Eddie Lampert increase his stake in auto retailer AutoNation (AN) to 69.1 million shares or 38.7% of the total outstanding this week.
For more on this read this article:
Disclosure (“none” means no position):None
Categories
Category: Articles
Categories
Leucadia (LUK) Ups Jefferies (JEF) Stake
Leucadia (LUK), in a just released SEC filing disclosed it purchased an additional 1.15 million shares of investment bank Jefferies (JEF) in two transactions. There was a 400K block at $17.77 on 5/16 and a 750K share block on 5/19 at $18.27
The purchases bring Leucadia’s stake to 45,492,100 shares.
Filing
Disclosure (“none” means no position):None
Categories
"Fast Money" for Wednesday
Wednesday’s Picks
Guy Adami thinks Public Service Enterprise Group (PEG) $43.91 is a buy.
Pete Najarian recommends getting long Excel Maritime (EXM) $55.03
Joe Terranova suggests shorting Hess (HES) $133.8
Jeff Macke likes getting long the SPDR Trust (SPY) $141.89 with a $139 stop.
Tuesday’s Results
Guy Adami suggests getting long Boeing (BA) $87.07 Close $85.14 LOSS
Pete Najarian thinks DuPont (DD) $49.5 is a buy.Close $48.95 LOSS
Jeff Macke recommends shorting Electronic Arts (ERTS) $48.43 Close $49.05 GAIN
Karen Finerman likes shorting the British pound with the CurrencyShares British Pound Ster. Trust (FXB) $195.31 Close $197.25 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 1-1
Jon Najarian= 4-3
Jeff Macke= 40-31-1
Tim Seymore= 17-14
Guy Adami= 40-35
Pete Najarian= 38-34
Karen Finerman= 35-30-1
Joe Terrenova= 1-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Well, NetFlix (NFLX) is once again ahead of Blockbuster (BBI).
A review from Time:
“This week, a consumer-electronics company called Roku, in partnership with Netflix, launched a set-top box that brings us tantalizingly close to my dream. The Netflix player ($99 at netflix.com) is a palm-sized, black device that connects your broadband network (wired or wirelessly) to your TV. For as little as $8.99 a month, you can access Netflix’s library of 10,000 movies and TV shows on demand. Watch what you want, instantly, for as long as you want. You can even start a movie on your home TV, and finish watching it on your PC laptop at a hotel days later. Apple, which uses its own digital-rights management to copy protect films and TV shows, doesn’t support the Netflix on-demand service.
Setting up the Roku was about as painless an experience as I’ve had, and took less than 5 minutes. I cabled it to my TV, powered up both, then followed the on-screen prompts. The Roku device found my wireless connection immediately and asked for my password. I watched video by logging into my Netflix account (you’ll need one, which also entitles you to rent-by-mail DVDs) and adding movies and TV seasons to my “instant” queue; they show up on the Roku box almost instantaneously. I moldered on the couch for a few days, watching The Office reruns, some old Kubrick and Peckinpah movies and a Jimi Hendrix documentary. It was great.”
The news device caused Lehman Brothers (LEH) to upgrades the company:
On their recent earnings call, Blockbuster CEO Jim Keyes said “Our acquisition of Movielink provided both digital content and a distribution tool. Movielink integration is going well and proceeding as planned. We have a new online service in testing, in beta testing now and we are planning to make it available to all customers in June. The extensive library of over 9,000 titles gives us one of the largest digital VOD and day date electronic sell-through libraries in the marketplace.”
He continued “The remaining missing pieces of our digital offering are relating to subscription content. We are actively exploring opportunities to acquire content and to develop partners for distribution to the PC, the portable device, and ultimately to the home. These are just a few of the many examples of work underway in the digital space. I can assure you that Blockbuster has not at all backed away from an online strategy. We called a time-out from our by-mail initiatives, both to make that business profitable and to develop a plan for true digital delivery. I look forward to providing more updates to you in the weeks and the months ahead.”
Jim, see above…
Is this box going to be the “new way” next month? No. Eventually it will be and it gives Netflix a start and an immediate advantage. The bigger issue for Blockbuster shareholders is that once again they have been outflanked by Netflix. Wouldn’t it be nice if for just once Blockbuster was on the cutting edge of a new way to deliver content to the home? Second place is not all that bad unless you consider there are only two of you that really do it (three if you include Apple’s (AAPL) iTunes in which case Blockbuster is now third) it means that you are last.
Again.
Disclosure (“none” means no position):None
Well, NetFlix (NFLX) is once again ahead of Blockbuster (BBI).
