Cramer, CBNC vs FOX. Icahn, OC vs USG
– spammer
– Jeff, the way to handle the competition is to ignore them if they are indeed so insignificant. By engaging them, you validate them, no mater what you sa
– Icahn is great…. he says what he thinks
– It isn’t a “which one“, it is a “buy both”
Upgrades
Netease.com (NTES)- Pali Research Neutral » Buy
Dick’s Sporting Goods (DKS)- UBS Neutral » Buy
EW Scripps (SSP)- Bear Stearns Peer Perform » Outperform
National Semi (NSM)- Deutsche Securities Hold » Buy
Downgrades
GTX (GTXI)- Cowen & Co Outperform » Neutral
Del Monte (DLM)- Longbow Neutral » Sell
Hansen Medical (HNSN)- Needham Buy » Hold
Brinker (EAT)- Stifel Nicolaus Hold » Sell
US Airways (LCC)- Credit Suisse Outperform » Underperform
Harte-Hanks (HHS)- Bear Stearns Outperform » Peer Perform
Pacific Sunwear (PSUN)- Piper Jaffray Buy » Neutral
Nalco (NLC)- JP Morgan Neutral » Underweight
Nordson (NDSN)- Jefferies & Co Buy » Hold
Alkermes (ALKS)- Robert W. Baird Outperform » Neutral
Linear Tech (LLTC)- Deutsche Securities Buy » Hold
Upgrades
Netease.com (NTES)- Pali Research Neutral » Buy
Dick’s Sporting Goods (DKS)- UBS Neutral » Buy
EW Scripps (SSP)- Bear Stearns Peer Perform » Outperform
National Semi (NSM)- Deutsche Securities Hold » Buy
Downgrades
GTX (GTXI)- Cowen & Co Outperform » Neutral
Del Monte (DLM)- Longbow Neutral » Sell
Hansen Medical (HNSN)- Needham Buy » Hold
Brinker (EAT)- Stifel Nicolaus Hold » Sell
US Airways (LCC)- Credit Suisse Outperform » Underperform
Harte-Hanks (HHS)- Bear Stearns Outperform » Peer Perform
Pacific Sunwear (PSUN)- Piper Jaffray Buy » Neutral
Nalco (NLC)- JP Morgan Neutral » Underweight
Nordson (NDSN)- Jefferies & Co Buy » Hold
Alkermes (ALKS)- Robert W. Baird Outperform » Neutral
Linear Tech (LLTC)- Deutsche Securities Buy » Hold
Just a week after adding 35,000 shares of Steak n’ shake (SNS) Sardar Biglari is at it again.
He purchased an additional 46,000 share last week at prices between $6.71 and $6.82 a share bring is total ownership to 2.489 million shares or 8.7% of the outstanding total
of 28.71 million shares
Disclosure (“none” means no position):None
Just a week after adding 35,000 shares of Steak n’ shake (SNS) Sardar Biglari is at it again.
He purchased an additional 46,000 share last week at prices between $6.71 and $6.82 a share bring is total ownership to 2.489 million shares or 8.7% of the outstanding total
of 28.71 million shares
Disclosure (“none” means no position):None
ADM, Money and the blind, Food prices, Oil driller
– A nice piece on Archer Daniels Midland (ADM)
– Are you kidding me? What is next, making TV illegal because the blind cannot see it? Radio because the deaf cannot hear it? Playboy because we cannot touch it?
– But, I though biofuels were to blame? This is becoming like Global Warming
– A gusher
Disclosure (“none” means no position):Long ADM
ADM, Money and the blind, Food prices, Oil driller
– A nice piece on Archer Daniels Midland (ADM)
– Are you kidding me? What is next, making TV illegal because the blind cannot see it? Radio because the deaf cannot hear it? Playboy because we cannot touch it?
– But, I though biofuels were to blame? This is becoming like Global Warming
– A gusher
Disclosure (“none” means no position):Long ADM
Here are the the week’s best at Value Investing News
I just used the new Value Investing News Button to submit this link to Value Investing News. You can add this new VIN Button to your own site. It allows readers to submit your articles to VIN and it allows them to remotely vote on your articles. See it in action by following this story link to Fat Pitch Financials.
Why is Buffett so often misrepresented on his famous “financial weapons of mass destruction” comments?
The most surprising thing about Warren Buffett is that he can still surprise. After all, more ink has likely been spilled dissecting Buffett’s strategies than those of any other investor. Buffett became the world’s richest person while displaying both integrity and wit.
