Here is the video from this mornings comments from Martin Whitman on Bill Ackman
Here is the video
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Category: Articles
Whitney is interviewed on a 360 point down day for the Dow in October. If you are a value investor, this is what your thought process must be to be successful. Please view this. It is 9 minutes long and worth every second.
Here he talks about about McDonalds (MCD), Google (GOOG), Oil (USO), Microsoft (MSFT), EMC (EMC), Citigroup (C), Target (TGT) and financials.
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Friday’s Links
Beer, Hat’s off, Steroids, CEO melt down,
– So it is beer, not guns, that cause more murders…
– Got to give it this parent, this is how you make a point.
– Who performed best after the “juiced”?
– Sallie Mae’s CEO melts down
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Marty Whitman Slams Bill Ackman
Whitman on CNBC just called Bill Ackman a “slick salesman who does not know much about insurance and certainly doesn’t know much about restructuring secure debt”…WOW
I’ll look for the video later…
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I guess we finally found out where the money Circuit City (CC) saved by “letting go” its highest paid and most experienced sales people earlier in the year is going, to the folks who made the ill-fated decision.
In an SEC filing, CC said the company’s board approved “retention awards” of $1 million for executive vice presidents and $600,000 for senior vice presidents. The awards will be effective as of January 1, 2008, and vest over a three-year period. Circuit City said the awards were intended “to ensure the stability of the company’s leadership team by providing an incentive” for the officers to stay.
Included in the payouts are Bruce H. Besanko, chief financial officer; George D. Clark Jr., executive vice president for multi-channel sales; and general counsel Reginald D. Hedgebeth.
CEO Philip Schoonover will not be participating in the retention plan, but would be able to receive long-term incentive awards under a 2003 stock incentive plan. Based on both the company’s and the stocks performance, Schoonover gets nothing and in all reality will be fired before next year is out anyway.
One would think shareholders would be outraged by this. They have watched this team lose almost 75% of the company’s market cap this year as shares have fallen from $22 to $6. If we go back a another year, the losses jump to 80% from $30 a share.
I guess the questions is, why would shareholders want to retain these guys? By almost every metric, Circuit City is worse off. Since FY 2005 ended its cash position has steadily deteriorated (from $1 billion to $400 million), debt has almost tripled and market share has plummeted. They did manage to raise the dividend this year from 16 cents a share from 7 cents in 2005 but given the company’s precarious financial situation, even that decision is questionable.
Both Best Buy (BBY), Wal-Mart (WMT) and Sears Holdings (SHLD) all have reported strong electronics sales this Christmas. If Circuit City does not do the same, there ought to be a shareholder revolt.
It just seems that every time we hear from Circuit City, they leave us scratching our heads. At least we are not shareholders, they are probably pounding their heads on a table.
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Starbucks Dairy Problem
Let’s just say it before they do. Starbucks (SBUX) will not meet its earnings goal this year. Why?
Back in May, months before Starbucks actually acknowledged this, I spoke about milk prices and their effect on the company. What has happened since then?
The price of milk has increase of 23.2 percent through November. The nationwide average for a gallon of whole milk is $3.80, according to the U.S. Department of Agriculture. That, by the way smashes the price of everyone largest gripe, the nationwide average for a gallon of unleaded gasoline which stands at $2.99.
Now, Starbucks actually came out in late summer and admitted diary prices were hurting them. What was the average price per gallon in May? $3.38, a full 13% lower than current levels.
Starbucks responded to these increases by raising prices, a move I panned then and a move that received the expected response, a dramatic decline in store traffic.
How do they expect to reach their lofty expectations in 2008? When facing lower store traffic and steadily increasing costs, another price increase for the company is just not possible.
