Sears Holdings (SHLD) Chairman Eddie Lampert disclosed in an SEC filing Tuesday night the purchase of an additional 792,500 shares of AutoNation (AN) through his RBS Partners hedge fund and other affiliates at prices between $15 and $15.26 a share.
This brings his ownership to 62.5 million shares or 34.6% of the total outstanding
Disclosure: None
Wednesday’s Picks
Jeff Macke likes Starbucks (SBUX0 $19.06
Guy Adami prefers Baker Hughes (BHI) $71.11
Karen Finerman recommends Microsoft (MSFT) $28.38
Pete Najarian thinks XTO Energy (XTO) $60.74 is a buy.
Tuesday’s Results
None
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 14-9
Tim Seymore= 5-4
Guy Adami= 13-13
Pete Najarian= 12-8
Karen Finerman= 13-11-1
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):
(WMK)- Weis Markets, Inc
(WIND)- Wind River Systems Inc
(WBMD)- Webmd Health Corp
(VRTU)- Virtusa Corp
(VRNM)- Verenium Corporation
(VRAZ)- Veraz Networks Inc
(VM )- Virgin Mobile Usa Inc
(TSCM)- TheStreet.com, Inc
(TRXB)- Tronox Inc
(MDAS)- Medassets Inc
(MCRI)- Monarch Casino & Reso …
(LVLT)- Level 3 Communication …
(LTM)- Life Time Fitness Inc
(LQDT)- Liquidity Services Inc
(LNET)- LodgeNet Entertainment
(COT)- Cott Corp Que
(BSI)- Blue Square-Israel Ltd.
(BOFI)- Bofi Hldg Inc
(BELM)- Bell Microproducts Inc
(GAP)- The Great Atlantic & …
(DLM)- Del Monte Foods Co
(DF)- Dean Foods Co New
What to expect from the Pink Panther over at Owens Corning (OC) Wednesday.
Current estimates for Q4 2007 are for 18 cents a share on $1.3 billion in revenue. 2007 will be a year the entire industry will be glad to see gone. Housing plummeted, there has not been a hurricane in two years and credit conditions are putting a hold on remodeling. That being said we expect earnings to be terrible. So looking towards the future, let’s get answer to the following:
1- What does the earnings profile look like now the St. Gobain deal has closed?
2- How dependent in the company now on US housing? What % of earnings now come from international operations?
3- Have any shares been repurchased yet?
4- Dividend?
5- 2008 outlook and direction for existing units, mainly the composites unit.
Sounds logical but if the company has managed to shift earnings from almost 70% US housing to 50% or better (lower is better), then a rebound in earnings ought to come in ahead of schedule.
Lowe’s (LOW) and Home Depot (HD) both offered depressing guidance and expectation for 2008, if management has accomplished its goal of diversifying its earnings profile sufficiently, the outlook for OC ought to be better..
Disclosure (“none” means no position):Long OC, none
Shopping Cart, Mortgages, Barak and Hillary, Boone
– A great way to actually measure inflation.
– Who should be saved?
– Will whomever is left standing have any fight left?
– I have a real hard time going against anything he says on this area..
Q4 international sales for Harley Davidson (HOG) were up 17% and the company now has its sights set on blowing past that number.
India’s commerce ministry has now agreed to recognize European engine emission standards for motorcycle engines exceeding 800 cubic centimeters, a standard Harley’s bikes already comply with. The door is now open to sell their bikes in one of the world’s most populous countries.
One hang up, a 60% tariff a various other taxes that cause the price of the bike to double. Harley is seeking a reduction in the tariff to 10%, a level comparable to other imported items in the country. They report having “regular contact” with government regulators on the subject.
Harley spokesperson Bob Klein said “this is step one”. Already entering the Chinese market and with sales in Latin America and Europe very strong, HOG has proven its brand will sell very well outside the US.
While neither the China or India ventures will contribute meaningfully in the near term baring a blockbuster move, the groundwork is being set for explosive results down the road. Results, it should be noted that will continue to be strong for decades given the populations of both countries.
