(OVEN)- Turbochef Technologie …
(NXTM)- Nxstage Medical Inc
(NURO )- Neurometrix Inc
(NT )- Nortel Networks Corp New
(NHWK)- Nighthawk Radiology H …
(ARUN )- Aruba Networks Inc
(AMAB )- Americasbank Corp
(ALLT )- Allot Communications Ltd
(AHC )- A H Belo Corp
(CPI)- Capital Properties, Inc
(CMN )- Cantel Industries Inc
(CIOU )- Asia Special Sit Acqs …
(CCZ )- Comcast Holdings Corp
(BRO )- Brown & Brown Inc
A profile on CNBC on Ackman and his trades in MBIA (MBI) and Ambac (ABK)
Also discussed in his positions in Borders (BGP), Target (TGT), Sears (SHLD) and Wendy’s (WEN).
Disclosure (“none” means no position):Long SHLD
Lizdon, Starbucks, Apple’s iPhone, Microsoft & Yahoo
– He is right, it would appear these folks were the LAST to know this
– Interesting. Not because Starbucks is silent but for the fact I have not seen this anywhere else.
– Will they make the 10 million unit sales?
– I have no opinion on this but this is a good one
Do people really think Berkshires Hathaway’s (BRK.A) is really “helping” the bond insurers? Really?
Buffett offered to insure $800 billion of municipal bonds held by the major insurers such as Ambac (ABK) and MBIA (MBI). Problem with that is based on results to date, that seems to be the only part of the insurers portfolio not falling apart. While the move would improve the “guarantee” offered by both companies, it would then leave them holding a collection of failing loans. Buffett is essentially offering to insure the only part of their portfolio not at risk. How is this helping them? In all reality, this would end up being a drain on their liquidity.
The only person other than Berkshire shareholders and Buffett hoping they take the bait on this is probably Pershing’s Bill Ackman. Once the only stable part of their portfolio now pledged to Buffett, Ackman’s prediction of failure for the insurers is as close to a sure thing in investing as one could get…..
Disclosure (“none” means no position):None
While the market may lump Sherwin Williams (SHW) in with the other “housing stocks” both today’s news and their earnings for the past year suggest otherwise…
Can anyone name a “housing stock” that saw earnings in 2007 grow double digits and project further earnings increases in 2008? Industries with huge housing exposure from builders, banks, chemical makers, wall board suppliers, insulation makers, mortgage companies all saw earnings decimated in 2007 and 2008’s outlook is spotty at best.
Who has bucked the trend? Sherwin Williams. Why? The US housing market is not the overwhelming driver of earnings at the company, despite what the market thinks.
In the past year, Sherwin-Williams has acquired paint and coatings companies in India, Uruguay and Mexico. As of Monday you can add Asia to the list.
Sherwin announced that it has signed a definitive agreement to acquire the Liquid Coatings Subsidiaries of Inchem Holdings of Inchem Holdings International Limited headquartered in Singapore. Terms were not released.
Inchem produces coatings applied to wood and plastic products in Asia. These waterborne, solvent-based, and ultraviolet (UV) curable coatings are applied to furniture, cabinets, flooring, and electronic products that are manufactured both for export as well as domestic sale. The coatings are made and sold in China, Vietnam and Malaysia, and distributed to 15 other countries throughout Asia.
CEO Christopher M. Connor said “this acquisition reaffirms our commitment to growing globally through organic growth accelerated by strategically important acquisitions. We are pleased to bring Inchem, a well respected company throughout Asia, it’s plants in China, Vietnam, and Malaysia, and most importantly its people into the Sherwin-Williams family.”
George E. Heath, President and General Manager of Sherwin-Williams Chemical Coatings Division, stated, “we continue to strengthen our growing global platform to better serve the needs of manufacturers in North America and Asia. Inchem supports this mission with great plants, products, and people throughout Southeast Asia.”