With shares trading at levels not seen since early 2004, it would seem investors feel the same way…
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Friday’s Upgrades and Downgrades
UPGRADES
OmniVision OVTI AmTech Research Sell » Neutral
Pier 1 Imports PIR Morgan Keegan Underperform » Mkt Perform
SMSC SMSC Needham & Co Buy » Strong Buy
Smart Modular Tech SMOD Needham & Co Hold » Buy
Park Electrochem PKE Needham & Co Hold » Buy
Petrobras Brasileiro PBR Citigroup Hold » Buy
Darden Restaurants DRI Morgan Keegan Mkt Perform » Outperform
RadioShack RSH Banc of America Sec Sell » Neutral
Nationwide NFS Banc of America Sec Sell » Neutral
CBRL Group CBRL Morgan Keegan Mkt Perform » Outperform
Dot Hill Systems HILL Friedman Billings Mkt Perform » Outperform
MasterCard MA Bear Stearns Peer Perform » Outperform
Heartland Payment Systems HPY Robert W. Baird Neutral » Outperform
Wynn Resorts WYNN UBS Sell » Neutral
Buckeye Tech BKI UBS Sell » Buy
Holly HOC UBS Neutral » Buy
Hancock Holding HBHC Keefe Bruyette Mkt Perform » Outperform
DOWNGRADES
Kinder Morgan Prtnrs KMP SMH Capital Buy » Neutral
BB&T Corp BBT Fox Pitt In Line » Underperform
Sterling Banc SBIB Fox Pitt Outperform » In Line
FBR Capital Markets FBCM Jefferies & Co Buy » Hold
Altus Pharma ALTU Collins Stewart Buy » Market Perform
priceline.com PCLN Stifel Nicolaus Buy » Hold
Orbitz OWW Stifel Nicolaus Buy » Hold
Expedia EXPE Stifel Nicolaus Buy » Hold
Hess HES Citigroup Buy » Hold
VeraSun Energy VSE Friedman Billings Outperform » Mkt Perform
Atlas America ATLS Friedman Billings Outperform » Mkt Perform
Altus Pharma ALTU Wachovia Outperform » Mkt Perform
LDK Solar LDK Piper Jaffray Neutral » Sell
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"Fast Money" for Friday
Friday’s Picks
Jeff Macke recommends getting long Disney (DIS). Open $32.33
Karen Finerman likes ValueClick (VCLK).Open $22.63
Pete Najarian prefers Microsoft (MSFT).Open $35.52
Thursday’s Results
Jeff Macke likes Disney (DIS). Open $32.26 Close $32.33 GAIN
Guy Adami prefers Sallie Mae (SLM). Open $22.89 Close $20.53 LOSS
Tim Seymour recommends Cameco (CCJ). Open $36.70 Close $38.59 GAIN
Pete Najarian says Morgan Stanley (MS) is a buy. Open $50.08 Close $51.37 GAIN
Results since 6/21/2007:
Guy Adami= 57-45 = 60%
John Najarian= 13-4 = 76%
Jeff Macke= 59-40 = 64%
Pete Najarian= 47-40 = 55%
Tim Seymore= 7-7 = 50%
Karen Finerman= 37-30 = 55%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
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Dr. Seuss on the CDO Debacle
Whitney Tilson sent this to me earlier today. It is great…
The author is unknown, if anyone does know who it is, let me know, they deserve credit.
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Thursday’s 52 Week Low’s
TRID Trident Microsystems Inc 5.79
TKG Telkom Sa Ltd 78.04
TIN Temple-Inland Inc 30.42
TGT Target Corp 50.10
OMX Officemax Inc Del 21.10
OLP One Liberty Propertie … 17.75
OFSI Omni Finl Svcs Inc 4.29
ODP Office Depot, Inc 13.39
OC Owens Corning New 20.25
MBI MBIA Inc 20.97
MAIR Mair Holdings Inc 4.38
M Macy’s, Inc. 26.20
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Thursday’s Links
Switch cell phone carriers, Gasparino, Bonuses, Magna Carta
– It will not be as expensive to switch carriers soon
– This is just funny.
– This is the very least they could do, considering what they have done to shareholders.
– Of all the things to do with your money, this is just one of the best.
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Google (GOOG) and Research in Motion (RIMM) have solved the problem stopping most Blackberry users from using Google calendar.
Blackberry users may now download a “sync” function for their devices that syncs the calendar on their Blackberries with their online Google calendar.
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Inflation Up: Bernanke Will Sit Tight
Much has been said about Bernanke & Co. the past four months. Despite it all, this is the truest test of his Chairmanship to date.
On Friday consumer inflation numbers were released. The CPI jumped 0.8% in November, crushing October’s 0.3% rise. It was largest increase since September 2005. The core CPI, excluding volatile food and energy prices, advanced 0.3%, it biggest rise since January. The results passed Wall Street forecasts of a 0.6% headline CPI increase and 0.2% core gain.
Now, IF the Fed is truly in a neutral stance and is not being told what to do by the markets, then they CANNOT cut rates again in January, barring a dramatic deterioration of the economic landscape.
