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Author: ToddSullivan

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Tuesday’s Upgrades and Downgrades

Post author By ToddSullivan
Post date February 12, 2008

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):

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Articles

"Fast Money" for Tuesday

Post author By ToddSullivan
Post date February 11, 2008

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):

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Articles

52 Week Low’s 2/11

Post author By ToddSullivan
Post date February 11, 2008

(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

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Articles

Monday’s Links

Post author By ToddSullivan
Post date February 11, 2008

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

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Articles

McDonalds Becoming Redundant: Nice Isn’t It?

Post author By ToddSullivan
Post date February 11, 2008

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

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Tags mcd, sbux

Articles

Another Misleading Sears Holdings Article

Post author By ToddSullivan
Post date February 11, 2008
4 Comments on Another Misleading Sears Holdings Article

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

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Tags buffett, SHLD

Articles

Monday’s Upgrades and Downgrades

Post author By ToddSullivan
Post date February 11, 2008

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

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Tags davidson

Articles

The Week’s Dividend Hikes

Post author By ToddSullivan
Post date February 10, 2008

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%

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"Fast Money" for Monday

Post author By ToddSullivan
Post date February 10, 2008

Monday’s Picks
Jeff Macke likes Microsoft (MSFT) $28.56

Guy Adami prefers Trinity Industries (TRN) $29.54

Karen Finerman is sticking with Crocs (CROX) $31.99 into earnings.

Pete Najarian says CNET Networks (CNET) $8.29 is a buy on options action.

Friday’s Results
Guy Adami likes Cisco (CSCO) $23.38 Close $23.54 GAIN

Karen Finerman prefers Crocs (CROX) $31.99 Close $31.00 PUSH

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 8-6
Tim Seymore= 2-3
Guy Adami= 8-10
Pete Najarian= 9-6
Karen Finerman= 7-9-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%

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The Week’s Insider Buys

Barnes & Noble Inc (BKS) = $9,935,860
Aldabra 2 Acquisition Corp (AII)=$ 5,812,920
Pepsiamericas Inc New (PAS0 = $5,130,040
Highland Credit Strategies Fund (HCF)=$ 2,856,871
Penwest Pharmaceuticals Co (PPCO) = $ 2,399,491
Global Logistics Acquisition Corp (GLA)= $ 2,398,400
Danaher Corp (DHR) = $2,124,981
Mcclatchy Co (MNI)= $ 1,705,500
Alliance Semiconductor Corp (ALSC )= $1,663,763
Cache Inc (CACH) = $1,325,290
Legg Mason Inc (LM )= $1,003,622
Mf Global Ltd (MF) = $997,963
Dow Chemical Co (DOW)= $ 996,967

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Tags dow

Articles

The Weeks Top Stories at Value Investing News

Post author By ToddSullivan
Post date February 9, 2008

Here are the top from the last week at VIN

1. Buffett Sees No Credit Crunch, Forecasts Lower Dollar

(via www.bloomberg.com)

This article discusses several comments by Warren Buffett today from Toronto on the credit crunch, the U.S. dollar, inflation, and the bond insurance business.

2. Special Situations Real Money Portfolio January 2008 Update

(via www.fatpitchfinancials.com)

This is a brief update on the performance of my special situations portfolio. I completed one going private transaction in January associated with Harold’s Stores and I bought into a potential future split off. The portfolio held up well this month and continues to acheive a 24% compound annual growth rate.

3. Why USG Moved Up After Terrible Earnings; Conference Call

(via collegeanalysts.com)

Even though USG posted a loss much bigger than expected and guided for weakness throughout 2008, the stock has moved up. Here’s why.

4. Global Treasure Hunter: David Winters

(via www.wintergreenfund.com)

For the second issue of Graham and Doddsville we are pleased to share an interview with David Winters, Founder and Chief nvestment Officer of The Wintergreen Fund. Prior to founding Wintergreen Advisors in 2005, Mr. Winters was Chief Investment Officer of Franklin Mutual Advisors and Portfolio

5. Craving the High That Risky Trading Can Bring

(via www.nytimes.com)

Scientists and psychologists, say they are starting to discover what many Wall Street pros have suspected — people are hard-wired for money. The brain, they say, responds to high-stakes trading just as it does to the lure of sex. The riskier the trades get, the more the brain craves them.

6. Where to find value investing ideas?

(via www.contrarianvalueinvesting.com)

So you read a couple of value investing books and are ready to put that new knowledge to work, so where do you find that next homerun stock? Below are some sources you should consider. The list below is in no particular order, feel free to add to the list.

