people cited in news stories to respond and have their response posted to the news story. What? How many people are they going to have to hire to make sure the "responder" is actually the person cited in the article? How much time will lapse between the news story and the time the response hits? With our lives at a story a minute pace, if the response is not posted fast, the story become old news and the service almost irrelevant. Will they be editing the posts for vulgarity or other "unwanted content" and if they are, how many more people will be needed to do that?
Will Google be held liable if a fake responder gets by them and trashes someone and creates another whole story or disastrous events unfold due to the fake response? I guess the question to be asked is, "what good for Google can come out of this?"
They already have message boards for people who like to engage in the online back and forth so there won't be the additional page views generated to justify the tremendous costs this will entail.
Maybe they are trying to save Whole Foods (WFMI) CEO Mackey some time?
The Home Depot Buyback: My Question Answered.
Earlier this week I asked the question, "Is Home Depot's Buyback At Risk?". Well, Home Depot (HD) today said it is in talks with the three private equity firms that agreed to buy its supply unit and the subject will not please shareholders. The discussions will lead to a lower price than the previously announced $10.325 billion. The nation’s largest home-improvement retailer is talking to Bain Capital, the Carlyle Group and Clayton Dubilier and Rice about “material changes to the terms and financing of the transaction.”
In an anticipated (at least at Valueplays) kick in the chops for shareholders, citing the current market for financing, The Depot said that it would cut the price it will pay for its $250 million share tender offer to between $37 and $42 a share. When the buyback was first announced last month, they said they would pay between $39 and $44 a share. The offer was extended to Aug. 31 at 5 p.m. Why are they doing this? Easy, a lower price will lead to fewer shares being tendered. The fewer shares tendered, the lower total cost of the offer.
None of this should be a surprise, hopefully. The Depot has been misfiring for a while now and there is no reason this unprecedented buyback should be any different. If anything it should teach us a lesson about the ambiguous open ended share buyback announcements that do not commit management to anything but do make for a neat little headline. In short, they are meaningless.
Here is the worst part. This was to be the "cash" portion of the share buyback program. Home Depot has not even broached the "debt" part. Let's not forget, a large portion of this buyback was to be funded by debt and if they can't get the cash part due to current conditions, anyone want to bet the debt part will not happen anytime soon?
Like almost everything else they have done recently, the huge share repurchase announcement by Home Depot will end up making them look bad.
In an anticipated (at least at Valueplays) kick in the chops for shareholders, citing the current market for financing, The Depot said that it would cut the price it will pay for its $250 million share tender offer to between $37 and $42 a share. When the buyback was first announced last month, they said they would pay between $39 and $44 a share. The offer was extended to Aug. 31 at 5 p.m. Why are they doing this? Easy, a lower price will lead to fewer shares being tendered. The fewer shares tendered, the lower total cost of the offer.
None of this should be a surprise, hopefully. The Depot has been misfiring for a while now and there is no reason this unprecedented buyback should be any different. If anything it should teach us a lesson about the ambiguous open ended share buyback announcements that do not commit management to anything but do make for a neat little headline. In short, they are meaningless.
Here is the worst part. This was to be the "cash" portion of the share buyback program. Home Depot has not even broached the "debt" part. Let's not forget, a large portion of this buyback was to be funded by debt and if they can't get the cash part due to current conditions, anyone want to bet the debt part will not happen anytime soon?
Like almost everything else they have done recently, the huge share repurchase announcement by Home Depot will end up making them look bad.
Wal-Mart and Facebook: Great idea
When I first read this last night I thought "great idea". After talking to some parents and kids going to college this fall this morning, I am thinking "really great idea". Wal-Mart (WMT) really nailed this one.
Here is the skinny. Wal-Mart has teamed op with Facebook to allow college student to team up online to design and stock their room. Now, the initial impulse may be "why would college kids shop at Wal-Mart? They may not, but who does the most back to school shopping? Mom and Dad and they love the idea of saving some bucks at Wal-Mart and having the goods delivered by Wal-Mart to the school (dads really like this idea). Let's be honest here, does junior really care where most of the staple items in their room come from? No, after all a microwave is a microwave.
The kids can go online a figure out who will buy the computer printer, microwave, TV, DVD player, futon etc. and then go the Walmart.com and purchase the items. In one swoop they save mom and dad a shopping trip, stop the inevitable multiple items in a room problem that always happens and help dad in reducing stuff to pack in the car for the move. Brilliant.
This was just announced so the results this year may be limited but this will gain traction big time in the future. This may be the reason Wal-Mart is one of the few retailers with positive same store sales results this summer?
The parents I spoke to though it was a wonderful idea and the kids thought it was very "cool" because they will eliminate the anxiety of "missing" something they will really need in their room and the Wal-Mart site gives them ideas they may not have thought of..
Kudos to whoever came up with this one..
Here is the skinny. Wal-Mart has teamed op with Facebook to allow college student to team up online to design and stock their room. Now, the initial impulse may be "why would college kids shop at Wal-Mart? They may not, but who does the most back to school shopping? Mom and Dad and they love the idea of saving some bucks at Wal-Mart and having the goods delivered by Wal-Mart to the school (dads really like this idea). Let's be honest here, does junior really care where most of the staple items in their room come from? No, after all a microwave is a microwave.
The kids can go online a figure out who will buy the computer printer, microwave, TV, DVD player, futon etc. and then go the Walmart.com and purchase the items. In one swoop they save mom and dad a shopping trip, stop the inevitable multiple items in a room problem that always happens and help dad in reducing stuff to pack in the car for the move. Brilliant.
This was just announced so the results this year may be limited but this will gain traction big time in the future. This may be the reason Wal-Mart is one of the few retailers with positive same store sales results this summer?
The parents I spoke to though it was a wonderful idea and the kids thought it was very "cool" because they will eliminate the anxiety of "missing" something they will really need in their room and the Wal-Mart site gives them ideas they may not have thought of..
Kudos to whoever came up with this one..
More Acquisitions for Sherwin Williams In India Soon
Having said they plan to "aggressively pursue" a "very fragmented" China and India paint and coating market for opportunities to expand, it appears Sherwin Williams (SHW) may be close to announcing another acquisition.
Already planning to build a production facility in India, it appears further acquisitions, namely that of a Bangalore-based company, are progressing. When asked recently whether the company is in talks with Surfa Coats Bangalore Ltd, Sanjiv Batra, CEO, Sherwin Williams India replied "It is all in the air and there is no plan of acquisition of any kind at present." He then gave the standard denial, "I am not privy to any such plan where we could be engaged in acquisitions."
But he then continued, "But we are very much on the consolidation mode and the company is thinking on an India-specific business model. We are in the process of engaging external agencies to undertake a marketing survey to do a due diligence of the Indian market. Specific customer tastes and preferences, types of products, price bands and distribution channels will be decided." Uh huh... so it is the old "I do not know but we are" double talk..
Sherwin Williams now has the Nitco exterior paints portfolio in India but has yet to bring in its huge range of interior decoratives to the country. “We cannot have a business model based on imports and hence may think of a suitable manufacturing facility over the next few months. Moreover, Sherwin would be keen to bring in its expertise state-of-the-art plant and processes in India”, he added. Translation: A factory will be built soon.
How much growth is there in the Indian market? Consider the per capita consumption of paint in India is just 1.2 kg per person against 7-8 kg in Malaysia and around 4 kg in China.
India is a massive market for Sherwin and they seem to be racing to dominate it. The Nitco purchase gave then a toehold there and they have both illustrated buy the statements and their actions to date they plan on doing much more.
Look for something to be announced before Columbus Day..
Already planning to build a production facility in India, it appears further acquisitions, namely that of a Bangalore-based company, are progressing. When asked recently whether the company is in talks with Surfa Coats Bangalore Ltd, Sanjiv Batra, CEO, Sherwin Williams India replied "It is all in the air and there is no plan of acquisition of any kind at present." He then gave the standard denial, "I am not privy to any such plan where we could be engaged in acquisitions."
But he then continued, "But we are very much on the consolidation mode and the company is thinking on an India-specific business model. We are in the process of engaging external agencies to undertake a marketing survey to do a due diligence of the Indian market. Specific customer tastes and preferences, types of products, price bands and distribution channels will be decided." Uh huh... so it is the old "I do not know but we are" double talk..
Sherwin Williams now has the Nitco exterior paints portfolio in India but has yet to bring in its huge range of interior decoratives to the country. “We cannot have a business model based on imports and hence may think of a suitable manufacturing facility over the next few months. Moreover, Sherwin would be keen to bring in its expertise state-of-the-art plant and processes in India”, he added. Translation: A factory will be built soon.
How much growth is there in the Indian market? Consider the per capita consumption of paint in India is just 1.2 kg per person against 7-8 kg in Malaysia and around 4 kg in China.
India is a massive market for Sherwin and they seem to be racing to dominate it. The Nitco purchase gave then a toehold there and they have both illustrated buy the statements and their actions to date they plan on doing much more.
Look for something to be announced before Columbus Day..
"Fast Money" for Thursday
Here are Thursday's picks
No "first trades" for today...
Wednesday's Results
Jeff Macke recommended getting long Target (TGT). Open $62.66 Close $65.21 Gain $2.55
Pete Najarian said jump on Juniper (JNPR). Open $33.66 Close $34.39 Gain $.73
Guy Adami preferred Micron (MU).Open $11.59 Close $12.07 Gain $.48
Eric Bolling liked Google (GOOG) Open $516.02 Close $535.78 Gain $19.24
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-10 Gain $24.16
Bolling= 9-9 Loss $15.08
John Najarian= 13-3 Gain $15.54
Macke= 19-12 Gain $7.08
Pete Najarian= 7-6 Gain $17.71
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
No "first trades" for today...
Wednesday's Results
Jeff Macke recommended getting long Target (TGT). Open $62.66 Close $65.21 Gain $2.55
Pete Najarian said jump on Juniper (JNPR). Open $33.66 Close $34.39 Gain $.73
Guy Adami preferred Micron (MU).Open $11.59 Close $12.07 Gain $.48
Eric Bolling liked Google (GOOG) Open $516.02 Close $535.78 Gain $19.24
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 12-10 Gain $24.16
Bolling= 9-9 Loss $15.08
John Najarian= 13-3 Gain $15.54
Macke= 19-12 Gain $7.08
Pete Najarian= 7-6 Gain $17.71
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Upgrades / Downgrades
Here are the late Wednesday and early Thursday calls.
