"Fast Money" for Tuesday

Tuesday's Picks
Jeff Macke recommends Freeport-McMoRan (FCX) $96.22

Guy Adami prefers Apple (AAPL) $143.5

Karen Finerman likes Golar (GLNG) $18.27

Pete Najarian thinks Research in Motion (RIMM) $112.23 is a buy.

Monday's Results
None

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 22-16
Tim Seymore= 14-8
Guy Adami= 20-21
Pete Najarian= 22-19
Karen Finerman= 17-22-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Boone Pickens on Oil and Alternatives

This guy does great interviews....

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Dow 10-K Notables

As promise, I went through Dow's (DOW) 10-K and here are the relevant items.

To be honest, it was a refreshing read because there really wasn't anything there that has not been discussed publicly by management at some point. The shot answer to that is that as shareholders were are getting a great level of disclosure and honesty from the stewards of the company.

Some Financials
* In 2007, lowered its debt-to-capital ratio to 32 percent from 34 percent at the end of 2006 and 39 percent at the end of 2005.
* In April 2007, Dow’s Board of Directors increased the quarterly dividend by 12 percent, to an annual rate of $1.68 per share.
* Since January 2006, the Company has raised its dividend by 25 percent.
* In the first quarter of 2007, Dow completed the share repurchase program authorized in July 2005, and commenced purchases under a new $2 billion share buyback program announced in October 2006.
* For the year, the Company invested over $1.4 billion to repurchase 32 million shares, an increase of more than 75 percent over the 18 million shares repurchased in 2006.
* Approximately two-thirds of Dow’s sales are now outside the United States.


Here is a "bet you did not know". Dow also is engaged in property casualty and reinsurance. From the 10-k, "sales for Unallocated and Other, which primarily relate to the Company’s insurance operations, were $421 million in 2007, compared with $316 million in 2006 and $306 million in 2005." Yes, I know in the scheme of things it is peanuts and there not any more details in the filing but I is worth noting.

Also, Dow's "defined contribution" pension plan is not only fully funded but as of 12/13 has a credit balance $526 million, up from a deficit of $890 million in 2006. The date of the funding runs through 2017.


New Ventures in 2007 included:
• Dow started up its first-ever production facility in Russia, located in Kryukovo, outside Moscow. The plant produces STYROFOAM extruded polystyrene insulation boards for the Dow Building Solutions business.
• Dow introduced Propylene Glycol Renewable, a propylene glycol made from the glycerin that is generated during the manufacture of biodiesel, a diesel-fuel alternative produced from vegetable oil.
• Saudi Aramco and Dow signed a Memorandum of Understanding to move forward with their multibillion-dollar joint venture chemicals and plastics production complex near Ras Tanura, Saudi Arabia.
• Dow and Chevron Phillips Chemical Company LP announcefd plans for a 50:50 polystyrene and styrene monomer joint venture in the Americas.
• Beijing-based Shenhua Group and Dow agreed to a detailed feasibility study for a coal-to-chemicals joint venture in the Shaanxi Province, China.
• Dow completed the acquisition of Wolff Walsrode AG and certain related affiliates and assets (‘‘Wolff Walsrode’’) and formed Dow Wolff Cellulosics, a $1 billion specialty business focused on cellulosics and related chemistries and serving a broad spectrum of industry sectors.
• Dow AgroSciences and Monsanto signed a corn cross-licensing agreement, which breaks new ground in the commercialization of gene stacking technology.
• The Company signed a Memorandum of Understanding with Brazilian ethanol producer, Crystalsev, to form a joint venture to manufacture polyethylene from sugar cane.
• Dow AgroSciences acquired Agromen Tecnologia, substantially expanding its Brazilian corn seed business. This transaction followed two other related acquisitions in 2007 – The Netherlands-based Duo Maize and Austrian company Maize Technologies International – strengthening the Company’s global corn seed platform.
• Dow’s Polyurethanes Systems business acquired Danish company Edulan A/S, an independent polyurethane systems house specializing in rigid foam and elastomer technologies.
• Dow acquired three leading epoxy systems formulators: UPPC AG in Germany, and POLY-CARB Inc. and GNS Technologies in the United States.
• Dow and Petrochemical Industries Company (‘‘PIC’’) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation, announced plans to form a 50:50 joint venture


Disclosure ("none" means no position):Long Dow

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Railroad's "Good Times" May Derail...

There is a brewing storm out there against the main rail carriers..

Last week I posted on Arched Daniel's (ADM) suit against the four major carriers, Union Pacific (UNP), BNSF (BNI), CSX (CSX), Norfolk Southern (NSC), and Kansas City Southern (KSU).

Today in the Wall St. Journal, they reiterate my opinion saying that "lawyers involved in the class-action case (currently ongoing in the District of Columbia) said the entry of ADM, one of the world's largest grain processors, could herald similar moves from other large rail customers.

What is so important here is to note that the majority of the improvements in the financial fortunes of the railroads the last few years can be directly related to their ability to pass along these fuel surcharges to rail users.

Should they be forced to refund a chunk of this money and should they suddenly come under increased scrutiny, they may find themselves in the same boat the US trucking industry is, being pinched by rising fuel costs.

How long do we think it will be before the American Trucking Association starts in earnest to rile shippers and lobby congress to begin to look into this?

This has not got much press lately but is will begin to snowball and one ought to expect other rail shippers to begin to pile in..

Disclosure ("none" means no position):Long ADM, None

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Monday's Links

Costs, McMuffin, Bullies, Anti-War Democrats


- If this is a huge deal for you, don't have kids, you'll be a lousy parent..

- Talk about having the best cocktail party conversation piece

- What ought to happen is the parents be allowed to torment the bullies parents....since we are to "advanced" to handle it that way (but not to advanced to stop the bullying), this may be the best solution. I hope they take them to the cleaners....

- What is next, did they get vacations and condos from Saddam too? Of course you won't see the story on the TV network news..

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Monday's Upgrades and Downgrades

Upgrades
Basic Energy Services (BAS)- CapitalOne southcoast Neutral » Add
Key Energy (KEG)- CapitalOne southcoast Neutral » Add
Autodesk (ADSK)- Kaufman Bros Hold » Buy
Zions Bancorp (ZION)- Stifel Nicolaus Hold » Buy
Orbitz (OWW)- Credit Suisse Neutral » Outperform
Lukoil (LUKOY)- UBS Neutral » Buy
Barrick Gold (ABX)- HSBC Securities Neutral » Overweight
Newmont Mining (NEM)- HSBC Securities Underweight » Neutral
DaVita (DVA)- UBS Neutral » Buy
HJ Heinz (HNZ)- Bernstein Mkt Perform » Outperform
Murphy Oil (MUR)- Deutsche Securities Hold » Buy
Lehman Brothers (LEH)- Citigroup Hold » Buy

Downgrades
USANA (USNA)- Avondale Partners Mkt Outperform » Mkt Perform
Maguire Properties (MPG)- Deutsche Securities Hold » Sell
SGX Pharma (SGXP)- Needham & Co Buy » Hold
Oplink Comms (OPLK)- Needham & Co Strong Buy » Hold
McCormick (MKC)- Stifel Nicolaus Buy » Hold
Aracruz Celulose (ARA)- JP Morgan Overweight » Neutral
Elixir Gaming (EGT)- Roth Capital Buy » Hold
Starwood Hotels (HOT)- Wachovia Outperform » Mkt Perform
LaSalle Hotel (LHO)- Wachovia Outperform » Mkt Perform
Apt Inv & Mgt (AIV)- UBS Buy » Neutral
Home Prop of NY (HME)- UBS Buy » Neutral
Oplink Comms (OPLK)- Piper Jaffray Neutral » Sell
USANA (USNA)- Jefferies & Co Buy » Hold
DRDGOLD (DROOY)- Deutsche Securities Buy » Hold
Bed Bath & Beyond (BBBY)- JP Morgan Neutral » Underweight
Meritage (MTH)- UBS Buy » Neutral
Tellabs (TLAB)- UBS Buy » Neutral
DSW (DSW)- Oppenheimer Outperform » Perform
Acorn Intl (ATV)- Oppenheimer Outperform » Perform
WellPoint (WLP)- Lehman Brothers Overweight » Equal-weight

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"Fast Money" for Monday

Monday's Picks
None

Friday's Results
Jeff Macke likes World Wrestling Entertainment (WWE) $18.25 Close $18.26 GAIN

Tim Seymour prefers ConocoPhillips (COP) $75.73 because they own 20% of Russia’s Lukoil. Close $75.67 LOSS

Karen Finerman recommends Altria (MO) $73.22. Close $73.84 GAIN

Pete Najarian thinks Burger King (BKC) $27.52 is a buy. Close $27.35 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 22-16
Tim Seymore= 14-8
Guy Adami= 20-21
Pete Najarian= 22-19
Karen Finerman= 17-22-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Liveris's Letter (DOW): A Bright Future

I read Liveris's letter to shareholders today and have some immediate thoughts..

The press has been reporting Liveris's compensation at $14.9 million but the reality is that only $1.5 million of that is salary, the rest is stock and loads of options that unless the share price turns around, are useless.

That being said, I actually like the fact he owns over 300,000 shares. It makes him one of the larger non-institutional individual shareholders (by far the largest of management) and does ensure that the decisions he makes today, are for the long term health of the company and by default, its share price.

In the letter, Liveris said "First, you can expect us to continue to run a tight ship. This is still a “no excuses” company, and we will manage our day-to-day business to deliver solid financial results. Dow people throughout the world have proven themselves capable of delivering what it takes to succeed.

Second, we will close on our joint venture with PIC and move forward with implementation of our asset-light strategy.

Third, we will continue transforming our earnings profile. I am committed that by the end of 2008 we will have taken another major step in that regard. If we do not find the right acquisition or acquisitions, we reserve the right to initiate a share buyback.

Either way, my commitment to our stockholders is that at the next industry trough, The Dow Chemical Company will have an earnings profi le that is well north of $3 per share and we will provide steady earnings growth beyond that point."

What to think?

Liveris has been a straight shooter with shareholders since taking over and has yet to not deliver on a stated goal or objective. He has transformed the earnings profile and the upcoming PIC deal will forever alter the company for the better.

With equity earnings in 2007 over in excess of $1 billion for the first time, these JV's, located in countries with access to cheap raw materials, will become the driver. The end of 2009 and 2010 will see many of the recent announcements come online that will expand this.

In one deal Dow will rid itself of having its fortunes tied to the highly cyclical commodities business and reap a windfall ($9.5 billion) that, based on to date evidence, will be used to reward shareholders.

Let's not forget that when Liveris took over Dow was saddled with almost $12 billion in long term debt and was a pure commodity play. He has trimmed that debt load 36%, raised the dividend 25%, nearly doubled the cash from operations and made the aforementioned earnings profile change..

It is worth noting that despite the volatility in the earnings for the commodities side, and the explosion in raw material costs, earnings from the performance business grew 8% and the JV earnings have remained steady.

These two segments are Dow's future and it is bright.

Now, the stock price......

Berkshire's (BRK.A) Warren Buffett has always said that "price is what you pay, value is what you get". It is one of my personal favorites because it reminds us that the price of a stock and what you are getting for that price are not always commensurate. There are times you pay in excess of what you are receiving in value and times you pay far less.

This is one of those times.

I have no idea what the price of Dow's stock will be in the future. I do know that, buying the stock at its current levels, yielding a growing 4.5% is a wise move long term. With earnings expectations above $3.50 for 2010 (the next expected trough), Dow currently sits at about 10 times those earnings. Should Liveris's "well north" mean $3.90 a share or higher, then we have a 4.5% yielding company sitting at 8 to 9 times earnings...

All this does not take into account the endless possibilities of $9.5 billion coming into the bank this year....

I will dig through the 10-k this week and see what I can find..


Disclosure ("none" means no position):Long Dow

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What Insiders Bought This Week...

China Security & Surveillance Tech Inc (CSR0 = $3,634,578
MTR Gaming Group Inc (MNTG)=$ 2,429,717
Heritage Crystal Clean Inc (HCCI)= $2,218,488
XTL Biopharmaceuticals Ltd (XTLB)=$2,172,037
Scientific Games Corp (SGMS)=$ 1,876,000
Enterprise GP Holdings L P (EPE)=$1,749,330
Gentek Inc (GETI)=$1,687,781
Sandridge Energy Inc (SD)=$1,567,427
Omrix Biopharmaceuticals Inc (OMRI)=$1,354,967
Emcore Corp (EMKR)=$1,209,636
Nortel Networks Corp (NT)=$1,024,047
Vail Resorts Inc (MTN)=$1,021,172

Disclosure ("none" means no position):

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Friday's Links

Planes, Race, Colleges, Hollywood

- The things we will hear..

- It was a flop

- I think the reality may be just the opposite..

- Can't they just stop pretending they care at the awards shows? We already know the answer.

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Ackman's Target Loss, Wow

Another nugget from Leucadia's (LUK) 10-k. This one has to do with Bill Ackman's Target (TGT) investment.

As of 12/31, Ackman owned 5.8 million shares and has call options on another 75 million shares. The total cost of the investment was $1.78 billion through Pershing Square IV, L.P.

The net loss on the investment as of 12/31 was $842 million. The loss included interest and dividends received. $135 million of the loss was actually realized, meaning the securities were sold at a loss. The remaining is still being held.

A 47.3% loss.....wow...

Pershing Square IV, L.P. (the "Partnership") is organized as a limited partnership under the laws of the state of Delaware on May 22, 2007 and commenced operations on June 1, 2007. The objective of the Partnership is to invest all of its assets in Pershing Square IV A, L.P. (the "Subsidiary Partnership"). The Subsidiary Partnership is an exempted limited partnership formed under the limited liability partnership laws of the Cayman Islands on May 31, 2007 and commenced operations on June 1, 2007. The investment objective of the Partnership and the Subsidiary Partnership (collectively, the "PSIV Partnerships") is to create significant capital appreciation by investing in stock, total return swaps and call options of Target Corporation.

Also,

Pershing, in its sole discretion, may advance or extend the Lock-Up Date for up to one year beyond December 31, 2009 if they believe it is in the best interest of the Partnership to do so.

Disclosure ("none" means no position):None

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Leucadia Profits From Being Short Mortgages

Sitting here skimming Leucadia's (LUK)10-K today and can across this.

On Jan. 2, 2007 Leucadia formed HFH SHORTPLUS MASTER FUND, LTD.

It purpose?

"HFH ShortPLUS Master Fund, Ltd. (the "Fund") is a Cayman Islands exempted company incorporated in accordance with the Companies Law (2004 revision) which commenced operations on January 2, 2007. The Fund's strategy is to assemble a short-biased portfolio of asset-backed securities ("ABS") that the Investment Manager believes are most likely to produce high returns during periods of adverse credit performance for residential mortgages, and for mortgage-backed securities ("MBS") and ABS. Returns will come from two principal sources: (i) market value changes arising from changes in credit spreads on the Fund's short positions; and (ii) credit default payments from counterparties on credit default swaps ("CDS") or other derivatives."

Short answer? They bet against mortgages in Jan, 2007.

How did they do?

NET ASSET VALUE PER SHARE, BEGINNING OF YEAR= $ 100,000.00
Net investment income = $ 7,873.42
Net realized and unrealized gain = $ 237,056.11
--------------
NET ASSET VALUE PER SHARE, END OF YEAR= $ 344,929.53
==============

Total return(b) 244.93%

The total investment in the fund was $321.3 million.

At December 31, 2007, 931.50 shares were issued and outstanding.

Disclosure ("none" means no position):None

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Google and The Analysts

I am loath to write an article about Google (GOOG) for the simple reason it will be one of about 1,000 written today, but I need to do so to make a point about the "analysts".

My sentiment on Google has been the same for over a year and for those not familiar, here it is.

Everyone is aware of the recent axing of "price targets" for shares of Google recently. For those who are not, here they are below.