Disclosure (“none” means no position):Long HOG
After announcing the feasibility study of the coal chemical joint venture between Dow Chemical (DOW) and Shenhua Group Corporation Limited in China is likely to be submitted to the National Development and Reform in early 2009, Dow announced a “reorganization of units for review”.
The new group, Dow Portfolio Optimization, will contain various businesses with the intent on finding how to best maximize their “long-term value to the company – whether that be through realignment to other Dow businesses, joint ventures or divestitures” said DOW.
George Biltz, currently the head of Dow’s specialty plastics and elastomers portfolio, will head the group. The products in it will be the SARAN speciality-films brand, polycarbonate, compounds and blends, synthetic rubber and specialty copolymers. Other businesses are expected to be added “as they are assessed for strategic alignment with Dow’s transformational strategy.
In short, “we are welcoming bidders”. My guess is DOW would love to sell these into a JV like they did with their commodity business lately.
It is estimated DOW will end up investing $5 billion in the Chinese JV and while that may seem like a lot, it is just over 1/2 the $9.5 billion they are getting from the commodity sale. Dow has promised that in 2008-09 that if they cannot find a place for the money, they will repurchase shares. $9.5 billion represents 1/4 of the company’s current market cap.
DOW will want to do both. Liveris has made it a mission of his to solidify the company’s balance sheet and he has succeeded in making it better than it has been in decades. That being said, do not expect him to pull a Home Depot (HD) and load it back up with debt to repurchase shares. What will do instead is shed low margin cash sucking product lines to repurchase the shares.
Personally I would love to see a much higher dividend so my DRIP plan pushes more shares my way before earnings explode after 2010. We’ll see.. Liveris has not let me down yet..
Disclosure (“none” means no position):Long DOW, None
Upgrades
Take-Two (TTWO)- Sterne Agee Sell » Hold
CoStar Group (CSGP)- Needham & Co Buy » Strong Buy
Penn Natl Gaming (PENN)- Brean Murray Hold » Buy
Juniper Networks (JNPR)- RBC Capital Mkts Sector Perform » Outperform
Semgroup Energy (SGLP)- Citigroup Hold » Buy
Citizens Rep Bancorp (CRBC)- JP Morgan Underweight » Neutral
Lloyds TSB plc (LYG)- Lehman Brothers Equal-weight » Overweight
Mechel Steel (MTL)- Deutsche Securities Hold » Buy
ESS Tech (ESST)- Jefferies & Co Underperform » Hold
YUM! Brands (YUM)- UBS Neutral » Buy
Hain Celestial (HAIN)- UBS Neutral » Buy
DTS (DTSI)- Deutsche Securities Hold » Buy
Genentech (DNA)- Rodman & Renshaw Mkt Perform » Mkt Outperform
Downgrades
Roper Inds (ROP)- Sterne Agee Hold » Sell
Calgon Carbon (CCC)- Brean Murray Buy » Hold
Sunstone Hotel (SHO)- Stifel Nicolaus Buy » Hold
LaSalle Hotel (LHO)- Stifel Nicolaus Buy » Hold
Hersha Hospitality Trust (HT)- Stifel Nicolaus Buy » Hold
MEMC Elec (WFR)- JMP Securities Mkt Outperform » Mkt Perform
Syntel (SYNT)- Wachovia Outperform » Mkt Perform
Medicure (MCU)- Merriman Curhan Ford Buy » Neutral
Glimcher Realty (GRT)- RBC Capital Mkts Sector Perform » Underperform
Aventine Renewable Energy (AVR)- Soleil Hold » Sell
SPX Corp (SPW)- JP Morgan Overweight » Neutral
Motorola (MOT)- Oppenheimer Outperform » Perform
Borg Warner (BWA)- Deutsche Securities Buy » Hold
General Motors (GM)- Deutsche Securities Buy » Hold
Smith Micro Software (SMSI)- JP Morgan Overweight » Neutral
Peabody Energy (BTU)- UBS Buy » Neutral
Alpha Natural Resources (ANR)- UBS Buy » Neutral
James River Coal (JRCC)- UBS Buy » Neutral
New York Times (NYT)- Deutsche Securities Hold » Sell
Disclosure (“none” means no position):
Tuesday’s Picks
None
Monday’s Results
Jeff Macke likes Disney (DIS) $32.57 Close $32.89 GAIN
Guy Adami prefers Wachovia (WB) $34.33 Close $34.72 GAIN
Karen Finerman recommends Yahoo! (YHOO) $28.42 Close $28.13 LOSS
Tim Seymour thinks Home (HXM) $58.81 is a buy. Close $60.07 GAIN
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 14-9
Tim Seymore= 5-4
Guy Adami= 13-13
Pete Najarian= 12-8
Karen Finerman= 13-11-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
(XRIT)- X-Rite Incorporated
(XLPRX)- Xl Cap Ltd
(WSC)- Wesco Financial Corpo …
(WPO)- The Washington Post C …
(WPL)- W.P. Stewart & Co. Ltd.