A review from Time:
“This week, a consumer-electronics company called Roku, in partnership with Netflix, launched a set-top box that brings us tantalizingly close to my dream. The Netflix player ($99 at netflix.com) is a palm-sized, black device that connects your broadband network (wired or wirelessly) to your TV. For as little as $8.99 a month, you can access Netflix’s library of 10,000 movies and TV shows on demand. Watch what you want, instantly, for as long as you want. You can even start a movie on your home TV, and finish watching it on your PC laptop at a hotel days later. Apple, which uses its own digital-rights management to copy protect films and TV shows, doesn’t support the Netflix on-demand service.
Setting up the Roku was about as painless an experience as I’ve had, and took less than 5 minutes. I cabled it to my TV, powered up both, then followed the on-screen prompts. The Roku device found my wireless connection immediately and asked for my password. I watched video by logging into my Netflix account (you’ll need one, which also entitles you to rent-by-mail DVDs) and adding movies and TV seasons to my “instant” queue; they show up on the Roku box almost instantaneously. I moldered on the couch for a few days, watching The Office reruns, some old Kubrick and Peckinpah movies and a Jimi Hendrix documentary. It was great.”
On their recent earnings call, Blockbuster CEO Jim Keyes said “Our acquisition of Movielink provided both digital content and a distribution tool. Movielink integration is going well and proceeding as planned. We have a new online service in testing, in beta testing now and we are planning to make it available to all customers in June. The extensive library of over 9,000 titles gives us one of the largest digital VOD and day date electronic sell-through libraries in the marketplace.”
He continued “The remaining missing pieces of our digital offering are relating to subscription content. We are actively exploring opportunities to acquire content and to develop partners for distribution to the PC, the portable device, and ultimately to the home. These are just a few of the many examples of work underway in the digital space. I can assure you that Blockbuster has not at all backed away from an online strategy. We called a time-out from our by-mail initiatives, both to make that business profitable and to develop a plan for true digital delivery. I look forward to providing more updates to you in the weeks and the months ahead.”
Jim, see above…
Is this box going to be the “new way” next month? No. Eventually it will be and it gives Netflix a start and an immediate advantage. The bigger issue for Blockbuster shareholders is that once again they have been outflanked by Netflix. Wouldn’t it be nice if for just once Blockbuster was on the cutting edge of a new way to deliver content to the home? Second place is not all that bad unless you consider there are only two of you that really do it (three if you include Apple’s (AAPL) iTunes in which case Blockbuster is now third) it means that you are last.
Again.
Disclosure (“none” means no position):None
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One word AutoZone (AZO), maybe technically two?
For a while now I have been speculating that the auto sector (not Ford (F) or GM (GM)) may be the way to go and that thee is value in the sector. Results from those companies may be confirming that.
AutoZone (AZO), the largest U.S. auto parts retailer, reported higher quarterly earnings Tuesday. Net income rose to $158.6 million, or $2.49 per share, in its fiscal Q3 ended May 3, from $151.6 million, or $2.17 per share, a year earlier. Expectation were for $2.44 a share.
AutoZone did not repurchase any shares of its common stock during the third quarter. The Company has $108 million remaining under the authorization. Year-to-date, the Company has repurchased 2.9 million shares of its common stock for $350 million (4% of total oustanding).
During the quarter ended May 3, 2008, AutoZone opened 32 new stores and replaced three stores in the U.S. and opened two stores in Mexico. As of May 3, 2008, the Company had 4,032 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 130 stores in Mexico. The compnay actually saw margins increase from 49.9% to 50.2%.
Sears' Chairman (SHLD) Eddie Lampert increased his stake in AutoZone to just over 36 percent from near 31 percent recently. Lampert also increase his stake in AutoNation Inc (AN), the largest U.S. auto dealership group. He holds just under 39 percent of AutoNation.
This comes a week after Advance Auto Parts (AAP), AutoZone's chief competitor, reported that net income grew 7.9% while revenue increased 4%.
While auto sales may fall, the chief recipient will be the parts stores as older car will need to be repaired rather than replaced. Add the "customization" trend out there now, AZO looks to have momentum for the foreseeable future.
I will check out the earnings call later...
PS. Where are the CNBC pieces about Lampert's "savvy investment"? Or, do they only run stuff when they can bash him? Erin?
Disclosure ("none" means no position):Long SHLD, None
Categories
Fed Auction Results
The interesting thing here is that rates actually fell for the first time this year.
On May 19, 2008, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate: 2.100 percent
Total propositions submitted: $84.438 billion
Total propositions accepted: $75.000 billion
Bid/cover ratio: 1.13
Number of bidders: 75
The previous auction had a 2.2% rate.