27-Mar-08 Stanford Research Reiterated Hold $615 to $500
27-Mar-08 Lehman Brothers Reiterated Overweight $644 to $580
25-Mar-08 UBS Reiterated Buy $590 to $570
20-Mar-08 Jackson Securities Reiterated Buy $815 to $600
20-Mar-08 RBC Capital Mkts Reiterated Outperform $675 to $530
28-Feb-08 Stifel Nicolaus Reiterated Buy $675 to $610
28-Feb-08 Oppenheimer Reiterated Outperform $715 to $600
26-Feb-08 BMO Capital Markets Reiterated Market Perform $690 to $590
01-Feb-08 AmTech Research Reiterated Buy $815 to $785
01-Feb-08 UBS Reiterated Buy $785 to $650
01-Feb-08 Bear Stearns Reiterated Outperform $700 to $650
01-Feb-08 Citigroup Reiterated Buy $775 to $650
01-Feb-08 Oppenheimer Reiterated Outperform $850 to $715
01-Feb-08 Stifel Nicolaus Reiterated Buy $725 to $675
01-Feb-08 RBC Capital Mkts Reiterated Outperform $725 to $675
01-Feb-08 Jefferies & Co Downgraded Buy Hold $725 to $600
01-Feb-08 Lehman Brothers Reiterated Overweight $714 to $644
24-Jan-08 Stanford Research Downgraded Buy Hold $735 to $615


Now, for those who may have forgotten, the recent rush to cut estimates comes only two months after the rush in the opposite direction to raise them. Again, for those who have forgotten, here those "predictions" are.

20-Nov-07 Credit Suisse Reiterated Outperform $800 to $900
06-Nov-07 Bernstein Reiterated Outperform $720 to $850
05-Nov-07 Oppenheimer Reiterated Buy $700 to $850
22-Oct-07 UBS Reiterated Buy $655 to $760
19-Oct-07 AmTech Research Reiterated Buy $685 to $815
19-Oct-07 RBC Capital Mkts Reiterated Outperform $690 to $725
19-Oct-07 BMO Capital Markets Reiterated Market Perform $545 to $690
19-Oct-07 Citigroup Reiterated Buy $600 to $775
19-Oct-07 Cantor Fitzgerald Reiterated Buy $650 to $750
19-Oct-07 Nollenberger Capital Reiterated Buy $650 to $720
16-Oct-07 Needham & Co Reiterated Buy $575 to $690
12-Oct-07 Oppenheimer Reiterated Buy $625 to $700
11-Oct-07 RBC Capital Mkts Reiterated Outperform $560 to $690
11-Oct-07 Stifel Nicolaus Reiterated Buy $620 to $710
11-Oct-07 Stanford Research Reiterated Buy $615 to $735
09-Oct-07 Lehman Brothers Reiterated Overweight $610 to $714
09-Oct-07 Banc of America Sec Reiterated Buy $620 to $670
05-Oct-07 Bear Stearns Reiterated Outperform $550 to $700
05-Oct-07 Nollenberger Capital Reiterated Buy $575 to $650

In the spring and summer of 2007, the urgency to ratchet up the target just was not there and the action was far more benign.

20-Jul-07 Bear Stearns Reiterated Outperform $600 to $550
10-Jul-07 UBS Reiterated Buy $580 to $655
25-Jun-07 JMP Securities Reiterated Mkt Outperform $580 to $625
20-Apr-07 UBS Reiterated Buy $560 to $580
20-Apr-07 Lehman Brothers Reiterated Overweight $560 to $610
20-Apr-07 BMO Capital Markets Reiterated Market Perform $525 to $545
20-Apr-07 Needham & Co Reiterated Buy $537 to $575
20-Apr-07 Banc of America Sec Reiterated Buy $601 to $620
20-Apr-07 Am Tech/JSA Research Reiterated Buy $540 to $600
01-Feb-07 JMP Securities Reiterated Mkt Outperform $525 to $580
01-Feb-07 UBS Reiterated Neutral $535 to $560


So, what is the point? Look close at all the rating. What do they all have in common? The word "reiterated". Almost without exception (there are a couple) the recommendation of the analyst has not changed. BUT, what they did change was the expectations of the stock price.

Look at UBS. In Feb. 2007 they said it would go to $560, in April they said $580 then in October 2007 they raised that to $760 (it never got that high) and then only two months later they cut it back to $650.

Currently Google's share price sits at $450. Why does this matter? It is essentially the same price it sat at in Feb. 2007 when UBS made its first call. Now, did Google's share price rise during the time frame? Yes. But, anyone who invested due to the UBS call in nov. 2007 has lost over 30% since then. As a matter of fact, if you invested after the April, 2007 price call you are underwater.

Another point here is that Google gives no guidance. This means the chasing by the analysts was done by themselves without ANY statement coming from the company that could have influenced them.

Yet, UBS is still saying buy the stock? The same scenario can be said of virtually all the analysts about. Despite the 30% plus drop in shares and the astronomical multiple they commanded despite the company's size, the sentiment has not changed?

The point here is to totally ignore price targets. The move like a heard and have no correlation to the actual performance of the company or its stock. They chase a stock up or down and inevitably, shareholders get stuck holding a huge bag of losses....


Disclosure ("none" means no position):None

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18.2% vs 4.8% = Perspective

I am hearing the word "Hooverville" bantered about by the talking heads on TV lately. Now, am I the only one laughing?

Are things perfect currently? No. But can we get just a little perspective here? Let's look at what the conditions were actually like when the term "Hooverville" was coined.

Robert J. Samuelson, at The Library of Economics and Liberty says:

"It is hard for those who did not live through it to grasp the full force of the worldwide depression. Between 1930 and 1939 U.S. unemployment averaged 18.2 percent. The economy's output of goods and services (gross national product) declined 30 percent between 1929 and 1933 and recovered to the 1929 level only in 1939. Prices of almost everything (farm products, raw materials, industrial goods, stocks) fell dramatically. Farm prices, for instance, dropped 51 percent from 1929 to 1933. World trade shriveled: between 1929 and 1933 it shrank 65 percent in dollar value and 25 percent in unit volume. Most nations suffered. In 1932 Britain's unemployment was 17.6 percent"

So where are we at today? Unemployment sits at 4.8%. Lets also note here that this is a full 33% BELOW the 1991-92 unemployment rate of 7.1%, the period of the last actual US recession.

Now, when we look at the "Hooverville" period, we also see a 30% contraction in US GDP. That means we would see a current GDP number of -30.0%!! But, today we see a number calling for an expansion of .6%. Anemic? Yes. Catastrophic? Laughable...

There are several reasons the US will avoid a recession and not remotely approach the "Hooverville" period.

1- The world's economies as far too intertwined today to allow industrialized nation's economies to deteriorate that far. Other nations have too much invested in each other to essentially allow another to fail for an extended period. US economic pain is felt in China and vice versa.

2- Demand from developing nations places a floor on production.

3- Money flow: The ease in which investors are able to profit from the economic activities all over the world ensures wealth creation even with deteriorating conditions in their home country. This was not the case in the 1930's.

4- International businesses: An extended recession in the US would hurt but not cripple profits in virtually all US businesses in the S&P 500. Currently over 50% of the S&P profits are from international operations. While profits as a whole would be damaged in a severe scenario, the evisceration of them we saw during the depression would not happen.

Now, of course a major catastrophic event (nuclear terror, China / Russia military conflict) could cause major disruptions. But, barring that, do not look for them.

Now, will it be all smooth sailing? No.

It does mean that we need a heavy heaping of perspective as to where we sit currently. We have historically low unemployment, an expanding economy and moderate inflation. A far cry from "Hooverville"

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Friday's Upgrades and Downgrades

Upgrades
W&T Offshore (WTI)- CapitalOne southcoast Neutral » Add
Arena Resources (ARD)- CapitalOne southcoast Add » Strong Buy
Endo Pharm (ENDP)- Susquehanna Financial Neutral » Positive
Barrick Gold (ABX)- UBS Neutral » Buy
Kinross Gold (KGC)- UBS Neutral » Buy
KLA-Tencor (KLAC)- Friedman Billings Mkt Perform » Outperform
3Com (COMS)- Bernstein Mkt Perform » Outperform
Teradyne (TER)- Friedman Billings Mkt Perform » Outperform
FormFactor (FORM)- Friedman Billings Underperform » Outperform
ASML Holding (ASML)- Friedman Billings Mkt Perform » Outperform
Nabors Ind (NBR)- RBC Capital Mkts Sector Perform » Outperform
Patterson-UTI (PTEN)- RBC Capital Mkts Sector Perform » Outperform
Superior Well Services (SWSI)- RBC Capital Mkts Sector Perform » Outperform
BJ Services (BJS)- RBC Capital Mkts Sector Perform » Outperform
Union Drilling (UDRL)- RBC Capital Mkts Sector Perform » Outperform
Halliburton (HAL)- RBC Capital Mkts Sector Perform » Outperform
Sempra Energy (SRE)- UBS Neutral » Buy
Hartford Financial (HIG)- Bernstein Mkt Perform » Outperform
Allstate (ALL)- Bernstein Mkt Perform » Outperform
Cott (COT)- Lehman Brothers Underweight » Equal-weight
Spirit Aerosystems (SPR)- UBS Neutral » Buy
Valero Energy (VLO)- Deutsche Securities Hold » Buy

Downgrades
Huron Consulting (HURN)- Robert W. Baird Outperform » Neutral
Bank of NY (BK)- Punk, Ziegel & Co Buy » Mkt Perform
Lennox Intl (LII)- Sterne Agee Buy » Hold
Hurco Companies (HURC)- Sterne Agee Buy » Hold
URS (URS)- BMO Capital Markets Outperform » Market Perform
BlackRock (BLK)- Credit Suisse Neutral » Underperform
Sepracor (SEPR)- Susquehanna Financial Neutral » Negative
Oracle (ORCL)- Cross Research Buy » Hold
Watsco (WSO)- BB&T Capital Mkts Buy » Hold
Yamana Gold (AUY)- CIBC Wrld Mkts Sector Outperform » Sector Perform
QLogic (QLGC)- JP Morgan Neutral » Underweight
California Pizza (CPKI)- Friedman Billings Outperform » Mkt Perform
Motorola (MOT)- Banc of America Sec Buy » Neutral
Seagate Tech (STX)- Robert W. Baird Outperform » Neutral

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Sears Holdings Shareholder Meeting Info.

Here it is. This years shareholder meeting details for Sears Holdings (SHLD)

Dear Stockholder:

I am pleased to invite you to attend the annual meeting of stockholders of Sears Holdings Corporation (the “Company” or “Sears Holdings”) on Monday, May 5, 2008. The meeting will begin at 9:00 a.m. (Central time) in the Sears Holdings General Session Room, 3333 Beverly Road, Hoffman Estates, Illinois.

The notice of Annual Meeting and proxy statement that follow this letter describe the matters to be voted on during the meeting. Your proxy card and the Company’s 2007 Annual Report on Form 10-K also are enclosed.

Whether or not you plan to attend the meeting in person, please read the proxy statement and vote your shares. Instructions for Internet and telephone voting are attached to your proxy card. If you prefer, you can vote by mail by completing your proxy card and returning it in the enclosed postage-paid envelope.

If you plan to attend the meeting:

If you are a stockholder of record and you plan to attend the meeting, please keep the admission ticket that is attached to the enclosed proxy card, as you must present this ticket to be admitted to the meeting. Each stockholder may be asked to present valid picture identification, such as a driver’s license or passport. Stockholders holding shares in brokerage accounts (“street-name stockholders”) will need to bring a copy of a brokerage statement, proxy or letter from the broker confirming ownership of Sears Holdings shares as of the record date of March 10, 2008. Registration will begin at 8:30 a.m. and seating will begin at 8:45 a.m. Cameras, recording devices and other electronic devices will not be permitted at the meeting.


Sincerely,

W. Bruce Johnson


An interesting note from the proxy. Directors and Senior Execs own 55.3% of the company.

There were 132,356,535 shares of common stock outstanding as of February 2, 2008



Disclosure ("none" means no position):Long SHLD

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Cramer Talks of Buying Bear STOCK

This is just hours before he later denied making the famous "keep our money in Bear Stern (BSC)" comment, that he now says was not an endorsement of the stock.

In this video, he clearly pushed the STOCK.. At least TheStreet.com has not taken this one down yet...

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"Fast Money" for Friday

Friday's Picks
Jeff Macke likes World Wrestling Entertainment (WWE) $18.25

Tim Seymour prefers ConocoPhillips (COP) $75.73 because they own 20% of Russia’s Lukoil.

Karen Finerman recommends Altria (MO) $73.22

Pete Najarian thinks Burger King (BKC) $27.52 is a buy.


Thursday's Results
Tim Seymour likes Cosan Limited (CZZ) $12.34 as the largest ethanol producer in Latin America. Close $11.97 LOSS

Karen Finerman prefers Kaiser Aluminum (KALU) $69.71 Close $69.20 LOSS

Pete Najarian recommends buying puts on the Oil Services HLDRS (OIH) $176.44 Close $175.25 GAIN

Jeff Macke says he likes Home Depot (HD) $28.16 out of spite, because it didn’t advance in the Fast Money Madness tournament. Close $27.86 LOSS


2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-16
Tim Seymore= 14-7
Guy Adami= 20-21
Pete Najarian= 22-18
Karen Finerman= 16-22-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Archer Daniels' Suit Ought to Give Railroads Pause...

Archer Daniels Midland (ADM) has filed a price-fixing lawsuit against the 5 major railroads. This could snowball....

The lawsuit filed Tuesday in federal court in Minneapolis names Union Pacific (UNP), BNSF (BNI), CSX (CSX), Norfolk Southern (NSC), and Kansas City Southern (KSU) as the conspirators. It accuses the five railroads of setting fuel surcharges by working through the Association of American Railroads, which publishes the indices used by railroads to calculate rates. AAR's board includes the CEOs from the five railroads, according to the lawsuit.

ADM accuses UP and BNSF of agreeing to tie their surcharges to the same fuel price index, and to impose changes in the surcharge on the same day. While UP and BNSF locked their surcharges together in the territory they dominate, the Western U.S., ADM claims CSX, Norfolk Southern and Kansas City Southern did the same thing in the East.

The effect is that the railroads' fuel surcharges moved in unison, the lawsuit alleges.

Most railroads hedge their fuel purchases. This ought to means that actual fuel spending should vary from one railroad to the next. If that is true, the fuel surcharges should have also varied, but they did not. In January 2007 the Federal Surface Transportation Board said railroads must link surcharges to their actual fuel costs.

ADM claims uniform pricing "could not have happened by chance or coincidence."

The railroads of course denied the charges saying they "have no merit" and that they would "vigorously defend them".

ADM says it alone has paid more than $250 million in fuel surcharges since 2003.

Here is where this could get sticky for the railroads. While ADM is a major rail shipper, there are thousands of smaller shippers looking for ways to reduce or recoup transportation costs. If there is any light at the end of this tunnel as the litigation moves forward, expect a flood of lawsuits to follow. The suits may follow anyway to force a settlement.

What we will then end up with is a major class action suit against the railroads. In that instance the sums the railroads will be looking at will be in the billions of dollars (both in refunds and punitive damages). Considering the 5 railroads only made almost $7 billion between them last year, the outcome could seriously damage the industry.


Disclosure ("none" means no position):Long ADM, None

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Now Micheal Lewis Calls Out Cramer

When it is no longer just us bloggers but the MSM calling you out, the end of the run is near...

Micheal Lewis writes on Bloomberg.

"Three days earlier, on theStreet.com, Jim Cramer listed Bear Stearns common stock as a ``buy'' at $62. On his CNBC program that day, he showed his viewers a chart of Bear Stearns stock price and hollered, ``Bear Stearns is fine! Do not take your money out of Bear.'' Over that weekend -- days when the markets were closed and there was no material news about the company -- Bear Stearns was believed to be worth $2 a share, so long as the Federal Reserve assumed the downside risk of almost $30 billion of its mortgage securities...

TheStreet.com quickly removed Cramer's March 11 ``buy'' recommendation from its page devoted to Bear Stearns. (The Cramer-obsessed Don Harrold's YouTube account of all this is priceless.) And Cramer went back on CNBC to explain that he never intended for anyone to go and actually BUY shares in Bear Stearns -- only that, if they happen to bank with Bear Stearns, they shouldn't worry about losing their money (a public service to all those ``Mad Money'' viewers who use Bear Stearns as a bank.)"

This is a tough one for Cramer if for no other reason the actions of Thestreet.com altering its website.

If he had just been honest (he may not be able to), this would have blown over already.

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Where is the Recession?