Many folks are advising to “wait” before buying shares in Sherwin. Here is the problem with that. My fear is that those who wait will find themselves wishing they had not as Sherwin becomes an enticing buyout prospect daily for a large buyer like a Dow Chemical (DOW) who could easily swallow the company. With only a $6.6 billion market cap, Sherwin is very easily digestible. Sorry James 🙂
Every few months Sherwin does a deal that further shrinks its exposure to the US housing market. Monday’s news is just another example.
Disclosure (“none” means no position): Long Sherwin, Dow
What is god’s name is going on at The Journal? I just finished reading an “interview” with Circuit City’s (CC) CEO Philip Schoonover that was, sad. It reads like it was a press release from the company.
Let’s just put aside Schoonover’s destruction of 80% of the companies value in under two years. First things first, here is the “interview”.
This could only have been a “email me the questions and I will send you answers”. There was no follow-up. It was a series of questions with wholly accepted answers. They actually went as far as to print this:
Now, am I the only one who notices that when Schoonover took over the company’s stock price was at a near decade high? The year prior to Schoonover taking over the company made 31 cents a share and this year losses ought to exceed $2 a share. How is he engineering a turnaround?
Why is he even being spoken to about this subject? Can anyone anywhere show me any evidence of ANY turnaround?
Even in his “5 Tips” above, current actions totally contradict them.
Was Schoonover “listening to employees” (Rule #1) when he fired thousands of high priced but experience ones? The very employees it should be noted they are begging to return due to the precipitous drop in customer satisfaction in the stores?
Circuit City recently approved cash retention bonuses for current executives when it became apparent the current bonus plan was worthless due to the plummet in the stock price. Maybe that would have to perfect time to “refresh management” (Tip #2) and save shareholders several million dollars?
Rule #3, “Embrace Your Heritage” seems more than a little bit the polar opposite of the new “The City” concept being rolled out currently which is simply a reinvention of Radioshack’s (RSH) wheel.
Rule #4, “Protect the Future” actually made me chuckle because at the rate Schoonover is going, the only thing in the company’s “future” is a Chapter 11 filing. The guy does make me laugh.
I will give Schoonover credit for following Rule #5, “Stay the course”. I have seen no evidence that Circuit City has any chance rebounding from its current downward spiral.
Disclosure (“none” means no position): Pity for shareholders (those who are left)
“What you have (in Sears Holdings (SHLD)) is a collection of brands and assets”, Whitney Tilson. Amen Whitney.. Watch the video..
Here is the video from last week I referenced in yesterday’s post.
Disclosure (“none” means no position): Long Sears, Fan of Whitney’s
Upgrades
Spirit Aerosystems (SPR)- Cowen & Co Neutral » Outperform
Adolor (ADLR)- Cowen & Co Neutral » Outperform
Vistaprint (VPRT)- Stifel Nicolaus Hold » Buy
China Petroleum (Sinopec) (SNP)- Deutsche Securities Hold » Buy
Discovery Labs (DSCO)- Brean Murray Hold » Buy
Lindsay Manu (LNN)- Rodman & Renshaw Mkt Underperform » Mkt Perform
Northeast Utilities (NU)- Jefferies & Co Hold » Buy
Napster (NAPS)- Bear Stearns Underperform » Outperform
SRA Intl (SRX)- UBS Sell » Neutral
GlaxoSmithKline (GSK)- UBS Neutral » Buy
General Maritime (GMR)- JP Morgan Neutral » Overweight
Frontline (FRO)- JP Morgan Underweight » Neutral
Downgrades
Neah Power (NPWS)- Jesup & Lamont Buy » Neutral
Centene (CNC)- Wachovia Outperform » Mkt Perform