UPGRADES
Mattel MAT Piper Jaffray Market Perform » Outperform
Interdigital Comm IDCC Piper Jaffray Underperform » Market Perform
LTX Corp LTXX Citigroup Hold » Buy
Xenoport XNPT Citigroup Hold » Buy
NBTY Inc NTY JP Morgan Underweight » Neutral
Methode Electronics METH Robert W. Baird Underperform » Neutral $13
Knology KNOL Robert W. Baird Neutral » Outperform
Centene CNC Jefferies & Co Underperform » Hold
1-800-FLOWERS FLWS JMP Securities Mkt Perform » Mkt Outperform
Watson Wyatt WW Deutsche Securities Hold » Buy
Alcoa AA Friedman Billings Mkt Perform » Outperform
Tenet Healthcare THC Stifel Nicolaus Sell » Hold
PG&E PCG RBC Capital Mkts Sector Perform » Outperform
Best Buy BBY Pali Research Neutral » Buy
AuthenTec AUTH Morgan Keegan Mkt Perform » Outperform
Cross Country CCRN BMO Capital Markets Market Perform » Outperform
Harris HRS Oppenheimer Neutral » Buy
Public Service PEG Matrix Research Hold » Buy
OM Group OMG Matrix Research Strong Sell » Strong Buy
Getty Images GYI Kaufman Bros Sell » Hold
Nuance Communications NUAN Needham & Co Hold » Buy
Golden Star Resources GSS UBS Neutral » Buy
W&T Offshore WTI Calyon Securities Neutral » Add
Noven Pharma NOVN Soleil Sell » Hold
DOWNGRADES
Cablevision CVC Wachovia Outperform » Mkt Perform
Chesapeake Energy CHK Wachovia Outperform » Mkt Perform
Green Mtn Coffee GMCR Piper Jaffray Outperform » Market Perform
Casual Male CMRG JP Morgan Overweight » Neutral
Novo-Nordisk A/S NVO Lehman Brothers Overweight » Equal-weight
Kenexa KNXA JMP Securities Mkt Outperform » Mkt Perform
The Knot KNOT Merriman Curhan Ford Buy » Neutral
Blue Nile NILE RBC Capital Mkts Outperform » Sector Perform
Unica UNCA Ferris Baker Watts Neutral » Sell
NMT Medical NMTI Needham & Co Buy » Hold
Allscripts MDRX Needham & Co Buy » Hold
Heelys HLYS Brean Murray Buy » Hold
Echelon ELON Nollenberger Capital Buy » Neutral
Heelys HLYS Wachovia Outperform » Mkt Perform
AEGON N.V. AEG Bear Stearns Outperform » Peer Perform
CBRE Realty Finance CBF Citigroup Buy » Hold
UPGRADES
Mattel MAT Piper Jaffray Market Perform » Outperform
Interdigital Comm IDCC Piper Jaffray Underperform » Market Perform
LTX Corp LTXX Citigroup Hold » Buy
Xenoport XNPT Citigroup Hold » Buy
NBTY Inc NTY JP Morgan Underweight » Neutral
Methode Electronics METH Robert W. Baird Underperform » Neutral $13
Knology KNOL Robert W. Baird Neutral » Outperform
Centene CNC Jefferies & Co Underperform » Hold
1-800-FLOWERS FLWS JMP Securities Mkt Perform » Mkt Outperform
Watson Wyatt WW Deutsche Securities Hold » Buy
Alcoa AA Friedman Billings Mkt Perform » Outperform
Tenet Healthcare THC Stifel Nicolaus Sell » Hold
PG&E PCG RBC Capital Mkts Sector Perform » Outperform
Best Buy BBY Pali Research Neutral » Buy
AuthenTec AUTH Morgan Keegan Mkt Perform » Outperform
Cross Country CCRN BMO Capital Markets Market Perform » Outperform
Harris HRS Oppenheimer Neutral » Buy
Public Service PEG Matrix Research Hold » Buy
OM Group OMG Matrix Research Strong Sell » Strong Buy
Getty Images GYI Kaufman Bros Sell » Hold
Nuance Communications NUAN Needham & Co Hold » Buy
Golden Star Resources GSS UBS Neutral » Buy
W&T Offshore WTI Calyon Securities Neutral » Add
Noven Pharma NOVN Soleil Sell » Hold
DOWNGRADES
Cablevision CVC Wachovia Outperform » Mkt Perform
Chesapeake Energy CHK Wachovia Outperform » Mkt Perform
Green Mtn Coffee GMCR Piper Jaffray Outperform » Market Perform
Casual Male CMRG JP Morgan Overweight » Neutral
Novo-Nordisk A/S NVO Lehman Brothers Overweight » Equal-weight
Kenexa KNXA JMP Securities Mkt Outperform » Mkt Perform
The Knot KNOT Merriman Curhan Ford Buy » Neutral
Blue Nile NILE RBC Capital Mkts Outperform » Sector Perform
Unica UNCA Ferris Baker Watts Neutral » Sell
NMT Medical NMTI Needham & Co Buy » Hold
Allscripts MDRX Needham & Co Buy » Hold
Heelys HLYS Brean Murray Buy » Hold
Echelon ELON Nollenberger Capital Buy » Neutral
Heelys HLYS Wachovia Outperform » Mkt Perform
AEGON N.V. AEG Bear Stearns Outperform » Peer Perform
CBRE Realty Finance CBF Citigroup Buy » Hold
Wednesday, August 8, 2007
Today's 52 Week Lows
Here are companies that hit a yearly bottom today. No homebuilders and no financials as they all rallied big time again.
XJT Expressjet Holdings Inc
SSP The E.W. Scripps Company
SCVL Shoe Carnival Inc
RURL Rural/Metro Corp
RNWK RealNetworks Inc
NUVO Nuvelo Inc
NOOF New Frontier Media Inc
MYL Mylan Laboratories Inc
MTEX Mannatech Inc
IKN Ikon Office Solutions Inc
HRL Hormel Foods Corporation
HLYS Heelys Inc
ELNK Earthlink Inc
ADSX Applied Digital Solutions
ACTL Actel Corp
XJT Expressjet Holdings Inc
SSP The E.W. Scripps Company
SCVL Shoe Carnival Inc
RURL Rural/Metro Corp
RNWK RealNetworks Inc
NUVO Nuvelo Inc
NOOF New Frontier Media Inc
MYL Mylan Laboratories Inc
MTEX Mannatech Inc
IKN Ikon Office Solutions Inc
HRL Hormel Foods Corporation
HLYS Heelys Inc
ELNK Earthlink Inc
ADSX Applied Digital Solutions
ACTL Actel Corp
Sprint's Downward Spiral Continues
Maybe Sprint (S) will recognize soon that those "pain in the ass" people who keep calling them are called customers and the more of them they have, the better their financial performance will be?
Let do the basics first, Sprint Nextel reported its net income nose-dived 95% as its balance sheet was banged up by costs associated with the launch of its WiMax network. For the quarter ended June 30, it said it earned $19 million, or 1 cent per share, versus $370 million, or 10 cents per share, for a similar period a year ago. In the quarter, Sprint added nearly 400,000 subscribers and ended the period with a total subscriber base of 54 million, a 5% increase from a year ago. You know it has been really bad when shown these numbers Stanford Group Co.'s Michael Nelson said "At least they managed to retain customers."
But, Sprint's monthly subscriber growth trailed the performance at AT&T (T) and Verizon (VZE). AT&T added more than 900,000 customers who committed to monthly contracts, while Verizon added 1.5 million.
In short, when the best you can say is "at least we did not lose any more customers", that does not bode well for shareholders down the road. Sprint is falling farther behind what is rapidly becoming a two horse race with Verizon and AT&T slugging it out for the crown. The shame of it really is that Sprint's problem and current it's state are totally of their own doing.
I really loved being a Nextel customer, they were different, Sprint, not so much.
Let do the basics first, Sprint Nextel reported its net income nose-dived 95% as its balance sheet was banged up by costs associated with the launch of its WiMax network. For the quarter ended June 30, it said it earned $19 million, or 1 cent per share, versus $370 million, or 10 cents per share, for a similar period a year ago. In the quarter, Sprint added nearly 400,000 subscribers and ended the period with a total subscriber base of 54 million, a 5% increase from a year ago. You know it has been really bad when shown these numbers Stanford Group Co.'s Michael Nelson said "At least they managed to retain customers."
But, Sprint's monthly subscriber growth trailed the performance at AT&T (T) and Verizon (VZE). AT&T added more than 900,000 customers who committed to monthly contracts, while Verizon added 1.5 million.
In short, when the best you can say is "at least we did not lose any more customers", that does not bode well for shareholders down the road. Sprint is falling farther behind what is rapidly becoming a two horse race with Verizon and AT&T slugging it out for the crown. The shame of it really is that Sprint's problem and current it's state are totally of their own doing.
I really loved being a Nextel customer, they were different, Sprint, not so much.
Note To Lampert: Let People Know About Land's End
Land's End has great, stylish products at great prices. Why don't more people know they can go to their local Sears (SHLD) to buy them?
At first I thought they just were not paying attention (or reading my blog) but then I began to look around. Not a single Sears commercial I have seen tells us Land End merchandise is available at stores. When I get my flyer in the newspaper each week, there isn't anything special telling me that I can buy Lands End clothing at Sears. When I get my Land's End catalog in the mail, nothing tells me to go to my local Sears in the Solomon Pond Mall to buy Land end clothing. Why the secret?
Land's End has fantastic stuff and the stores that have it according the the salespeople I spoke to yesterday have a huge advantage over those that do not. If you sit in a Sears that sells Land's End, there is a constant stream of traffic to the areas of the store that have the Land's End merchandise. This is probably the reason Lampert announced he plans to double the locations that offer the products this year. But, Eddie, tell people about it!!
I do not want the local Sears that sells Land End clothing to be the best kept shopping secret in the area. I want it to be mobbed.
Some Ideas
- Create a Land's End commercial and run it in those areas that sell it in the stores with the big tag line "Available at Sears"
- Run Land's End flyers in Sunday papers that prominently display the Sears logo
- Ever hear of a billboard? They have been around so long because they work...
- Forget Radio
Telling people about Land's End will drive traffic to your stores and they will by other merchandise there. If nothing else, it will create the "relevance in the shopper's mind" Lewis spoke of after the latest earnings were released.
At first I thought they just were not paying attention (or reading my blog) but then I began to look around. Not a single Sears commercial I have seen tells us Land End merchandise is available at stores. When I get my flyer in the newspaper each week, there isn't anything special telling me that I can buy Lands End clothing at Sears. When I get my Land's End catalog in the mail, nothing tells me to go to my local Sears in the Solomon Pond Mall to buy Land end clothing. Why the secret?
Land's End has fantastic stuff and the stores that have it according the the salespeople I spoke to yesterday have a huge advantage over those that do not. If you sit in a Sears that sells Land's End, there is a constant stream of traffic to the areas of the store that have the Land's End merchandise. This is probably the reason Lampert announced he plans to double the locations that offer the products this year. But, Eddie, tell people about it!!
I do not want the local Sears that sells Land End clothing to be the best kept shopping secret in the area. I want it to be mobbed.
Some Ideas
- Create a Land's End commercial and run it in those areas that sell it in the stores with the big tag line "Available at Sears"
- Run Land's End flyers in Sunday papers that prominently display the Sears logo
- Ever hear of a billboard? They have been around so long because they work...
- Forget Radio
Telling people about Land's End will drive traffic to your stores and they will by other merchandise there. If nothing else, it will create the "relevance in the shopper's mind" Lewis spoke of after the latest earnings were released.
McDonald's Crushes Estimates
I wonder if executives at Starbucks (SBUX) feel like a deer in the headlights of the freight train that is McDonalds (MCD).
McDonald's announced today that global comparable sales rose 6.5% in July, well ahead of the 4% estimates. Systemwide sales for all McDonald's restaurants (this number includes franchises) worldwide increased 11.7% for the month.
McDonald's Chief Executive Officer Jim Skinner said, "We continue to connect with customers through our menu variety and value, innovative marketing and contemporary restaurants. These combined initiatives have powered our ongoing momentum and delivered our best sustained sales performance in more than 25 years."
U.S. comparable sales rose 4.3% in July due to the enduring appeal of McDonald’s popular breakfast menu (COFFEE), new food offerings, value and convenient late night hours.
Comparable sales were up 9.9% in Asia/Pacific, Middle East and Africa, driven by ongoing sales strength in Japan, Australia and China. Breakfast (COFFEE) and extended hours contributed to the segment’s July performance.
