Huckabee, Detroit, Kids, Nukes
– Political opinions aside, the neat thing here is the involvement and power of youth in the process.
– One has to wonder where the US auto industry could be in these folks decided to work together say 20 or 30 years ago..
– How much does it cost to raise them?
– Nuclear energy is making a comeback, thankfully..
Leucadia (LUK) which acquired almost 10% of AmeriCredit (ACF) increased its stake with cal options in an SEC filing Thursday night. (
Leucadia purchased 10,000 options, representing 1,000,000 more shares of AmeriCredit (ACF) on 1/15. The options have a $9 call price and Leucadia paid $390 for them.
They expire on 3/14/08
Disclosure (“none” means no position):
Things are shaping up nicely for a purchase real soon.
Harley-Davidson (HOG) was downgraded to sell from hold by Citigroup (C) on Wednesday. Citi said that U.S. retail sales at the motorcycle maker may drop 10% to 12% in the current quarter. International sales also are showing early signs of moderating growth, though it said there are probably one or two quarters before it will materialize in the company’s European retail sales or shipment numbers.
I have commented on my admiration and desire to own shares in the world’s #1 motorcycle maker in the world in the past. With shares trading at levels not seen since late 2000 and early 2001, the time is getting near.
In October Harley forcasted FY 2007 EPS of $3.63 to $3.77 a share and said 2008 would see 4% to 7% growth, a 20 million share repurchase plan and increased the dividend 20%. Current earnings estimates are for $3.86 a share in 2008 or virtually flat growth. At that level shares will trade at 9.7 times earnings and yield 3%.
Next Friday HOG reports and gives guidance for 2008. I am very comfortable owning shares at this level but am going to hold off just in case they drop a bomb next week . Now if they do and shares crater, I’ll be buying. If they do not and shares rally, I will be a buyer and be out a few bucks appreciation. Right now, the markets is spooked and bad news gets far more downside action (ask Intel (INTC)) than good news does upside.
Simply put, the risk is for greater losses than gains next week. So I sit. Content either way to wait and see what happens before jumping in.
Disclosure: Long Citi, None in HOG yet…
New Merrill Lynch (MER) CEO John Thain said something very interesting Thursday in an interview after the bank released earnings
“We had $15 billion of them (CDO’s) on the books in September and now that has been written down to $4.4 billion. Essentially they are being valued on their interest only component”. See the interview here:
This is stunning really. It also means that when the CDO market settles, the very same securities that have been eviscerated will see a surge in value. Thain also said that the CDO market was non existent in December and that recently they had sold a few of the securities.
He gave no details on the transactions but the fact there is even some liquidity in that market is good news indeed.
What has happened to the CDO markets is a bit like pricing all mortgage brokers for bankruptcy because one of them go. It is important to note that while defaults have risen, they are by no means above historical norms or in a danger area. Despite that, the entire universe of them have been hit.
This type of thing seems to happen in real estate due to its prolonged cycles. When Berkshire Hathaway’s (BRK.A) Warren Buffett first bought into Wells Fargo (WFC) in 1990, he did so in the midst of a California housing crisis. Warren determined that bank’s value as reflected by its stock price was being unfairly tainted by the market. A “guilt by association” thing. All things housing we sold off. While many lenders at the time were suffering due to loans made, Buffett felt that while Wells would take a small hit (much smaller than anticipated), when housing recovered, it was well positioned to then capitalized. He called the classic over-reaction of the market and has since made a killing on the stock.
What is happening today is very similar to that time frame, crisis’s create opportunity….