Categories
Lowe’s Earnings Call Notes
It is coming down to one thing for Lowe’s (LOW), market share.
Lowe’s continued to capture market share in Q1. During the quarter, they gained 70 basis points of total unit market share according to third-party sources (gained unit market share in 15 of our 19 product categories).
Larry D. Stone, COO
“I am also encouraged by our draw rate, or the number of times Lowe’s [was in the consideration set] of customers buying the products we sell. Of our 19 categories, draw rates improved in 17, stayed flat in one, and declined slightly in one in the first quarter. These solid results suggest that we are moving ever closer to achieving our vision of become the customer’s first choice for home improvement.”
Other Notes:
* No shares repurchased in the first quarter and our current plans do not contemplate any share repurchases for fiscal 2008.
* Cash flow from operations exceeded $2.5 billion, which represents a $399 million, or 18.7% increase over Q1 2007
* Expect diluted earnings per share of $1.45 to $1.55 for the year.
* Saw improvement in the negative comps in Gulf Coast and Florida over 2007 and that improvement continued into the first quarter of 2008.
It was more than a little disappointing that not a single question on the call from the “analysts” dealt with market share. Rather they focused obsessively on comp. sales. Guys, they will not be good until housing turns, unless you have a crystal ball that tells you when that will be, move on and ask something important.
Market share is what matters here. In a two horse race and this is essentially what it is, the company that performs the best when the environment improves will be the one gaining a larger piece of the total pie. With quarter after quarter of market share gains and now consumer awareness ones also, the winner will clearly be Lowe’s.
With both HD and Lowe’s trading at essentially the same premium to earnings, if one is looking to invest, where would you put your money? The company closing locations and losing market share or the one gaining share and opening new locations at a disciplined rate? Would you invest in the one with a clearly defined plan from management or the one who seems to make decisions based on what they see today?
Me too..
Full earnings call transcript here:
Disclosure (“none” means no position):
Categories
Lowe's Earnings Call Notes
It is coming down to one thing for Lowe’s (LOW), market share.
Lowe’s continued to capture market share in Q1. During the quarter, they gained 70 basis points of total unit market share according to third-party sources (gained unit market share in 15 of our 19 product categories).
Larry D. Stone, COO
“I am also encouraged by our draw rate, or the number of times Lowe’s [was in the consideration set] of customers buying the products we sell. Of our 19 categories, draw rates improved in 17, stayed flat in one, and declined slightly in one in the first quarter. These solid results suggest that we are moving ever closer to achieving our vision of become the customer’s first choice for home improvement.”
Other Notes:
* No shares repurchased in the first quarter and our current plans do not contemplate any share repurchases for fiscal 2008.
* Cash flow from operations exceeded $2.5 billion, which represents a $399 million, or 18.7% increase over Q1 2007
* Expect diluted earnings per share of $1.45 to $1.55 for the year.
* Saw improvement in the negative comps in Gulf Coast and Florida over 2007 and that improvement continued into the first quarter of 2008.
It was more than a little disappointing that not a single question on the call from the “analysts” dealt with market share. Rather they focused obsessively on comp. sales. Guys, they will not be good until housing turns, unless you have a crystal ball that tells you when that will be, move on and ask something important.
Market share is what matters here. In a two horse race and this is essentially what it is, the company that performs the best when the environment improves will be the one gaining a larger piece of the total pie. With quarter after quarter of market share gains and now consumer awareness ones also, the winner will clearly be Lowe’s.
With both HD and Lowe’s trading at essentially the same premium to earnings, if one is looking to invest, where would you put your money? The company closing locations and losing market share or the one gaining share and opening new locations at a disciplined rate? Would you invest in the one with a clearly defined plan from management or the one who seems to make decisions based on what they see today?
Me too..
Full earnings call transcript here:
Disclosure (“none” means no position):
Categories
Fed Vice-Chair Kohn’s Economic Outlook
At the National Conference on Public Employee Retirement Systems Annual Conference, New Orleans, Louisiana, Fed Vice-Chair Kohn gave the following outlook this morning.
“The Economic Outlook
Although the current financial and economic situation remains quite difficult, I believe that the most likely scenario over the next year or so is one in which economic activity firms during the second half of this year and then gathers some strength in 2009. In the near term, consumer spending is likely to receive a boost from the rebates that are now flowing to taxpayers. Although the timing and the magnitude of the spending response are uncertain, economic studies of the previous experience suggest that a noticeable proportion of households respond reasonably quickly to temporary cash flows. Of course, the stimulus to domestic production will depend on the extent to which the additional demand is met by a temporary drawdown of inventories or an increase in imports rather than by an expansion in domestic output. But to date, businesses appear to be keeping tight control on inventories, and a reasonable assumption is that we will see a temporary lift to the economy in coming months.