Year to date system wide sales for McDonald's are up 11%. No excuses about rising coffee and milk prices, no new recording labels or free t-shirt giveaways, just performance quarter after quarter by focusing on what they do best..
Novel idea...
McDonald's announced today that global comparable sales rose 6.5% in July, well ahead of the 4% estimates. Systemwide sales for all McDonald's restaurants (this number includes franchises) worldwide increased 11.7% for the month.
McDonald's Chief Executive Officer Jim Skinner said, "We continue to connect with customers through our menu variety and value, innovative marketing and contemporary restaurants. These combined initiatives have powered our ongoing momentum and delivered our best sustained sales performance in more than 25 years."
U.S. comparable sales rose 4.3% in July due to the enduring appeal of McDonald’s popular breakfast menu (COFFEE), new food offerings, value and convenient late night hours.
Comparable sales were up 9.9% in Asia/Pacific, Middle East and Africa, driven by ongoing sales strength in Japan, Australia and China. Breakfast (COFFEE) and extended hours contributed to the segment’s July performance.
Year to date system wide sales for McDonald's are up 11%. No excuses about rising coffee and milk prices, no new recording labels or free t-shirt giveaways, just performance quarter after quarter by focusing on what they do best..
Novel idea...
Upgrades / Downgrades
Here are the late Tuesday and early Wednesday calls.
>
UPGRADES
Warner Music Group WMG Citigroup Sell » Buy
priceline.com PCLN Susquehanna Financial Neutral » Positive
Natural Resource NRP Friedman Billings Mkt Perform » Outperform
True Religion TRLG Friedman Billings Mkt Perform » Outperform
Computer Sciences CSC Jefferies & Co Underperform » Hold
Nuance Communications NUAN Friedman Billings Mkt Perform » Outperform
Parkway Prop PKY Robert W. Baird Neutral » Outperform
Equity Inns ENN Robert W. Baird Neutral » Outperform
F5 Networks FFIV CE Unterberg Towbin Market Perform » Buy
TETRA Tech TTI CapitalOne southcoast Hold » Buy
Pactiv Corp PTV KeyBanc Capital Mkts / McDonald Hold » Buy
Silgan Holdings SLGN KeyBanc Capital Mkts / McDonald Buy » Aggressive Buy
Greif Brothers GEF KeyBanc Capital Mkts / McDonald Buy » Aggressive Buy
Gap Inc GPS CL King Underperform » Neutral
TeleTech TTEC Janco Partners Accumulate » Buy
Brinker EAT Sanders Morris Harris Neutral » Buy
Halliburton HAL Calyon Securities Add » Buy
Baker Hughes BHI Calyon Securities Neutral » Add
JA Solar JASO Needham & Co Hold » Buy
AC Moore ACMR BB&T Capital Mkts Hold » Buy
Blackbaud BLKB Jefferies & Co Hold » Buy
Martha Stewart MSO Bear Stearns Peer Perform » Outperform
DOWNGRADES
Dick's Sporting Goods DKS Citigroup Buy » Hold
Heelys HLYS JP Morgan Overweight » Neutral
Alexion Pharm ALXN Credit Suisse Outperform » Neutral
Heelys HLYS CIBC Wrld Mkts Sector Outperform » Sector Perform
MetroPCS PCS Wachovia Outperform » Mkt Perform
Leap Wireless LEAP Wachovia Outperform » Mkt Perform
Heelys HLYS Robert W. Baird Outperform » Neutral
AMN Healthcare Services AHS CL King Strong Buy » Neutral
Mobile Mini MINI Robert W. Baird Outperform » Neutral
F5 Networks FFIV Wedbush Morgan Buy » Hold
Myers Industries MYE KeyBanc Capital Mkts / McDonald Buy » Hold
Ball Corp BLL KeyBanc Capital Mkts / McDonald Aggressive Buy » Buy
U-Store-It YSI Wachovia Mkt Perform » Underperform
NGP Capital Resources NGPC Ferris Baker Watts Buy » Neutral
Luminent Mortgage Capital LUM UBS Neutral » Sell
>
UPGRADES
Warner Music Group WMG Citigroup Sell » Buy
priceline.com PCLN Susquehanna Financial Neutral » Positive
Natural Resource NRP Friedman Billings Mkt Perform » Outperform
True Religion TRLG Friedman Billings Mkt Perform » Outperform
Computer Sciences CSC Jefferies & Co Underperform » Hold
Nuance Communications NUAN Friedman Billings Mkt Perform » Outperform
Parkway Prop PKY Robert W. Baird Neutral » Outperform
Equity Inns ENN Robert W. Baird Neutral » Outperform
F5 Networks FFIV CE Unterberg Towbin Market Perform » Buy
TETRA Tech TTI CapitalOne southcoast Hold » Buy
Pactiv Corp PTV KeyBanc Capital Mkts / McDonald Hold » Buy
Silgan Holdings SLGN KeyBanc Capital Mkts / McDonald Buy » Aggressive Buy
Greif Brothers GEF KeyBanc Capital Mkts / McDonald Buy » Aggressive Buy
Gap Inc GPS CL King Underperform » Neutral
TeleTech TTEC Janco Partners Accumulate » Buy
Brinker EAT Sanders Morris Harris Neutral » Buy
Halliburton HAL Calyon Securities Add » Buy
Baker Hughes BHI Calyon Securities Neutral » Add
JA Solar JASO Needham & Co Hold » Buy
AC Moore ACMR BB&T Capital Mkts Hold » Buy
Blackbaud BLKB Jefferies & Co Hold » Buy
Martha Stewart MSO Bear Stearns Peer Perform » Outperform
DOWNGRADES
Dick's Sporting Goods DKS Citigroup Buy » Hold
Heelys HLYS JP Morgan Overweight » Neutral
Alexion Pharm ALXN Credit Suisse Outperform » Neutral
Heelys HLYS CIBC Wrld Mkts Sector Outperform » Sector Perform
MetroPCS PCS Wachovia Outperform » Mkt Perform
Leap Wireless LEAP Wachovia Outperform » Mkt Perform
Heelys HLYS Robert W. Baird Outperform » Neutral
AMN Healthcare Services AHS CL King Strong Buy » Neutral
Mobile Mini MINI Robert W. Baird Outperform » Neutral
F5 Networks FFIV Wedbush Morgan Buy » Hold
Myers Industries MYE KeyBanc Capital Mkts / McDonald Buy » Hold
Ball Corp BLL KeyBanc Capital Mkts / McDonald Aggressive Buy » Buy
U-Store-It YSI Wachovia Mkt Perform » Underperform
NGP Capital Resources NGPC Ferris Baker Watts Buy » Neutral
Luminent Mortgage Capital LUM UBS Neutral » Sell
"Fast Money" for Wednesday
Here are Tuesday's results and Wednesday's picks.
WEDNESDAY'S PICKS
Jeff Macke recommended getting long Target (TGT). Open $62.66
Pete Najarian said jump on Juniper (JNPR). Open $33.66
Guy Adami preferred Micron (MU).Open $11.59
Eric Bolling liked Google (GOOG) Open $516.02
TUESDAY'S RESULTS
Jeff Macke recommended selling Goldman Sachs (GS). Open $187.70 Close $191.25 Loss $3.45
Guy Adami preferred Juniper (JNPR). Open $33.46 Close $33.66 Gain $.20
Tim Seymour liked iShares MSCI Brazil Index (EWZ). $61.10 Close $62.18 Gain $1.08
Eric Bolling did not have a stock pick.
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 11-10 Gain $23.68
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 18-12 Gain $4.53
Pete Najarian= 6-6 Gain $16.98
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
WEDNESDAY'S PICKS
Jeff Macke recommended getting long Target (TGT). Open $62.66
Pete Najarian said jump on Juniper (JNPR). Open $33.66
Guy Adami preferred Micron (MU).Open $11.59
Eric Bolling liked Google (GOOG) Open $516.02
TUESDAY'S RESULTS
Jeff Macke recommended selling Goldman Sachs (GS). Open $187.70 Close $191.25 Loss $3.45
Guy Adami preferred Juniper (JNPR). Open $33.46 Close $33.66 Gain $.20
Tim Seymour liked iShares MSCI Brazil Index (EWZ). $61.10 Close $62.18 Gain $1.08
Eric Bolling did not have a stock pick.
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 11-10 Gain $23.68
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 18-12 Gain $4.53
Pete Najarian= 6-6 Gain $16.98
Seymore= 2-1 Gain $1.09
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Bernanke Nails It.
"The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent." announced the Fed today.
They continued "Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."
"Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures."
Finally, "Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information."
For those interested in how this statement is similar to everything they have said up until this point, go here
Inflation, inflation and inflation. Until it's ebbs, rates will not drop. Big Ben has been saying this since he took office repeatedly and hopefully the street gets it soon so we do not have all the speculation before each meeting. It will also be good for stocks as things will level out once they come to the reality that Bernanke is telling them what to expect from the Fed. It seems they may be beginning to get it as today the DOW, S&P and Nasdaq were essentially unchanged.
The Fed will not bail out lenders that made dumb loans and now are in trouble. Bernanke is going to let the market work (as he should) and it is already taking care of things. Bad credit is harder to get, and hopefully credit standards return to what they should be. Both of these are good things long term.
Even if growth slows, that is ok as long as inflation stays contained. Given the choice between slowing growth and high inflation, high inflation should always be fought because it always is a economy killer.
They continued "Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."
"Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures."
Finally, "Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information."
For those interested in how this statement is similar to everything they have said up until this point, go here
Inflation, inflation and inflation. Until it's ebbs, rates will not drop. Big Ben has been saying this since he took office repeatedly and hopefully the street gets it soon so we do not have all the speculation before each meeting. It will also be good for stocks as things will level out once they come to the reality that Bernanke is telling them what to expect from the Fed. It seems they may be beginning to get it as today the DOW, S&P and Nasdaq were essentially unchanged.
The Fed will not bail out lenders that made dumb loans and now are in trouble. Bernanke is going to let the market work (as he should) and it is already taking care of things. Bad credit is harder to get, and hopefully credit standards return to what they should be. Both of these are good things long term.
Even if growth slows, that is ok as long as inflation stays contained. Given the choice between slowing growth and high inflation, high inflation should always be fought because it always is a economy killer.
Tuesday, August 7, 2007
52 Week Low List
Here are today's cellar dwellers.. no homebuilders or financials today as they all rallied big time
WON Westwood One Inc
WMG Warner Music Group Corp
TVE Tennessee Valley Auth
TUTR Plato Learning Inc
TGEN Targeted Genetics Corp
TARR Tarragon Corp
SWX Southwest Gas Corporation
NAII Natural Alternatives
NABI Nabi Biopharmaceuticals
MYL Mylan Laboratories Inc
IKN Ikon Office Solutions Inc
DF Dean Foods Co New
DDS Dillard Department St
CC Circuit City Stores
BAMM Books-A-Million Inc
WON Westwood One Inc
WMG Warner Music Group Corp
TVE Tennessee Valley Auth
TUTR Plato Learning Inc
TGEN Targeted Genetics Corp
TARR Tarragon Corp
SWX Southwest Gas Corporation
NAII Natural Alternatives
NABI Nabi Biopharmaceuticals
MYL Mylan Laboratories Inc
IKN Ikon Office Solutions Inc
DF Dean Foods Co New
DDS Dillard Department St
CC Circuit City Stores
BAMM Books-A-Million Inc
EIA: Home Heating Oil Prices To Rise
Just a quick not to those who use oil to heat their homes. If you can lock in your rate now, it will probably be a good idea to do it.