When did the definition of a recession change from "two consecutive quarters of negative GDP growth" to "not as much growth as we want"?

Everyday day I sit here and read and hear folks pontificate about the US "currently being in recession". Yet, when one looks at the numbers, not only we not "currently in a recession", we are not even approaching one.

It has been almost two decades since the last true recession in the US. I know we experienced slowdowns in the mid 1990's and early 2001-2002 but if we are being honest, those were just simply bumps in the road. In Q4 1990, GDP fell 3% and Q1 1991 followed with a 2% drop from there. We have not had consecutive negative quarterly growth since then. In short, we are spoiled. Prior to the 1990-1991 recession, people had only go back 9 years in their memories to remember the last one. We are currently approaching year 19 which means there are a whole class of investors who have never actually experienced a recession in their investing lives...

So, where are we now?

Gross domestic product rose at an unrevised 0.6% annual rate October through December, the Commerce Department reported today, in line with expectations. For the current quarter ending Monday, economists expect growth to be flat. For Q2, economists expect GDP to fall 1%.

For all of 2007, the US economy grew at the weakest pace in five years, rising at an inflation-adjusted 2.2% rate compared to 2.9% in 2006.

The Labor Department reported that initial claims for jobless benefits fell 9,000 last week but remained at elevated levels. Also, the previous week's level was revised down by 3,000. The unemployment rate remains at historically low levels.

Inflation, (consumer prices) was revised down to a 3.9% annual rate in the quarter from 4.1% previously reported. Core prices, which exclude food and energy costs, rose at a 2.5% pace, again revised down from 2.7%

None of those numbers, NONE, are recessionary.

Expectations of both business and economists are for the "economy to turn around" in the second half of 2008. So, if this is true, and we have flat growth in the current quarter, we are now running out of time to have a recession.

In fact, the "recession we are in but not entered into yet according to actual data" will most likely never materialize. Confusing?

Remember back in the late 1990's when people began redefining earnings and were using EBITDA instead the actual EPS? It was as if they wanted us to believe taxes and interest on debt no longer mattered. When people start to redefine metrics, they are doing so to make the current situation fit the outlook they want us to see.

This means when you read or hear people lamenting the recession we are in "due to housing", you would do best to ignore them. Housing is a significant part but not the total of the economy. They are trying to redefine what a recession actually is.

We are facing "slowing growth" not "negative". Until we get a single quarter of negative GDP growth, ANY talk of recession is just that, talk.

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Thursday's Links

Reality TV, Interest rates, Borders, Tips

- I never Tivo the right shows...

- And we thought 6% was "too high"?

- The Master's jump on the Borders Bandwagon

- Wow.... that is all I can say

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Icahn Adds to Motorola Stake

In an SEC filing yesterday Carl Icahn and affiliates disclosed they added over 2.3 million shares of Motorola (MOT) on 3/6 and 3/7 at $9.75 and $9.99 a share.

This brings to total ownership to 6.44%.

Disclosure ("none" means no position):None

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Thursday's Upgrades and Downgrades

Upgrades
Motorola (MOT)- AmTech Research Sell » Neutral
Telecom Italia (TI)- Bear Stearns Underperform » Peer Perform
EnCana (ECA)- Bernstein Underperform » Mkt Perform
Apache (APA)- Bernstein Mkt Perform » Outperform
XTO Energy (XTO)- Bernstein Mkt Perform » Outperform
Waters (WAT)- JP Morgan Neutral » Overweight
Clear Channel Outdoor (CCO)- Jefferies & Co Hold » Buy
Watson Wyatt (WW)- UBS Neutral » Buy
Talisman Energy (TLM)- Citigroup Hold » Buy
Comp. Cervecerias (CU)- Citigroup Sell » Hold

Downgrades
SiRF Technology (SIRF)- Collins Stewart Buy » Hold
Jabil Circuit (JBL)- Longbow Buy » Neutral
Clear Channel (CCU)- SMH Capital Buy » Sell
Jabil Circuit (JBL)- Credit Suisse Outperform » Neutral
Elan (ELN)- Canaccord Adams Hold » Sell
Brookfield Asset Mngmt (BAM)- BMO Capital Markets Outperform » Market Perform
Cooper Tire (CTB)- KeyBanc Capital Mkts Aggressive Buy » Hold
PF Chang's (PFCB)- Friedman Billings Mkt Perform » Underperform
Hudson City Banc (HCBK)- Friedman Billings Outperform » Mkt Perform
Astoria Fincl (AF)- Friedman Billings Mkt Perform » Underperform
Aircastle (AYR)- JP Morgan Overweight » Neutral
Genesis Lease (GLS)- JP Morgan Overweight » Neutral
Jabil Circuit (JBL)- JP Morgan Overweight » Underweight

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"Fast Money" for Thursday

Thursday's Picks
Tim Seymour likes Cosan Limited (CZZ) $12.34 as the largest ethanol producer in Latin America.

Karen Finerman prefers Kaiser Aluminum (KALU) $69.71

Pete Najarian recommends buying puts on the Oil Services HLDRS (OIH) $176.44

Jeff Macke says he likes Home Depot (HD) $28.16 out of spite, because it didn’t advance in the Fast Money Madness tournament.

Wednesday's Results
Jeff Macke likes Intel (INTC) $22.27 Close $21.86 LOSS

Tim Seymour prefers Tesoro (TSO) $29.88 Close $30.73 GAIN

Karen Finerman recommends the Altria (MO) $73.33 stub. Close $73 LOSS

Pete Najarian thinks Oracle (ORCL) $21.08 is a buy ahead of earnings. Close $20.94 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-15
Tim Seymore= 14-6
Guy Adami= 20-21
Pete Najarian= 21-18
Karen Finerman= 16-21-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Wednesday's Links

HiPhone, iPod, iPhone, Gphone

- The reason Apple (AAPL) has no deal in China

- The reason iPod sales are slowing

- More evidence Apple's total control issues may be hurting it

- And finally, this..

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Hesse Ignored Whitworth: Sprint Shareholders Win

Who can forget Ralph Witworth's ill timed foray into Home Depot (HD) and the carnage that ensued for shareholders. At least Sprint (S) seems to have learned from that history and gave his demands their due course, the garbage can.

In February I begged Sprint's new CEO Dan Hesse to ignore Withworth's call to abandon the WiMax effort and spin off the long distance unit.

New out today from the Journal says Comcast (CMCSA) and Time Warner Cable (TWC) are considering providing funding for a new wireless company that would be operated by both Sprint and Clearwire (CLWR).

The new venture would create a nationwide wireless network using Sprint's WiMax technology. The goal is to provide high-speed Web access and high-quality mobile video to laptops, cellphones and other mobile devices. Sprint and Clearwire have been working for months on WiMax have looked to raise at least $3 billion for a joint venture.

Comcast, Time Warner Cable and Bright House Networks are rumored to be contributing $1.7 billion to the new company.

This does some very important things:

1- Begins "tying up loose ends" at Sprint for any potential buyer. With all the uncertainty surrounding the effort, potential buyers have been staying at arms length. With this cleared up, a price for the company can be more easily attained.

2- Sprint Network: Sprint already has a far superior network to rival AT&T (T), its problems have been customer service related. As mobile web-browsing becomes more prevalent, the best network has the clear advantage. As this is rolled-out, that will be Sprint.

Rather than listening to Whitworth, Hesse ignored his calls to either abandon, sell or otherwise dispose of the WiMax effort and instead seems to be on the cusp of making it the future of the company.

Good for him...

Disclosure ("none" means no position):None

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Atheists and the Stock Market

Watch "Black Swan" author Nassim Nicolas Talub. This guy makes you think about how the "improbable" regularly happens.



Here he describes the book title:

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Buffett Investing Video

Interesting video I cam across.

Mary Buffett talks about the types of businesses Berkshire's (BRK.A) Warren Buffett likes..




Disclosure ("none" means no position):none

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Icahn Wins with Motorola

It looks like Carl Icahn will get what he want with Motorola (MOT)

Motorola announced this morning it has "commenced a process to create two independent, publicly-traded companies. Today's decision follows the Company's January 31, 2008 announced evaluation of the structural and strategic realignment of its businesses and represents affirmative steps to position its Mobile Devices and Broadband & Mobility Solutions businesses for success, while creating value for all Motorola shareholders.

"Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisors," said Greg Brown, Motorola's president and chief executive officer. "Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for our shareholders."

Based on current plans, the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola's shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies."

It took him a while but the man (Icahn) rarely loses...

Disclosure ("none" means no position):none

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Circuit City Being Sold Soon?

On March 11th Goldman Sachs (GS) made an announcement that may give light into the future of Circuit City (CC).

An analyst note removed price targets for CC's stock saying Goldman is "acting as a financial adviser in connection with a strategic transaction that is fundamental to the reasonable analysis" of Circuit City's stock price.

Hmm

But, Circuit City spokesman Bill Cimino said yesterday the "strategic transaction" referenced is an ongoing effort to sell the company's InterTan unit, a Canadian electronics retailer purchased from RadioShack (RSK) in 2004.

He continued.."Last year, [the process] was put on hold for the holidays, then it started back up." Goldman's withdrawal of its stock rating "is really in connection with that."

Well, if that is true, why didn't Goldman withdraw its price targets from CC's stock then? Shouldn't they have done so? Why wait 6 months? It does not make sense.

The timing of investor Mark Wattles' recent agitation and the Goldman change must leave one to think this has nothing to do with the Canadian unit. We can assume this if for no other reason than CC says it is so.

We can assume that something is in the works......

Disclosure ("none" means no position):None

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Borders Call Notes

Finally got around to reading the Borders (BGP) earnings call and the take away for me at least was very positive...

A couple of things struck me.

1- Guidance:
Despite a 2% comps sales increase number last year, guidance for the current year was in the words of CEO George Jones "very conservative", "given the current environment".

2- Cost cutting:
DVD "shrinkage" (read:theft) was at $20 million last year. The company has both made changes to security measures and will be reducing the number of titles sold and the expectations are for this number to fall dramatically.

Inventory ended the year at $1.3 billion and change, essentially flat over the previous year. Now, the company is moving towards a "face out" strategy on books that will reduce the number of titles sold at the store level. The results will be a dramatic fall in carried inventory at the store level. This savings drops immediately to the bottom line. The locations that have the "face out" shelving, carry 20% fewer titles yet are seeing double digits sales growth. hmmm.

The dividend was stopped (for now) and that will save $25 million and change.

3-Selective Promotions:
The Borders Rewards program now sports a membership of 25 million people. The importance of this is huge. It allows Borders to track purchases from its members and then tailor promotions to maximize the value of them. Retailers have been using these programs for years but Borders is only now getting involved. The tie in with the upcoming website launch will allow email-to-purchase marketing previously not available on this scale to the company.

4-Borders.com
The heavy costs involved with rolling out the site are done. Estimates of them were not given but looking sat the site one ought to assume they were substantial. It is important to note that in the previous year, Borders reaped no benefits from that investment. This year they will both reap the benefits and see a decrease in costs. CEO Jones said that he expects CapEX to fall from $200 million to "around" $140 million


5- Sale of assets
The minimum that will be raised in the $125 million offered by Ackman. Now, the company only has a market cap of just under $400 million at the current share price. They could conceivably by back 25% of the shares and have cash left over for operations or debt repurchases.


So where does this leave us? A cursory look shows $80 to $100 million in cost cuts available without any real effort or impediment to operations. The inventory reductions should be over an additional $100 million as the stores (not the company) begin stocking fewer titles.

Border lost $157 million last year and it looks as though it could easily cut its way to break-even or better this year now that much of heavy lifting in investment has be done. This assumes the above conservative guidance. Should that guidance prove to be conservative, results could improve even more.


Disclosure ("none" means no position):Long BGP

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Wednesday's Upgrades and Downgrades

Upgrades
Radyne (RADN)- Feltl & Co. Hold » Buy
XM Satellite (XMSR)- Utendahl Equal-weight » Over-weight
Force Protection (FRPT)- Collins Stewart Sell » Hold
L-1 Identity Solutions (ID)- Needham & Co Hold » Buy
N Amer Palladium (PAL)- HSBC Securities Underweight » Neutral
Avant Immun (AVAN)- Needham & Co Hold » Buy
XM Satellite (XMSR)- Stifel Nicolaus Hold » Buy
Canadian Solar (CSIQ)- Lazard Capital Hold » Buy
Boardwalk Pipeline (BWP)- Morgan Keegan Mkt Perform » Outperform
Orleans Homebuilders (OHB)- JMP Securities Mkt Perform » Mkt Outperform
Pulte Homes (PHM)- JMP Securities Mkt Perform » Mkt Outperform
Meritage (MTH)- JMP Securities Mkt Perform » Mkt Outperform
DR Horton (DHI)- JMP Securities Mkt Outperform » Strong Buy
Packeteer (PKTR)- Brean Murray Sell » Hold
CIGNA (CI)- Credit Suisse Neutral » Outperform
Wimm-Bill-Dann Foods (WBD)- Citigroup Hold » Buy
THQ Inc (THQI)- Citigroup Hold » Buy
Yahoo! (YHOO)- Citigroup Hold » Buy

Downgrades
SiRF Technology (SIRF)- Piper Jaffray Neutral » Sell
Agree Realty (ADC)- Janney Mntgmy Scott Buy » Sell
Omega Health (OHI)- Ferris Baker Watts Buy » Neutral
XM Satellite (XMSR)- Janco Partners Buy » Accumulate
Williams-Sonoma (WSM)- FTN Midwest Buy » Neutral
Volcom (VLCM)- Wedbush Morgan Buy » Hold
Stillwater Mining (SWC)- HSBC Securities Neutral » Underweight
Heartland Payment Systems (HPY)- Sun Trust Rbsn Humphrey Buy » Neutral
Starwood Hotels (HOT)- Stifel Nicolaus Buy » Hold
FPIC Insurance (FPIC)- Stifel Nicolaus Buy » Hold
Extra Space Storage (EXR)- Banc of America Sec Buy » Neutral
Prosperity Bancshares (PRSP)- BMO Capital Markets Outperform » Market Perform
Public Storage (PSA)- Banc of America Sec Buy » Neutral
Accentia Biopharmaceuticals (ABPI)- Jefferies & Co Buy » Underperform
Capital One (COF)- Friedman Billings Mkt Perform » Underperform
UnitedHealth (UNH)- Credit Suisse Outperform » Neutral
C.H. Robinson (CHRW)- UBS Buy » Neutral
Amtrust Financial (AFSI)- Keefe Bruyette Outperform » Mkt Perform
Pzena (PZN)- Keefe Bruyette Mkt Perform » Underperform
Royal Philips Electronics (PHG)- JP Morgan Overweight » Neutral
Credit Suisse (CS)- UBS Buy » Neutral
Liberty Media Capital (LCAPA)- Lehman Brothers Overweight » Equal-weight
Gap Inc (GPS)- Citigroup Buy » Hold
Bear Stearns (BSC)- Sandler O'Neill Hold » Sell
Accentia Biopharmaceuticals (ABPI)- Rodman & Renshaw Mkt Outperform » Mkt Perform
Zumiez (ZUMZ)- Oppenheimer Outperform » Perform
Tiffany & Co (TIF)- Oppenheimer Outperform » Perform

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"Fast Money" for Wednesday

Wednesday's Picks
Jeff Macke likes Intel (INTC) $22.27

Tim Seymour prefers Tesoro (TSO) $29.88

Karen Finerman recommends the Altria (MO) $73.33 stub.

Pete Najarian thinks Oracle (ORCL) $21.08 is a buy ahead of earnings.

Tuesday's Results
Jeff Macke is buying Valero (VLO) $50.08 Close $48.10 LOSS

Tim Seymour likes the U.S. Natural Gas ETF (UNG) $45.56 Close $45.99 GAIN

Karen Finerman recommends Philip Morris International (PM-WI). Agreed

Jon Najarian is sticking with JPMorgan Chase (JPM) $46.55 and CEO Jamie Dimon. Close $46.06 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-14
Tim Seymore= 13-6
Guy Adami= 20-21
Pete Najarian= 21-17
Karen Finerman= 16-20-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Schoonover: Come Any Closer and I'll Wreck It!!!

Ever see the cop shows where the crazy guy sits there with a gun to his head and shouts "take one step closer and I'll shoot"? We now know what Circuit City (CC) CEO Phil "The Shill" Schoonover watched as a kid.