NeuroMetrix (NURO)- Punk, Ziegel & Co Accumulate » Sell
Darden Restaurants (DRI)- MKM Partners Buy » Neutral
NeuroMetrix (NURO)- Stanford Research Buy » Hold
Brown & Brown (BRO)- Piper Jaffray Buy » Neutral
Baldwin & Lyons (BWINB)- Morgan Keegan Outperform » Mkt Perform
Capital Corp. of the West (CCOW)- FTN Midwest Buy » Neutral
Granite Constr (GVA)- BB&T Capital Mkts Buy » Hold
Microsoft (MSFT)- RBC Capital Mkts Outperform » Sector Perform
Level 3 (LVLT)- Credit Suisse Outperform » Neutral
Centene (CNC)- Credit Suisse Outperform » Neutral
BT Group PLC (BT)- Credit Suisse Neutral » Underperform
FirstMerit Corp (FMER)- Oppenheimer Perform » Underperform
Independent Bank (IBCP)- Oppenheimer Perform » Underperform
CBL & Assoc (CBL)- UBS Buy » Neutral
Castle Brands (ROX )- Piper Jaffray Buy » Neutral
UTI Worldwide (UTIW)- Bear Stearns Outperform » Peer Perform
Telecom Italia (TI)- Citigroup Buy » Hold
Unilever PLC (UL)- UBS Buy » Neutral
Tsakos Energy (TNP)- JP Morgan Overweight » Neutral
Arlington Tankers (ATB)- JP Morgan Neutral » Underweight
WW Grainger (GWW)- Robert W. Baird Outperform » Neutral
American Express (AXP)- Keefe Bruyette Outperform » Mkt Perform
Disclosure (“none” means no position):
Tuesday’s Picks
Jeff Macke likes Yahoo! (YHOO) $29.87
Guy Adami prefers Merck (MRK0 $45.31
Tim Seymour recommends Tesoro (TSO) $37.06
Pete Najarian thinks Allegheny Technology (ATI) $80.71 is a buy on any pullback.
Monday’s Results
Jeff Macke likes Microsoft (MSFT) $28.56 Close $28.21 LOSS
Guy Adami prefers Trinity Industries (TRN) $29.54 Close $29.48 LOSS
Karen Finerman is sticking with Crocs (CROX) $31.99 into earnings. Close $32.00 GAIN
Pete Najarian says CNET Networks (CNET) $8.29 is a buy on options action. Close $8.00 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 8-7
Tim Seymore= 2-3
Guy Adami= 8-11
Pete Najarian= 9-7
Karen Finerman= 8-9-1
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):
(UBS)- UBS Ag
(UAM )- Universal American Fi …
(TVHU )- Media & Entmt Holding …
(TOD )- Todd Shipyards Corpor …
(SNY )- Sanofi Aventis
(SLRY)- Salary Com Inc
(SLE )- Sara Lee Corporation
(SDXC )- Switch & Data Facilit …
(RDY )- Dr. Reddy’s Labs, Ltd.
(MENT)- Mentor Graphics Corpo …
(MEND )- Micrus Endovascular Corp
(LPNT )- Lifepoint Hospitals Inc
(LDIS )- Leadis Technology Inc
(HSTX )- Harris Stratex Ntwrks Inc
(HMG )- HMG/Courtland Propert …
(HBC )- HSBC Hldgs Plc
(GTN )- Gray Television Inc
(ALL )- The Allstate Corporation
(AIG )- American Internationa …
(AHS )- Amn Healthcare Servic …
(AEG )- AEGON N.V.
(ABVA )- Alliance Bankshares Corp
Timing, Bills, Hockey, Flashback 20 years
– Were have we seen this story before?
– Please Ralph, sell the team to Tom
– Great story about sports and business
– What trading was like 20 tears ago
McDonald’s (MCD) said Friday its same-store sales rose 5.7 percent in January, driven by strong international growth. Yawn… haven’t we heard the same thing every month for a few years now? Aren’t shareholders thrilled that because of this you have not had a down year in the last 5?
For the month ended Jan. 31, U.S. same-store sales rose 1.9%, boosted by sales of breakfast (COFFEE!!) and dollar-menu items. Europe same-store sales jumped 8.2% on strong sales in France, Germany and the U.K.
Now, much of the current though process out there is that McDonald’s is over-reaching with the new coffee offerings slated to be completed in 2009. McDonalds on the other hand sees and additional $1 billion in sales. Who to believe? McDonalds of course.
Why? Those who think that McDonalds is over reaching keep saying that they will never “over-take Starbucks (SBUX)”. Here is the thing though. McDonalds has no plan to do this. What they do plan to do, and have been doing exceptionally well, is tap into a vast market gap.