The EIA today predicted that heating oil will rise at least 37 cents a gallon to a price in excess of $2.85 a gallon this winter. This price, it should be noted does not take into account the possible effects of a hurricane(s), more middle east unrest (could it happen?) or additional refinery problems that have been so prevalent this spring and early summer. It would seem that the forecast is a "as long as things stay the way they are now" scenario.
This does not mean the forecast is wrong or irrelevant. If anything, knowing the methodology they use to predict the prices and what they base them on make it very useful. We now know that any combination of the above events OR extremely cold winter will most likely drive heating oil prices over $3 a gallon.
So, rather than pay Exxon (XOM), Chevron (CVX) or BP(BP) additional funds this winter, it is recommended that prices get locked in. If only I could do the same thing with the natural gas I heat my home with.
The EIA today predicted that heating oil will rise at least 37 cents a gallon to a price in excess of $2.85 a gallon this winter. This price, it should be noted does not take into account the possible effects of a hurricane(s), more middle east unrest (could it happen?) or additional refinery problems that have been so prevalent this spring and early summer. It would seem that the forecast is a "as long as things stay the way they are now" scenario.
This does not mean the forecast is wrong or irrelevant. If anything, knowing the methodology they use to predict the prices and what they base them on make it very useful. We now know that any combination of the above events OR extremely cold winter will most likely drive heating oil prices over $3 a gallon.
So, rather than pay Exxon (XOM), Chevron (CVX) or BP(BP) additional funds this winter, it is recommended that prices get locked in. If only I could do the same thing with the natural gas I heat my home with.
Fed Speculating Time Again
Tis' the season and there is a ton of speculation out there about what the Fed will say and or do today. Sooner or later folks are going to realize that Greenspan no longer Chairs the Fed. Bernanke does not want the Fed to be the focus and has no desire to lower rates in response to imbecilic lending.
There is no "credit shortage" out there. There is a "stupid credit shortage" though and that is actually healthy. Sally and Paul who want to have $400,000 loaned to them with no money down, no credit check and pay interest only for two years probably will begin to find this more difficult if not impossible and you know what, this also is good. Bernanke will not finance stupidity by flushing the market with funds to bail these folks out.
What will he do? The same thing he has done since taking office, nothing. He is watching inflation and until that is under wraps, rates will stay where they are, at historically low levels. The economy is growing at a very healthy and retrained rate, unemployment is virtually non-existent, corporate profits are growing at near double digit rates and corporations are so flush with cash they are buying back their own shares at a pace never seen before. So, just because the DOW and S&P drop 4% we should just abandon the plan and lower rates to re-energize the fools who got themselves in a hole in the first place? No way..
Here is proof of why emotion should not rule the Fed. Watch Jim Cramer, in a WWF's Vince McMahon inspired act have a Fed meltdown two weeks after saying sub-prime is "completely meaningless, it has no meaning whatsoever". Laughable.....
Sam Zell was on CNBC last week and he was talking about housing. He said simply that there was no "meltdown" and that housing starts were slowing to historically normal levels. The last three years were an aberration and at 1.4 to 1.6 million starts, we have settled into a "normal" range. Since when did normal require a rate cut?
I think Greenspan enjoyed the market jolting effects of his incoherent ramblings when at the Fed. This is proven by his inexplicable clarity since he left office as exemplified by his call of a "1/3 chance of US recession in 2007". He misses the rush of the market reacting to him. Bernanke has no such desire and if anything, seems to wish the Fed to fade to an after thought when it comes to the markets. If the Fed becomes real predictable, the effects of their actions is minimized. Once Wall St. figures out that rates will not come down until inflation is well under wraps, we can end this speculation every month or two. We can talk about a rate cut when we see proof that inflation is waning.
If you want to know when to panic it is easy, the day Bernanke surprises us with a rate cut, things are far worse than we think.
There is no "credit shortage" out there. There is a "stupid credit shortage" though and that is actually healthy. Sally and Paul who want to have $400,000 loaned to them with no money down, no credit check and pay interest only for two years probably will begin to find this more difficult if not impossible and you know what, this also is good. Bernanke will not finance stupidity by flushing the market with funds to bail these folks out.
What will he do? The same thing he has done since taking office, nothing. He is watching inflation and until that is under wraps, rates will stay where they are, at historically low levels. The economy is growing at a very healthy and retrained rate, unemployment is virtually non-existent, corporate profits are growing at near double digit rates and corporations are so flush with cash they are buying back their own shares at a pace never seen before. So, just because the DOW and S&P drop 4% we should just abandon the plan and lower rates to re-energize the fools who got themselves in a hole in the first place? No way..
Here is proof of why emotion should not rule the Fed. Watch Jim Cramer, in a WWF's Vince McMahon inspired act have a Fed meltdown two weeks after saying sub-prime is "completely meaningless, it has no meaning whatsoever". Laughable.....
Sam Zell was on CNBC last week and he was talking about housing. He said simply that there was no "meltdown" and that housing starts were slowing to historically normal levels. The last three years were an aberration and at 1.4 to 1.6 million starts, we have settled into a "normal" range. Since when did normal require a rate cut?
I think Greenspan enjoyed the market jolting effects of his incoherent ramblings when at the Fed. This is proven by his inexplicable clarity since he left office as exemplified by his call of a "1/3 chance of US recession in 2007". He misses the rush of the market reacting to him. Bernanke has no such desire and if anything, seems to wish the Fed to fade to an after thought when it comes to the markets. If the Fed becomes real predictable, the effects of their actions is minimized. Once Wall St. figures out that rates will not come down until inflation is well under wraps, we can end this speculation every month or two. We can talk about a rate cut when we see proof that inflation is waning.
If you want to know when to panic it is easy, the day Bernanke surprises us with a rate cut, things are far worse than we think.
Upgrades / Downgrades
Here are the late Monday and early Tuesday calls
UPGRADES
Cooper Tire CTB BB&T Capital Mkts Hold » Buy
Silicon Image SIMG Jefferies & Co Underperform » Hold
Alliant Energy LNT Robert W. Baird Neutral » Outperform
Advanced Semi ASX Citigroup Hold » Buy
Burger King BKC Citigroup Hold » Buy
Pepsi Bottling PBG Banc of America Sec Neutral » Buy
Buffalo Wild Wings BWLD Merriman Curhan Ford Neutral » Buy
Electronic Arts ERTS Davenport Reduce/Sell » Neutral
ACCO Brands ABD Barrington Research Mkt Perform » Outperform
Fuel-Tech FTEK Roth Capital Hold » Buy
Marvel Enterprises MVL Janco Partners Mkt Perform » Accumulate
Walter Inds WLT Davenport Buy » Strong Buy
Fiserv FISV DA Davidson Neutral » Buy
Captaris CAPA B. Riley & Co Neutral » Buy
Comerica CMA AG Edwards Hold » Buy
National Cinemedia NCMI Janco Partners Mkt Perform » Accumulate
Tesco TESO CapitalOne southcoast Hold » Buy
TheStreet.com TSCM Needham & Co Buy » Strong Buy
DOWNGRADES
Luminent Mortgage Capital LUM Keefe Bruyette Outperform » Mkt Perform
Itron ITRI JP Morgan Overweight » Neutral
Luminent Mortgage Capital LUM JMP Securities Mkt Outperform » Mkt Underperform
j2 Global JCOM Jefferies & Co Buy » Hold
Thornburg Mortg TMA Deutsche Securities Hold » Sell
Opteum OPX Deutsche Securities Buy » Hold
F5 Networks FFIV Ferris Baker Watts Buy » Neutral
CheckFree CKFR DA Davidson Buy » Neutral
XTO Energy XTO Oppenheimer Buy » Neutral
Exxon Mobil XOM Oppenheimer Buy » Neutral
Valero Energy VLO Oppenheimer Buy » Neutral
Tesoro Petroleum TSO Oppenheimer Buy » Neutral
Sunoco SUN Oppenheimer Buy » Neutral
Pioneer Natural PXD Oppenheimer Buy » Neutral
Occidental Petro OXY Oppenheimer Buy » Neutral
Noble Energy NBL Oppenheimer Buy » Neutral
Murphy Oil MUR Oppenheimer Buy » Neutral
Marathon Oil MRO Oppenheimer Buy » Neutral
Hess HES Oppenheimer Buy » Neutral
Frontier Oil FTO Oppenheimer Buy » Neutral
EOG Resources EOG Oppenheimer Buy » Neutral
Devon Energy DVN Oppenheimer Buy » Neutral
Chevron CVX Oppenheimer Buy » Neutral
Comstock CRK Oppenheimer Buy » Neutral
ConocoPhillips COP Oppenheimer Buy » Neutral
Cabot Oil & Gas COG Oppenheimer Buy » Neutra
UPGRADES
Cooper Tire CTB BB&T Capital Mkts Hold » Buy
Silicon Image SIMG Jefferies & Co Underperform » Hold
Alliant Energy LNT Robert W. Baird Neutral » Outperform
Advanced Semi ASX Citigroup Hold » Buy
Burger King BKC Citigroup Hold » Buy
Pepsi Bottling PBG Banc of America Sec Neutral » Buy
Buffalo Wild Wings BWLD Merriman Curhan Ford Neutral » Buy
Electronic Arts ERTS Davenport Reduce/Sell » Neutral
ACCO Brands ABD Barrington Research Mkt Perform » Outperform
Fuel-Tech FTEK Roth Capital Hold » Buy
Marvel Enterprises MVL Janco Partners Mkt Perform » Accumulate
Walter Inds WLT Davenport Buy » Strong Buy
Fiserv FISV DA Davidson Neutral » Buy
Captaris CAPA B. Riley & Co Neutral » Buy
Comerica CMA AG Edwards Hold » Buy
National Cinemedia NCMI Janco Partners Mkt Perform » Accumulate
Tesco TESO CapitalOne southcoast Hold » Buy
TheStreet.com TSCM Needham & Co Buy » Strong Buy
DOWNGRADES
Luminent Mortgage Capital LUM Keefe Bruyette Outperform » Mkt Perform
Itron ITRI JP Morgan Overweight » Neutral
Luminent Mortgage Capital LUM JMP Securities Mkt Outperform » Mkt Underperform
j2 Global JCOM Jefferies & Co Buy » Hold
Thornburg Mortg TMA Deutsche Securities Hold » Sell
Opteum OPX Deutsche Securities Buy » Hold
F5 Networks FFIV Ferris Baker Watts Buy » Neutral
CheckFree CKFR DA Davidson Buy » Neutral
XTO Energy XTO Oppenheimer Buy » Neutral
Exxon Mobil XOM Oppenheimer Buy » Neutral
Valero Energy VLO Oppenheimer Buy » Neutral
Tesoro Petroleum TSO Oppenheimer Buy » Neutral
Sunoco SUN Oppenheimer Buy » Neutral
Pioneer Natural PXD Oppenheimer Buy » Neutral
Occidental Petro OXY Oppenheimer Buy » Neutral
Noble Energy NBL Oppenheimer Buy » Neutral
Murphy Oil MUR Oppenheimer Buy » Neutral
Marathon Oil MRO Oppenheimer Buy » Neutral
Hess HES Oppenheimer Buy » Neutral
Frontier Oil FTO Oppenheimer Buy » Neutral
EOG Resources EOG Oppenheimer Buy » Neutral
Devon Energy DVN Oppenheimer Buy » Neutral
Chevron CVX Oppenheimer Buy » Neutral
Comstock CRK Oppenheimer Buy » Neutral
ConocoPhillips COP Oppenheimer Buy » Neutral
Cabot Oil & Gas COG Oppenheimer Buy » Neutra
Is Home Depot's Buyback At Risk?