Back in February when Mark Wattles disclosed a 5% stake in the company, rumors abounded he may make a play for it. Schoonver responded by expanding the company's credit line by $800 million to $1.3 billion with an option to add another $300 million at their convenience. It does not seem like much until you consider prior to this they had $49.7 million outstanding against the current credit facility and have total sales of a paltry $2.9 billion. Quite an increase for no apparent reason.

Clearly Schoonover was trying to protect his job by making the company unattractive as a potential investment. It should be noted here that the now almost 80% drop in the stock price had done that for scores of current investors.

Wattles then called for the a new Board of Directors and nominated his own slate.

Schoonover responded by chopping off his own feet and fired Steven Pappas the Company's "Small Store President," and Peter Weedfald the Chief Marketing Officer. An important note here is the $6 million bonuses approved in December to retain 10 Vice Presidents and $3 million more to retain Executive Vice presidents, including the now unemployed Pappas and Weedfald. At the time Schoonover defended the bonuses saying it was important to retain "instrumental executives". OK

Now word is that Schoonover is seeking to pacify irate investors with a $0.04 dividend. Is he thinking that makes up for the $16 collapse in the stock price?

Now the company is being removed from the S&P 500 and index funds are dumping the stock by the truck load. Schoonover's moves have backfired as activist funds D.E. Shaw, Royal Capital Management & HBK Investments LP, have scooped up over 15% of the shares.

I cannot wait to see Schoonover's next move... maybe random rolling store closings until Wattles "goes away"?

Disclosure ("none" means no position):None (Thank God)

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More Evidence for Auto Loan Investing

CNBC ran a piece today that may give more clarity into Leucadia's (LUK) recent AmeriCredit (ACF) investment.



The key take-away is that the financing companies are seeing more revenues due to the increased length of financing terms BUT, so far there have been no real increase in defaults. I still stand by my thesis that people will walk away from a home before an auto.....must get to work.

Translation: Higher profits.

Disclosure ("none" means no position): None

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Tuesday's Links

Tipping, LTCM again, Starbucks' "social networking site", Hillary.

- This was fascinating

- Remember John Meriweather? Left Solomon in the 80's amid bond trading scandal, then founded LTCM which imploded, almost taking 6 banks with it and now.... back at his old tricks.

- Finally got it....it is just an idea factory.

- Oops....Bet she never though this stuff would see the light of day
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A Classic.....

Did anyone else see this ad? It seems Cramer is now fodder for Fox Biz

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Who Will Buy Borders?

It seems there are four options for a purchaser of Borders (BGP).

1- Barnes and Noble (BKS)
This has been talked about fr a few years now. The theory being that a combined entity would be better able to compete with Amazon (AMZN) without the cannibalization of the foot traffic market the two currently compete for.

2- Indigo-
Canada's largest bookseller has been mentioned as a possible suitor. This has some interesting story-lines to it. Indigo leads in market share in Canada. Here is the interesting part. Indigo's CEO Heather Reisman knows Borders well. She lead the attempt to expand Borders into Canada in 1996 that was blocked by the Canadian government. She eventually left Borders,started Indigo, and then took over Canadian rival Chapters in 2001, claiming market dominance in the country. A combination of the two would lead to a North American powerhouse and with the controlling interesting being Canadian, would see no objection from that country's government.


3- Pershing.
Ackman will already own the international operations soon enough, why not just convert his soon to be 40% stake into total ownership, do what he wants to it, and then spin it out in a few years when the climate is better?

4- Nothing.
It is possible for the company to continue on its own should no legitimate offered come about as the Ackman loan allows for uninterrupted operations through 2009. This option is not likely though. It was probably done to give the company some bargaining power in negotiations.

No matter what happens, Pershing will own the international operations on Australia, New Zealand, Singapore and Britain. Having those operation off the books may clear the way for Indigo to scoop up the US assets at a reduced price.

Borders is a profitable business that is turning around albeit very slowly in the current environment. With that being said, there is a market for the business for a buyer.

Again, the good news for current shareholders is Ackman's interest. Being the largest shareholder and essentially in control of the sale process, shareholders can be assured of a good deal should one come about.

Disclosure ("none" means no position):Long BGP, none

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Tuesday's Upgrades and Downgrades

Upgrades
Alcoa (AA)- Davenport Buy » Strong Buy
Delia's (DLIA)- CL King Underperform » Neutral
Green Mtn Coffee (GMCR)- Canaccord Adams Hold » Buy
Big Lots (BIG)- Wedbush Morgan Buy » Strong Buy
Molson Coors Brewing (TAP)- Stifel Nicolaus Hold » Buy
CIT Group (CIT)- Stifel Nicolaus Hold » Buy
Anheuser-Busch (BUD)- Stifel Nicolaus Hold » Buy
Tsakos Energy (TNP)- Citigroup Sell » Hold
Rockwell Collins (COL)- JP Morgan Neutral » Overweight
National City (NCC)- Friedman Billings Underperform » Mkt Perform
Potash (POT)- RBC Capital Mkts Outperform » Top Pick
Grey Wolf (GW)- Credit Suisse Neutral » Outperform
PMC-Sierra (PMCS)- Lehman Brothers Equal-weight » Overweight
Microsemi (MSCC)- Lehman Brothers Equal-weight » Overweight
Intersil (ISIL)- Lehman Brothers Equal-weight » Overweight
Fairchild Semi (FCS)- Lehman Brothers Equal-weight » Overweight
Analog Devices (ADI)- Lehman Brothers Equal-weight » Overweight
FPL Group (FPL)- Lehman Brothers Equal-weight » Overweight
Xyratex (XRTX)- Wachovia Mkt Perform » Outperform
Hawaiian Airlines, Inc. (HA)- Bear Stearns Peer Perform » Outperform
CIGNA (CI)- UBS Neutral » Buy
Monsanto (MON)- UBS Neutral » Buy
Cameron (CAM)- Wachovia Mkt Perform » Outperform
Cresud SA (CRESY)- HSBC Securities Neutral » Overweight
Collective Brands (PSS)- Soleil Hold » Buy
Auxilium Pharma (AUXL)- Soleil Hold » Buy
Domtar (UFS)- Soleil Hold » Buy

Downgrades
Synplicity (SYNP)- DA Davidson Buy » Neutral
Cambrex (CBM)- KeyBanc Capital Mkts Buy » Hold
Piper Jaffray (PJC)- Sterne Agee Buy » Sell
Steelcase (SCS)- BB&T Capital Mkts Buy » Hold
Herman Miller (MLHR)- BB&T Capital Mkts Buy » Hold
Astoria Fincl (AF)- Sterne Agee Buy » Hold
InfoSpace (INSP)- Needham & Co Buy » Hold
Dime Community (DCOM)- FTN Midwest Buy » Neutral
Integra Bank (IBNK)- FTN Midwest Buy » Neutral
Cambrex (CBM)- First Analysis Sec Overweight » Equal-Weight
Textron (TXT)- Cowen & Co Outperform » Neutral
Hercules Offshore (HERO)- CapitalOne southcoast Add » Neutral
Cellcom Israel (CEL)- Jefferies & Co Buy » Hold
Winnebago Inds (WGO)- BB&T Capital Mkts Buy » Hold
CIT Group (CIT)- Oppenheimer Outperform » Perform
Symmetry Medical (SMA)- Wachovia Outperform » Mkt Perform
Gap Inc (GPS)- UBS Buy » Neutral
Selective Insurance (SIGI)- Banc of America Sec Buy » Neutral
Auxilium Pharma (AUXL)- Merriman Curhan Ford Neutral » Sell
Wells Fargo (WFC)- Robert W. Baird Neutral » Underperform
Lehman Brothers (LEH)- Oppenheimer Outperform » Perform

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"Fast Money" for Tuesday

Tuesday's Picks
Jeff Macke is buying Valero (VLO) $50.08

Tim Seymour likes the U.S. Natural Gas ETF (UNG) $45.56

Karen Finerman recommends Philip Morris International (PM-WI).

Jon Najarian is sticking with JPMorgan Chase (JPM) $46.55 and CEO Jamie Dimon.

Monday's Results
Jeff Macke believes in the financials breakout and is buying the XLF (XLF) $26.32 Close $26.65 GAIN

Guy Adami’s going with Microsoft (MSFT) $29.18 which he predicts gets a 30-handle. Close $29.17 LOSS

Tim Seymour said the time is right to buy PetroChina (PTR) $122.55 Close $123.20 GAIN

Pete Najarian is bullish on Oracle (ORCL) $20.08 into its earnings next Wednesday.Close $20.77 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-13
Tim Seymore= 12-6
Guy Adami= 20-21
Pete Najarian= 21-16
Karen Finerman= 16-20-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Disclosure ("none" means no position):

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Monday's Upgrades and Downgrades

Upgrades
Morgan Stanley (MS)- Punk, Ziegel & Co Sell » Mkt Perform
Oritani Financial (ORIT)- Sterne Agee Hold » Buy
Lindsay Manu (LNN)- Boenning & Scattergood Market Perform » Market Outperform
Rent-A-Center (RCII)- Stifel Nicolaus Hold » Buy
Abbott Labs (ABT)- Wachovia Mkt Perform » Outperform
Global Industries (GLBL)- CapitalOne southcoast Neutral » Add
TeleTech (TTEC)- Wachovia Mkt Perform » Outperform
Micromet (MITI)- RBC Capital Mkts Sector Perform » Outperform
Netflix (NFLX)- Cantor Fitzgerald Hold » Buy
Zimmer Hldgs (ZMH)- Lehman Brothers Equal-weight » Overweight
Fannie Mae (FNM)- Keefe Bruyette Mkt Perform » Outperform
Freddie Mac (FRE)- Keefe Bruyette Mkt Perform » Outperform

Downgrades
Towerstream (TWER)- Canaccord Adams Buy » Hold
Texas Instruments (TXN)- AmTech Research Buy » Neutral
Banco Sant. P.R. (SBP)- Sandler O'Neill Buy » Hold
Great Plains Engy (GXP)- Wachovia Outperform » Mkt Perform
InterNAP (INAP)- Jefferies & Co Buy » Underperform
Diamond Mngmt (DTPI)- JMP Securities Mkt Perform » Mkt Underperform
BladeLogic (BLOG)- Cowen & Co Outperform » Neutral
Assured Guaranty (AGO)- Citigroup Buy » Hold
China Sunergy (CSUN)- Jefferies & Co Hold » Underperform
Towerstream (TWER)- Morgan Joseph Buy » Hold
US Airways (LCC)- Lehman Brothers Overweight » Equal-weight
Air Tran Holdings (AAI)- Lehman Brothers Overweight » Equal-weight
Panera Bread (PNRA)- JP Morgan Overweight » Neutral
First Horizon (FHN)- JP Morgan Overweight » Neutral
SanDisk (SNDK)- JP Morgan Overweight » Neutral
AMR Corp (AMR)- UBS Neutral » Sell
Delta Air Lines (DAL)- UBS Buy » Neutral
Continental Air (CAL)- UBS Buy » Neutral
US Airways (LCC)- UBS Buy » Neutral
Northwest Airlines (NWA)- UBS Buy » Neutral
UAL Corp. (UAUA)- UBS Buy » Neutral
Amgen (AMGN)- Wachovia Outperform » Mkt Perform
ICICI Bank (IBN)- Jefferies & Co Buy » Underperform

Disclosure ("none" means no position):

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"Fast Money" for Monday

Monday's Picks
Jeff Macke believes in the financials breakout and is buying the XLF (XLF) $26.32

Guy Adami’s going with Microsoft (MSFT) $29.18 which he predicts gets a 30-handle.

Tim Seymour said the time is right to buy PetroChina (PTR) $122.55

Pete Najarian is bullish on Oracle (ORCL) $20.08 into its earnings next Wednesday.

Thursday's Results
Jeff Macke recommends selling the United States Oil Fund (USO) $82.29 Close $81.30 GAIN

Guy Adami thinks Starbucks (SBUX) $17.50 is a buy with a tight stop. Close $17.53 GAIN

Tim Seymoyr prefers iShares MSCI Emerging Markets Index (EEM) $126.467 Close $128.60 GAIN

Pete Najarian anticpates upside in Merck (MRK) $42.99. Close $43.36 GAIN


2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 20-13
Tim Seymore= 11-6
Guy Adami= 20-20
Pete Najarian= 20-16
Karen Finerman= 16-20-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Weekend Reading at VIN

Long weekend so here is the list a day early...visit Value Investing News for more.

1. Betting Big, Winning Big: Interview With Bruce Berkowitz
(via online.barrons.com)

Barron's: You run a very concentrated portfolio, with the top 10 holdings of the Fairholme Fund accounting for roughly 70% of the assets. Why is that?

2. Gannon On Investing: On Ignorance Admitted
(via www.gannononinvesting.com)

How well defined is your circle of competence? How honest are you with yourself? Join Geoff as he discusses these topics and current market environment.

3. Bruce Berkowitz on Sears Holdings (Video)
(via www.bloomberg.com)

4. How value investor Chou wins with bonds
(via www.theglobeandmail.com)

Mr. Francis Chou’s method can be boiled down to a few principles. As he wrote in his 2007 report to unitholders, “the cardinal principle of investing is to think first about preserving capital before thinking about making money. The greater the probability of permanent loss of capital, the greater the spread should be between a particular debt instrument and risk-free treasuries.”

5. Does the magic formula work?
(via www.contrarianvalueinvesting.com)

Ever since its release, much has been written whether or not Joel Greenblatt’s “Magic Formula” works. Joel Greenblatt has consistently said that results should be measured over time and every once in a while there would be stretches where the magic formula does not work.

6. How Bad Will This Get? The US Dollar.
(via www.fwallstreet.com)

"When the markets are flying high, value investors tend to sit back and let things happen. When they crash, we must start looking for opportunities — dissecting information, scouring annual reports and proxy statements, and evaluating which companies will survive and which ones will die. (That's why I haven't been around as much lately. Sorry.)"

7. Altria's Spin: Your Questions Answered
(via valueplays.blogspot.com)

Answers to the most common PMI spin questions

8. How Bad Will This Get? The Recession.
(via www.fwallstreet.com)

Through our investing, we can combat the recession, achieve growth, and keep our heads above water (or fly high). To help us in that endeavor, we must understand the effects of the recession so that we pick the opportunities out of the blood on the streets.

9. World Wrestling (WWE): Cramer is Wrong - Buy for the Dividend
(via collegeanalysts.com)

A look at Cramer's track record on the stock, and why you should buy even if the capital appreciation will be limited.

Billytickets will vote this down.

10. A Bear Stearns Market
(via www.washingtonpost.com)

"Panic is old hat on Wall Street. Rarely before, however, has there been a crisis so comprehensive as this one. It first materialized last summer in the shape of a disturbance in the low-rated, or subprime, mortgage market. "Contained," the regulatory establishment hopefully pronounced.

11. Gannon On Investing: An Email on Economic Catastrophe
(via www.gannononinvesting.com)

Excerpt: "The Fed is in a very tough position. This is a credit problem. It's serious. It's hard to say what the result will be - but it could potentially be very bad. You can have some pretty catastrophic things happen when people start to panic - as far as what happens with money and how all sorts of things can seize up at once.

12. Mutual Fund Companies Make Better Investments Than The Funds They Manage
(via amateurassetallocator.com)

The stocks of mutual fund companies often make better investments than the funds they manage.

13. Understanding Valuation Measures
(via magicdiligence.com)

The second in a three part series, this article examines several valuation based formulas, explaining for each what it means, how to calculate it, what's a good or bad number, and a simple example.

14. Special Situation: Steak N Shake a Landslide Victory!
(via streetcapitalist.com)

With the company now trading at about $8 per share there seems to be quite a bit of fear. One of the walls that stood in the way of the company’s value was their stubborn and entrenched management. With Biglari's landslide win, change becomes very possible.

15. NVIDIA - The Fleeting Advantage
(via magicdiligence.com)

NVIDIA is a leading graphics processor maker. Over the last 3 years it has crushed it's rival AMD (formerly ATI) in the technology battle, delivering huge revenue and earnings gains to shareholders and improving margins by 400%. But in the face of strong competition, does the company really have any durable advantage?

