Author: ToddSullivan

There was some great stuff this week at VIN. Check out George’s post on the 52 Week Low List.

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When the Dow drops 350 points, the list gets big

WM Washington Mutual Inc 28.82
WLK Westlake Chem Corp 23.40
WL Wilmington Trust Corp … 36.07
TRY Triarc Companies, Inc … 11.86
TRX Tronox Inc 8.12
TRK Speedway Motorsports, Inc 35.80
RF Regions Financial Cor … 26.57
RDN Radian Group Inc 14.03
RCII Rent A Ctr Inc New 16.12
PSS Collective Brands Inc 18.07
PMTI Palomar Med Technolog … 25.91
PMI The PMI Group, Inc 20.89
PLAB Photronics Inc 11.16
PFBC Preferred Bank 33.15
PEIX Pacific Ethanol Inc 8.33
PBKS Provident Bankshares Corp 26.05
PACR Pacer Intl Inc Tenn 16.84
ORI Old Republic Internat … 16.71
OLCB Ohio Legacy Corp 7.78
NTRI Nutri Sys Inc New 27.97
MAT Mattel, Inc 20.78
LZB La-Z-Boy Incorporated 7.06
LIZ Liz Claiborne, Inc 28.95
HTLD Heartland Express Inc 13.65
HSY Hershey Co 42.22
HMNF HMN Financial Inc 27.50
HIBB Hibbett Sports Inc 21.87
HHS Harte-Hanks Communica … 17.98
HD Home Depot, Inc 30.62
GYMB The Gymboree Corp 32.95
GW Grey Wolf Inc 6.10
GPI Group 1 Automotive Inc 30.95
GLYT Genlyte Group Incorported 59.28
GHS Gatehouse Media Inc 11.38
GCI Gannett Co., Inc 41.28
DITC Ditech Networks Inc 4.50
DFS Discover Finl Svcs 19.80
DEIX Directed Electronics Inc 2.93
CZFC Citizens First Corp 11.81
CTRN Citi Trends Inc 18.03
CTCT Constant Contact Inc 21.80
CSK Chesapeake Corporation 8.11
CRFT Craftmade Internation … 9.95
C Citigroup, Inc 42.75

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Sherwin Williams (SHW) today declared a dividend and announced a huge share repurchase plan.

SHW declared a regular quarterly dividend of $0.315 per common share, payable on December 7, 2007 to shareholders of record on November 16, 2007. In addition, Sherwin-Williams’s board of directors authorized the Company to purchase, in the aggregate, 30,000,000 shares of stock.

With only 130 million shares outstanding, the authorization amounts to 23% of the outstanding shares. Now the question begs, when will it be finished? Let’s look. In the past three years Sherwin has repurchased about $230 million a year worth of stock and for the first 6 months of 2007, that number sits far ahead of that pace at $250 million. If we use a $67 share price the 30 million shares comes to $2 billion dollars needed to finish the authorization. Of course there will be variations as the stock price fluctuates but we need to pick a number.

That means at the current rate of the past three years, it will take about 8 years to complete the repurchase. Now based on the fact Sherwin will probably repurchase in excess of $350 million this year alone, the eight year number is a worse case scenario. That being said, we are looking at about 4% a year being added to earnings from the repurchase plan. Not bad..

The nice part about the history of current management is that unlike the recent Home Depot (HD) buyback, the company will not be sunk deep into debt to accomplish it. In fact, long term debt at Sherwin has fallen from $506 million in 2002 to $291 million last year. Fiscally speaking, despite the housing recession we are in the company is in it best shape in years.

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Apple-holics, CAT, Oil, Red Sox

– James Cullen, who had the audacity to suggest Apple is not the single best investment in the history of man (please note sarcasm) brilliantly answers the critics of his stance that actually had the ability to do it without hurling insults, a rare event for Apple lovers.

– The Stockmasters absolutely nail it on the importance of Caterpillar’s upcoming earnings.

– Some interesting thoughts on crude oil as it sits at $88 a barrel.

– Just a reminder for those who bought furniture at Jordan’s this spring. If the Sox continue, you may be getting your money back.

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LeapFrog (LF) announced preliminary results and, well, not much to be happy about and not much to be upset about

LeapFrog said it expects to report net sales for the third quarter ended September 30, 2007 of approximately $143 million and a net loss of approximately $(0.05) per share. The Company expects to report cash and investments of approximately $95 million and inventories, net of allowances, of approximately $110 million at September 30, 2007, consistent with LeapFrog’s plan.