Home Depot (HD) had it's credit rating downgraded last month because of it's plans to tap the credit markets to accomplish it's $15 billion share repurchase plan. With the recent credit market tightening out there, will that buyback or a substantial part of it be put on the shelf?
When they announced the ambitious plan, Home Depot said they would accomplish it "as soon as practicable". Which means, well, nothing. They have announced a tender offer for shares but it remains to be seen how many people actually tender those share to the company. Moody's (MCO)did say yesterday that they may downgrade Home Depot debt even further depending on how expensive corporate lending becomes. Another debt downgrade will have the effect of making borrowing even more expensive for Home Depot.
In July, there was only $29 billion in corporate bonds issued vs $128 billion in June. The reason? Tightening credit markets have sharply driven up the cost of issuing that debt. Now, the cost still is below historic levels but that is of little consequence when you announce plans based on yesterday's levels. How has this debt figured into stock buybacks? Last year $602 billion in shares were repurchased and corporations issued a record $454 billion in cheap new debt to make those purchases. Just last month Expedia (EXPE) cut a previously announced buyback by over 20% saying "lack of available financing, on terms satisfactory to the company". Translation: It was too expensive
It bears close watching whether or another large debt supported buyback at Proctor & Gamble (PG) of $24 billion will be slowed to a crawl as the cast of it also increases.
Now, not all buybacks out there are being debt financed but it is safe to say that when a billion dollar company is buying back 20% of it's shares, a large amount of now more expensive debt is involved. Do not take those buyback plans into your thinking when deciding to purchase shares, there is a very good chance the buyback will not be accomplished now.
When they announced the ambitious plan, Home Depot said they would accomplish it "as soon as practicable". Which means, well, nothing. They have announced a tender offer for shares but it remains to be seen how many people actually tender those share to the company. Moody's (MCO)did say yesterday that they may downgrade Home Depot debt even further depending on how expensive corporate lending becomes. Another debt downgrade will have the effect of making borrowing even more expensive for Home Depot.
In July, there was only $29 billion in corporate bonds issued vs $128 billion in June. The reason? Tightening credit markets have sharply driven up the cost of issuing that debt. Now, the cost still is below historic levels but that is of little consequence when you announce plans based on yesterday's levels. How has this debt figured into stock buybacks? Last year $602 billion in shares were repurchased and corporations issued a record $454 billion in cheap new debt to make those purchases. Just last month Expedia (EXPE) cut a previously announced buyback by over 20% saying "lack of available financing, on terms satisfactory to the company". Translation: It was too expensive
It bears close watching whether or another large debt supported buyback at Proctor & Gamble (PG) of $24 billion will be slowed to a crawl as the cast of it also increases.
Now, not all buybacks out there are being debt financed but it is safe to say that when a billion dollar company is buying back 20% of it's shares, a large amount of now more expensive debt is involved. Do not take those buyback plans into your thinking when deciding to purchase shares, there is a very good chance the buyback will not be accomplished now.
"Fast Money" for Tuesday
TUESDAY'S PICKS
Jeff Macke recommended selling Goldman Sachs (GS). Open $187.79
Guy Adami preferred Juniper (JNPR). Open $33.46
Tim Seymour liked iShares MSCI Brazil Index (EWZ). $61.10
Eric Bolling did not have a stock pick.
Monday's Results
Karen Finerman liked Kaiser Aluminum (KALU) Open $60.34 Close $60.54 Gain $.20
Guy Adami preferred Tiffany & Co. (TIF) Open $48.52 Close $45.82 Loss $2.70
Jon Najarian revealed he made a bet that Fed Chief Bernanke makes a surprise rate cut.
Jeff Macke said get long the Financial Select Sector SPDR (XLF). Open $32.06 Close $33.70 Gain $1.64
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 10-10 Gain $23.48
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 18-11 Gain $7.98
Pete Najarian= 6-6 Gain $16.98
Seymore= 1-1 Gain $.01
Finerman= 2-2 Gain $.88
Gilbert= 1-0 Gain $.29
Monday, August 6, 2007
Today's 52 Week Lows
Finally a day with a short list....
WON Westwood One Inc
VOXX Audiovox Corporation
USG USG Corporation
TWC Time Warner Cable Inc
SANM Sanmina Corp
RCNI Rcn Corp
PEIX Pacific Ethanol Inc
NT Nortel Networks Corp New
NCOC National Coal Corp
MWY Midway Games Inc
JMBA Jamba Inc
HOTT Hot Topic Inc
GTW Gateway Inc
COMS 3Com Corporation
CDL Citadel Broadcasting Corp
BBW Build A Bear Workshop
ALK Alaska Air Group, Inc
WON Westwood One Inc
VOXX Audiovox Corporation
USG USG Corporation
TWC Time Warner Cable Inc
SANM Sanmina Corp
RCNI Rcn Corp
PEIX Pacific Ethanol Inc
NT Nortel Networks Corp New
NCOC National Coal Corp
MWY Midway Games Inc
JMBA Jamba Inc
HOTT Hot Topic Inc
GTW Gateway Inc
COMS 3Com Corporation
CDL Citadel Broadcasting Corp
BBW Build A Bear Workshop
ALK Alaska Air Group, Inc
Wal-Mart Enters into JV In India
It seems that JV's are really gaining popularity for US companies as a way to establish themselves in a new region at a minimal cost while gaining immediate acceptance as a "partner" in the new country. Wal-Mart (WMT), the world's largest retailer, said today it's establishing a 50% held joint venture with Bharti Enterprises for a wholesale cash-and-carry back-end suppy chain management operation in India. The first wholesale cash-and-carry facility is targeted to open by the end of next year and over the next seven years they expect to open 10 to 15 facilities and employ approximately 5,000. A typical location will stand between 50,000 and 100,000 square feet and sell a wide range of fruits and vegetables, groceries and staples, stationery, footwear, clothing, consumer durables and other general merchandise items.
The venture will invest in setting up an efficient supply chain by linking farmers and small manufacturers directly to retailers, maximizing value for farmers and manufacturers on the one end and retailers and consumers on the other. It will support farmers and small manufacturers who have limited infrastructure and distribution strength, and the supply chain will enable minimum wastage, particularly of fresh foods and vegetables.
“We are delighted to partner with Wal-Mart for wholesale cash-and-carry and back-end supply chain management operations in India,” said Sunil Bharti Mittal, Chairman and Group CEO, Bharti Enterprises. “Wal-Mart’s global expertise in supply chain and logistics will bring enhanced efficiencies across the retail ecosystem. This venture promises to bring great value to millions of farmers, artisans, small manufacturers and retailers across India. We are pleased to be a partner in developing this sector which is set to become a significant engine of India’s economic growth.”
Bharti Wal-Mart Private Limited will bring modern supply chain and back-end logistics to India, bringing Wal-Mart’s practices in such areas as just-in-time inventory, retail information systems, cold chain infrastructure, GPS for truck and trailer tracking, and fuel management systems. Additionally, Bharti Enterprises’ 100% subsidiary Bharti Retail, who will own and manage the retail stores, has entered into a franchise agreement with Wal-Mart which will provide technical support to Bharti Retail.
Wal-Mart is entering the Indian market through the back door so to speak. By partnering with a local ownership they are establishing themselves not as a foreign intruder looking to take business from locals, but as a well financed partner helping those locals improve their business and provide residents better services. The positive reception they will get cannot be understated. When Wal-Mart eventually opens retail location in India, they will already have years of positive exposure to the market. India is a massive market and success there will be very good for shareholders indeed.
The venture will invest in setting up an efficient supply chain by linking farmers and small manufacturers directly to retailers, maximizing value for farmers and manufacturers on the one end and retailers and consumers on the other. It will support farmers and small manufacturers who have limited infrastructure and distribution strength, and the supply chain will enable minimum wastage, particularly of fresh foods and vegetables.
“We are delighted to partner with Wal-Mart for wholesale cash-and-carry and back-end supply chain management operations in India,” said Sunil Bharti Mittal, Chairman and Group CEO, Bharti Enterprises. “Wal-Mart’s global expertise in supply chain and logistics will bring enhanced efficiencies across the retail ecosystem. This venture promises to bring great value to millions of farmers, artisans, small manufacturers and retailers across India. We are pleased to be a partner in developing this sector which is set to become a significant engine of India’s economic growth.”
Bharti Wal-Mart Private Limited will bring modern supply chain and back-end logistics to India, bringing Wal-Mart’s practices in such areas as just-in-time inventory, retail information systems, cold chain infrastructure, GPS for truck and trailer tracking, and fuel management systems. Additionally, Bharti Enterprises’ 100% subsidiary Bharti Retail, who will own and manage the retail stores, has entered into a franchise agreement with Wal-Mart which will provide technical support to Bharti Retail.
Wal-Mart is entering the Indian market through the back door so to speak. By partnering with a local ownership they are establishing themselves not as a foreign intruder looking to take business from locals, but as a well financed partner helping those locals improve their business and provide residents better services. The positive reception they will get cannot be understated. When Wal-Mart eventually opens retail location in India, they will already have years of positive exposure to the market. India is a massive market and success there will be very good for shareholders indeed.
Banks Fight For Blackstone Business
Another quick look at the ratings for Blackstone Group indicate that despite all current indications to the contrary and the potential for massive tax increases on the company by a Democratic congress, big banks still will not piss off a potential big customer
Here is the list (updated as of Friday)
Credit Suisse (CS)= Outperform
Lehman (LEH)= Outperform
Morgan Stanley (MS)= Overweight
Merrill Lynch (MER)= Buy
Deutche Bank (DB)= Buy
Citigroup (C)= Buy
Bank Of America (BAC)= Buy
Wachovia (WAC)= MarketPerform
All great ratings for a company with a deteriorating business environment, tightening credit markets, political hostilities, and increasing competition.
I have to wonder that if Blackstone did not generate almost all it's business through loans made by these very companies that generate billions in fees for the banks, would the ratings be so good? If they sold candy, had no real use for the banks and had the same current business environment, would they still be a "outperform"?
I do not think so either...
Here is the list (updated as of Friday)
Credit Suisse (CS)= Outperform
Lehman (LEH)= Outperform
Morgan Stanley (MS)= Overweight
Merrill Lynch (MER)= Buy
Deutche Bank (DB)= Buy
Citigroup (C)= Buy
Bank Of America (BAC)= Buy
Wachovia (WAC)= MarketPerform
All great ratings for a company with a deteriorating business environment, tightening credit markets, political hostilities, and increasing competition.
I have to wonder that if Blackstone did not generate almost all it's business through loans made by these very companies that generate billions in fees for the banks, would the ratings be so good? If they sold candy, had no real use for the banks and had the same current business environment, would they still be a "outperform"?
I do not think so either...