I read an article called “Sears majesty to hedge-fund dust” at the behest of a reader on the gurufocus message boards, and I have to say it is one of the most uninformed and incomplete articles I’ve ever read.
Today is the day that the 13F’s are released for funds managing over $100m. Below is a list of 4 picks that I find interesting: WCG, SATS, WLP, AMWD
It sounds crazy that Warren Buffett and Jim Rogers might have something in common besides intellect and wealth. Buffett has owned the Washington Post for 35 years, Coca-Cola for 18 years.
Joe Ponzio details his reasoning for buying the small company stock of Graham Corporation, the unique attributes of small caps, and why he decided to sell when he did.
88% invested in financials…
The Special Situations Real Money Portfolio hits a rough patch in April. Thankfully, some profits were made on the recent Sybase tender offer.
Garmin is the dominant player in the fast growing GPS market. The company has delivered nearly 50% annual earnings growth since 2003, and is expected to grow at 17% per year going forward. With it’s current 11 P/E, is Garmin a textbook example of growth at a reasonable price?
VIN should be “Buffet Investing News” so far in May. Todd Sullivan explains why too much Buffett may be a bad thing.
On Wednesday the 7th, Dr Pepper Snapple Group (DPS) officially began to trade. Its $25 price tag is lower than many expected after the soft-drink maker was spun-off of its parent company, Cadbury Schweppes.
Dow Chemical’s (DOW) CEO pulls no punches when talking about Congress
After saying that more drilling needs to get done and more refineries need to be built, Andrew Liveris said, “In fact, it’s almost the reverse under the current Congress, which is a joke,” he said. “We’re letting everyone else drill with our technology and we are not doing it ourselves. To me that is the insane asylum being run by lunatics,” Liveris said.
“Inflationary pressures on the (U.S.) consumer through gasoline prices and food prices have reached the point where the consumer is clearly changing behavior,” said Liveris told Reuters.
Liveris said Dow is within days of making statements about the sorts of actions it intends taking to deal with the cost escalation, he said, declining to specify those steps. The company had considered implementing an energy surcharge, but is unlikely to follow Rohm and Haas (ROH) who implemented one last month.
Based on past moves, this means more US jobs will be lost as Liveris exercises his only option, move production facilities to countries that actually value energy, rather than bitching about it.
The really sad thing is we have the oil (USO) and we have the gas, we just cannot drill for it. If you are upset about what it costs to fill your tank or heat or cool your home, look at how your Congress-person has voted. Chances are, they have voted to increase your costs by not allowing energy companies to get the cheap oil and gas we have sitting in our country and just off our shores.
If you voted for them, blame yourself. If you want things to change, let them know by voting against them in November…
Disclosure (“none” means no position):Long Dow, USO
Dow Chemical’s (DOW) CEO pulls no punches when talking about Congress
After saying that more drilling needs to get done and more refineries need to be built, Andrew Liveris said, “In fact, it’s almost the reverse under the current Congress, which is a joke,” he said. “We’re letting everyone else drill with our technology and we are not doing it ourselves. To me that is the insane asylum being run by lunatics,” Liveris said.
“Inflationary pressures on the (U.S.) consumer through gasoline prices and food prices have reached the point where the consumer is clearly changing behavior,” said Liveris told Reuters.
Liveris said Dow is within days of making statements about the sorts of actions it intends taking to deal with the cost escalation, he said, declining to specify those steps. The company had considered implementing an energy surcharge, but is unlikely to follow Rohm and Haas (ROH) who implemented one last month.
Based on past moves, this means more US jobs will be lost as Liveris exercises his only option, move production facilities to countries that actually value energy, rather than bitching about it.
The really sad thing is we have the oil (USO) and we have the gas, we just cannot drill for it. If you are upset about what it costs to fill your tank or heat or cool your home, look at how your Congress-person has voted. Chances are, they have voted to increase your costs by not allowing energy companies to get the cheap oil and gas we have sitting in our country and just off our shores.
If you voted for them, blame yourself. If you want things to change, let them know by voting against them in November…
Disclosure (“none” means no position):Long Dow, USO
While well intended, mark to market accounting in times of stress only serves to exacerbate market dislocations and confuse investors. For instance, check out FGIC’s earnings release today.
