Here are the top website referrers to ValuePlays for the month of January.
7- studio-5.financialcontent.com
James Cullen who runs the College Analysts investing site recently asked me 10 questions.
You can see the interview here:
If you have not visited the site yet, Please at least check out James’ report on USG (USG), it is a fantastic read and I am starting to think it may be the best way to play the housing crunch rebound.
Disclosure (“none” means no position):None
Here they are, the Top 20 from VIN
Jan. 31 (Bloomberg) — It was the $109,000 photocopying bill that hedge fund manager William Ackman says made him realize how much he’d read and underlined before betting against bond insurer MBIA Inc. in 2002.
Sears got more than its share of online holiday traffic this year, to place emphasis here make perfect sense.
Has the Fed staunched the bleeding of the wounded financial markets with its historic three-quarters of a percent interest rate cut? And how should individual investors react to the falling markets this month?
At 91, the man Warren Buffett famously dubbed a “superinvestor” is still picking unloved stocks. Walter Schloss has lived through 17 recessions, starting with one when Woodrow Wilson was President. This old-school value investor has made money through many of them. What’s ahead for the economy? He doesn’t worry about it.
Robert Cialdini’s old article – The Science and Practice of Persuasion.
Excerpt: “In this webcast, Robert A. Olstein discusses the following:
* Valuation and inferential financial statement analysis
* Free cash flow
* Quality of earnings”
Shlomi Cohen claims that Warren Buffett is the only person who predicted what is happening on the markets at present. The current upheaval was not sparked by economic processes, such as the US real estate crisis, which is neither that country’s first crisis nor its last, although everyone finds it a very convenient peg to hang all the current troubles on.
Have you ever wondered what separates David Dreman, Warren Buffett, Charlie Munger,etc.from the rest of the world? The answer is simple but the force behind it can make the difference between a great investor and an average investor. I am talking about investor psychology, also known as Behavior Finance.
Bottom-up manager Dodge & Cox’s domestic equity and fixed-income performance slumped at the end of 2007, but don’t be quick to point a finger at the credit crunch.
“Better early than never,” I always say. And since never is a long, long, time – being late is OK too, but early – yeah early – is a portfolio manager’s best maxim. In this case it has nothing to do with birds getting the worm or being the first runner out of the starting blocks, but more about being positioned when markets move into crisis mode.
Eight years after he shut down his famed Tiger fund, the veteran ‘retired’ manager is racking up the biggest wins of his life. Fortune gets an exclusive peek at the Wall Street legend’s portfolio.
David Dreman, the 71-year-old value investor, said he bought more shares of financial institutions after the industry’s worst annual performance since 1990 created a “major opportunity.”
Munger told a story of composing great Wolfgang Mozart. It goes something like this: A young man, around 25 years old, goes to Mozart and asks him for advice on writing symphonies. Mozart suggests to him that he is too young to write symphonies. The young man gets confused and reminds Mozart that Mozart himself had been writing symphonies since he was 10 years old.
Things in 2008 are not going to be as bad as the market thinks for the motorcycle maker
Lindsay Williams for Resource Investor speaks with Jim Rogers, co-founder of the Quantum Fund, about the financial woes hitting the U.S. markets – and where to put your money.
After advising against buying shares as they fell from $70 to $38, Todd Sullivan finally bought them.
Barron’s cover story this week that looks at 10 potentially inexpensive stocks that may be worth investing in this down market.
Capital One Fin’l-(COF) = 1309.8 %
Brooklyn Fedl Bncp Inc-(BFSB)= 40.0%
Airgas Inc-(ARG )= 33.3 %
United States Steel Corp-(X)= 25.0%
Fluor Corp-(FLR) 25.0%
Alliance Bancorp PA-(ALLB)= 20.0%
Alberto-Culver Co-(ACV)= 18.2%
Targa Res PrtnrsL.P-(NGLS) 17.8%
Lehman Bros-(LEH)= 13.3%
GATX Corp-(GMT) 12.5%
Lazard Ltd-(LAZ)= 11.1%
Timberland Bancorp-(TSBK) = 10.05
Coldwater Creek Inc (CWTR)= $ 9,606,000
Luby S Inc LUB 1 600,000 5,400
Xtl Biopharmaceuticals Ltd (XTLB) = $ 5,070,000
Citigroup Inc (C) = $4,998,000
Raymond James Financial Inc (RJF)= $ 2,987,000
Cenveo Inc (CVO) = $2,900,000
Equity One Inc (EQY)= $2,705,000
At&T Inc (T ) = $2,274,000
Johnson Controls Inc (JCI)= $2,121,000
E Trade Financial Corp (ETFC) = $1,929,000
Lions Gate Entertainment Corp (LGF) = $ 1,829,000
Disclosure (“none” means no position):
(URX)= United Refining Energ …
(UNCA )= Unica Corp
(TXA )= Tribune Co New
(PCOP )= Pharmacopeia Inc
(PCBI )= Peoples Cmnty Bancorp Inc
(OMRI )= Omrix Biopharmaceutic …
(MRX)= Medicis Pharmaceutica …
(MROE )= Monroe Bancorp
(MAYS )= J W Mays Inc
(LIMC )= Limco Piedmont Inc
(KWK )= Quicksilver Resources Inc
(INTT )= Intest Corp
(BFRM )= Bioform Medical Inc
(BCRX )= BioCryst Pharmaceutic …
(AZN )= Astrazeneca Plc
(AWBC )= Americanwest Bancorpo …
(AVID )= Avid Technology Inc
(ARAY )= Accuray Inc
A report in the WSJ today said the stake is among Mr. Icahn’s top five holdings, which could mean it runs into the hundreds of millions of dollar.