The pace of activity should continue to improve next year, with an important part of the gains coming from the abatement of the forces currently restraining activity. That said, a number of factors suggest that the recovery could be relatively moderate. I’ve already mentioned my expectation that financial market functioning and risk appetites will continue to improve, but that recuperation will require some time. As all that happens, the policy easing the Federal Reserve has put in place over recent months will begin to show through more in reductions in the cost of capital and the greater availability of credit. The demand for housing is not likely to rebound substantially for a while after this episode, but the drag on growth from declining activity and prices in the housing market will ebb as excess inventories are worked off and affordability improves. Consumption should pick up along with the improvement in jobs and income, though a gradual increase in the saving rate would be expected now that households will no longer be counting on increases in the value of their homes to finance retirement or other future spending. With a lag, business investment should turn up as prospects for a sustained expansion of economic activity become clearer. And both households and businesses should benefit from a leveling-off in the prices of energy and other commodities along the path implied by futures markets.”
Inflation
“My expectations for moderating inflation and limited spillover effects from commodity price increases depend critically on the continued stability of inflation expectations. In that regard, year-ahead inflation expectations of households have increased this year in response to the jump in headline inflation. Of greater concern, some measures of longer-term inflation expectations appear to have edged up. If longer-term inflation expectations were to become unmoored–whether because of a protracted period of elevated headline inflation or because the public misinterpreted the recent substantial policy easing as suggesting that monetary policy makers had a greater tolerance for inflation than previously thought–then I believe that we would be facing a more serious situation.”
Categories
Fed Vice-Chair Kohn's Economic Outlook
At the National Conference on Public Employee Retirement Systems Annual Conference, New Orleans, Louisiana, Fed Vice-Chair Kohn gave the following outlook this morning.
“The Economic Outlook
Although the current financial and economic situation remains quite difficult, I believe that the most likely scenario over the next year or so is one in which economic activity firms during the second half of this year and then gathers some strength in 2009. In the near term, consumer spending is likely to receive a boost from the rebates that are now flowing to taxpayers. Although the timing and the magnitude of the spending response are uncertain, economic studies of the previous experience suggest that a noticeable proportion of households respond reasonably quickly to temporary cash flows. Of course, the stimulus to domestic production will depend on the extent to which the additional demand is met by a temporary drawdown of inventories or an increase in imports rather than by an expansion in domestic output. But to date, businesses appear to be keeping tight control on inventories, and a reasonable assumption is that we will see a temporary lift to the economy in coming months.
The pace of activity should continue to improve next year, with an important part of the gains coming from the abatement of the forces currently restraining activity. That said, a number of factors suggest that the recovery could be relatively moderate. I’ve already mentioned my expectation that financial market functioning and risk appetites will continue to improve, but that recuperation will require some time. As all that happens, the policy easing the Federal Reserve has put in place over recent months will begin to show through more in reductions in the cost of capital and the greater availability of credit. The demand for housing is not likely to rebound substantially for a while after this episode, but the drag on growth from declining activity and prices in the housing market will ebb as excess inventories are worked off and affordability improves. Consumption should pick up along with the improvement in jobs and income, though a gradual increase in the saving rate would be expected now that households will no longer be counting on increases in the value of their homes to finance retirement or other future spending. With a lag, business investment should turn up as prospects for a sustained expansion of economic activity become clearer. And both households and businesses should benefit from a leveling-off in the prices of energy and other commodities along the path implied by futures markets.”
Inflation
“My expectations for moderating inflation and limited spillover effects from commodity price increases depend critically on the continued stability of inflation expectations. In that regard, year-ahead inflation expectations of households have increased this year in response to the jump in headline inflation. Of greater concern, some measures of longer-term inflation expectations appear to have edged up. If longer-term inflation expectations were to become unmoored–whether because of a protracted period of elevated headline inflation or because the public misinterpreted the recent substantial policy easing as suggesting that monetary policy makers had a greater tolerance for inflation than previously thought–then I believe that we would be facing a more serious situation.”
Categories
Home Depot Lays an Egg
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Yesterday about Lowe's (LOW) I said "I thought earnings would have been worse". Today, after Home Depot's (HD) I am thinking "wow, that bad?"