Upgrades / Downgrades
Here are the late Friday and early Monday calls
UPGRADES
TD Ameritrade AMTD UBS Neutral » Buy
Merrill Lynch MER UBS Neutral » Buy
McMoRan Expl MMR JP Morgan Neutral » Overweight
PG&E PCG Deutsche Securities Hold » Buy
Electronic Arts ERTS Bear Stearns Peer Perform » Outperform
AnnTaylor ANN DA Davidson Neutral » Buy
Insituform Tech INSU Canaccord Adams Sell » Hold
St. Mary Lnd/Expl SM KeyBanc Capital Mkts / McDonald Hold » Buy
Gulfmark Offshore GLF CapitalOne southcoast Hold » Buy
Telefonica S.A. TEF Lehman Brothers Underweight » Equal-weight
OdysseyRe ORH Ferris Baker Watts Neutral » Buy
Transocean RIG Wachovia Mkt Perform » Outperform
Ensco ESV Wachovia Mkt Perform » Outperform
Assured Guaranty AGO Calyon Securities Neutral » Buy
AMBAC Fincl ABK Calyon Securities Add » Buy
Amylin Pharms AMLN Cowen & Co Underperform » Neutral
DOWNGRADES
Luminent Mortgage Capital LUM JP Morgan Neutral » Underweight
CheckFree CKFR JP Morgan Overweight » Neutral
Penn Va GP Hldgs PVG RBC Capital Mkts Outperform » Sector Perform
Independent Bank IBCP RBC Capital Mkts Sector Perform » Underperform IMPAC Mortgage IMH Deutsche Securities Buy » Hold
Nortel NT Charter Equity Buy » Mkt Perform
Ditech DITC First Albany Buy » Underperform
PNM Resources PNM RBC Capital Mkts Sector Perform » Underperform
Owens & Minor OMI Credit Suisse Outperform » Neutral
Silicon Image SIMG Longbow Buy » Neutral
Portfolio Recovery Assoc. PRAA First Analysis Sec Overweight » Equal-Weight
Asset Acceptance Capital AACC First Analysis Sec Overweight » Equal-Weight
SPSS Inc SPSS Cowen & Co Neutral » Underperform
Radiation Therapy Services RTSX Cowen & Co Outperform » Neutral
UPGRADES
TD Ameritrade AMTD UBS Neutral » Buy
Merrill Lynch MER UBS Neutral » Buy
McMoRan Expl MMR JP Morgan Neutral » Overweight
PG&E PCG Deutsche Securities Hold » Buy
Electronic Arts ERTS Bear Stearns Peer Perform » Outperform
AnnTaylor ANN DA Davidson Neutral » Buy
Insituform Tech INSU Canaccord Adams Sell » Hold
St. Mary Lnd/Expl SM KeyBanc Capital Mkts / McDonald Hold » Buy
Gulfmark Offshore GLF CapitalOne southcoast Hold » Buy
Telefonica S.A. TEF Lehman Brothers Underweight » Equal-weight
OdysseyRe ORH Ferris Baker Watts Neutral » Buy
Transocean RIG Wachovia Mkt Perform » Outperform
Ensco ESV Wachovia Mkt Perform » Outperform
Assured Guaranty AGO Calyon Securities Neutral » Buy
AMBAC Fincl ABK Calyon Securities Add » Buy
Amylin Pharms AMLN Cowen & Co Underperform » Neutral
DOWNGRADES
Luminent Mortgage Capital LUM JP Morgan Neutral » Underweight
CheckFree CKFR JP Morgan Overweight » Neutral
Penn Va GP Hldgs PVG RBC Capital Mkts Outperform » Sector Perform
Independent Bank IBCP RBC Capital Mkts Sector Perform » Underperform IMPAC Mortgage IMH Deutsche Securities Buy » Hold
Nortel NT Charter Equity Buy » Mkt Perform
Ditech DITC First Albany Buy » Underperform
PNM Resources PNM RBC Capital Mkts Sector Perform » Underperform
Owens & Minor OMI Credit Suisse Outperform » Neutral
Silicon Image SIMG Longbow Buy » Neutral
Portfolio Recovery Assoc. PRAA First Analysis Sec Overweight » Equal-Weight
Asset Acceptance Capital AACC First Analysis Sec Overweight » Equal-Weight
SPSS Inc SPSS Cowen & Co Neutral » Underperform
Radiation Therapy Services RTSX Cowen & Co Outperform » Neutral
Sunday, August 5, 2007
Disney Responds To My Post
Apparently there may be some apprehension over at the "House of Mouse" about their recent purchase. I received an email from the VP of Corporate Communications "chastising" me for not calling Disney (DIS) first.
I have omitted the email addresses assuming those who really want to find them will be able to.
From: Spelich, John
Sent: Friday, August 03, 2007 4:25 PM
To: todd.sullivan1@gmail.com
Subject: Shame you didn't call
Todd:
It’s a shame you wrote your column today on “Stockmasters” about Disney and Club Penguin without calling us so you could understand the steps we take to protect children online.
Disney is, and always has been, committed to creating a safe environment for kids and families online, and Club Penguin shares this commitment. We intend to immediately begin combining best practices from both companies to further enhance the safety of the Club Penguin experience, including the continued aggressive use of filtering and monitoring of the site’s chat function to prevent the sharing of personally identifiable information.
We are already the no. 1 destination on the web for kids and families with Disney.com (more than 20 million unique visitors a month). And we have had a similar multiplayer game, Toontown Online, in place for four years.
Sincerely,
John W. Spelich
Vice President -- Corporate Communications
The Walt Disney Internet Group
My Reply
----- Original Message -----
From: Todd Sullivan
To: Spelich, John
Sent: Fri Aug 03 18:08:27 2007
Subject: RE: Shame you didn't call
John,
I did not call because I have no doubt you are taking tremendous steps to eliminate a “worse case scenario” and I never alluded to the fact you may not be in the post. BUT, I doubt even you would claim “it cannot happen here”. My post is from a investing perspective and the downside here far outweighs the advantages of having it.
All the safeguards in the world cannot stop a committed pervert if they really want to find a way….
Sorry
His response to this was a simple "that's not a good answer". So, should I have called? No. Why? Because unless he can guarantee me "it cannot happen here" (he was given the chance and wisely did not do it) then my thesis stands that the risks this pose to the Disney brand far outweigh any potential bottom line increase it may produce.
Let assume Disney has gone far and above every other social networking site out there in it's effort to protect children. I will go ahead in advance and grant them that they have and that the site is the safest out there. If history tells us anything and Mr. Spelich himself admitted through his omission of any answer to my statement, nothing is 100%. The Titanic sunk, the Jets and Joe Namath beat the Colts, the US hockey kids beat the Russians, the Red Sox came back 0-3 and beat the Yanks in the "House Ruth Built" and the Soviet Union did actually crumble under it's own failures.
My point in the original post still stands that Disney can be 99.99999% perfect in this case and still lose, big time. All it will take is one singe example and as I told Mr. Spelich, "the 20/20's and Dateline's of the world will be all over you folks". They will take the exception and lead us to believe it is either pervasive or "will happen to our kids" at any moment. It is what they do, make the oddities the norm for ratings. Whether it is right or wrong of them irrelevant in as much as that is what they do and the world we live in. Disney needs to recognize this. Their reputation will not get them a free pass here but just make them a bigger target. I can just see Dateline producers now sitting there setting up dummy accounts trying to lure kids so they can break the story and make the splashy headline.
I guess if we made a list like Ben Franklin used to do of "pro's and con's" of a decision, can there be enough "pro's" for Disney to offset the potential "a pedophile meets and abuses a child through our site"?
I pray it never happens but based on the internet's history in this area, they will be out there trying..
I have omitted the email addresses assuming those who really want to find them will be able to.
From: Spelich, John
Sent: Friday, August 03, 2007 4:25 PM
To: todd.sullivan1@gmail.com
Subject: Shame you didn't call
Todd:
It’s a shame you wrote your column today on “Stockmasters” about Disney and Club Penguin without calling us so you could understand the steps we take to protect children online.
Disney is, and always has been, committed to creating a safe environment for kids and families online, and Club Penguin shares this commitment. We intend to immediately begin combining best practices from both companies to further enhance the safety of the Club Penguin experience, including the continued aggressive use of filtering and monitoring of the site’s chat function to prevent the sharing of personally identifiable information.
We are already the no. 1 destination on the web for kids and families with Disney.com (more than 20 million unique visitors a month). And we have had a similar multiplayer game, Toontown Online, in place for four years.
Sincerely,
John W. Spelich
Vice President -- Corporate Communications
The Walt Disney Internet Group
My Reply
----- Original Message -----
From: Todd Sullivan
To: Spelich, John
Sent: Fri Aug 03 18:08:27 2007
Subject: RE: Shame you didn't call
John,
I did not call because I have no doubt you are taking tremendous steps to eliminate a “worse case scenario” and I never alluded to the fact you may not be in the post. BUT, I doubt even you would claim “it cannot happen here”. My post is from a investing perspective and the downside here far outweighs the advantages of having it.
All the safeguards in the world cannot stop a committed pervert if they really want to find a way….
Sorry
His response to this was a simple "that's not a good answer". So, should I have called? No. Why? Because unless he can guarantee me "it cannot happen here" (he was given the chance and wisely did not do it) then my thesis stands that the risks this pose to the Disney brand far outweigh any potential bottom line increase it may produce.
Let assume Disney has gone far and above every other social networking site out there in it's effort to protect children. I will go ahead in advance and grant them that they have and that the site is the safest out there. If history tells us anything and Mr. Spelich himself admitted through his omission of any answer to my statement, nothing is 100%. The Titanic sunk, the Jets and Joe Namath beat the Colts, the US hockey kids beat the Russians, the Red Sox came back 0-3 and beat the Yanks in the "House Ruth Built" and the Soviet Union did actually crumble under it's own failures.
My point in the original post still stands that Disney can be 99.99999% perfect in this case and still lose, big time. All it will take is one singe example and as I told Mr. Spelich, "the 20/20's and Dateline's of the world will be all over you folks". They will take the exception and lead us to believe it is either pervasive or "will happen to our kids" at any moment. It is what they do, make the oddities the norm for ratings. Whether it is right or wrong of them irrelevant in as much as that is what they do and the world we live in. Disney needs to recognize this. Their reputation will not get them a free pass here but just make them a bigger target. I can just see Dateline producers now sitting there setting up dummy accounts trying to lure kids so they can break the story and make the splashy headline.
I guess if we made a list like Ben Franklin used to do of "pro's and con's" of a decision, can there be enough "pro's" for Disney to offset the potential "a pedophile meets and abuses a child through our site"?
I pray it never happens but based on the internet's history in this area, they will be out there trying..
"Fast Money" for Monday
Here are Friday's results and Monday's picks
Monday's Picks
Karen Finerman liked Kaiser Aluminum (KALU) Open $60.34
Guy Adami preferred Tiffany & Co. (TIF) Open $48.52
Jon Najarian revealed he made a bet that Fed Chief Bernanke makes a surprise rate cut.
Jeff Macke said get long the Financial Select Sector SPDR (XLF). Open $32.06
Friday's Results
Jeff Macke recommends buying Callaway Golf (ELY) on the dip. Open $15.67 Close $15.63 Loss $.04
Pete Najarian likes Juniper (JNPR) ahead of Cisco (CSCO) earnings. Open $32.55 close $31.23 Loss $1.32
Guy Adami and Eric Bolling didn’t have any stock picks.
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 10-9 Gain $26.22
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 17-11 Gain $6.34
Pete Najarian= 6-6 Gain $16.98
Seymore= 1-1 Gain $.01
Finerman= 1-2 Gain $.68
Gilbert= 1-0 Gain $.29
Monday's Picks
Karen Finerman liked Kaiser Aluminum (KALU) Open $60.34
Guy Adami preferred Tiffany & Co. (TIF) Open $48.52
Jon Najarian revealed he made a bet that Fed Chief Bernanke makes a surprise rate cut.
