Author: ToddSullivan

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WSOB Watsco 44.00
WNC Wabash National Corpo … 10.86
VRX Valeant Pharmaceutica … 14.99
TXRH Texas Roadhouse Inc 11.20
TUES Tuesday Morning Corp 7.98
SPF Standard Pacific Corp 5.14
SMRT Stein Mart Inc 7.45
SMMF Summit Financial Grou … 17.31
SCSS Select Comfort Corp 13.28
RUTH Ruths Chris Steak Hse Inc 13.40
RT Ruby Tuesday, Inc. (G … 15.76
QI Qimonda Ag 10.61
GPRE Green Plains Renewabl … 9.50
GPIC Gaming Partners Intl Corp 8.82
FUN Cedar Fair, L.P. 23.25
CWTR Coldwater Creek Inc 7.88
CRFT Craftmade Internation … 10.57
COLM Columbia Sportswear Co 51.09
CNTY Century Casinos Inc 5.42
CMRG Casual Male Retail Gr … 8.29
BGG Briggs & Stratton Cor … 24.26
BGFV Big 5 Sporting Goods Corp 18.01

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How Does Your State Rank?, Discourse, Baseball and Investing

– Here are the top ten states for doing business

– I have noticed this myself. Why are the majority of those who disagree with you only able to do it with insults?

– Find out what baseball can teach you about investing.

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CNBC is outdoing itself today in the hypocrisy department.

Apparently Ann Coulter was on “The Big Idea” with Donnie Deutsch Monday and made some pretty offensive remarks, and folks there are shocked. First off, how they could be either shocked or surprised Ann said something incendiary is just not believable and if they really are, that kind of ignorance of your guest is inexcusable. That being said, here is where the hypocrisy comes in.

Donnie has been all over the CNBC airwaves today lamenting his dismay at Coulter’s comments and saying that he “initially did not want to run the show because that is not what the show is about”. Donnie is apparently so upset that he now feels the need to RUN IT AGAIN TONIGHT. Why? Probably because it will now be his top rated show of the year and the only one more than 50 people and his mom will actually watch.

Erin Burnett was “so disgusted” she declared Coulter “should be banned from the airwaves”. This comes just a month or so after she argued on air that Hugo Chavez and Mahmoud Ahmadinejad “have a right to free speech, even if we do not like it” in response to their rants about the Bush administration, Israel, and America at the UN. So, which is it Erin?

Donnie then said “America is over her act, it is wearing thin and we are moving on” and all of CNBC is just so despondent of what Ann said that it is all they can talk about all day today and oh yeah…”You can see it again tonight on “The Big Idea” with Donnie Deutche” ………. Looks like ratings trumps all huh kids?

Joe Kernan seems to be the only one who actually gets it. “Coulter is just an author, she is selling books” he said this morning and then he continued “why do we care”? She is not a teacher, business owner, CEO, politician… just an author who says outrageous things to sell books. If these folks who are now giddy over their ratings are so outraged, stop putting her on the air!!!! Alas, they won’t because their own greed will win in the end. Want more proof? Ann will be on CNBC this afternoon with Larry Kudlow.. CNBC just cannot get enough of her! It is all Ann all the time.

I do not know what Ann said on the show and really do not care. I am sure it was whatever adjective you want to call it and you know what? It worked because it is all people are talking about, she is getting ratings and selling her book.

Coulter and CNBC are both winners here so CNBC can just stop feigning outrage, it is so pathetically transparent. I’ll bet Ann is already booked there for her next show..

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It appears Citigroup (C) CEO Charles Prince wants to give people something to talk about other than this quarters results Monday when results are released.

Late Thursday Citi announced a new corporate structure in which its investment banking operations and its alternative investments businesses will be merged. The new division will be run by Vikram Pandit, a former Morgan Stanley (MS) executive who joined Citigroup earlier this year when the bank bought his Old Lane hedge fund for $800 million. Mr. Pandit has been long considered a potential replacement for Prince and now appears one step closer to that office. Before joining Citigroup, Pandit ran Morgan Stanley’s institutional securities business and was considered the top candidate to replace CEO Philip Purcell but he left in 2005, opting to set up his own hedge fund, Old Lane Partners.