7. Jeff Matthews Is Not Making This Up: Been to a Dairy Queen Lately? Part III

(via jeffmatthewsisnotmakingthisup.blogspot.com)

The third part of this series, Jeff Matthews discusses Buffett’s purchase of Dairy Queen.

8. Down to the Last Drop of Profit Growth

(via online.barrons.com)

Vitaliy Katsenelson, interviewed here in the past, writes about why stocks might not be as cheap as they appear using P/E ratios. Profit margins might be coming down from all time highs.

9. Fairholme Funds 2007 Annual Report

(via www.fairholmefunds.com)

Fairholme Funds 2007 Annual Report

10. Digging for dividends

(via www.marketwatch.com)

Tweedy, Browne value gurus seek undervalued stocks with solid payouts.

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Tags buffett

Articles

52 Week Low’s 2/8

Post author By ToddSullivan
Post date February 8, 2008

(WMK)- Weis Markets, Inc
(VSAT )- ViaSat Inc
(VRTX )- Vertex Pharmaceutical …
(VNBC )- Vineyard Natl Bancorp
(SNY )- Sanofi Aventis
(SNCI )- Sonic Innovations Inc
(SHMR )- Shamir Optical Indust …
(SCSS )- Select Comfort Corp
(RVSN )- Radvision Ltd
(RTEC )- Rudolph Technologies Inc
(PATR)- Patriot Transn Hldg Inc
(OZM )- Och Ziff Cap Mgmt Group
(ORIT )- Oritani Finl Corp
(OFSI )- Omni Finl Svcs Inc
(OESX )- Orion Energy Systems Inc
(NT )- Nortel Networks Corp New
(NSANY)- Nissan Motors
(CTAS )- Cintas Corporation
(CSGS )- CSG Systems Internati …
(CPI )- Capital Properties, Inc
(CHRD)- Chordiant Software Inc
(CGNX )- Cognex Corp
(CEPH )- Cephalon Inc

Disclosure (“none” means no position):

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Eric Bolling on WallStrip

Post author By ToddSullivan
Post date February 8, 2008

I really liked Bolling when he was on “Fast Money” because of his insight. There is a bit at the end about Jim Cramer welshing on a $50,000 bet.

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Friday’s Links

Post author By ToddSullivan
Post date February 8, 2008

Google, Clemens, Lizdon on Cramer, Gadgets..

– Cullen has some thoughts on Google

– What did he say?

– Good advice

– This is true, tis stuff just gets too small sometimes

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Wal-Mart January: Could It Be The Weather?

Post author By ToddSullivan
Post date February 8, 2008

Wal-Mart released sales today and at first blush, it was not all that good, until you dig just a bit more.

First the results:

Wal-Mart said “Unfavorable weather negatively affected overall general merchandise sales, especially in the Midwest. Gift card redemptions were below expectations, and customers appear to be holding gift cards longer and using them more often for food and consumables rather than discretionary purchases.”

They continued ” We expect to be within our previously stated guidance of $0.99 to $1.03 for earnings per share from continuing operations for the fourth quarter of fiscal year 2008.”

On CNBC this morning Jim Cramer dismissed the “weather” reasoning because of the results at both Costco (COST) and BJ’s (BJ). Here is the problem with that. If it indeed was the weather in the Midwest as Wal-Mart stated, it would not effect BJ’s at all as they have no locations there and Costco has less than 10% of theirs there. BJ’s said “By region, the largest sales increases were in Upstate New York and Metro New York” where the weather was mild in January.

Now even Costco’s results were not that stellar as the headlines would lead you to believe. In their release they said “The U.S. comparable sales figure includes, among other things, the effect of gasoline price inflation, with the average sales price per gallon of gasoline up 31% for the four-week month of January, as compared to the year-earlier January. Excluding gasoline price inflation, U.S. comparable sales would have been up 3%.” Wal-Mart numbers are reported “excluding fuel”.

At BJ’s, “For January 2007, the Company reported a comparable club sales increase of 3.5%, including a contribution from sales of gasoline of 0.3%.

If we are doing an honest comp., we need look at Sam’s Club, which reported 2.1% comparable growth without gas as has far more exposure to the Midwest that the others.

Looking at Target (TGT), they said today “On this same equal-week basis, January comparable store sales decreased 1.1 percent”.

Now, does this mean Wal-Mart is in trouble or we should just ignore these results? No, it does mean that we should not draw too many conclusions from this month. The weather in the Midwest was lousy and the two retailers Wal-Mart is being compared to have no real exposure there, making the comparison flawed.

Disclosure (“none” means no position):Long Wal-Mart, None

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