Jeff Macke said get long the Financial Select Sector SPDR (XLF). Open $32.06
Friday's Results
Jeff Macke recommends buying Callaway Golf (ELY) on the dip. Open $15.67 Close $15.63 Loss $.04
Pete Najarian likes Juniper (JNPR) ahead of Cisco (CSCO) earnings. Open $32.55 close $31.23 Loss $1.32
Guy Adami and Eric Bolling didn’t have any stock picks.
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 10-9 Gain $26.22
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 17-11 Gain $6.34
Pete Najarian= 6-6 Gain $16.98
Seymore= 1-1 Gain $.01
Finerman= 1-2 Gain $.68
Gilbert= 1-0 Gain $.29
Last Week's Insider Buys & One Huge Sell
In a down week, here are the companies that had insiders step up top the plate and buy shares.
Jefferies Group (JEF)= $9,821,000
Gatehouse Media (GHS)= $6,310,000
Thornburg Mortgage (TMA)= $5,996,000
Equity One (EQY)= $5,356,000
Encore Bancshares (EBTX)= $3,620,000
Johnson Controls (JCI)= $2,400,000
On another note, did anyone out there notice Bill Gates sold $156,120,000 of Microsoft (MSFT) last week?
Jefferies Group (JEF)= $9,821,000
Gatehouse Media (GHS)= $6,310,000
Thornburg Mortgage (TMA)= $5,996,000
Equity One (EQY)= $5,356,000
Encore Bancshares (EBTX)= $3,620,000
Johnson Controls (JCI)= $2,400,000
On another note, did anyone out there notice Bill Gates sold $156,120,000 of Microsoft (MSFT) last week?
Notable Dividend Increases Last Week
Saturday, August 4, 2007
Top Stories at VIN for July
Here are the top stories for the month of July at Value Investing News.
1- Best 3 Investments Over The Past Year
2- Valuing Tyco Spinoffs
3- Value Creation or Destruction.
4- Risk Arbitrage
5- Biggest Losers of Today's Stock Market Panic
Please visit this wonderful site here
1- Best 3 Investments Over The Past Year
2- Valuing Tyco Spinoffs
3- Value Creation or Destruction.
4- Risk Arbitrage
5- Biggest Losers of Today's Stock Market Panic
Please visit this wonderful site here
ValuePlays Most Read Posts for July
Here are the most read posts for the month of July
1- Macy's Into Sears Holdings?
2- Sears Holdings: If Lampert Is Buying more, Shouldn't We?
3- Mohnish Pabrai Interview
4- Buffett and Johnson & Johnson
5- Another Mystifying Analyst Call: Starbucks
1- Macy's Into Sears Holdings?
2- Sears Holdings: If Lampert Is Buying more, Shouldn't We?
3- Mohnish Pabrai Interview
4- Buffett and Johnson & Johnson
5- Another Mystifying Analyst Call: Starbucks
Friday, August 3, 2007
Today's 52 Week Lows
Here are the low for the year...... again (broken record?) financial get crushed. Noe for something completely different, some non financials...
XEL Xcel Energy Inc
WPP Wausau Paper Corp
WGO Winnebago Industries, Inc
VOXX Audiovox Corporation
TZOO Travelzoo Inc
TWC Time Warner Cable Inc
THC Tenet Healthcare Corp
STLY Stanley Furniture Company
RT Ruby Tuesday, Inc.
RGS Regis Corp
NTAP Network Appliance Inc
MSO Martha Stewart Living
MOT Motorola, Inc
LTD Limited Brands Inc
KKD Krispy Kreme Doughnut
JNY Jones Apparel Group, Inc
ILA Aquila Inc
HSY Hershey Foods Corporation
HRL Hormel Foods Corporation
HOG Harley Davidson
DPZ Dominos Pizza Inc
DDS Dillard Department St ores
ANN Ann Taylor Stores
AN AutoNation Inc
XEL Xcel Energy Inc
WPP Wausau Paper Corp
WGO Winnebago Industries, Inc
VOXX Audiovox Corporation
TZOO Travelzoo Inc
TWC Time Warner Cable Inc
THC Tenet Healthcare Corp
STLY Stanley Furniture Company
RT Ruby Tuesday, Inc.
RGS Regis Corp
NTAP Network Appliance Inc
MSO Martha Stewart Living
MOT Motorola, Inc
LTD Limited Brands Inc
KKD Krispy Kreme Doughnut
JNY Jones Apparel Group, Inc
ILA Aquila Inc
HSY Hershey Foods Corporation
HRL Hormel Foods Corporation
HOG Harley Davidson
DPZ Dominos Pizza Inc
DDS Dillard Department St ores
ANN Ann Taylor Stores
AN AutoNation Inc
DOW Looking To Enter Russian Market
Dow Chemical (DOW) is looking for a Russian partner to construct a petrochemical plant in Russia.
Gazprom has been indicated as a possible partner in the plant construction. DOW representatives note that Russia currently produces less ethylene than any of Dow Chemical's plants around the world. Last year Dow's turnover in Russia and CIS countries totaled $530 million. Current rates of growth of the Company's Russian business exceed 30%.
In January, DOW started up its first ever production facility in Russia. The plant, located at Kryukovo, outside Moscow, will produce STYROFOAM™ brand extruded polystyrene (XPS) insulation boards for Dow Building Solutions, one of Dow’s market-facing business units.
Now, doing business with Russia has proven to be a bit risky, but for 30% growth, there is a price to do it. Not only that, but to be the first there with a major facility would be a major coup.
In Q3 DOW has said they will produce a "white paper" on the progress and outlooks for their multitude of JV's around the world. This is a much anticipated event and it will be a huge catalyst for the company and by default, it's stock price. It will detail expected future earnings from the JV's going forward. On another note, a birdy tells me to look for another dividend increase or an additional share repurchase announcement around the same time.
The end of the current "commodity cycle" is expected to be around the turn of the century and typically in the past, DOW has seen earning plummet during these times. It is no coincidence the the huge JV's in Saudi Arabia and Brazil are scheduled to come on line at that time to counter the expected earnings fall.
Gazprom has been indicated as a possible partner in the plant construction. DOW representatives note that Russia currently produces less ethylene than any of Dow Chemical's plants around the world. Last year Dow's turnover in Russia and CIS countries totaled $530 million. Current rates of growth of the Company's Russian business exceed 30%.
In January, DOW started up its first ever production facility in Russia. The plant, located at Kryukovo, outside Moscow, will produce STYROFOAM™ brand extruded polystyrene (XPS) insulation boards for Dow Building Solutions, one of Dow’s market-facing business units.
Now, doing business with Russia has proven to be a bit risky, but for 30% growth, there is a price to do it. Not only that, but to be the first there with a major facility would be a major coup.
In Q3 DOW has said they will produce a "white paper" on the progress and outlooks for their multitude of JV's around the world. This is a much anticipated event and it will be a huge catalyst for the company and by default, it's stock price. It will detail expected future earnings from the JV's going forward. On another note, a birdy tells me to look for another dividend increase or an additional share repurchase announcement around the same time.
The end of the current "commodity cycle" is expected to be around the turn of the century and typically in the past, DOW has seen earning plummet during these times. It is no coincidence the the huge JV's in Saudi Arabia and Brazil are scheduled to come on line at that time to counter the expected earnings fall.
Disney Buys Club Penquin...... Asking for Trouble?
It was announced this week that Disney (DIS) had purchased the children's social networking site "Club Penguin". My initial reaction was that it was a good idea but, something just did not sit right with me.
After more thought it hit me. I wonder if Disney has considered how this may possibly backfire? The news a few weeks ago that there were 29,000 convicted sex offenders on News Corp.'s (NWS) MySpace that were using there own names tell us that the internet and social networking sites are the "playgrounds" of the 70's and 80's for pedophiles.
Now, admittedly the Disney Penguin site is not as well known as Myspace but now that Disney is the new owner, that will change. I am sure that Disney has plans for the Penguin to become THE social site for youngsters and with that comes the inevitable problems of this century.
I am also sure that Disney will take extra precautions to ensure pedophiles do not use their own names but if one wants to become anonymous in today's age, they can easily pretend they are a 6 year old.
Because it is now a Disney site, expectations for safety will be far greater and a single problem will instantly become an enormous issue. Any issue with the site will rub off on the theme parks. People will begin to wonder, "if the pedophiles are on the site, are they in the parks also"? Personally, as the father of three it will be a cold day in hell before any of my kids spend time on any of these sites, but millions of children are daily and shows like "To Catch A Predator" on Dateline should illustrate the depth pedophiles will go to meet children.
Disney is in a tough place with this one. If the site becomes very popular and profitable it will attract the sickos, if it doesn't it was wasted money.
I have a feeling Disney will regret this one....
After more thought it hit me. I wonder if Disney has considered how this may possibly backfire? The news a few weeks ago that there were 29,000 convicted sex offenders on News Corp.'s (NWS) MySpace that were using there own names tell us that the internet and social networking sites are the "playgrounds" of the 70's and 80's for pedophiles.
Now, admittedly the Disney Penguin site is not as well known as Myspace but now that Disney is the new owner, that will change. I am sure that Disney has plans for the Penguin to become THE social site for youngsters and with that comes the inevitable problems of this century.
I am also sure that Disney will take extra precautions to ensure pedophiles do not use their own names but if one wants to become anonymous in today's age, they can easily pretend they are a 6 year old.
Because it is now a Disney site, expectations for safety will be far greater and a single problem will instantly become an enormous issue. Any issue with the site will rub off on the theme parks. People will begin to wonder, "if the pedophiles are on the site, are they in the parks also"? Personally, as the father of three it will be a cold day in hell before any of my kids spend time on any of these sites, but millions of children are daily and shows like "To Catch A Predator" on Dateline should illustrate the depth pedophiles will go to meet children.
Disney is in a tough place with this one. If the site becomes very popular and profitable it will attract the sickos, if it doesn't it was wasted money.
I have a feeling Disney will regret this one....
CSX: A Great Buy For An Odd Reason
Over year ago my sons and I were waiting at the train station in Worcester, MA for a family member to come for a visit. My kids, who were three and thought Thomas The Tank Engine was (and still is) the coolest thing in the world wanted to leave early that day so they could watch the freight trains in the rail yard. After about 45 minutes of watching I struck up a conversation with the rail worker waiting for the next train to arrive.
He said that in his 15 years there it had "never been this busy" and that there are days that the trains are just lined up trying to get in to get through to various points in New England. I asked him if this was just a local issue and he said that his friends in other areas along the CSX (CSX) line reported the same issues. "It is just crazy everywhere" he claimed.
When I asked him why there were tractor trailers on the train cars he said "it is cheaper to haul them by train and then just move them locally". Why? I asked. "Gas" he said in a word. "As long as gas stays high, it will cost too much to ship by truck and we will haul it all". Bingo...
I asked my kids "if they wanted to buy part of the train company" and after they finished jumping up and down for joy, we went back home that day and bought CSX shares for their education accounts at $23 a share. Just to see their faces, I let them push the "buy" button and laughed as they jumped and clapped as the screen changed. I wanted to teach them about "ownership" and how the business world around them functions and yes I know they were only 3 at the time but even basic lessons are good ones, no?