Thomas Maheras, now former co-head of investment banking with responsibility for capital markets and trading, is leaving Citigroup. Mr. Maheras also had been considered a potential successor to Mr. Prince. It appears it is now a one horse race.

Investor have been clamoring for a shakeup at Citi for almost a year now and have finally got it. I believe this is the first of several move which will lead to the weary Prince’s unforced departure early next year. When Prince took over Citi was a mess and it heaps of trouble both here and abroad. Prince solved those issues and got Citi back on solid footing but he has taken the banking giant as far as he can.

This is a good move and the start of what investors have been clamoring for… new leadership

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Full disclosure, I have DirecTV (DTV) but do not own the stock.

If you want you HDTV, your best choice is DirecTV. With Cable providers like Comcast (CMCSA), Time Warner Cable (TWC) and Verizon (VZ) all offering about 20-30 HD channels, they have a long way to go to reach the 55 current channels and 100 total channels DirecTV plans on offering by year end.

Rural America is most affected by this. Currently cable operators do not deliver HDTV to this part of the population which is roughly 20% of the total. Currently the only option they have is DirecTV and they are choosing it in droves.

NFL fans already are switching en mass to DirecTV and its “Sunday Ticket” service that offer viewers all that day’s NFL games. The company almost scored another coup when it nearly accomplished the same thing with Major League Baseball this year. While it did not get the exclusive package for the 2007 season, do not rule it out next year. Sports fans of all ilk can get their favorites on DirecTV’s services and the company is luring international viewers with it foreign language stations.

DirecTV has dramatically dropped the price of its Sat-Go portable device, reducing it by $500 to $999, the Web site Gizmodo.com reported recently. The product, introduced in May, is the first-ever portable satellite TV unit. In the shape of a briefcase, the device allows DirecTV users to take their service on the road with them, and is pitched to both business travelers and sports tailgaters.

Customer service is a strength of the company currently after a rough go in the late 90’s and the turn of the century. They have more professional installers and wait (on hold) times fixing issues are seldom more than a few minutes and are virtually always solved on that call.

DirectTV’s stock, after languishing from 2004 and 2005 was up 71% last year and almost 10% in 2007. In February they announced a $1 billion share repurchase which will total about 3% of all shares, modest. Shares currently trade at 15 times 2008 earnings projections and 21 times current years.

DirecTV’s real profit center may be their latest deal to sell internet access and VIOP over existing power lines. DIRECTV customers will be able to access the Internet by plugging a BPL modem into virtually any outlet in their home. This easy-to-use symmetrical service can send data faster than the typical cable modem service in use today. Initially only available in the Dallas area, look for this to take off.

Are shares a buy? DirectTV is in a category of one here even though they operate against cable operators. The breadth of services they can offer and the market they can reach (the whole thing) are unparalleled. Are they a value? In October of last year at $18 a share they were but at today’s $26 they are fairly valued. But, if the price should dip to around $20 again, I think you have a great buying opportunity.

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Has anyone else noticed the downgrade list far outnumbers the upgrades list recently?

UPGRADES

Occulogix OCCX Caris & Company Average » Above Average
BRE Properties BRE Credit Suisse Neutral » Outperform $50 » $65
Pharmacopeia PCOP CIBC Wrld Mkts Sector Perform » Sector Outperform
Norfolk Southern NSC Lehman Brothers Underweight » Equal-weight
Celestica CLS JP Morgan Underweight » Neutral
SL Green Rlty SLG Stifel Nicolaus Hold » Buy