President and CEO Jeffrey G. Katz stated, “The sales performance of our portfolio overall was weaker than we expected during the third quarter, largely driven by declines in legacy products. Reported weakness in the retail economy and lingering bad news regarding the toy sector certainly hasn’t helped. However, we are seeing good results with several new products, such as ClickStart(TM) My First Computer, and our Leapster(R) handheld educational gaming business continues to perform well. Our new FLY Fusion(TM) Pentop Computer performed at plan for the third quarter and shipments should increase during the fourth quarter driven by on-air advertising, which began in October. Inventory levels and gross margin continued to improve in the third quarter.”

“Fourth quarter is typically our strongest and we expect to see sales improve from third quarter levels,” Katz continued. “Nevertheless, due to third quarter weakness, we expect that full year 2007 revenues will be down by approximately 10% to 15% compared to 2006. As we’ve said before, 2007 is a ‘Reload’ year and we are on track to roll out a substantially new product line next year as planned. We will host our first-ever Investor and Analyst Day on Thursday, November 8 and we hope investors will see for themselves the progress we’ve made and the implications for next year and beyond.”

Kinda of like eating a so-so meal at a cheap restaurant, when you leave you think “could have been better but at least I did not pay too much.” That is the way I feel about LeapFrog. Shares make up .5% of the portfolio and are there for a little risk and adventure. If it works out, we do really well, if not, we don’t lose much of anything. For this company, Q4 is the whole ball of wax. If things do not get better then, we cut and run. If they improve, we hold on more.

I have seen the new products and they are great. I think LeapFrog will come through this just fine. Their items are good quality and a little pricey (a good value though). My guess is folks are holding off making the more expensive purchases to see what types of bargains will be had closer to Christmas. Let’s not forget Toys R’Us gave LeapFrog top billing for it’s “Hot Toys For Christmas” list.

People may also be a little freaked out about the whole toy recall thing now and even though Leapfrog has not had a single toy recalled, when folks are worried, nobody is safe.

Stay tuned…

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Friday’s Picks

Jeff Macke recommended Intel (INTC). Open $26.97

“Short Exxon Mobil (XOM)” said Guy Adami. Open $95.05

Karen Finerman thought investors should get long Limited Brands (LTD). Open $21.95

Pete Najarian said Cypress Semi (CY) is a buy. Open $32.94

THURSDAY’S RESULTS

Jeff Macke recommended eBay (EBAY). Open $40.60 Close $38.10 LOSS

Guy Adami said the play is shorting Exxon Mobil (XOM). Open $94.80 Close $95.05 LOSS

Karen Finerman takes the other side of Adami’s trade and recommended ConocoPhillips (COP). Open $87.46 Close $88.01 GAIN

Pete Najarian liked Evergreen Solar (ESLR). Open $9.44 Close $9.98 GAIN

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks

Guy Adami= 32-22 = 59%
John Najarian= 13-4 = 76%
Jeff Macke= 38-29 = 56%
Pete Najarian= 26-23 = 53%
Tim Seymore= 4-3 = 57%
Karen Finerman= 17-11 = 60%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%

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WOS Wolseley Plc 16.21
WM Washington Mutual Inc 30.53
WLK Westlake Chem Corp 23.80
WAL Western Alliance Bancorp 21.19
WAG Walgreen Co. 38.05
SPSN Spansion Inc 7.44
SPF Standard Pacific Corp 3.78
SOV Sovereign Bancorp Inc 15.06
RVI Retail Ventures Inc 8.76
ROX Castle Brands Inc 3.37
RF Regions Financial Cor 27.17
PZZA Papa John’s International 22.80
PMI The PMI Group, Inc 23.29
PGR The Progressive Corpo 18.57
LZB La-Z-Boy Incorporated 7.17
LIZ Liz Claiborne, Inc 29.80
LENB Lennar Corp 20.07
KNX Knight Transportation Inc 16.08
JWN Nordstrom Inc 39.79
JCP Penney (J.C.) Company 57.28
HSY Hershey Co 42.50
HSWI Hsw International Inc 6.34
HMNF HMN Financial Inc 28.50
HD Home Depot, Inc 31.43
FRE Freddie Mac 54.88
FNSR Finisar 2.66
FL Foot Locker Inc 14.32
BC Brunswick Corporation 20.84
BBND Bigband Networks Inc 5.56
AYIWI Acuity Brands Inc 39.02
CLDN Celadon Group Inc 9.58
CHS Chico’s FAS Inc 12.74

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I challenge anyone to find me a person more relived at the poor results posted by Bank of America (BAC) today than Citi’s (C) besieged CEO Chuck Prince.