From the release:
“In accordance with SFAS No. 157, which the Company adopted effective January 1, 2008, FGIC updated its mark-to-market methodology to take into account the market’s perception of FGIC’s non-performance risk. The adjusted methodology, which resulted in a reduction in the valuation of FGIC’s derivative liabilities, incorporated spreads of FGIC’s credit default swaps. In accordance with SFAS No. 157, the Company recorded a benefit of $1.56 billion in the fair value of credit protection contracts provided by FGIC that are considered credit derivatives, which more than offset the mark-to-market losses of $1.40 billion related to such credit derivatives and resulted in a net unrealized gain of $157.0 million in the fair value of such credit derivatives for the first quarter of 2008.
The first quarter 2008 mark-to-market loss of $1.40 billion consisted of approximately $228 million related to estimated credit impairments and $1.18 billion related to the widening of credit spreads in the structured credit markets. The estimated credit impairment of $228 million represents management’s estimate of future claim payments on certain ABS CDOs and other derivative transactions.”
Got it?
All the numbers being thrown around, billions, yet what did the business actually do?
What mark-to-market has done in many cases is reduce earning for companies from actual earnings based on the functions of the business to “anticipated results”. The credit spreads referenced are what the market feels about the insurance issue by the company. If the market feels good, the spreads contract, if they feel bad they expand.
This caused the “earnings” of FGIC to rise and fall based on these “feelings”. They do not have any actual effect on the actual eps. Yet they are now becoming more powerful than the actual operations, especially for businesses like banks and insurance companies that hold large pools of products. Without selling anything and actually realizing a loss or a gain, they will see wild swings in earnings based on market perception of these products.
It is like Anheuser-Busch (BUD) posting a “loss” for the quarter because the market thinks the selling price of beer will fall casing profits to be affected negatively. What should happen is that the market votes on the stock price by buying or selling and then we wait and see what actually happens. What mark-to-market has done is take that speculation and transferred it from the price of the stock to the earnings of the company. Not right…
The good news is for those with stones, when these spreads contract and the huge write-downs become write-ups, boom go earnings…..
Oh, FGIC, actually had a loss of $279 million based on “reserves for estimated credit losses”. That is what operations actually did irrespective of posted results and write-ups and write-downs.
Disclosure (“none” means no position):None
Wal-Mart (WMT), already on the top of consumer’s minds when it comes to prices, is now trying to get there for specialty items also.
Once again Wal-Mart is ahead of the game. Wisely retreating from the previous gang busters growth strategy and already the low cost leader, this is a fantastic way to draw in more shoppers to its existing locations.
Now the first thing that people will say it that this will hurt margins. Well, yes and no. While the small number of specialty items that will be sold may be done at a lower margin, the additional sales of other items will lead to overall ales increases.
At the end of the day, isn’t that what matters? By no means are the specialty items going to be sold as “loss leaders” so even at a lower margin , they will still be profitable. Now add in the additional milk, toilet paper and other ancillary items people going there will pick up rather than making an additional trip and you have the making of another win for Wal-Mart.
Better still is that they are ahead of the competition like Target (TGT) in the implementation of it.
Disclosure (“none” means no position):Long WMT, none
Gaps (GPS) earnings call was very interesting..
CEO Glenn murphy: “We here at Gap Inc., continue to be committed to our three financial tenants for the remainder of this fiscal year. Number one, driving a healthier margin business through a combination of tactics such as our commitment to solid inventory management, reducing and containing costs; it is obviously a critical tenant for us in 2008, and taking a more disciplined approach to capital spending in order to improve our ROIC.
We believe that our unwavering focus to these financial priorities will service well going forward, as we see no signs of improvement in the psyche of the American consumer. Having said that, we recognize and acknowledge that a company like Gap, with a leading market share, that we need to internally advance the dialogue of how we will at the right time begin the stem and then recapture our lost market share.”
* Gross margin increased 150 basis points to 39.7% versus 38.2% last year.
* Operating expenses decreased by $92 million
* Repurchased 11 million shares for $216 million.
* Online sales grew 21% versus last year to $236 million for the quarter
* Merchandise margin improved 310 basis points in the first quarter,
* Ended the Q1 with $1.6 billion in inventory, down 14% versus the prior year.
* Inventory per square foot was $37, down 17% versus down 8% in 2007
* Ended the first quarter with about $1.8 billion in cash and short-term investments.
The Q&A session was a bit of a disappointment because they questions were not very insightful. Murphy and the rest of management were very forthcoming it is just that they were not asked anything that would give more light into the future.