The Home Depot reported Q1 consolidated net earnings of $356 million, or $0.21 per diluted share, compared with $1.0 billion, or $0.53 per diluted share, in the same period in fiscal 2007 (60% drop). These results reflect a nonrecurring charge of $543 million due to the recently announced closing of 15 stores and removal of 50 stores from the future growth pipeline. Excluding this nonrecurring charge, the Company reported consolidated net earnings of $697 million, or $0.41 per diluted share (22% drop).
Now, there are times that "charges" are just that and can be discounted. This is not one of those times. Consider store sales experienced a drop of 6.5 percent. Due to the 14th week in the fourth quarter of 2007, first quarter benefited from a seasonal timing change that added approximately $536 million to sales. Taking this extra week of sales out would decrease net income by another $10 million or another penny per share.
Home depot has been late in enacting cost cutting moves whether it be stores closings or operational ones. With housing looking to rebound not until next year, investors ought to expect more of both.
If you believe that Home Depot's service issues are behind it, think again.
Unlike Lowe's, Home Depot seems to be consistently playing catch up. There does not seem to be a plan here just a reaction to events. This all began last year with the sale of the Supply unit and the announced and now canceled share repurchase.
Until some type of plan emerges, I will be avoiding shares. Even if macro conditions do improve, management has not shown any ability to run things in a specific direction.
Disclosure ("none" means no position):None
Categories
Tuesday’s Links
Thank-you, Cells vs. Land Lines, DOW, Homebuilders
– Thank you for the mention
– Actually considering getting rid of ours…
– 4% yield
– This is a good sign…
Categories
Tuesday's Links
Thank-you, Cells vs. Land Lines, DOW, Homebuilders
– Thank you for the mention
– Actually considering getting rid of ours…
– 4% yield
– This is a good sign…
Categories
Tiuesday’s Upgrades and Downgrades
Upgrades
beriaBank (IBKC)- Janney Mntgmy Scott Neutral » Buy
Echostar Holdings (SATS)- Stifel Nicolaus Hold » Buy
Union Pacific (UNP)- Stifel Nicolaus Hold » Buy
Trailer Bridge, Inc. (TRBR)- Stifel Nicolaus Hold » Buy
Anglo American (AAUK)- Citigroup Hold » Buy
Yahoo! (YHOO)- Needham Hold » Buy
Jetblue Airways (JBLU)- JP Morgan Underweight » Neutral
Alaska Air (ALK)- JP Morgan Underweight » Neutral
Equity Res (EQR)- RBC Capital Mkts Underperform » Sector Perform
Ariba (ARBA)- RBC Capital Mkts Sector Perform » Outperform
Monaco Coach (MNC)- RBC Capital Mkts Underperform » Sector Perform
Teekay Offshore (TOO)- Wachovia Mkt Perform » Outperform
Opnext (OPXT)- JP Morgan Underweight » Neutral
British Sky Brdcst (BSY)- Deutsche Securities Hold » Buy
Oplink Comms (OPLK)- Merriman Curhan Ford Neutral » Buy
National City (NCC)- Citigroup Hold » Buy
Texas Instruments (TXN)- Citigroup Hold » Buy
ScanSource (SCSC)- Robert W. Baird Neutral » Outperform
Compuware (CPWR)- Banc of America Sec Neutral » Buy
Downgrades
beriaBank (IBKC)- Janney Mntgmy Scott Neutral » Buy
Echostar Holdings (SATS)- Stifel Nicolaus Hold » Buy
Union Pacific (UNP)- Stifel Nicolaus Hold » Buy
Trailer Bridge, Inc. (TRBR)- Stifel Nicolaus Hold » Buy
Anglo American (AAUK)- Citigroup Hold » Buy
Yahoo! (YHOO)- Needham Hold » Buy
Jetblue Airways (JBLU)- JP Morgan Underweight » Neutral
Alaska Air (ALK)- JP Morgan Underweight » Neutral
Equity Res (EQR)- RBC Capital Mkts Underperform » Sector Perform
Ariba (ARBA)- RBC Capital Mkts Sector Perform » Outperform
Monaco Coach (MNC)- RBC Capital Mkts Underperform » Sector Perform
Teekay Offshore (TOO)- Wachovia Mkt Perform » Outperform
Opnext (OPXT)- JP Morgan Underweight » Neutral
British Sky Brdcst (BSY)- Deutsche Securities Hold » Buy
Oplink Comms (OPLK)- Merriman Curhan Ford Neutral » Buy
National City (NCC)- Citigroup Hold » Buy
Texas Instruments (TXN)- Citigroup Hold » Buy
ScanSource (SCSC)- Robert W. Baird Neutral » Outperform
Compuware (CPWR)- Banc of America Sec Neutral » Buy