DOWNGRADES

Saul Centers BFS Ferris Baker Watts Buy » Neutral
United Tech UTX KeyBanc Capital Mkts Buy » Hold
Robbins & Myers RBN KeyBanc Capital Mkts Aggressive Buy » Hold
Regal-Beloit RBC KeyBanc Capital Mkts Aggressive Buy » Buy
Goodman Global GGL KeyBanc Capital Mkts Aggressive Buy » Hold
Mission West MSW Stifel Nicolaus Buy » Hold
Altair Nanotechnologies ALTI Merriman Curhan Ford Buy » Neutral
Edge Petroleum EPEX BMO Capital Markets Market Perform » Underperform
Molson Coors Brewing TAP UBS Buy » Neutral
Perini PCR Morgan Joseph Buy » Hold
Corel CREL CIBC Wrld Mkts Sector Outperform » Sector Perform $18.50 » $16
Expeditors Intl EXPD UBS Buy » Neutral
SanDisk SNDK Oppenheimer Buy » Neutral
Abbott Labs ABT Wachovia Outperform » Mkt Perform
CSX Corp CSX Lehman Brothers Equal-weight » Underweight
Burl Nrth Santa Fe BNI Lehman Brothers Overweight » Equal-weight
Xyratex XRTX Citigroup Buy » Hold
AXA AXA Deutsche Securities Buy » Hold
TTM Tech TTMI JP Morgan Overweight » Neutral
ValueClick VCLK Citigroup Buy » Hold
Nuance Communications NUAN Citigroup Buy » Hold
NASDAQ NDAQ Piper Jaffray Outperform » Market Perform
FirstFed Financial FED Friedman Billings Outperform » Mkt Perform

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FRIDAY’S PICKS

Jeff Macke recommended buying UltraShort QQQ ProShares (QID). Open $37.08

Guy Adami preferred Short Dow30 ProShares (DOG). Open $56.40

Karen Finerman told the panel to short Baidu.com (BIDU). Open $308.78

Pete Najarian thought EMC Corp. (EMC) is a buy. Open $22.75

THURSDAY’S RESULTS

Jon Najarian liked Google (GOOG).Open $625.39 Close $622 LOSS

Jeff Macke recommended Merck (MRK).Open $53.23 Close $53.04 LOSS

Tim Seymour preferred ConocoPhillips (COP).Open $86.73 Close $85.72 LOSS

Karen Finerman said Tyco Electronics (TEL) is a buy.Open $36.84 Close $36.65 LOSS

Pete Najarian likeed ValueClick (VCLK). Open $29.32 Close $27.59 LOSS

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= 29-19 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-4 = 76%
Jeff Macke= 36-27 = 54%
Pete Najarian= 23-21 = 52%
Tim Seymore= 4-3 = 57%
Karen Finerman= 14-9 = 60%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%

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Discretionary income names are getting hammered..

USAK USA Truck Inc 14.50
UMC United Microelectroni … 4.02
TXRH Texas Roadhouse Inc 10.95
SMRT Stein Mart Inc 7.37
SHRP Sharper Image Corporation 3.30
SCSS Select Comfort Corp 13.74
RUTH Ruths Chris Steak Hse Inc 13.93
RT Ruby Tuesday, Inc. (G … 16.03
PLCM Polycom Inc 24.18
MWY Midway Games Inc 3.85
MSSR Mccormick & Schmicks … 18.01
MFB Maidenform Brands Inc 14.88
CRFT Craftmade Internation … 10.70
COLM Columbia Sportswear Co 51.05
CNTY Century Casinos Inc 5.78
CMRG Casual Male Retail Gr … 8.31
BGG Briggs & Stratton Cor … 24.20
BGFV Big 5 Sporting Goods Corp 18.18

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I was going to post on what Hillary said on CNBC about healthcare but she didn’t say anything coherent or specific. Just more ambigous soundbites. “My plan takes what works and gets rid of what doesn’t and is fiscally sound”. Easy does it Hill, too many details. Another detail ridden bite “My plan will lower premiums and increase coverage”…. uhhhh.. How? she must have said 10 times “Under my husband… then transitioned to “under President Bush”… Uh… Who is running Hill? How about running on your record?

By the way, in case you did not know it, according to Hill we are on the precipice of economic ruin…

Interesting note… when she was CNBC the S&P dropped almost 10 points, coincidence?