16. Bloomberg Interview with Jean-Marie Eveillard
(via www.bloomberg.com)

Bloomberg Interview with Jean-Marie Eveillard.

17. Sham Gad : Cash Is King Again
(via www.fool.com)

You usually don't realize how good something is until it's gone. For most investors, the red-headed stepchild in their portfolios is cash. When markets are advancing, it's easy to see cash as a weak, underperforming asset that needs to be put to better use. After all, who wants sit on an asset earning low-single-digit returns when the markets are serving up double-digit gains?

18. Can’t Grasp Credit Crisis? Join the Club
(via www.nytimes.com)

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

19. Sooner Fed bail-outs than the 1930s revisited
(via www.telegraph.co.uk)

Put a clothes peg on your nose. The moral stench of bail-outs for the über-rich will be sickening. None of us wants to pay a farthing to rescue the bankers and assorted debt pimps who got us into this financial mess, and in doing so exposed our societies to such harm.

I found the comments to be the best part. Very thought-provoking

20. Why Paying $5 Per Share For Bear Stearns Might Make Sense
(via stockmarketbeat.com)

Bondholders can use options to hedge a stock buy, and effectively buy the right to vote in favor of the deal for $0.35 per share.

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Friday's Links

Financials, Masters, Apple, Puts

- Yup

- Citi

- It will miss

- It is a good idea..

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May 15th: Mark Your Calandar

Lead paint diva Jane Genova is reporting that the RI Supreme Court will stream live video on the Internet of oral arguments between the State of Rhode Island and Sherwin Williams (SHW) and NL Industries (NL) on May 15th.


This will be a very interesting day. It is one this to give an oral argument, it is another thing entirely to so it in front of millions on the internet.

Read Jane's blog post here


Disclosure ("none" means no position):Long Sherwin (SHW), None

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Starbucks: What Are They Doing Out There?

This one is priceless.....

So, yesterday Starbucks (SBUX) announced its "transformational ideas" to bring life back to the company. Rather than recite them in detail, here they are in brief, new machines, ground coffee, rewards card, social site. Yea, I though the same thing, "you kidding me?"

Now I read this little nugget in the USA Today:
"Consumers will be encouraged to submit ideas, to comment and vote on ideas from others, and even to follow along as ideas evolve into real products (on the new "social site"). Some 48 Starbucks employees will respond to comments on the site, and Schultz will have a blog. Alas, consumers will not be compensated for ideas that Starbucks adopts, says spokesman Brandon Borrman."

Is this what Schultz $ Co. have been reduced to? Having employees pilfer ideas from customers? Guys, you sell coffee, you are not splicing DNA out there in Seattle. Go back to what you do best and stop all this ancillary garbage that clearly has taken your mind off the game. CD sales, not working, end it. Breakfast and lunch, done. If I want a book, I'll go to Borders (BGP), not the local coffee shop. Just because you have empty floor and counter space, you do not need to put crap there to sell.

Howard, rather than blogging away the day, figure out how to get me a coffee in under ten minutes when there are more than 5 people in line. How about a location I can actually sit in? This is getting out of control.

The question is now this. What is Starbucks? Is it a coffee house chain? I mean, wasn't that the genesis of the whole thing? Wasn't Starbucks modeled after Italian style coffee houses Schultz visited in Europe? They are so far away from that now, getting back may just require a complete "do over". They have now unequivocally lost their soul. No question.

Trolling the web for ideas........sad

Alas shareholders, Schultz, far from being the company's savior, may just be its largest hurdle...

Disclosure ("none" means no position):None (thank god)

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The Economy (Video)

As much as Liesman irritates me, I like Westbury

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Buying Borders

Well, that didn't take very long. "Ask and ye shall receive" I guess?

So yesterday I posed some questions about Borders (BGP) and today, answers came piling in.

Bill Ackman's Pershing Square Capital Management Borders's largest holder, has entered into the following agreement with Borders.

- A $42.5 million secured term loan to Borders at a 12.5% annual interest rate; the loan matures Jan. 15, 2009.
- Pershing committed to a "backstop purchase offer" that gives Borders the option until Jan. 15, 2009, to sell its Paperchase, Australia, New Zealand and Singapore units and its 17% interest in Borders U.K. to Pershing for $125 million, "after the company has pursued a sale process to maximize the value of those assets."
- Borders will issue to Pershing 14.7 million warrants to buy shares at $7 each. That would be just under a 20% stake in Borders. The stake would be protected against dilution if Borders were to issue more equity, except shares issued for employee stock options.

The proposal is binding on Pershing Square until April 4. Borders has the right until then to seek better financing deals. If Borders finds a better deal, it can end the Pershing agreement with no break-up fee, although Pershing can request reimbursement of "reasonable expenses", Borders said.

And oh yea....

The company today also reported results for the fourth fiscal quarter and full year 2007, ended Feb. 2, 2008. As detailed below, on an operating basis, fourth quarter income from continuing operations was $84.7 million or $1.44 per share compared to $87.7 million or $1.45 per share a year ago. Total consolidated sales from continuing operations were $1.3 billion in the fourth quarter. Excluding the impact of the extra week during fiscal 2006, this represents a 2.8% increase over the same period a year ago.

Ok.

After Ackman exercises the warrants, his ownership of the chain will be 40% when you take into consideration his economic interest being held in "total return swaps". This ownership percentage will effectively give him total control of the chain. This is very good for shareholders.

Let's not forget, Ackman began buying at $24, doubled down at $12 and now will pick up another chunk at $7.

A key here is the dilution protection. Buying shares here can be done with a reasonable as can be expected assumption of no further dilution. That is important. One could probably assume that Ackman may be buying more now with the stock hovering around $5.50 a share.

Here is why all the above is good news. The equity stake by Ackman in Borders is a non issue because his interest in the chain is the same as mine. He is "eating his own cooking" when it comes to the company as Berkshire's (BRK.A) Warren Buffett is fond of saying.

Were this an outside equity stake, we could not be sure what the intent of the holder was. The loan that is issued would take priority over the stock price but with the loan holder being Ackman, and he having an interest in 40% of the shares, the stock price will not be ignored.

Yes the dividend was eliminated but let's be honest, 11 cents a share ain't gonna buy a summer home. Keep it and get this going.

The question that was not answered was the online store. But, a look at the results there from Barnes and Nobel (BKS) show that there is definitely growth there (13%) apart from Amazon (AMZN).

All that being said, at $5 and change, time to pick it up...

Disclosure ("none" means no position): Long BGP

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Thursday's Links

Cramer, Starbucks, Best Buy, Bear on Ebay

- Now we catch TheStreet.com altering its website to scrub Cramer's bullish call on Bear Sterns (BSC) days before its implosion. Deplorable............

- Get out of the music biz....focus on coffee..

- This is how you build loyalty.... yes Circuit City (CC) missed the boat..... again

- This is great...

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AutoNation......hmmmmm

AutoNation (AN) looks more appealing each time I look at it.

Still thinking about autos and no, not Ford (F) or GM (GM).

Eddie Lampert, can't seem to buy it fast enough and he currently owns over 35% of the company.

Forecasts this year call for about 15.5 million cars to be sold. Now, interesting tidbit. On CNBC Wednesday, CEO and Chairman Mike Jackson did an interview and was speaking of running his (or any) business. In the interview he said he runs his business for "a 1,000 year flood". He then said that if auto sales dropped to 10 million units, "a depression" he called it, his business would be "cash flow neutral". That is his based for decision making.

As a potential investor, this is fantastic news. It simply means that the business will still produce cash even in an almost devastating economic climate. Wonderful...

It also makes sense as to Lampert's interest in the company. Lampert is a cash and balance sheet investor (See Sears Holdings (SHLD)). A positive cash company in the current economic climate makes for tremendous flexibility competitors will not have. Jackson can reduce debt, repurchase shares or expand. In fact, Jackson has reduced share count by 30% the last two years. The repurchases have allowed EPS to stay flat at $1.44 despite the downturn in the auto industry during that time frame.

In the past two years, U.S. auto retail sales have declined 12 percent, Jackson said in early February and he said that economic downturns run in cycles of 30 to 40 months, and the market is currently 24 months into the downswing.

AutoNation's markets in California and Florida, who account for half of new vehicle sales drove down earnings last year. The two states account for 20 percent of industry-wide new vehicle sales.

When things get better, investor ought to see an amplified increase on the other end due to the repurchases. Hold flat in down times and explode up in good ones, very nice.

Disclosure ("none" means no position):None, yet

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Thursday's Upgrades and Downgrades

Upgrades
Buffalo Wild Wings (BWLD)- SMH Capital Sell » Buy
FCStone (FCSX)- BMO Capital Markets Market Perform » Outperform
Mercantile Bank (MBWM)- Stifel Nicolaus Hold » Buy
Getty Realty Corp. (GTY)- Stifel Nicolaus Sell » Hold
Imclone (IMCL)- Citigroup Hold » Buy
Bill Barrett (BBG)- Wachovia Mkt Perform » Outperform
Seattle Genetics (SGEN)- RBC Capital Mkts Sector Perform » Outperform
National City (NCC)- RBC Capital Mkts Underperform » Sector Perform
Bunge (BG)- JP Morgan Neutral » Overweight
Massey Energy (MEE)- JP Morgan Underweight » Neutral
International Coal (ICO)- JP Morgan Underweight » Neutral
Sanderson Farms (SAFM)- JP Morgan Neutral » Overweight
Tyson Foods (TSN)- JP Morgan Underweight » Neutral
AstraZeneca (AZN)- HSBC Securities Neutral » Overweight
Countrywide (CFC)- Wachovia Underperform » Mkt Perform
Boardwalk Pipeline (BWP)- Wachovia Mkt Perform » Outperform
Helicos BioSciences (HLCS)- UBS Sell » Neutral

Downgrades
Nucor (NUE)- Longbow Buy » Neutral
Home Depot (HD)- Morgan Keegan Mkt Perform » Underperform
Monster Worldwide (MNST)- JP Morgan Overweight » Neutral
Radyne (RADN)- Roth Capital Buy » Hold
priceline.com (PCLN)- Susquehanna Financial Positive » Neutral
Lamar Advertising (LAMR)- JP Morgan Neutral » Underweight
InterNAP (INAP)- Merriman Curhan Ford Buy » Neutral
Sara Lee (SLE)- JP Morgan Overweight » Neutral
Kraft Foods (KFT)- JP Morgan Overweight » Neutral

Disclosure ("none" means no position):

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"Fast Money" for Thursday

Thursday's Picks
Jeff Macke recommends selling the United States Oil Fund (USO) $82.29

Guy Adami thinks Starbucks (SBUX) $17.50 is a buy with a tight stop.

Tim Seymoyr prefers iShares MSCI Emerging Markets Index (EEM) $126.467

Pete Najarian anticpates upside in Merck (MRK) $42.99 .


Wednesday's Results
Jeff Macke urged investors to get out of gold – specifically, to sell the GLD (GLD) $96.50 Close $ 93.04 GAIN

Adobe’s (ADBE) $31.88 after-hours surge bodes well for Oracle (ORCL) $20.02 Guy Adami said. Close $19.56 LOSS

Tim Seymour would short the FXE (FXE) $156.66 , which is a long play on the euro. Close $156.41 GAIN

Pete Najarian is riding the explosion in refiners with Tesoro (TSO) $29.56 Close $30.30 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 19-13
Tim Seymore= 10-6
Guy Adami= 19-20
Pete Najarian= 19-16
Karen Finerman= 16-20-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%


Disclosure ("none" means no position):

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Wednesday's Link

Nothing to do with investing. Only one link today because someone has to say it.........

Barack Obama delivered a speech on Tuesday in which he said "Race is an issue I believe this nation cannot afford to ignore right now".

Here is the thing. He is a hypocrite. The only reason he is even close to getting the Democratic nomination is because the overwhelming majority of American's actually do ignore race. It is not an issue for us. We could care less.

We tend to concentrate more on "the content of their character, not the color of their skin". Who said that?

Were American's to focus solely on race, Obama, an African American would not have a prayer of winning as his "race" is roughly 10% of the US population. If American's were hung up on race, his friend Oprah would not be the most powerful women in television and quite possibly America and Tiger Woods would not be the most sought after endorsement since Micheal Jordan.

Now the other argument is that American's are focused on race and the only reason we have elevated someone with a stunning dearth of experience to the position he is in is simply because he is black. Which would the Senator prefer?

No, we American's tend to ignore race until those looking to opportunistically profit from it remind us to concentrate on it. Instead of saying the remarks of his Pastor were wrong, he ought to have immediately disassociated himself from the Preacher and the Church, much like John McCain did to a supporter who had the audacity to simply use Obama's middle name.

Hatred is hatred no matter what color it comes from or how eloquent and passionate the diatribe that delivers it is.

The media is of course giving him a pass on this one. Let me ask, had Hillary or McCain attended a church that espoused a view of black America like the one spoken of at Obama's, what would the expectations be of either of those two candidates? Perhaps if their Pastor gave a sermon railing against homosexuality? Would a simply "I disagree" work?

I don't think so either...

Has anyone asked Obama why he called for Don Imus to be fired for his remarks but not the Preacher?

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The Press Still Does Not Get It...

Watch this video. This is the third one I have seen with Paulson in which the reported tries to say that the Fed is more concerned with Wall St. vs Main St.. Hello Matt?!? Would you mind asking a Bear Sterns (BSC) shareholder the same question? I would guess they would give you a though or two on the subject.

By the way Matt, Bear Sterns effectively no longer exists.....Bailout?



I am in amazement that Paulson can actually answer the question without asking Matt if he ever even took Economics 100..

Matt says three times "Bailout" in regard to Bear Sterns..... go away Matt, stick to "cute puppy" stories...

Disclosure ("none" means no position):None

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Starbucks: Initial Reports Not Encouraging

Some initial thoughts on early reports on Starbucks' (SBUX) "initiatives".

In an interview before the meeting, Starbucks executives said they want to bring back some of the romance and theater that's been missing from stores since the company switched to using sealed grounds years ago. Starbucks will quit using flavor-locked bags of pre-ground coffee next month and get back to grinding beans in most of its U.S. stores.

Starbucks' senior vice president of global strategy, Michelle Gass says she expects the change will improve sales that have gone to rivals McDonalds (MCD) and Dunkin' Donuts.

One quote struck me, ""We have an economy in a tailspin . . . and a company whose performance has not met your expectations or mine," Howard Schultz. Earth to Howard, we have not even had one quarter of negative GDP, this not only does not qualify as a tailspin, it barely qualifies as a hiccup. This is alarming as Schultz is seeming to push the chains poor results, which have been deteriorating for longer than the economy on outside factors.

Has he seen McDonald's results?

Rather than a return to what they do best, Starbucks seems intent, at least after initial reports to be running around in more directions. After begging them to get rid of the clutter in the stores, a report is out that they sell approximately 2 Cd's per day per location. What is the point for forging ahead with this? The resource expenditure in terms of money, human time and stores space is tremendous for essentially zero return.

Here are the initiatives:
* A proprietary and revolutionary in-store Clover® brewing system that delivers the best cup of brewed coffee available anywhere;
* A complete reinvention of brewed coffee in-store, that will be brought to life by baristas across the U.S., who will scoop and grind a new unique coffee blend, connecting customers to the early days of Starbucks;
* The introduction of a new state-of-the-art espresso system that provides the perfect shot every time and helps facilitate the critical connection between barista and customer;
* The first phase of a Starbucks Card Rewards program, rewarding registered cardholders and providing unique new benefits when using their cards in Starbucks stores;
* The launch of MyStarbucksIdea.com, Starbucks first online community, that takes the Starbucks Experience outside the store and enables customers to play a role in shaping the company’s future; and,
* An expanded relationship with Conservation International

A social networking site? Why? An expanded relationship with Conservation International? Nice, but, who really cares? Stocking your shelves with 100% organic products would have made a much larger difference with countless more folks. It seems as though Schultz is driving the company to be almost a social experiment and is ignoring his business's realities. When he started, he had almost no competition. Now the competition is fierce. A social networking site will be meaningless long term.

The initiatives set to "transform" the company simply fall flat and will perpetuate the current slide. As a casual Starbucks user, only one of the six actually will have any affect on me and any purchasing decision and even it is negligible. A new espresso machine and coffee brewer? So what. Are you telling me what is in there now is no good? The one that will actually matter? A rewards card, not a bad idea.