Recent numbers portray an economy that is growing faster than expectation with jobs and output ahead of expectations. That being said inflation now becomes the primary concern for all and it is getting to the point it is a problem.
Energy prices it seem have finally crept into the picture outside of our gas tanks and heating systems. Now that they have, they cannot be ignored.
Should Bernanke opt to cut rates in the face of the current situation is January, all creditability will be lost. It will then be clear he is taking his direction from the markets which ALWAYS want lower rates, whether is is the right thing or not. That being said we will have to update this again as we get closer to decision day but it is unlikely recent numbers are aberrations.
Investors ought to get in the right frame of mind going into the new year…
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Sprint’s New CEO: So Far So Good
Yeah, I know it has only been one day, but at least Sprint’s (S) new CEO knows what the company’s #1 problem is.
New CEO Dan Hesse said his first priority will be to tackle the customer-service problems and customer defections that have plagued the company in the past year saying, “I read the magazines and Consumer Reports like everyone else.” Good
An internal Sprint document recently disclosed described the company’s “inferior results” in customer service. It pointed out that Sprint resolved just 53% of problems on the first call, compared with 71% for Deutsche Telekom AG’s T-Mobile USA despite Sprint having nearly 3X’s as many customer service reps.
Hesse was the pioneer of AT&T’s (T) “Digital One Rate” plan, which introduced flat-rate pricing to U.S. wireless consumers in the late 1990s. Prior the “One Rate” plan, most Americans were accustomed to paying for wireless service by the minute, incurring extra charges for roaming or long-distance calling. In short, they revolutionized the cell phone industry. Hess has the experience and a proven track record, if he complete step two below, he has a chance at success.
The second thing he can do is chop heads. Sprint and Nextel have never merged on a corporate level and until they do, real success will be elusive. I have no idea whose fault it is and two full years after the merger was completed it really no longer matters. Anyone from either side who stands in the way, see ya’.
Fortunately for potential shareholders, both of these steps will take time to accomplish. The evidence that they are being implemented will become apparent before their results show up in earnings and that gives those who wish to buy shares plenty of time to wait.
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Thursday’s Upgrades and Downgrades
Here is the list:
UPGRADES
PS Business Parks PSB KeyBanc Capital Mkts Underweight » Hold
Home Prop of NY HME KeyBanc Capital Mkts Hold » Buy
Watsco WSO BB&T Capital Mkts Hold » Buy
Buckeye Partners BPL SMH Capital Sell » Neutral
Applied Signal APSG BB&T Capital Mkts Underweight » Hold
Verint Systems VRNT Lehman Brothers Equal-weight » Overweight
American Medical AMMD Piper Jaffray Neutral » Buy
Corel CREL Piper Jaffray Neutral » Buy
GSI Commerce GSIC Piper Jaffray Neutral » Buy
Take-Two TTWO Citigroup Hold » Buy
NYMEX NMX Deutsche Securities Hold » Buy
Amdocs DOX Cantor Fitzgerald Hold » Buy
Celera Genomics CRA JMP Securities Mkt Perform » Mkt Outperform
Blue Nile NILE Citigroup Hold » Buy
Agrium AGU CIBC Wrld Mkts Sector Perform » Sector Outperform
Maxim Integrated MXIM Citigroup Hold » Buy
Plantronics PLT Robert W. Baird Neutral » Outperform
DOWNGRADES
Kingsway Fin KFS Ferris Baker Watts Neutral » Sell
Force Protection FRPT Dougherty & Company Buy » Neutral
United Dominion UDR KeyBanc Capital Mkts Buy » Hold
SL Green Rlty SLG KeyBanc Capital Mkts Buy » Hold
Post Properties PPS KeyBanc Capital Mkts Hold » Underweight
First Potomac Realty FPO KeyBanc Capital Mkts Buy » Hold
Mack-Cali Realty CLI KeyBanc Capital Mkts Buy » Hold
AvalonBay AVB KeyBanc Capital Mkts Hold » Underweight
Diebold DBD Wedbush Morgan Buy » Hold
Darden Restaurants DRI Banc of America Sec Buy » Neutral
Tribune TRB Deutsche Securities Buy » Hold
Tecumseh Prods TECUA Robert W. Baird Outperform » Neutral
Golden Telecom GLDN JP Morgan Overweight » Neutral
BP BP JP Morgan Overweight » Neutral
Grant Prideco GRP Banc of America Sec Buy » Neutral
Exelon EXC Jefferies & Co Buy » Hold
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