I figured gas prices were not coming down anytime soon and if anyone new anything this guy would. I dismissed the historical "railroads suck cash" commentary and figured that were were entering a un-historic phase in the US pertaining to gas prices and the use of railroads for biofuels (ethanol). Quick research disclosed that any ethanol into the eastern US was shipped almost exclusively by CSX. That alone would dramatically boost volume. I figured that alone would boost pricing and earnings which would leave extra money for repurchases or dividend increases since building new railroads was probably not in the cards. I did not look into "discounted future cash flows", beta, I did not do a chart analysis or look at earnings 10 years ago to the present, nor did I check to see what Wall St. analyst's felt on the subject.
Well, almost a 100% return in a year and a half would prove that rail worker very correct indeed. In their most recent quarter, CSX produced record earnings and stated pricing and financial results looks to remain strong through the end of the decade. They are also in the process of repurchasing over 15% of the outstanding shares and have tripled the dividend. Word then came out in March 2007 that Carl Icahn, George Soros and David Dremen had all taken large stakes in the company. Maybe they spoke to the same rail worker?
Come to think of it, I bought them shares in McDonalds (MCD) for very similar reasons in 2003 and that has worked out spectacularly also with shares now sitting near their all time high.
Maybe simply listening to the people who are intimately involved with the operations and looking at macro factors is not the "wrong way" after all but the "right way"?
I think I am going to get Peter Lynch's book. Anyone read it?
He said that in his 15 years there it had "never been this busy" and that there are days that the trains are just lined up trying to get in to get through to various points in New England. I asked him if this was just a local issue and he said that his friends in other areas along the CSX (CSX) line reported the same issues. "It is just crazy everywhere" he claimed.
When I asked him why there were tractor trailers on the train cars he said "it is cheaper to haul them by train and then just move them locally". Why? I asked. "Gas" he said in a word. "As long as gas stays high, it will cost too much to ship by truck and we will haul it all". Bingo...
I asked my kids "if they wanted to buy part of the train company" and after they finished jumping up and down for joy, we went back home that day and bought CSX shares for their education accounts at $23 a share. Just to see their faces, I let them push the "buy" button and laughed as they jumped and clapped as the screen changed. I wanted to teach them about "ownership" and how the business world around them functions and yes I know they were only 3 at the time but even basic lessons are good ones, no?
I figured gas prices were not coming down anytime soon and if anyone new anything this guy would. I dismissed the historical "railroads suck cash" commentary and figured that were were entering a un-historic phase in the US pertaining to gas prices and the use of railroads for biofuels (ethanol). Quick research disclosed that any ethanol into the eastern US was shipped almost exclusively by CSX. That alone would dramatically boost volume. I figured that alone would boost pricing and earnings which would leave extra money for repurchases or dividend increases since building new railroads was probably not in the cards. I did not look into "discounted future cash flows", beta, I did not do a chart analysis or look at earnings 10 years ago to the present, nor did I check to see what Wall St. analyst's felt on the subject.
Well, almost a 100% return in a year and a half would prove that rail worker very correct indeed. In their most recent quarter, CSX produced record earnings and stated pricing and financial results looks to remain strong through the end of the decade. They are also in the process of repurchasing over 15% of the outstanding shares and have tripled the dividend. Word then came out in March 2007 that Carl Icahn, George Soros and David Dremen had all taken large stakes in the company. Maybe they spoke to the same rail worker?
Come to think of it, I bought them shares in McDonalds (MCD) for very similar reasons in 2003 and that has worked out spectacularly also with shares now sitting near their all time high.
Maybe simply listening to the people who are intimately involved with the operations and looking at macro factors is not the "wrong way" after all but the "right way"?
I think I am going to get Peter Lynch's book. Anyone read it?
Upgrades / Downgrades
Here are the late Thursday's and Friday's analyst calls
UPGRADES
KBR Inc. KBR Wachovia Mkt Perform » Outperform
Eagle Bulk Shipping EGLE Wachovia Mkt Perform » Outperform
Timberland TBL UBS Reduce » Neutral
DaVita DVA Piper Jaffray Underperform » Market Perform
Entercom ETM Banc of America Sec Sell » Neutral
Advanced Medical Optics EYE Citigroup Sell » Hold
ONEOK Partners OKS Citigroup Hold » Buy
Network Appliance NTAP Citigroup Hold » Buy
NRG Energy NRG RBC Capital Mkts Underperform » Sector Perform
Harleysville Grp HGIC Ferris Baker Watts Neutral » Buy
Comp Vale Do Rio RIO Canaccord Adams Hold » Buy
Barnes & Noble BKS CL King Neutral » Strong Buy
Gen-Probe GPRO Ferris Baker Watts Neutral » Buy
Blackboard BBBB Wedbush Morgan Hold » Buy
Cleveland-Cliffs CLF Longbow Neutral » Buy
General Maritime GMR Cantor Fitzgerald Hold » Buy
O2Micro OIIM Needham & Co Buy » Strong Buy
Fred's FRED Avondale Partners Mkt Perform » Mkt Outperform
Smith Micro Software SMSI Rodman & Renshaw Mkt Perform » Mkt Outperform
Gasco Energy GSX Nokia NOK Davenport Strong Buy » Neutral
CGI Group GIB BMO Capital Markets Outperform » Market Perform
DOWNGRADES
Alliance Bankshares ABVA Stifel Nicolaus Buy » Hold
Revlon REV Sun Trust Rbsn Humphrey Buy » Neutral
POZEN POZN Jefferies & Co Buy » Hold
Gulfmark Offshore GLF Jefferies & Co Buy » Hold
Clorox CLX Lehman Brothers Overweight » Equal-weight
Nokia NOK Davenport Strong Buy » Neutral
CGI Group GIB BMO Capital Markets Outperform » Market Perform
Reliv' International, Inc RELV Canaccord Adams Buy » Hold
Kyphon KYPH Lazard Capital Buy » Hold
Getty Images GYI McAdams,Wright,Ragen Buy » Hold
RC2 RCRC Wedbush Morgan Strong Buy » Buy
Autodesk ADSK Credit Suisse Outperform » Neutral
Chipotle Mexican Grill CMG Morgan Keegan Outperform » Mkt Perform
Liquidity Services LQDT Stifel Nicolaus Buy » Hold
Alliance Resource ARLP Stifel Nicolaus Buy » Hold
Alliance Holdings AHGP Stifel Nicolaus Buy » Hold
U.S. Steel X Matrix Research Strong Buy » Buy
Norfolk Southern NSC Matrix Research Strong Buy » BuyWachovia Mkt Perform » Outperform
UPGRADES
KBR Inc. KBR Wachovia Mkt Perform » Outperform
Eagle Bulk Shipping EGLE Wachovia Mkt Perform » Outperform
Timberland TBL UBS Reduce » Neutral
DaVita DVA Piper Jaffray Underperform » Market Perform
Entercom ETM Banc of America Sec Sell » Neutral
Advanced Medical Optics EYE Citigroup Sell » Hold
ONEOK Partners OKS Citigroup Hold » Buy
Network Appliance NTAP Citigroup Hold » Buy
NRG Energy NRG RBC Capital Mkts Underperform » Sector Perform
Harleysville Grp HGIC Ferris Baker Watts Neutral » Buy
Comp Vale Do Rio RIO Canaccord Adams Hold » Buy
Barnes & Noble BKS CL King Neutral » Strong Buy
Gen-Probe GPRO Ferris Baker Watts Neutral » Buy
Blackboard BBBB Wedbush Morgan Hold » Buy
Cleveland-Cliffs CLF Longbow Neutral » Buy
General Maritime GMR Cantor Fitzgerald Hold » Buy
O2Micro OIIM Needham & Co Buy » Strong Buy
Fred's FRED Avondale Partners Mkt Perform » Mkt Outperform
Smith Micro Software SMSI Rodman & Renshaw Mkt Perform » Mkt Outperform
Gasco Energy GSX Nokia NOK Davenport Strong Buy » Neutral
CGI Group GIB BMO Capital Markets Outperform » Market Perform
DOWNGRADES
Alliance Bankshares ABVA Stifel Nicolaus Buy » Hold
Revlon REV Sun Trust Rbsn Humphrey Buy » Neutral
POZEN POZN Jefferies & Co Buy » Hold
Gulfmark Offshore GLF Jefferies & Co Buy » Hold
Clorox CLX Lehman Brothers Overweight » Equal-weight
Nokia NOK Davenport Strong Buy » Neutral
CGI Group GIB BMO Capital Markets Outperform » Market Perform
Reliv' International, Inc RELV Canaccord Adams Buy » Hold
Kyphon KYPH Lazard Capital Buy » Hold
Getty Images GYI McAdams,Wright,Ragen Buy » Hold
RC2 RCRC Wedbush Morgan Strong Buy » Buy
Autodesk ADSK Credit Suisse Outperform » Neutral
Chipotle Mexican Grill CMG Morgan Keegan Outperform » Mkt Perform
Liquidity Services LQDT Stifel Nicolaus Buy » Hold
Alliance Resource ARLP Stifel Nicolaus Buy » Hold
Alliance Holdings AHGP Stifel Nicolaus Buy » Hold
U.S. Steel X Matrix Research Strong Buy » Buy
Norfolk Southern NSC Matrix Research Strong Buy » BuyWachovia Mkt Perform » Outperform
Thursday, August 2, 2007
"Fast Money" for Friday
Here are Thursday's results and Friday's picks.
Friday's picks
Jeff Macke recommends buying Callaway Golf (ELY) on the dip. Open $15.67
Pete Najarian likes Juniper (JNPR) ahead of Cisco (CSCO) earnings. Open $32.55
Guy Adami and Eric Bolling didn’t have any stock picks.
Thursday's results
Jeff Macke said Starbucks (SBUX) is a sell. Open $27.60 Close $26.92 Gain $.68
Pete Najarian liked St. Jude Medical (STJ). Open $44.81 Close $45.35 Gain $.54
Guy Adami recommended buying Short Dow30 ProShares (DOG) Open $59.50 Close $58.96 Loss $.54
Eric Bolling liked El Paso Corp (EP) Open $16.81 Close $16.67 Loss $.14
Records:
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 10-9 Gain $26.22
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 17-10 Gain $6.34
Pete Najarian= 6-5 Gain $18.30
Seymore= 1-1 Gain $.01
Finerman= 1-2 Gain $.68
Gilbert= 1-0 Gain $.29
Friday's picks
Jeff Macke recommends buying Callaway Golf (ELY) on the dip. Open $15.67
Pete Najarian likes Juniper (JNPR) ahead of Cisco (CSCO) earnings. Open $32.55
Guy Adami and Eric Bolling didn’t have any stock picks.
Thursday's results
Jeff Macke said Starbucks (SBUX) is a sell. Open $27.60 Close $26.92 Gain $.68
Pete Najarian liked St. Jude Medical (STJ). Open $44.81 Close $45.35 Gain $.54
Guy Adami recommended buying Short Dow30 ProShares (DOG) Open $59.50 Close $58.96 Loss $.54
Eric Bolling liked El Paso Corp (EP) Open $16.81 Close $16.67 Loss $.14
Records:
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 10-9 Gain $26.22
Bolling= 8-9 Loss $4.16
John Najarian= 13-3 Gain $15.54
Macke= 17-10 Gain $6.34
Pete Najarian= 6-5 Gain $18.30
Seymore= 1-1 Gain $.01
Finerman= 1-2 Gain $.68
Gilbert= 1-0 Gain $.29