Schultz & Co. still have not addressed the chief complaints people have, Convenience, Price and Service. Until they do, do not expect any dramatic improvement.


Disclosure ("none" means no position):None

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"Way of theTurtle"

I read the book "Way of the Turtle" this week and while I am not a trader, there were some very fascinating takeaways for every investor.



Here is a portion of the best part of the book (for me):

Chapter Two: Taming the Turtle Mind:

The author, Curtis Faith talks about "cognitive biases" that effect investors decision making. While he is talking strictly about traders, it does pertain to all investors because in some way were are all traders, our time frames for our trades just differ greatly.

The biases are:

- Loss Aversion: The tendency for people to have a strong preference for avoiding losses over acquiring gains

- Sunk costs effect: The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired.

- Disposition effect: The tendency for people to lock in gains and ride losses

- Outcome bias: The tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made

- Recovery bias: The tendency to weigh recent data or experience more than earlier data or experience ("it is different this time")

- Anchoring: The tendency to rely to heavily or "anchor" on easily available information

- Bandwagon: Believing something because many other believe the same thing.

- Believe in the law of small numbers: Drawing unjustified conclusions from too little information.


We all do these things and taken in concert, they can be the destruction of our portfolios. The importance of any one of the biases grow or diminishes based on the time frame you, as an investor have. If you have a two year time frame, the disposition effect varies. You can "ride a loss" for six or seven months and still come out ahead a year down the road. If you are an option trader, riding a loss for more than a month could ruin you.

It is hard to avoid these biases because they are ingrained in our nature. What one needs to do is remind themselves of them and then before investing ask your self if you are making the decision you are making because of any of the biases. If you are, then you may not be please with the results..

Chapter four takes the biases and uses them in conjunction with the trading strategy. A good chapter for both investors and traders as the concepts apply to both

All in all the books was worth the money spent if not only for the first half of it. The second half of the book goes into the "Turtle Trading System" which, as a non-trader, I have very little interest in. For those who are traders, it would be very valuable though.

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Altria's Spin: Your Questions Answered

Here are the answers to many questions regarding the upcoming Altria (MO) spin of PMI.

Q: I own Altria shares. What will I receive as a result of the Spin-off?

A: Altria will distribute one share of PMI common stock for each share of Altria common stock outstanding as of the Record Date for the Distribution.

Q: What is the Record Date for the Distribution, and when will the Distribution occur?

A: The Record Date is March 19, 2008, and ownership is determined as of 5:00 p.m. New
York City Time on that date. Shares of PMI common stock will be distributed on March 28, 2008. We refer to this date as the Distribution Date.

Q: What do I have to do to participate in the Distribution?

A: Nothing. You will receive one share of PMI common stock for each share of Altria common stock held as of the Record Date and retained through the Distribution Date. You may also participate in the Distribution if you purchase Altria common stock in the “regular way” market and retain your Altria shares through the Distribution Date. See “Summary—Trading Prior to or on the Distribution Date.”

Q: If I sell my shares of Altria common stock before or on the Distribution Date, will I still be entitled to receive PMI shares in the Distribution?

A: If you sell your shares of Altria common stock prior to or on the Distribution Date, you may also be selling your right to receive shares of PMI common stock. See “Summary—Trading Prior to or on the Distribution Date.” You are encouraged to consult with your financial advisor regarding the specific implications of selling your Altria common stock prior to or on the Distribution Date.

Q: Will the Spin-off affect the number of shares of Altria I currently hold?

A: The number of shares of Altria common stock held by a stockholder will be unchanged. The market value of each Altria share, however, will decline to reflect the impact of the Distribution

Q: What are the U.S. federal income taxconsequences of the Distribution to U.S.
stockholders?

A: Altria has received a private letter ruling from the Internal Revenue Service and an opinion of counsel that the Distribution of PMI common stock to Altria stockholders will qualify as a tax-free distribution for United States federal income tax purposes. You should, of course, consult your own tax advisor as to the particular consequences of the Distribution to you, including the applicability and effect of any U.S. federal, state and local and foreign tax laws, which may result in the distribution being taxable to you. Altria will provide its U.S. stockholders
with information to enable them to compute their tax basis in both Altria and PMI shares. This information will be posted on Altria’s website, www.altria.com/PMIspinoff, promptly following the Distribution Date. Certain United States federal income tax consequences of the Spin-off are described in more detail under “The Distribution—U.S. Federal Income Tax Consequences of the Distribution.”

Q: Is the Distribution tax free to Non-U.S. stockholders?

A: Non-U.S. stockholders may be subject to tax on the Distribution in jurisdictions other than the U.S. It is expected that the Distribution will be tax free in Canada and Sweden, but subject to tax in Denmark, France, Germany, Ireland, Japan, the Netherlands, Norway and Switzerland. We will post the results (if any) of foreign tax authority determinations on our website, including the Canada Revenue Agency’s conclusion whether the Distribution is tax free. See “The Distribution—Tax Consequences of the Distribution to Non-U.S. Stockholders.” The foregoing is for general information purposes and does not constitute tax advice. Stockholders should consult their own tax advisors regarding the particular consequences of the Distribution to them.

Q: When will I receive my PMI shares? Will I receive a stock certificate for PMI shares distributed as a result of the Spin-off?

A: Registered holders of Altria common stock who are entitled to participate in the Distribution will receive a book-entry account statement reflecting their ownership of PMI common stock. For additional information, registered stockholders in the U.S. or Canada should contact Altria’s transfer agent, Computershare Trust Company, at 1-866-538-5172 or by e-mail at altria@computershare.com. Stockholders from outside the U.S. and Canada may call 1-781-575- 3572. If you would like to receive physical certificates evidencing your PMI shares, please contact PMI’s transfer agent. See “Description of Capital Stock—Transfer Agent and Registrar.”

Q: What if I hold my shares through a broker, bank or other nominee?

A: Altria stockholders who hold their shares through a broker, bank or other nominee will have their brokerage account credited with PMI common stock. For additional information, those stockholders should contact their broker or bank directly. Questions regarding the Distribution can also be directed to our information agent, D.F. King & Co., Inc., at 1-800-290-6431.

Q: What if I have stock certificates reflecting my shares of Altria common stock? Should I send them to the transfer agent or to Altria?

A: No, you should not send your stock certificates to the transfer agent or to Altria. You should retain your Altria stock certificates. No certificates representing your shares of PMI common stock will be mailed to you. PMI common stock will be issued as uncertificated shares registered in book-entry form through the direct registration system.

Q: If I was enrolled in an Altria dividend reinvestment plan, will I automatically be
enrolled in the PMI dividend reinvestment plan?

A: Yes. If you elected to have your Altria cash dividends applied toward the purchase of additional Altria shares, the PMI shares you receive in the Distribution will be automatically enrolled in the PMI Direct Stock Purchase and Dividend Reinvestment Plan sponsored by Computershare Trust Company (PMI’s transferagent and registrar), unless you notify Computershare that you do not want to reinvest any PMI cash dividends in additional PMI shares. For contact information for the PMI plan sponsor (Computershare), see “Description of Capital Stock—Transfer Agent and Registrar.”

Q: Why is Altria separating PMI from its business?

A: Altria’s Board of Directors and management believe the separation will provide the benefits set forth below under the caption “The Distribution—Reasons for the Distribution” and that achieving those benefits will result in greater aggregate value to stockholders who retain their Altria and PMI shares than would be obtained under the current structure.

Q: Why is the separation of the two companies structured as a spin-off?

A: A U.S. tax-free distribution of shares in PMI is the most tax efficient way to separate the companies.

Q: Are there risks to owning PMI common stock?

A: Yes. PMI’s business is subject both to general and specific business risks relating to its operations. In addition, the Spin-off presents risks relating to PMI’s being a separately-traded public company. See “Risk Factors.”

Q: Does PMI plan to pay dividends?

A: Yes. PMI plans to pay a dividend at the initial rate of $0.46 per share per quarter, or $1.84 per year. Dividends are subject to the discretion of PMI’s Board of Directors in accordance with applicable law. See “Dividend and Share Repurchase Policy.”

Q: What will the relationship between Altria and PMI be following the Distribution?

A: After the Distribution, Altria will not own any shares of PMI common stock. However, in connection with the Distribution, we are entering into a number of agreements with Altria that will govern the Spin-off and our future relationship with Altria. See “Relationship with Altria.”

Q: What will Altria own following the Distribution?

A: Altria will own 100% of PM USA, Philip Morris Capital Corporation and John Middleton, Inc., as well as its 28.6% economic interest in SABMiller plc.

Disclosure ("none" means no position):Long Both Companies

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Borders Earnings.....

Borders (BGP) reports earnings tomorrow and while one would not expect stellar results, there some things that could give us real clarity into the future.

Borders expects operating profit, excluding one-time items, to be $1.45 per share or less in the fourth quarter. Analysts predict profit of $1.42 per share on revenue of $1.34 billion.

The key to Borders is Bill Ackman. He has upped his stake to 24.4% and has had discussions with management. Recently he was able to get a Pershing partner, Richard Mcquire appointed to Borders board of directors.

Based on Ackman's success at McDonalds (MCD) and the fact he initially bought in at $24 and doubled down at $12, one has to think there is considerable upside from here.

Let's assume the quarterly numbers meet expectations. What we are looking for is clarity. We want to know results at the newest location. Now that Ackman has a voice on the board, are there any announcements coming. Debt reduction? share repurchases (not likely). When the sale of the Australian is completed, what is the use of those funds going to be? Recent negotiations on the sale of it were terminated but it is a matter of time before a buyer is found.

The website. What expectations are there. What did they receive from the Amazon (AMZN) partnership and by how much do they expect to exceed that with their own site.

When is the new concept coming close to me? One was announced in Massachusetts but I am not willing to travel an hour for a bookstore. A central Massachusetts location is needed. Alright, this last one will have no effect whatsoever on the stock but I would like it.

Disclosure ("none" means no position):None

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Wednesday's Upgrades and Downgrades

Upgrades
Omniture (OMTR)- Cantor Fitzgerald Hold » Buy
Digi Intl (DGII)- Feltl & Co. Hold » Buy
Consolidated Water (CWCO)- Janney Mntgmy Scott Neutral » Buy
CSX Corp (CSX)- UBS Neutral » Buy
Applied Materials (AMAT)- Caris & Company Average » Buy
Reliance Steel (RS)- Longbow Neutral » Buy
Post Properties (PPS)- Stifel Nicolaus Hold » Buy
Oil States (OIS)- Stifel Nicolaus Hold » Buy
Helmerich & Payne (HP)- Stifel Nicolaus Hold » Buy
Alliance Data (ADS)- Morgan Keegan Mkt Perform » Outperform
National City (NCC)- Keefe Bruyette Underperform » Mkt Perform
Edwards Lifesci (EW)- Stanford Research Hold » Buy
Vimicro (VIMC)- Susquehanna Financial Negative » Neutral
Vimpel Comms (VIP)- Citigroup Sell » Hold
RiskMetrics (RMG)- Banc of America Sec Neutral » Buy
SAP AG (SAP)- Bernstein Mkt Perform » Outperform
Teekay Shipping (TK)- Citigroup Hold » Buy
General Maritime (GMR)- Citigroup Hold » Buy
Alexza Pharma (ALXA)- JMP Securities Mkt Perform » Mkt Outperform
Goldman Sachs (GS)- Wachovia Mkt Perform » Outperform
Overseas Shipholding (OSG)- Citigroup Sell » Buy

Downgrades
Nova Biosource Fuels (NBF)- Ardour Capital Buy » Accumulate
Xerium Tech (XRM)- Citigroup Buy » Hold
Cash Systems (CKNN)- Barrington Research Outperform » Underperform
Nuvelo (NUVO)- Pacific Growth Equities Buy » Neutral
Intl Paper (IP)- DA Davidson Buy » Neutral
Holly (HOC)- BMO Capital Markets Outperform » Market Perform
Valero Energy (VLO)- BMO Capital Markets Outperform » Market Perform
Frontier Oil (FTO)- BMO Capital Markets Outperform » Market Perform
Tesoro (TSO)- BMO Capital Markets Outperform » Market Perform
Western Refining (WNR)- BMO Capital Markets Outperform » Underperform
Marathon Oil (MRO)- BMO Capital Markets Outperform » Market Perform
Siemens AG (SI)- Bear Stearns Outperform » Peer Perform
Siemens AG (SI)- Deutsche Securities Buy » Hold
Vornado Rlty Trust (VNO)- Deutsche Securities Buy » Hold
SL Green Rlty (SLG)- Deutsche Securities Buy » Hold
Telus (TU)- Citigroup Hold » Sell
Northstar Realty (NRF)- KeyBanc Capital Mkts Buy » Hold
Newcastle Investment (NCT)- KeyBanc Capital Mkts Buy » Hold
Spectrum Pharma (SPPI)- Brean Murray Buy » Hold
Intl Paper (IP)- JP Morgan Overweight » Neutral
Directed Electronics (DEIX)- JP Morgan Overweight » Neutral
United Rentals (URI)- JP Morgan Neutral » Underweight
Seacor Hldgs (CKH)- JP Morgan Overweight » Neutral
American Railcar Industries (ARII)- UBS Neutral » Sell
Dynavax Technologies (DVAX)- Merriman Curhan Ford Buy » Neutral
ViewPoint Financial (VPFG)- Keefe Bruyette Outperform » Mkt Perform

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Leucadia Exercises Option on AmeriCredit

Leucadia (LUK) exercised call options on 3.25 million Americredit (ACF) shares on 3/14.

The options were purchased in January.

1. Reflects 26,086,440 shares of AmeriCredit common stock directly owned by Baldwin Enterprises, Inc. ("Baldwin") and indirectly owned by Phlcorp, Inc. ("Phlcorp") and Leucadia National Corporation ("Leucadia") and 3,250,000 shares of AmeriCredit common stock directly owned by RCG Baldwin, L.P. ("RCG Baldwin"), as nominee for Baldwin, and indirectly owned by Baldwin, Phlcorp and Leucadia. Baldwin is a wholly-owned subsidiary of Phlcorp and Phlcorp is a wholly-owned subsidiary of Leucadia. Baldwin, the sole limited partner of RCG Baldwin, has decision making authority and pecuniary interest with respect to the shares of AmeriCredit common stock owned directly by RCG Baldwin pursuant to an agreement with RCG Baldwin's general partner.
2. Call options directly owned by RCG Baldwin, as nominee for Baldwin, and indirectly owned by Baldwin, Phlcorp and Leucadia.


Disclosure ("none" means no position):None

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"Fast Money" for Wednesday

Wedneday's Picks
Jeff Macke urged investors to get out of gold – specifically, to sell the GLD (GLD) $96.5

Adobe’s (ADBE) $31.88 after-hours surge bodes well for Oracle (ORCL) $20.02 Guy Adami said.

Tim Seymour would short the FXE (FXE) $156.66 , which is a long play on the euro.

Pete Najarian is riding the explosion in refiners with Tesoro (TSO0 $29.56


Tuesday's Results
Jeff Macke likes Lehman (LEH) $31.75 close $46.49 GAIN

Guy Adami prefers Apple (AAPL) $126.73 Close $132.82 GAIN

Joe Terranova recommends Valero (VLO) $46.69 Close $50.06 GAIN

Pete Najarian thinks Tesoro (TSO) $27.16 is a buy. Close $29.42 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 18-13
Tim Seymore= 9-6
Guy Adami= 19-19
Pete Najarian= 18-16
Karen Finerman= 16-20-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Fed Cuts 75

Inflation is back in the statement....

Federal Reserve Press Release

Release Date: March 18, 2008
For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent.


Here is the link to the statement.

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Tuesday's Links

A Cramer time-line on Bear, Google vs Apple, Race

- You have to see this. There is a whole bunch of controversy over this and Adam is the first to nail it.

- The Google phone will outsell the iPhone

- Because we can't admit what everyone know to be true.

-

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Goldman's Results: World Not Ending

So, Goldman Sachs (GS) announced results today and it was bad news for the doomsayers.

The Results:
GS reported net income of $1.51 billion, or $3.23 a share, for the quarter ended Feb. 29, compared to $3.2 billion, or $6.67 a share last year. Revenue decreased 35% to $8.34 billion. Analysts estimates were for earnings of $2.58 a share on revenue of $7.47 billion.