Although not as bad as Citi’s results, BAC post a 32% decline in earnings (Citi posted a 57% decline) due to more than $1.4 billion in trading losses in its investment bank and about $2 billion in additional provisions for credit losses. Earnings dropped to $3.7 billion, or 82 cents a share, from $5.42 billion, or $1.18 a share, a year earlier. Revenue fell 12% to $16.3 billion.

Also unlike Citi, it marked the first time since 2005 that BAC failed to raise year over year profits.

Add to this the bad earnings at Washington Mutual (WM) and Prince now can point fingers and claim events, not his management caused the disastrous Q3. While it does not eliminate the need for him to produce in Q4 or leave, it will, for the time being quiet to “get him out now” chants that were beginning to reach a crescendo yesterday.

I think I could here his sigh or a relief all the way up here in Massachusetts…

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Greenspan, Bush Could Refuse to Leave, Exposure,

– Another good take on the Greenspan era.

– Here is one that would make the Dems just sob.

– The is a thing called over exposure and he is testing those limits

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I thought this was the quarter all the banks suffered? It looks like it might be just Chuck Prince’s Citi (C).

On Tuesday, the historically conservative Wells Fargo (WFC) reported a 4% increase in earnings amid the tumultuous environment of the past two months. Eyebrows were raised among Citi shareholders given the 57% drop they experienced the day before. Those raised eyebrows have now turned into churning stomach acid after the results at JP Morgan (JPM) this morning. It is beginning to look like the quarter may not have been that tough for all the banks, just Citi.

JP Morgan actually posted a 2.3% increase in third-quarter net income despite $1.3 billion in write downs on loans and increasing credit loss provisions as the company’s asset management business had record results. Net income was $3.37 billion, or 97 cents a share, compared with $3.3 billion, or 92 cents a share, last year. Revenue increased 3.6% to $16.11 billion. Analysts estimates were for earnings of a 90 cents share on revenue of $16.6 billion. Total credit loss provisions jumped 67% to $2.36 billion.

CEO Jamie Dimon said, “Our firm performed well overall in the third quarter, despite challenging credit and market conditions. We remain cautious about the future economic environment, but will continue to make investments based upon the long-term outlook for market and client volumes. Our focus will be on investments in areas across our franchise, including the Investment Bank and the retail mortgage business, where we can wisely utilize our balance sheet to better serve our clients and gain market share in the process. I believe our firm is well positioned for the future.”

Unlike Citigroup, Morgan’s Tier 1 capital ratio remained at 8.4%.

Bank of America (BAC) reports today and if the results are along the lines of Wells Fargo and Morgan, expect the “oust Prince” chorus to grow very loud very quickly as it will have appeared to be the only major bank not to have been able navigate the choppy waters. It is beginning to look more and more as these results come out that either Citi is just too large and cumbersome to manage, or, the team in place now is just not able to manage what is there. Either way, something needs to change.

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The CSX (CSX) saga gets more interesting by the hour it seems.

“The hired hands who manage CSX railroad should be given their walking papers,” said Paul Thompson, The United Transportation Union President, which represents 11,000 CSX employees.

The NY Times today speculated that Atticus Capital, a shareholder in CSX may team up with TCI like the two did in their successful campaign against the proposed merger between London Stock Exchange and Deutsche Borse. Atticus, with $13 billion under management, has accumulated 10.2 million CSX shares, a 2.3 percent stake, as of 12/31/2006.

Also in the mix is Carl Icahn who in March of 2007 purchased 2.9 million shares of the railroad. Given Mr. Icahn’s recent track record, should be choose to publicly back TCI and Atticus, it would be almost impossible for management not to take whatever is said very seriously.

Consider the trio would have over 7% of the outstanding common shares, a wildly successful history and the backing of 11,0000 CSX employees. It will only be a matter of time before additional shareholders begin taking a close look and backing TCI.

Chairman and CEO Michael Ward collected $13.8 million last year making him the highest paid railroad executive. TCI has made a convincing case that his company’s performance is more a factor of macroeconomics events pulling it along rather management’s skill driving those results.

Stay tuned…

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