Icahn will disclose the stake in mid-Feb according to the story. Now, Carl is scheduled to appear on CNBC’s “Fast Money” show today at 5pm. If he is not going to disclosed the stake until the next couple weeks, it is unlikely we will get any details tonight on the show.
JC Pennys’ stock, like rival retailers such as Sears Holdings (SHLD), Macy’s (M) and Kohl’s (KSS) is down over 40% in the last year and trades at just under 10 times earnings.
Disclosure (“none” means no position):None, Long SHLD
Wall Strip on Smoking, Jeff Matthews, iPhone
killer” or, Not a iPhone “killer”
– This just may be one of the funniest things I have ever seen.
– Jeff makes a good point here
From the “timing is everything” department.
In a post entitled “Financials: This is What a Bottom Starts to Look Like” I said “So does this means the financials index (XLF) has nowhere to go but up? No, there may be a little more downside from here. It does mean that there will not be much more significant downside though. Currently trading at a 5 year low, the sector as a whole is vastly oversold.”
The XLF (the financial sector ETF) stood at $27.88 the following trading day (1/14) and dropped 8.5% to $25.50 on January 18th. Since then it has rebounded from that low and stands just over $29.
Was that the low for the financial sector in 2008? Barring a seminal event (terrorist attack, another war, etc.) my gut tells me yes..
Consider since then Wilbur Ross is now in talks with Ambac (ABK) or another bond insurer, Ajit Jain at Berkshire Hathaway (BRK.A) has said they “are talking with” them or MBIA (MBI) and Leucadia (LUK) is acquiring shares of AmerCredit (ACF) at a breakneck pace. These are very smart people who have made billions of dollars picking up scraps of unwanted sectors.
The fact they are now circling the financials must tell us something…
Disclosure (“none” means no position): None
“What we have to do is simple: Differentiate our experience, so that when a customer walks into a Starbucks store, they get something that they can only get from us..” Starbucks (SBUX) CEO CEO Howard Schultz
Notes from the earnings call:
The financials:
** Revenues for the quarter were up 17% to $2.8 billion, from $2.4 billion a year ago.
** Earnings per share increased to $0.28 cents in Q1 of this fiscal year, compared to $0.26 cents per share in Q1 of ‘07.
** Dairy costs resulted in a negative $0.02 impact to EPS in the quarter.(ValuePlays readers first got this in May of 2007)
** Operating margins contracted 160 basis points to 12% from last year’s Q1 margin of 13.6%. (Dairy cost)
** Higher interest expense driven by an increased level of debt when compared to the first quarter of 2007. The debt was used to repurchase shares, resulting in a net neutral impact on earnings per share in the quarter. (Again, see May of 2007)
** A new share repurchase authorization by our Board of Directors for up to an additional 5 million shares
** For 2008 “we are looking to deliver low double-digit earnings growth — lower than expected”
The stores:
** plan to open a total of approximately 1,175 net new stores in 2008, down 34% from fiscal 2007 openings.
** Closing approximately 100 underperforming stores.
** For 2009, plan to open fewer than 1,000 new stores in the U.S.
** Will open approximately an additional 75 net new stores in international markets
** In fiscal 2009, that number will rise to over 1,000 new stores internationally,
Products:
** will discontinue warmed breakfast sandwiches in our North American stores
Plans:
** “At our Annual Meeting of our shareholders on March 19th, we will lay out five specific, bold consumer-facing initiatives that will be a major catalyst for change and transformation.” Schultz
The sentence that really mattered? “Comparable store sales declined 1% in the quarter, driven by a 3% decrease in transactions.” That is the whole ball of wax.
So Schultz and company have a plan? Here are some more helpful hints:
1- 100 US store closing just are not even the beginning of what is necessary
2- Differentiation? If I am going to pay premium prices for ANY product, I want a service level that equates. Most people feel the same way. I do not expect the service at McDonalds (MCD) to be the same as a Mortons (MRT). That being said, if I go to McDonalds and have to wait for my order to be completed, they politely ask me to go sit down and relax and they bring it to me. If I am in Starbucks, I stand in the “cattle line” and wait, and wait, and wait. Why?