Other numbers:
* Return on equity was 17%
* Trading and principal investments segment saw revenue decrease 46% because of credit and investment losses.
* Investment banking revenue dropped 32% because of a decline in debt underwriting
* Asset management unit recorded a 23% increase on higher fees.


Not great, but, better than expected. When you combine these results with those at Lehman (LEH), they make the Bear Sterns (BSC) situation look more like a management issue rather than a systemic event.

This is not to say that things are going to turn on a dime and begin to rise. It is also not to say there may be other, smaller institutions suffer (Ambac (ABK) ,MBIA (MBI)) and possibly fold. It is to say that a widespread banking run will not happen and because of that, the system will remain intact. Because of that, we now know there is a light at the end of this tunnel.

Now, where is the light? I think is is closer than it currently looks. Let's not forget, the losses the banks are seeing are unrealized for the most part. This means they are writing down the value of a security because of an assumed market value of it, not because of a tangible deterioration of the assets performance. That is a huge point.

It means that when we can now value these instruments higher, earnings jump, fast.

In every financial "crisis" there is a sacrificial lamb. In this one it was Bear Sterns. Now that the Fed has opened the discount window to not only the banks but the brokers, the liquidity squeeze that destroyed Bear will not be repeated.

Now, poor management may take a smaller institution under, but if that happens, it will not be anywhere near the scale of a Bear Sterns.

Disclosure ("none" means no position):Long GS, None

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Value In Autos????

Some very big guns in the value investment world have been buying stocks in the auto sector. That means it is time to take a look.

In November, Berkshire Hathaway's (BRK.A) Warren Buffett disclosed a 13.98 million share stake in CarMax (KMX) valued at $284.3 million (9.6% of total). CarMax has 90 locations it sells mostly used autos from.

It also showed a new, 2.7 million share stake in Wabco Holdings Inc (WBC), a maker of braking and other vehicle control systems.

Sears Holdings (SHLD) Chairman Eddie Lampert has been very aggressive in adding to his AutoNation (AN) stake and still holds Autozone (AZO) shares. AutoNation is the behemoth of the bunch with 245 locations primarily in the Southeast US.

Leucadia National (LUK) recently agreed to a standstill after accumulating 30% of the outstanding shares of Amercredit (ACF), an auto loan servicing company. AmeriCredit's focus is primarily in the Southwest US.

All are hovering around 52 week lows.

It should be noted that this is NOT an endorsement of the US auto industry via Ford (F) or GM (GM) as these are just terrible businesses due to legacy union costs.
They are stuck in a cost structure that dooms them. It is probably the only business the airlines can look at and say "at least we are not them".

It is to say that American's have to drive. It is also to say that despite the current housing environment, the auto loan business has, up until this point, held up much better. My thinking is that I can walk away from my home if I am stuck in a resetting mortgage that will break me and still rent an apartment. But, in most cases, I will still need a car to get back and forth to work from wherever I end up living.

Because of that, I am far less likely to let them take my car or walk away from it since once I do that, the odds of getting another one anytime soon in this environment is, well, minimal. It almost is a built in base for the industry.

I have a real hard time saying Buffett, Lampert and the boys at Leucadia are missing the boat on this one since since an investment with either in the last decade has crushed the market by a wide margin.

I will say that I am looking very closely at the sector an will most likely piggy back on something here.

Disclosure ("none" means no position):Long SHLD, none

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Tuesday's Upgrades and Downgrades

Upgrades
Callaway Golf (ELY)- FTN Midwest Neutral » Buy
Aixtron (AIXG)- Needham & Co Hold » Buy
Hellenic Telecom (OTE)- Bear Stearns Underperform » Peer Perform
Concur Tech (CNQR)- Piper Jaffray Neutral » Buy
Advanced Analogic Tech (AATI)- Piper Jaffray Neutral » Buy
Ashland (ASH)- Jefferies & Co Hold » Buy
Nordic American Tanker (NAT)- JP Morgan Underweight » Neutral
Photon Dynamics (PHTN)- Lehman Brothers Equal-weight » Overweight
Wynn Resorts (WYNN)- Bear Stearns Peer Perform » Outperform
PepsiAmericas (PAS)- HSBC Securities Underweight » Neutral
AnnTaylor (ANN)- Citigroup Hold » Buy

Downgrades
UCBH Holdings (UCBH)- DA Davidson Buy » Neutral
Dolbys Labs (DLB)- Canaccord Adams Buy » Hold
Infosys (INFY)- Oppenheimer Outperform » Perform
Nike (NKE)- Caris & Company Buy » Above Average
CEMEX S.A. (CX)- Credit Suisse Outperform » Neutral
Interface (IFSIA)- Stifel Nicolaus Buy » Hold
Hibbett Sporting (HIBB)- Piper Jaffray Buy » Neutral
Brooke Credit (BRCR)- Morgan Joseph Buy » Hold
Sterling Construction (STRL)- Morgan Joseph Buy » Hold
Metabolix (MBLX)- Jefferies & Co Buy » Hold
Double Hull Tankers (DHT)- JP Morgan Neutral » Underweight
TD Ameritrade (AMTD)- Friedman Billings Outperform » Mkt Perform
Charles Schwab (SCHW)- Friedman Billings Mkt Perform » Underperform
Newcastle Investment (NCT)- Bear Stearns Outperform » Peer Perform
Portugal Telecom (PT)- JP Morgan Neutral » Underweight
TD Ameritrade (AMTD)- UBS Buy » Neutral
InVesco (IVZ)- UBS Buy » Neutral
State Street (STT)- UBS Buy » Neutral
Goldman Sachs (GS)- UBS Buy » Neutral
Lehman Brothers (LEH)- UBS Buy » Neutral
Bank of NY (BK)- UBS Buy » Neutral
Coach (COH)- Citigroup Buy » Hold

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"Fast Money" for Tuesday

Tuesday's Picks
Jeff Macke likes Lehman (LEH0 $31.75

Guy Adami prefers Apple (AAPL) $126.73

Joe Terranova recommends Valero (VLO) $46.69

Pete Najarian thinks Tesoro (TSO) $27.16 is a buy.

Monday's Results

None

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 17-13
Tim Seymore= 9-6
Guy Adami= 18-19
Pete Najarian= 17-16
Karen Finerman= 16-20-1
Joe Terrenova= 0-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Icahn Files 13-D on XO Holdings

Carl Icahn filed an amended 13-D on XO Holdings (XO) tonight.

From the Filing:
"As of the close of business on March 14, 2008, the Filing Persons may be deemed to beneficially own in the aggregate 129,466,420 Shares constituting approximately 58.95% of the outstanding Shares (based upon (i) the 182,075,035 Shares stated to be issued and outstanding by Issuer, (ii) the 91,913,269 Shares beneficially held by the Filing Persons, (iii) the 10,041,858 Shares issuable upon exercise of the Warrants beneficially held by the Filing Persons and (iv) the 27,511,293 Shares issuable upon conversion of the 2,075,000 Convertible Preferred Shares beneficially held by the Filing Persons. The 27,511,293 Shares issuable upon conversion of the 2,075,000 Convertible Preferred Shares reflect an increase of 807,134 Shares, in the aggregate, since July 2, 2007, the date on which the Filing Persons filed Amendment No. 9 to the Original 13D, as a result of the liquidation preference on the Convertible Preferred Shares which accretes quarterly at a rate of 1.5%."

Also:,

"On March 13, 2008, Arnos Corp., an entity affiliated with Mr. Icahn (“Arnos”), entered into a Note Purchase Agreement (the “Note Purchase Agreement) with XO Communications, LLC (“XOC”), pursuant to which Arnos purchased from XOC $75,000,000, aggregate principal amount of XOC’s Senior Unsecured Notes due April 15, 2009 (the “Notes”). The Notes bear interest at the rate of 11.5% per annum, which amounts will be capitalized and added to the principal amount of the Notes on April 15, 2008 and quarterly thereafter on July 15, 2008, October 15, 2008, January 15, 2009 and April 15, 2009 or, at the election of XOC, following approval by a majority of the Issuer’s disinterested independent directors, interest on the unpaid principal amount of the Notes may be paid on a cash basis, in which case such interest shall accrue from the preceding interest payment date, at the rate of 9.5% per annum, and shall be payable on April 15, 2008 and quarterly in arrears thereafter on July 15, 2008, October 15, 2008, January 15, 2009 and April 15, 2009. The obligations of XOC under the Note Purchase Agreement and the Notes are jointly and severally guaranteed by the Issuer and certain subsidiaries of XOC pursuant to a Guaranty Agreement, dated as of March 13, 2008 (the “Guaranty Agreement”). Copies of the Note Purchase Agreement and the Guaranty Agreement are filed as Exhibit 1 and Exhibit 2 hereto, respectively, and are incorporated herein by reference. Any descriptions herein of the Note Purchase Agreement or the Guaranty Agreement are qualified in their entirety by reference to the Note Purchase Agreement and the Guaranty Agreement filed herewith, respectively. "

The release coincides with the earnings release today from XO.

Disclosure ("None" means no interest): None

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Monday's Links

Blogging, Lampert, More Lampert, Jeff Mathews

- Jane Genova has a great interview on blogging

- An NPR piece on Lampert and Sears,

- The Economist takes a look at Sears Chairman

- Jeff has some interesting thoughts on Starbucks

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"Mark to No Market"

We have all heard of "mark to market" accounting. In short, you value an asset based on its market value. But, what if there is no market?

This is what is happening with the current situation. Banks and lenders are basing values of assets, not on the performance of them, but on the "perceived value". This is causing huge write-downs of the assets, that then forces the institutions to raise capital. How? A forced selling of these performing assets. Since everyone else is on the same boat, no one wants to buy them. If there are no buyers, there is no market. When I took Economics 100, a market was defined as a "place where buyer and sellers of good or services meet". Unless that definition changed in the last 21 years, we should not force holders or these instruments to "mark to no market".

When the market knows a seller has to dump an asset, the last thing it will get for that asset is a fair price. Now, the question is, are the assets really performing?

Since this all centers around mortgages, lets look. According to the FDIC, 98% of all real estate loans are current as of 12/31. Now, admittedly there has been some deterioration of this metric since then but it is nowhere near the level that would cause the pricing of mortgage backed assets today.

It is not a question of performance but of complexity. How can you value a CDO that you cannot understand the revenue stream from. When in doubt, in times like this, investors flee.

Thus we have the current environment. So, what happens? Intense pain the followed by a surge in the opposite direction. Think of it this way.

You live in a home and have a job. The value of your home has fallen and thus your "net worth" along with it. Has this "net worth" decline had any real effect on your day to day life? Is your EPS (income) affected by it? No. But, if you are a bank, you have to account for the decline in your home as a "loss" in your EPS. Now, assuming you are the bank, because the value of your home has fallen, and perhaps you have a home equity loan on it you have a problem. The holder of your home equity loan tells you that you have to liquidate assets in order to keep a "ratio" of assets to liabilities that they want.

Now you have a problem. You have to sell something and fast to raise $$ or reduce debt. It is a fire sale. Since you cannot sell more "shares" of yourself (like the bank can) to raise cash, you have to sell the home to the first bidder to reduce debt and raise cash. Problem, everyone looking at the home knows you have to do this. How low are those offers going to be below the fair value of the home? Way below....

As you start getting offers in for the home the banks sees them and now we have a problem because the money you will raise from the sale is much less than what everyone previously thought you would get. Your "net worth" or EPS if you were a bank would fall further because your new net worth would be based on this artificially low new estimate. Now you may have to sell the car also to meet their "asset levels".

Now, out of the blue Grandpa comes in and gives you the money you need to restore your "asset levels" with the bank. Now, all of a sudden the home sale is not necessary and you can value your house at a fair market value and your net worth rises.

But, did anything actually happen? No. It was a mystical market driven event that turned into a very real problem for you. Were you late on a payment? No. Did you lose your job or revenue stream? No. Did you actually have to sell them home? No. Was the "quality" of the loans you had out less based on your payment results? No. But your "net worth" fell and rose and thus the above actions took place.

Had the value of you, the loan payer, been based on your performance on the loan, none of the above would have happened.

When the forced dumping by irresponsible holders of these mortgage assets stops, the value of what is left will rise, rapidly. When is does, the holders of what is left will then do the reverse of what they are going now. They will announce "write-ups" of the assets and EPS will surge and many of the institutions.

Thus is the current financial institutions situation.

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Wilbur Ross Buying Mortgage Lender

In a press release, H&R Block (HRB) announced it is selling it Option One Mortgage Servicing Business to Wilbur Ross for $1.1 billion.

In the release, HRB said "based on the balance sheet as it existed on January 31, 2008, the Buyer would have assumed approximately $1.07 billion in servicing advances made by OOMC on behalf of mortgage security holders at a formula price of $0.97 per $1.00 of outstanding servicing advances. Thus, at January 31 the Buyer would have paid approximately $1.04 billion to acquire such advances, less a retained receivable. However, the Company expects the amount of outstanding servicing advances to grow during the period between January 31 and closing, and the actual price to be paid by the Buyer for the assumption of servicing advances will be based on the formula price."

This is Ross's second billion dollar foray into the currently troubled financial sector in as many weeks. Last week he disclosed a billion dollar investment in municipal bond insurer Assured Guarantee (AGO).

Disclosure ("none" means no position):None

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JP Morgan's Bargain....

So, $2 a share for Bear Sterns (BSC). Jamie Dimon just pulled off potentially the bargain of the decade at JP Morgan (JPM). Let's look....

JPM is paying $236 million (in stock) for Bear. The CFO at Bear estimated its book value at $80 a share just a week ago.

Let's assume he is way off. The fun thing about the market now is that we can assume anything we want. Since there is no market for the instruments being written off, we are in a "your guess is as good as mine" scenario.

Assume he was off and it was $40 a share. Eventually, the instruments will trade at a value and the Bear Stern portion of JPM will trade at its book value. That being said, the value of JPM's investment in Bear is now worth $4.7 billion. That alone would add almost 4% to the value of JPM. That is dramatic when you consider JPM is paying .1% (that is one tenth of one percent) of its value for Bear. It is pocket change.

If he is right, and the true book value is $80, the value of Bear to JPM is now $9.4 billion or an additional 7.6% of JPM's value. The same current risk applies.

The true value is somewhere in the middle. In an orderly sale, estimates today are running a value of Bear of about $7 billion. Look at it this way, the building that Bear Sterns owns and houses its operations is valued at over $1 billion. JPM essentially got all of Bears Sterns operations and assets for the cost of less than 1/3 of the building they sit in... stunning

No matter how you slice this, JPM shareholders ought to consider dropping Chase from the name and adding Dimon.

One potential issue... Bear employees own over 30% of the companies stock. Investor Joe Lewis has lost $1 billion on his investment and owns another 9.4%. Will the deal get approved by shareholders? Bear employees are understandable very angry, let not assume this is a done deal. At this price, how many other bidder might appear? Even at $10 a share, it is a steal...

Disclosure ("none" means no position):None

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Monday's Upgrades and Downgrades

Upgrades
Union Drilling (UDRL)- BMO Capital Markets Market Perform » Outperform
Salem Comms (SALM)- Barrington Research Mkt Perform » Outperform
FLIR Systems (FLIR)- AmTech Research Sell » Neutral
Carter Holdings (CRI)- Sterne Agee Hold » Buy
Warner Music Group (WMG)- Pali Research Sell » Neutral
Dexcom (DXCM)- Lazard Capital Sell » Hold
Hecla Mining (HL)- RBC Capital Mkts Sector Perform » Outperform
Quicksilver Gas (KGS)- JP Morgan Neutral » Overweight
Exxon Mobil (XOM)- Credit Suisse Neutral » Outperform
WuXi PharmaTech (WX )- Jefferies & Co Hold » Buy
Global Industries (GLBL)- Oppenheimer Perform » Outperform
Eastman Kodak (EK)- Citigroup Sell » Hold
Mylan Labs (MYL)- Citigroup Hold » Buy
Orient-Express (OEH)- UBS Neutral » Buy
Omniture (OMTR)- Robert W. Baird Neutral » Outperform

Downgrades
Newcastle Investment (NCT)- Friedman Billings Outperform » Mkt Perform
CollaGenex Pharm (CGPI)- Lazard Capital Buy » Hold
ICX Technolgies (ICXT)- Morgan Keegan Outperform » Mkt Perform
RadNet (RDNT)- Morgan Keegan Outperform » Mkt Perform
Technology Investmt Cap (TICC)- Friedman Billings Outperform » Mkt Perform
UCBH Holdings (UCBH)- Friedman Billings Outperform » Mkt Perform
National Atlantic Holdings (NAHC)- Citigroup Buy » Hold
Teva Pharm (TEVA)- Citigroup Buy » Hold
Goodrich Petroleum (GDP)- Sun Trust Rbsn Humphrey Buy » Neutral

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Also, the Fed....