Millions of people want very good coffee at very good prices. That is what McDonalds is providing. They have no intention of being an upscale coffee house. What they do intend on being and based on all empirical evidence to date they are succeeding at, is the nations most convenient place to get a cup of good coffee.
With 14,000 locations virtually all with speedy drive -thru’s, McDonalds has given the nation another reason not to stop and get out of their car to get their daily fix.
Starbucks’ Howard Schultz keeps pounding home the specter of the size of the US market for quality coffee. He is right that the market is huge. But, he is wrong if he thinks they will all pay $8 for a couple cups of it. The far larger market is those folks who want the quality but will not pay the price. This is not an “coffee specific” event. This trend in the same whether we are talking about cars, computers, or cell phones. We Americans want value.
Years ago the gap between the quality of McDonalds’ coffee and Starbucks’ was vast. It has close considerably and for your basic “cup of Joe”, there is none. McDonalds has expended its potential market for its offering while at the same time, shrunk that of Starbucks. This move into lattes and cappuccinos will further shrink any remaining gap.
Starbucks could alter this easily but they won’t until shareholder dissatisfaction becomes so great that even Schultz’s head is called for. Starbucks is no longer a growth company and it appears management is the last to recognize this. That does not mean they cannot reward shareholders, they just can’t if their reality escapes them.
Until they stop the exodus of customers, they will not right their ship. What to do? Give customers more value.
Want proof? Just sit back and watch McDonalds the next couple years.
Disclosure (“none” means no position): Long McDonald’s, None
This one surprised me. The WSJ ran an article Friday that made things at Sears (SHLD) look dire. Let’s take a closer look.
A summation of the article is pretty simple. Sears’ cash will be far below last years levels when they report and thus, investors will run for the exits.
The article starts off with this quote, “Now, some analysts wonder whether falling sales, slimmer profit margins and other woes are causing cash flows to decline to a level that could hinder a turnaround.”
The very reason Sears split into 5 separate entities was to avoid this very scenario. It will allow each division to pursue deals outside of the current locations. This was witness just last week by the Diehard deal with Orange County Choppers. I am having trouble figuring out what any cash deterioration at Sears would hinder more deal like this. I can easily see how they will expand sales of those items and actually increase cash. I can also easily picture licensing deals for Craftsmen tools and Kenmore appliance that throw more cash Lampert’s way.
Later in the article comes this gem “…Sears to draw on a $4 billion credit line. But this might not be received well by creditors, especially if it looks like the borrowing is being done to fund further stock buybacks.”
Now, has Lampert ever borrowed to repurchase shares? Ever? If we go just the end of Q3, Lampert had $734 million of cash in hand. The company said that, as of Jan. 11, it had used $513 million of that cash to repurchase stock in Q4 and as of Nov. 27, it had paid back a $625 million credit facility.
Both of these were done from cash from operations. If Lampert had ANY inclination to repurchase shares with debt, he surely would not have paid off the credit facility. Lampert has been constantly paying off debt since taking over Sears and that is the reason the company has the best balance sheet of its competitors (JC Penny (JCP), Macy’s (M), Home Depot (HD) and Kohl’s (KSS)). As a matter of fact, since taking over Sears, Lampert has reduced its outstanding debt every year and FY 2008 that just ended will be no different.
The article also laments the fact that cash is lower this year than at the same time last. But, it casually misses the fact that Lampert has repurchased almost $3 billion in stock in the last 9 months vs $800 million total the previous year. Now, had he not done that, the cash balances would be similar.
The same people who are wringing their hands over the cash account today at $1 billion are the same ones who were complaining when it was at $4 billion and Lampert was just sitting on it. Back then they were championing Lampert to spend it on a Home Depot, Radioshack (RSH) or Macy’s acquisition. In retrospect, any one of those moves at the prices they were at then would be a complete catastrophe today. I wonder were all the articles pointing that out are?
So, Lampert invested that cash on Sears by repurchasing stock. By doing so, he has increased shareholders percentage ownership of earnings in excess of 13% rather than destroying it with an abysmally timed dilutive acquisition to appease folks. Thank you Eddie.