It is almost like the analysts cannot recognize this type of retailing. They seem to think everyone must be a Wal-Mart (WMT) or Target (TGT) and cannot escape that paradigm. Too bad, Murphy seems like the kind of guy tht would answer almost anything…if he was actually asked.
That being said he is doing a tremendous job in a very difficult operating environment.
Disclosure (“none” means no position):Long WMT, none
In March of 2007 I made a request for the new GAP (GPS) CEO, make him or her a grad of “Lampert U”. Did anyone else have a flashback when looking at Gap’s results yesterday?
Then I said “most important thing they can do is grow profits, not just sell merchandise. Somewhere along the way, retailers got the “bigger at all cost is better” mantra ingrained in them and began to chase sales over profits. Lampert and Day have said, profits matter most, not just sales. This has lead them to close under performing locations, sell off unnecessary assets, keep closer tabs on inventory and not just discount merchandise to drive unprofitable revenue growth. They then take this extra money and begin massive share buybacks, pay off debt and to re-invest in the current locations that are performing satisfactorily.
The potential here for a CEO like this to make shareholders very wealthy is just waiting to be had as Gap has $2 billion in the bank, produces another $1.5 billion of operating cash flow per year and is virtually debt free. If they would stop investing in trying to just get bigger and got smart, they could return a ton to investors via buybacks (I estimate 15%-20% in year one at current prices). Currently Gap (GPS) shares are trading over 10% below their early year buyout rumor highs.”
In March of this year new CEO Glen Murphy laid out his plan. It included increase the share repurchase plan, increasing margins and halting square footage growth in the US. Hmmmm.
Yesterday:
Reporting after the closing bell, Gap (GPS) said it earned $249 million, or 34 cents per share, compared to $178 million, or 22 cents per share, a year ago. Even though it beat the Street with earnings, Gap’s sales fell to $3.38 billion, compared with $3.55 billion a year ago. The retailer’s same-store sales fell 11% in the first period, worse than the 4% decline it suffered a year ago. Gap did better overseas, with sales falling just 5%.
The company’s Old Navy stores hurt the most during the first quarter, with sales tumbling 18% to $1.2 billion. Comparatively, sales at its North American Banana Republic stores fell by 4% from a year ago. Gap’s so-called same-store sales have now declined in 15 consecutive quarters. Despite all this, Gap reaffirmed its 2008 earnings outlook of $1.20 to $1.27 per share. How? A more disciplined cost approach combined with lower advertising expenses, layoffs and other cost cutting has increased Gap’s profits for four consecutive quarters.
“We are pleased with our first-quarter results, as we delivered solid earnings growth in a difficult environment,” CEO Glenn Murphy said. “We are focused on bringing compelling product and shopping experiences to our customers while managing costs tightly. We believe this approach is proving even more prudent given the current economic conditions.”
This is textbook Lampert (SHLD). One could even throw RadioShack’s (RSH) CEO Julian Day in the mix. Effective cost management, share repurchases, margins control lead to increasing profits.
Back then (15 months ago) I said that if Gap hired a CEO along Lampert’s way of thinking I would buy shares. Now I am not. I am hesitant to enter the category now already owning shares of Sears (SHLD), Wal-Mart (WMT), Harley Davidson (HOG) and Borders (BGP). There is way too much economic opaqueness out there to invest new money in retail but Gap is climbing to the top of the list when things clear out a bit.
Disclosure (“none” means no position):Long SHLD,HOG,WMT,BGP none
I always laugh at things like this.
Borders (BGP) CEO George Jones said yesterday that the company has had “no substantive talks” regarding a sale of the company. Rumor were swirling that Barnes and Noble (BKS) was preparing and offer.
Here is the thing. Jones clearly has had “talks”, just not “substantive” ones. Now, what has to happen when one talks about selling the company at what point the talks go from “just talking” to “substantive”.
Seems to me that the answer to that depends on the person qualifying the talks. Jones has multiple suitors and a company that seems to be on to something with its new concept. That being said, the longer he can drag the process out, allowing for the company’s results to improve, he dramatically increase the price he can get for himself and his shareholders.
For Jones to shorten the process at this point would probably leave money on the table.
Borders is in a sweet spot for both private equity and strategic buyers. A good brand with valuable assets and an appealing price.
This will happen….eventually
Disclosure (“none” means no position):Long BGP, none