3- Too many small locations. Now, I am sure the little locations are money makers but their proliferation has had a negative effect. Why? If it is a nice day, I do not mind stopping and dragging the kids inside to get some coffee, but, if it is raining, snowing and very cold, I won’t go in because there will be no place for us to sit and it is just too much effort to walk and and then turn around and go. The proliferation of the “counter stop” locations with no real sitting area causes a mental picture of Starbucks. I now (and so do others) pass them by when I see them because there now is an assumption of their lack of adequate seating. They have changed the perception of the company from a place to hang out and drink coffee to one of inconvenience.
4- Get rid of all the crap. There is just too much junk for sale and the stores feel claustrophobic. Has anyone ever purchases one of the cappuccino machines there for sale? I keep waiting to see lawn mowers for sale out front..
Starbucks shares are getting hit on Thursday and even with all the pain in 2007, they trade around 26 times this years earnings. They are by no means cheap. With growth expected to slow even more, there isn’t anything to warrant shares going higher anytime soon.
Disclosure (“none” means no position): None
If you thought Ackman’s letter to the ratings agencies was something else. In a letter to the NY & Wisconsin Insurance Commissioners as well as the SEC, he lays out the cases for massive losses to MBIA (MBI) and Ambac (ABK). It is stunning…
The full 20 page letter can be found on pdf. here
Disclosure (“none” means no position): None
Upgrades
Alliance Data (ADS)= Robert W. Baird Neutral » Outperform
MIPS Techs (MIPS)= B. Riley & Co Neutral » Buy
Ryder System (R)= BB&T Capital Mkts Hold » Buy
NCR Corp (NCR)= Wedbush Morgan Buy » Strong Buy
Imation (IMN )= Needham & Co Hold » Buy
Cablevision (CVC)= Kaufman Bros Sell » Hold
Big Lots (BIG)= Wachovia Underperform » Mkt Perform
Enterprises Finl (EFSC)= Keefe Bruyette Underperform » Mkt Perform
Comerica (CMA)= Rochdale Securities Sell » Hold
Pinnacle West (PNW )= Lehman Brothers Underweight » Equal-weight
Alliance Data (ADS)= Sun Trust Rbsn Humphrey Neutral » Buy
SCP Pool (POOL)= JP Morgan Neutral » Overweight
Alliance Data (ADS)= JMP Securities Mkt Perform » Mkt Outperform
Alliance Data (ADS )= Bear Stearns Peer Perform » Outperform
Sealed Air (SEE)= Credit Suisse Underperform » Neutral
Astoria Fincl (AF)= Bear Stearns Underperform » Outperform
Nordstrom (JWN)= Bear Stearns Peer Perform » Outperform
Hess (HES)= JP Morgan Neutral » Overweight
Gilead Sciences (GILD)= Wachovia Mkt Perform » Outperform
Downgrades
Cirrus Logic (CRUS)= Longbow Buy » Neutral
Polo Ralph Lauren (RL)= Morgan Keegan Mkt Perform » Underperform
Mattson (MTSN)= Caris & Company Above Average » Average
Allstate (ALL)= Sandler O’Neill Buy » Hold
bebe stores (BEBE)= Morgan Keegan Outperform » Mkt Perform
Audible (ADBL)= Merriman Curhan Ford Buy » Neutral
Accuray (ARAY)= Soleil Buy » Hold
TriCo Bancshares (TCBK)= Keefe Bruyette Outperform » Mkt Perform
Affiliated Managers (AMG)= Keefe Bruyette Outperform » Mkt Perform
Baker Hughes (BHI)= RBC Capital Mkts Outperform » Underperform
Schlumberger (SLB)= RBC Capital Mkts Outperform » Sector Perform
W&T Offshore (WTI)= JP Morgan Neutral » Underweight
Saks (SKS)= Bear Stearns Peer Perform » Underperform
NuCo2 (NUCO)= Bear Stearns Outperform » Peer Perform
Baker Hughes (BHI)= Wachovia Outperform » Mkt Perform
Delhaize Group (DEG)= JP Morgan Overweight » Neutral
Harris Stratex (HSTX)= Morgan Joseph Buy » Hold
Century Aluminum (CENX)= Friedman Billings Outperform » Mkt Perform
Cadence Design (CDNS)= JP Morgan Neutral » Underweight
Polo Ralph Lauren (RL)= Banc of America Sec Buy » Neutral
Monster Worldwide (MNST)= Deutsche Securities Buy » Hold
Adobe Systems (ADBE)= Jefferies & Co Buy » Underperform
YUM! Brands (YUM) Deutsche Securities Buy » Hold