The essence of this article is based on a flawed premise. It is a bit like speculating about the cash drain at Berkshire Hathaway (BRK.A) should Warren Buffett try to outbid Microsoft (MSFT) for Yahoo (YHOO). It will never happen so making the speculation is just filling a page with words. To be honest, I had a hard time finding the premise.
Whitney Tilson, said Friday on CNBC that he was “aggressively buying shares in the 80’s” recently. To quote Whitney “we are buying a 30 cent dollar”.
Disclosure (“none” means no position): Long Sears, None in others
Upgrades
Tidewater (TDW)- Credit Suisse Underperform » Neutral
Spartan Stores (SPTN)- CIBC Wrld Mkts Sector Perform » Sector Outperform
Nuance Communications (NUAN)- Wedbush Morgan Hold » Buy
OptionsXpress (OXPS)- BMO Capital Markets Market Perform » Outperform
MasterCard (MA)- Stifel Nicolaus Hold » Buy
EuroBancshares (EUBK)- Kaufman Bros Hold » Buy
Syngenta (SYT)- Citigroup Sell » Hold
ResMed (RMD)- Caris & Company Above Average » Buy
Alnylam Pharmaceuticals (ALNY)- Caris & Company Average » Above Average
Pain Therapeutics (PTIE)- Broadpoint Capital Underperform » Neutral
Omnicell (OMCL)- BB&T Capital Mkts Hold » Buy
Walgreen (WAG)- UBS Neutral » Buy
Moody’s (MCO)- Citigroup Hold » Buy
Novo-Nordisk A/S (NVO)- Bernstein Mkt Perform » Outperform
Coca-Cola (KO)- Bear Stearns Peer Perform » Outperform
Urban Outfitters (URBN)- Bear Stearns Underperform » Peer Perform
Mobile TeleSystems (MBT)- Bear Stearns Peer Perform » Outperform
Anworth Mortgage (ANH )- Friedman Billings Mkt Perform » Outperform
Equinix (EQIX)- Merriman Curhan Ford Neutral » Buy
Downgrades
Universal Forest (UFPI)- DA Davidson Buy » Neutral
Riverview Bancorp, Inc. (RVSB)- DA Davidson Neutral » Underperform
MGM Mirage (MGM)- UBS Buy » Neutral
Centene (CNC)- Bear Stearns Peer Perform » Underperform
BT Group PLC (BT)- Lehman Brothers Overweight » Equal-weight
Finlay Enterprises FNLY CL King Accumulate » Neutral
Medcath (MDTH)- Longbow Buy » Neutral
MTC Tech (MTCT)- Stifel Nicolaus Buy » Hold
Aruba Networks (ARUN)- Stifel Nicolaus Buy » Hold
Acme Packet (APKT)- Deutsche Securities Buy » Hold
R.H. Donnelley (RHD)- Deutsche Securities Buy » Hold
Idearc (IAR) Deutsche Securities Hold » Sell
PDF Solutions (PDFS)- RBC Capital Mkts Outperform » Sector Perform
Camden Property (CPT)- RBC Capital Mkts Sector Perform » Underperform
Shire Pharm (SHPGY)- Lehman Brothers Equal-weight » Underweight
Telecom Corp. New Zealand (NZT)- Citigroup Buy » Hold
Limited (LTD)- Bear Stearns Outperform » Peer Perform
Level 3 (LVLT)- Merriman Curhan Ford Buy » Neutral
Spectrum Brands (SPC)- Bear Stearns Outperform » Peer Perform
Cincinnati Bell (CBB)- JP Morgan Overweight » Neutral
Anglogold (AU)- UBS Buy » Neutral
CME Group A-(CME)= 33.7%
Cameco Corp-(CCJ)= 20.0%
Hasbro Inc-(HAS)= 25.0%
Koppers Holdings-(KOP)= 29.4%
L-3 Communications-(LLL)= 20.0%
Mission West Props-(MSW)= 25.0%
Ross Stores Inc-(ROST )=26.7%
Smith Int’l Inc-(SII) = 20.0%