Also announced Sunday night......

"The Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York."

In short, they are preempting another Bear Sterns...

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Fed Cuts 1/4 Point

Bear (BSC) for $2 a share and now a quarter point rate cut.....tomorrow will be interseting..

http://online.wsj.com/article/SB120571194513840285.html??mod=djemalertNEWS

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How Did We Get Here?

In reviewing Whitney Tilson's 75 page presentation of the current crisis, one page jumped out at me. They say a picture says a thousand words?

If you want to know what happened to housing and mortgages, this slide tells it all.


In reviewing Whitney Tilson's 75 page presentation of the current crisis, one page jumped out at me. They say a picture says a thousand words?




You can download the presentation here or email me and I will send it to you.
Disclosure ("none" means no position):Tilson fan,

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Bear Sterns Bailout (Video)

Watching Kudlow & Company the other night and saw this..

Don Luskin and Larry have a great discussion on Bear Sterns (BSC) and the current liquidity situation.



Disclosure ("none" means no position):None

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"Fast Money" for Monday

Monday's Picks

None

Friday's Results
Joe Terranova recommends Calpine Corp. (CPN) $17.54 Close $17.22 LOSS

Guy Adami prefers Home Depot (HD) $26.48 Close $25.75 LOSS

Karen Finerman likes Goldman Sachs (GS) $165.44 Close $156.86 LOSS

Pete Najarian thinks Genentech (DNA) $81.43 is a buy. Close $78.83 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 17-13
Tim Seymore= 9-6
Guy Adami= 18-19
Pete Najarian= 17-16
Karen Finerman= 16-20-1
Joe Terrenova= 0-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

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Sardar Biglari Discloses Additional Steak n' Shake Holding

Through his control of "The Lion Fund" Western Sizzlin' (WEST) CEO Biglari disclosed that on 3/12 he acquired interest in 2.4 million shares of Steak n' Shake (SNS)

From the SEC filing:

1. Mr. Biglari, as Chief Executive Officer of Biglari Capital Corp., the General Partner of The Lion Fund, L.P. ("Lion Fund"), may be deemed to beneficially own the securities of the Issuer beneficially owned by the Lion Fund. Mr. Biglari disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.
2. Mr. Biglari, as a member of a Section 13(d) group with respect to the securities of the Issuer with Philip L. Cooley, may be deemed to beneficially own an additional 15,300 shares of the Issuer beneficially owned by Mr. Cooley. Mr. Biglari disclaims beneficial ownership of such shares.
3. Mr. Biglari, as Chief Executive Officer of Western Acquisitions L.P. ("Western Acquisitions"), may be deemed to beneficially own the securities of the Issuer beneficially owned by Western Acquisitions. Mr. Biglari disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.

So who is Biglari and what is Western Sizzlin'?

George, over at Fat Pitch Financials has done the most extensive work on the Western Sizzlin (WEST) to date. I suggest you read his reasoning for buying it here and here.

Regarding Bilgari and Steak n' Shake, George addresses that in his most recent post on the subject.

Biglari has done some very interesting things at Western and his action are worth a closer look. I am going to look closer at this in the future.

Disclosure ("none" means no position):None

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The Week's Insider Buys

This list get larger every week...


Cabela S Inc (CAB)-$7,654,000
Aquila Inc New (ILA)-$4,053,000
XTL Biopharmaceuticals Ltd (XTLB)-$3,881,000
Lions Gate Entertainment Corp (LGF)-$3,448,000
Enterprise Products Partners LP (EPD)- $2,623,000
Stereotaxis Inc (STXS)-$2,053,000
General Electric Co (GE )-$2,042,000
Ntelos Holdings Corp (NTLS)-$1,748,000
Builders Firstsource Inc (BLDR)-$1,706,000
Citadel Broadcasting Corp (CDL)-$1,690,000
New York Community Bancorp Inc (NYB)-$1,590,000
WebMD Health Corp (WBMD)- $1,524,000
La Jolla Pharmaceutical Co (LJPC)-$1,168,000
M & F Worldwide Corp (MFW)-$1,157,000
PSB Holdings Inc New (PSBH)- $1,019,000
Psychiatric Solutions Inc New (PSYS)-$1,019,000
Weis Markets Inc (WMK )- $1,005,000
Silverleaf Resorts Inc (SVLF)-$1,004,000

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The Week's Best At VIN

Here are the week's top stories at Value Investing News

1. Why Warren Buffet is richer than the Hedge Fund managers - a tale of two business models | Aroha

(via www.arohanvalue.com)

Forbes rankings are still topped by Business leaders even when hedge fund managers are earning mind boggling amounts of money. This article examines why that may be the case with help from an analysis done at Financial Times

2. Notes From A Conversation with Munger`

(via rationalangle.blogspot.com)

Tonight I got to see A Conversation with Charlie Munger at Caltech in Pasadena. I took some notes on the discussion below. C refers to Charlie Munger speaking, while T stands for Tom Tombrello, the interviewer. These are not their exact words.

3. Berkshire Letter P2: Selling Market Puts

(via www.futureblind.com)

Buffett has pulled it off again. He’s made a creative, favorable bet that may pay off handsomely for long-term Berkshire shareholders. Over the past year, Berkshire Hathaway sold put options on the S&P 500 and three foreign indices. These options have a potential profit of over $36 billion.

4. Sneak Preview of The Four Filters by Bud Labitan

(via www.fatpitchfinancials.com)

Read Chapter 5 of Bud Labitan's book, The Four Filters: What I learned from the Invention of Warren Buffett and Charlie Munger. This short read examines the invention that Buffett and Munger created to guide their investment decisions.

5. Marvel - Superhero Value?

(via magicdiligence.com)

Marvel Entertainment runs an attractive business, licensing it's stable of superhero characters for use in movies, TV, video games, and general merchandise. It's position on the Magic Formula indicates it's attractiveness as a value play. But can the company succeed in it's new venture as a movie studio?

6. Buffett: The ultimate self-made man

(via www.nzherald.co.nz)

"I've reluctantly discarded the notion of my continuing to manage the portfolio after my death," he wrote, "abandoning my hope to give new meaning to the term 'thinking outside the box'."

7. Berkowitz Sees Volatility As An Opportunity

(via money.cnn.com)

"Volatility equates to opportunity and not risk," said Bruce Berkowitz, one of the fund's FAIRX three managers. "Risk is the chance for a permanent loss. This is the kind of environment that Warren Buffett has been patiently awaiting for many years."

8. Just think, the fees you could charge Buffett

(via www.ft.com)

The news that Warren Buffett is now the world’s richest man led to the predictable round of stories about his frugal habits – the cherry Coke, the well-done steaks and the bungalow in Omaha that has been home for 50 years. There is a point here. Like Bill Gates, whom he has toppled from the top spot, Mr Buffett is primarily interested in the business rather than the wealth that results.

9. "Abolish the Fed"

(via www.cnbc.com)

If Jim Rogers, CEO of Rogers Holdings, woke up as Ben Bernanke, he'd quit and close up the Federal Reserve for providing 'socialism for the rich'.

10. A Solid Bet: The Case For Ternium Steel

(via shamgad.blogspot.com)

My approach to investing has fit the philosophy, "Give a man a fish and you feed him for a day, but teach a man how to fish and you feed him for life."

Today, I'll make an exception and outline my analysis for Ternium Steel, one of the most profitable steel companies in the world.

11. Understanding Business Statistics

(via magicdiligence.com)

A review of business efficiency statistics, how to calculate them, what's "good" or "bad", and examples that beginners can understand.

12. Ten great investors

(via www.incademy.com)

Context

A select band of great professional investors have shown that it is possible to beat the market averages consistently over long periods. They act as an inspiration and example to less experienced investors. Their methods can also act as a starting point for beginners seeking to familiarize themselves with the basics of growth or value investment.

Contents

1. Warren Buffett

13. Berkshire Letter P1: See's Candy & PetroChina

(via www.futureblind.com)

What makes See's Candy a cash-generating machine, and commentary on last week's letter to Berkshire Hathaway shareholders.

14. Does the magic formula work?

(via www.contrarianvalueinvesting.com)

Ever since its release, much has been written whether or not Joel Greenblatt’s “Magic Formula” works. Joel Greenblatt has consistently said that results should be measured over time and every once in a while there would be stretches where the magic formula does not work.

15. Altria's Investor Day Notes

(via valueplays.blogspot.com)

16. Icahn on 60 Minutes

(via valueplays.blogspot.com)

17. Free RSS Feeds for Company Filings on EDGAR

(via www.fwallstreet.com)

Joe Ponzio’s F Wall Street Blog just announced a great new feature. You can now generate company specific RSS feeds for SEC filings using the F Wall Street Blog's RSS Feeds for EDGAR Filings generator.

18. Perini (PCR) Trading At a Homebuilder Valuation

(via collegeanalysts.com)

Perini is a construction company and the stock has been crushed because of that. But with half the share price in cash and continued strength in key sectors like gambling and government spending, should the stock be so low?

19. Perini (PCR) Trading At a Homebuilder Valuation

(via collegeanalysts.com)

Perini is a construction company and the stock has been crushed because of that. But with half the share price in cash and continued strength in key sectors like gambling and government spending, should the stock be so low?

20. EMCOR (EME): Cheap, Boring, and a Screaming Buy

(via collegeanalysts.com)

EMCOR might be a boring business, but with a soaring backlog and generous cash flows it shouldn't be trading for a single-digit earnings multiple.

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Icahn Files 13D on Enzon Pharma

Carl Icahn filed a 13D regarding his stake in Enzon Pharmaceuticals (ENZN) today.

Icahn now may be deemed to beneficially own, in the aggregate, 3,072,103 Shares, representing approximately 6.93% of Enzon's outstanding Shares (based upon the 44,322,923 Shares

Also,

"The Reporting Persons have entered into a number of derivative agreements, commonly known as Total Return Swaps, with counterparties, which agreements provide that the profit to the Reporting Persons shall be based upon the increase in value of the Shares and the loss to the Reporting Persons shall be based upon the decrease in the value of the Shares, during the period from inception of the applicable agreement to its termination. The agreements provide that they settle in cash. In addition to the Shares which they beneficially own as shown in Item 5 above, the Reporting Persons currently have long economic exposure to an aggregate of 3,552,897 Shares through such agreements."

Enzon:
Enzon Pharmaceuticals, Inc. (Enzon) is a biopharmaceutical company focused on the development, manufacturing and commercialization of medicines for patients with cancer and other life-threatening conditions. The Company has a portfolio of four marketed products: Oncaspar, DepoCyt, Abelcet and Adagen. Enzon’s drug development programs utilize several approaches, including its PEGylation technology platform. The PEGylation technology was used to develop two of Enzon’s products, Oncaspar and Adagen, and has created a royalty revenue stream from licensing partnerships for other products developed using the technology. The Company is also engaged in contract manufacturing for several pharmaceutical companies.

Why the interest?
"The Reporting Persons acquired their positions in the Shares in the belief that they were undervalued. The Reporting Persons have had conversations with members of the Issuer’s management during which the Reporting Persons expressed their concern with the current Share price. In addition, during these conversations, the Reporting Persons indicated that management should conduct a comprehensive review of strategic transactions that could enhance shareholder value, including a spinoff or other monetization of certain assets, such as royalty streams and products with limited market potential; or a sale of the entire company. No agreement, arrangement or understanding was reached between the Reporting Persons and management. The Reporting Persons intend to seek to have further conversations with management."

Disclosure ("none" means no position):None

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Friday's Links

Sovereign Wealth,Cramer on Eliot, Southwest (LUV), Culture

- This is a great oped. Why are we so afraid of these funds when we already have them?

- Watch this, does it make me terrible that I just started laughing......hysterically?



- In case you were not nervous enough to fly..

- This makes sense. With the deterioration of the family, culture takes on more prevalence.

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Insider Trading in Bear Stearns Puts?

Time to call a duck a duck SEC...

Disclosure ("none" means no position):

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Get Rid of Kneale and Gasparino

Nothing to do with investing... but am I the only one who is sick of seeing these two? Every segment they are in dissolves into this stuff..

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Buffett Talks About SIV's

Here is an interview with Buffett in which he talks about the current situation.



Disclosure ("none" means no position):None

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Bruce Berkowitz on Sears Holdings

Here is a Bloomberg interview with Fairholme's Bruce Berkowitz in which he talks about Sears Holdings

Disclosure ("none" means no position):Long SHLD

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$3.25 Gas Helping Harley Davidson?

As gas approaches $4 a gallon, are consumer going to switch to two wheels to save money? It would seem early results are ..yes.

The questions was posed to an Illinois Harley Dealer recently.

Shad Zimbro, co-owner of Black Diamond Harley Davidson in Marion, Illinois says,"It really is the truth because they do save a lot of money in gas by going to a motorcycle." He says his sales have doubled since last year.

Motorcycles tend to average about 50 miles a gallon and Harley makes models that get 70. Zimbro says he commutes 40 miles a day to work on his Harley and saves about $100 a week by doing so.

It does make perfect sense but obviously we need more data to see if it is just a regional trend or a larger on. The significance of his increase though, is impressive and that does lead me to believe it may be more than a local event.

In January Harley did issue 2008 guidance above the consensus estimates so perhaps they are seeing something?

We'll have to wait until late spring to get more info but I am thinking that this may actually be something larger..

Disclosure ("none" means no position):Long HOG

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Friday's Upgrades and Downgrades

Upgrades
UnionBanCal (UB)- Punk, Ziegel & Co Mkt Perform » Buy
JA Solar (JASO)- Needham & Co Buy » Strong Buy
Unisource Energy (UNS)- Soleil Hold » Buy
Leap Wireless (LEAP)- Wachovia Underperform » Mkt Perform
Millennium Pharm (MLNM)- Piper Jaffray Neutral » Buy
Humana (HUM)- UBS Sell » Neutral
JA Solar (JASO)- Lehman Brothers Equal-weight » Overweight
NIDEC (NJ)- JP Morgan Neutral » Overweight
GSI Commerce (GSIC)- Jefferies & Co Hold » Buy
Wimm-Bill-Dann Foods (WBD)- Credit Suisse Neutral » Outperform
Monsanto (MON)- Banc of America Sec Neutral » Buy
AstraZeneca (AZN)- UBS Sell » Neutral

Downgrades
Hot Topic (HOTT)- BB&T Capital Mkts Buy » Hold
Raven Industries (RAVN)- Dougherty & Company Buy » Neutral
Sigma Designs (SIGM)- BWS Financial Strong Buy » Hold
Orbcomm (ORBC)- Oppenheimer Outperform » Perform
Glu Mobile (GLUU)- Deutsche Securities Hold » Sell
PNC Bank (PNC)- Keefe Bruyette Outperform » Mkt Perform
Fed Investors (FII)- UBS Buy » Neutral

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"Fast Money" for Friday

Friday's Picks
Joe Terranova recommends Calpine Corp. (CPN) $17.54

Guy Adami prefers Home Depot (HD) $26.48

Karen Finerman likes Goldman Sachs (GS) $165.44

Pete Najarian thinks Genentech (DNA) $81.43 is a buy.

Thursday's Results
Tim Seymour recommends Chunghwa Telecom Co (CHT) $24.47 Close $24.51 GAIN

Guy Adami prefers Crocs (CROX) $20.59 Close $20.88 GAIN

Karen Finerman likes Microsoft (MSFT) $28.63 Close $28.62 LOSS

Pete Najarian thinks Dupont (DD) $46.58 is a buy. Close $47.31 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 17-13
Tim Seymore= 9-6
Guy Adami= 18-18
Pete Najarian= 17-15
Karen Finerman= 16-19-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%


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