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Fight Foreclosure, Adam’s links, Crime, Sleep

– Here are four ways you can fend off foreclosure of your home

– Adam Warner has his blog report out again

– The link to child abuse and crime.

– Lack of sleep can be just as damaging as lead poisoning in children

It does make sense. If money is indeed tight for people, where else are they going to shop?

On a day that Target (TGT), JC Penny (JCP) and Nordstrom (JWN) reduced guidance, Wal-Mart (WMT) released sales results today:

5 Weeks Ending 10.6.2007

Wal-Mart = +6.4%
Sam’s Club = +6.8%
International= +20.1%

35 Weeks Ending 10/5

Wal-Mart= +6.3%
Sam’s Club= +7.0%
International= +16.7%

Wal-Mart Stores:
For the September five-week period, comparable store sales at the Wal-Mart Stores segment were driven by grocery and pharmacy. The Company marked the anniversary of its $4 generic prescription program with a national expansion of additional medications available for treating even more conditions.

Overall, apparel and home remain soft. Company research reinforces that customers remain concerned about their finances, especially the cost of living. Within this environment, Wal-Mart Stores continues to reinforce its price leadership message, and during September launched its national brand advertising campaign with the new tagline “Save money. Live better.”

Sam’s Club:
Sales for the five-week period were driven by increases in average ticket for both business and Advantage members, with small business member sales growth continuing to lead. Sales strengths for the month included fresh food, grocery, electronics and video games. As October progresses, the clubs are transitioning into holiday entertaining in food and general merchandise.

International
During the September period, the United Kingdom, Brazil and China continued their recent positive performance. Sales throughout Brazil continue to be driven by a stronger price position, assortment that is customized to the local community and a recovery of disposable income. Macroeconomic factors continued to contribute to a slowdown in sales in Mexico.

Wal-Mart then raised earnings guidance for Q3 6% from the previously stated guidance of $0.62 to $0.65 to a range of $0.66 to $0.69. Nothing wrong with that. What pleases me most is the continued surge in growth in the international division. International operations now make up 25.8% of sales vs 23.5% in 2006. I have stressed my feelings on the potential here both in China and in India and this growth underscores my point. This is where money needs to be spent.

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The notes from the last Fed meeting were released today and for those looking for more rate cuts, a reading of them must make you smile.

Here are the key decision making variables for the meeting and the conclusion and outlook drawn form them. You can read the whole release here

CREDIT MARKETS:

“In their discussion of the economic situation and outlook, meeting participants focused on the potential for recent credit market developments to restrain aggregate demand in coming quarters. The disruptions to the market for nonconforming mortgages were likely to reduce further the demand for housing, and recent financial developments could well lead to a more general tightening of credit availability. Moreover, some recent data and anecdotal information pointed to a possible nascent slowdown in the pace of expansion. Given the unusual nature of the current financial shock, participants regarded the outlook for economic activity as characterized by particularly high uncertainty, with the risks to growth skewed to the downside. Some participants cited concerns that a weaker economy could lead to a further tightening of financial conditions, which in turn could reinforce the economic slowdown. But participants also noted that the resilience of the economy in the face of a number of previous periods of financial market disruptions left open the possibility that the macroeconomic effects of the financial market turbulence would prove limited.

Although financial markets were expected to stabilize over time, participants judged that credit markets were likely to restrain economic growth in the period ahead. Given existing commitments to customers and the increased resistance of investors to purchasing some securitized products, banks might need to take a large volume of assets onto their balance sheets over coming weeks, including leveraged loans, asset-backed commercial paper, and some types of mortgages. Banks’ concerns about the implications of rapid growth in their balance sheets for their capital ratios and for their liquidity, as well as the recent deterioration in various term funding markets, might well lead banks to tighten the availability of credit to households and firms. Tighter credit conditions were likely to weigh particularly on residential investment and to a lesser extent on other components of aggregate demand in coming quarters. Meeting participants also noted that financial market conditions, while seeming to have improved somewhat in the most recent days, were still fragile and that further adverse credit market developments could well increase the downside risks to the economy. Even after market volatility subsided and the recent strains eased, risk spreads probably would be wider and credit terms tighter than they had been a few months ago. Although these developments would likely be consistent with longer-term financial stability, they were likely to exert some restraint on aggregate demand.”