(WMK)- Weis Markets, Inc
(WIND)- Wind River Systems Inc
(USM)- United States Cellula …
(UNFI)- United Natural Foods Inc
(UFS)- Domtar Corp
(TZOO)- Travelzoo Inc
(TWPG)- Thomas Weisel Partner …
(SLRY)- Salary Com Inc
(SLE)- Sara Lee Corporation
(SIRF)- Sirf Technology Hldgs Inc
(DF)- Dean Foods Co New
(CSPI)- CSP Inc
(CSHB)- Community Shores Bank …
(COT)- Cott Corp Que
(AVR)- Aventine Renewable Energy
(ANAD)- ANADIGICS Inc
Master Picks subscribers, today were told to sell Take-Two Interactive(TTWO) and take the 3 month 69% gain, congratulations for those of you who held on. We’ll be cashing out TTWO from our current portfolio.
Disclosure (“none” means no position):None
Boone makes more sense than anything I have heard any Senator or Congressman say in two decades on the subject.
Citi, Crox, DOW, Goldman
– Part 2 in Chad Brand’s Citi analysis.
– Crox at $28? The Master’s think that’s a Crock
– Looks like the MSM is finally recognizing what Dow Chemical is doing
– Goldman Sachs want your distressed mortgage debt..
Whitney talks about what to look for in the current environment.
Frannie Mae (FMN), Freddie Mac (FRE), Merrill Lynch (MER), Sears Holdings (SHLD)and Target (TGT) are discussed.
Whitney says the “break up” value of Sears is $250 a share. He goes into good detail on it.
Disclosure (“none” means no position):Long SHLD, None
After reading about Whole Foods (WFMI) recent quarter, I revisited a post I did on the subject last May.
In it I said “Here is an equation that does not work for me. Paying 32 times earnings for a company who, if it hits the high end of analyst estimates, will grow 9.4% this year and maybe 17% next. When you consider this company has missed the last three quarters estimates, and four of the past 6, one has to wonder what investors are thinking.”
Well, things are currently worse than at that time and investors are still paying 30 times this years earnings that, far from only increasing the 9% anticipated in May of 2007 are now declining.
Whole Foods in 2008 will most likely finish its second consecutive year of declining results. In the recent earnings call CEO John Mackey took time out from pumping his stock on Yahoo (YHOO) message boards to affirm that even with the estimated impact of the Wild Oats acquisition excluded, adjusted net income was $51 million and adjusted diluted earnings per share was $0.36 vs. 38 last year.
Read the conference call. I haven’t seen a call in a long time that went so far to avoid the word “earnings”. Macke focused extensively on sales. They even went as far to create a new metric to measure earnings, EBITANCE or earnings before interest, taxes and non-cash expenses.
Here is the thing. It really does not matter what you want to try to do to slice earnings, the only thing that matters is what drops to the bottom line. Unfortunately, even if we subtract the cost of the wild Oats merger, that number is falling.
The stock now sits just above its 52 week low and is still trading at an excessive premium to earnings. With organic food being found at about every grocer including club stores like Costco (COST), BJ’s (BJ) and Wal-Mart’s (WMT) Sam’s Club, a pinched consumer is far less likely to visit Macke’s locations.
The stock is down about 10% from my initial post and I cannot see any reason to think there is any upside in shares anytime soon.
Disclosure (“none” means no position): Long Wal-Mart, None