INFLATION:

“Participants made only modest revisions to their outlook for inflation in the period since the Committee’s last regular meeting. Still, they recognized that incoming data on core inflation continued to be favorable, and they generally were a little more confident that the decline in inflation earlier this year would be sustained. Inflation expectations seemed to be contained, and the less robust economic outlook implied somewhat less pressure on resources going forward.”

OUTLOOK:

“The Committee agreed that the statement to be released after the meeting should indicate that the outlook for economic growth had shifted appreciably since the Committee’s last regular meeting but that the 50 basis point easing in policy should help to promote moderate growth over time. They also agreed that the inflation situation seemed to have improved slightly and judged that it was no longer appropriate to indicate that a sustained moderation in inflation pressures had yet to be shown. Nonetheless, all agreed that some inflation risks remained and that the statement should indicate that the Committee would continue to monitor inflation developments carefully. Given the heightened uncertainty about the economic outlook, the Committee decided to refrain from providing an explicit assessment of the balance of risks, as such a characterization could give the mistaken impression that the Committee was more certain about the economic outlook than was in fact the case. Future actions would depend on how economic prospects were affected by evolving market developments and by other factors.”

It is clear that the committee is concerned about growth going forward but their inflation fear seem to have ebbed considerably. That being said, it leave Bernanke & Co. now have total flexibility to react to events as they see fit free of the inflation handcuffs they wore in the spring and into the early summer.

If the economy seem to continue it’s slide in October, count on another cut but if it shows signs of stabilizing, the Fed will most likely tight for a meeting before acting again…

In July Citi (C) reported net income for Q2 of $6.23 billion, or $1.24 per share, both up 18%. International revenues and net income were a record, up 34% and 35%, respectively and ROE was 20.1%.

Charles Prince, Citi Chairman and Chief Executive Officer said at the time,”We have very clear priorities to drive growth and we are executing on all of them. We generated record revenues, up 20%, and record earnings from continuing operations, up 18%, both driven by our record international results,”.

He continued: “We continued to generate revenue and volume growth in our U.S. consumer franchise, while making excellent progress in re-weighting Citi toward our other businesses, especially our international franchises, where revenues and net income increased over 30%. Our capital markets-driven businesses performed extremely well and international consumer revenues and volumes grew at a double-digit pace.”

“We made excellent progress in expanding our business through targeted acquisitions, completing three international transactions, including an increase in our ownership of Nikko Cordial Corporation in Japan to 68%.”

Revenue increases were led by 34% growth in international revenues. International markets & banking revenues grew 50%, international consumer revenues increased 16%, and wealth management revenues more than doubled.

Fast forward to earlier this month. Citi, which currently gets 40% of earnings from international operations came out and warned the credit market disruptions will effect earnings by about 60% in Q3. They joined the parade of institutions (Merrill (MER), Lehman (LEH), Morgan Stanley (MS), Washington Mutual (WM) and Bear Sterns (BSC)to name just a few) writing down the values of mortgage based assets.

Here is what is happening. The banks are using this situation to “come clean”. They are going to jam all the bad news and write-downs into this quarter. This means that the return to normalcy in the credit markets and asset reduction overkill in Q3 can’t help but make Q4 a very strong quarter.

Expect this to be very dismal, about 43 cents from last years $1.06 a share. That being said, the only thing that matters here is Q4’s outlook. All the bad news has been let out so there should not be any more skeletons in the closet (if there are, heads will roll). Another item worth watching is the percentage of income from international operations. If the US does slow down a bit, this segment should be able to take up the slack.

CEO Prince has promise a “strong Q4”. He has to deliver in order to keep his job.