Disclosure (“none” means no position): None
UPGRADES
Occidental Petro (OXY)= BMO Capital Markets Market Perform » Outperform
Magna (MGA)= RBC Capital Mkts Sector Perform » Outperform
Odyssey Healthcare (ODSY)= Leerink Swann Mkt Perform » Outperform
Comtech (COGO)= Needham & Co Buy » Strong Buy
Hi-Tech Pharma (HITK)= FTN Midwest Neutral » Buy
NYMEX (NMX)= BMO Capital Markets Market Perform » Outperform
Quiksilver (ZQK)= Morgan Keegan Mkt Perform » Outperform
Tesoro (TSO)= BMO Capital Markets Market Perform » Outperform
Stryker (SYK)= Wachovia Mkt Perform » Outperform
Boeing (BA)= Bernstein Mkt Perform » Outperform
Callaway Golf (ELY)= Wachovia Mkt Perform » Outperform
Ctrip.com (CTRP)= Susquehanna Financial Neutral » Positive
Melco PBL Entertainment (MPEL)= UBS Neutral » Buy
Western Union (WU)= Oppenheimer Perform » Outperform
TIBCO Software (TIBX)= Citigroup Hold » Buy
Coeur d’Alene Mines (CDE)= CIBC Wrld Mkts Sector Perform » Sector Outperform
Millennium Pharm (MLNM)= JP Morgan Underweight » Neutral
Alberto-Culver (ACV)= Citigroup Hold » Buy
eBay (EBAY)= Bear Stearns Peer Perform » Outperform
Ashford Hospitality Trust (AHT)= Robert W. Baird Neutral » Outperform
Biogen Idec (BIIB)= Banc of America Sec Neutral » Buy
DOWNGRADES
Precision Drilling (PDS)= BMO Capital Markets Outperform » Market Perform
TeleTech (TTEC)= RBC Capital Mkts Outperform » Underperform
Genomic Health (GHDX)= Leerink Swann Outperform » Mkt Perform
Intervest Bancshares Corp (IBCA)= Stifel Nicolaus Buy » Hold
Sunpower (SPWR)= Credit Suisse Outperform » Neutral
Gerdau AmeriSteel (GNA)= KeyBanc Capital Mkts Aggressive Buy » Buy
MicroStrategy (MSTR)= Sun Trust Rbsn Humphrey Buy » Neutral
A.M. Castle (CAS)= KeyBanc Capital Mkts Buy » Hold
Jones Soda (JSDA)= Piper Jaffray Buy » Neutral
Wells Fargo (WFC)= Oppenheimer Outperform » Perform
Daimler AG (DAI)= Bernstein Outperform » Mkt Perform
JP Morgan Chase (JPM)= Oppenheimer Outperform » Perform
deCODE genetics (DCGN)= Lehman Brothers Equal-weight » Underweight
Harley-Davidson (HOG)= Citigroup Hold » Sell
Intel (INTC)= Charter Equity Buy » Mkt Perform
Silver Wheaton (SLW)= CIBC Wrld Mkts Sector Perform » Sector Underperform
Adobe Systems (ADBE)= UBS Buy » Neutral
Epicor Software (EPIC)= UBS Buy » Neutral
McAfee (MFE)= UBS Buy » Neutral
Disclosure (“none” means no position):
Friday’s Picks
Macke, Adami and Finerman all recommend buying if the market gaps significantly lower at the open in the morning.
For example, if the Dow average .DJIA 12159.21 opens down 200 points that will be a sign of capitulation. Can’t track this one…….
Thursday’s Results
Jeff Macke says buy Pfizer (PFE) = $23.40 Close $22.98 LOSS
Guy Adami likes Johnson & Johnson (JNJ)= $68.31 Close $67.83 LOSS
Karen Finerman recommends shorting Lehman (LEH)= $58.06 Close $54.66 GAIN
Pete Najarian thinks Tibco (TIBX) = $7.50 is a buy. Close $7.60 GAIN
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 3-1
Jeff Macke= 4-3
Tim Seymore= 2-1
Guy Adami= 3-5
Pete Najarian= 3-3
Karen Finerman= 3-3
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%
Disclosure (“none” means no position):
(YHOO) Yahoo! Inc =$21.20
(XRX ) Xerox Corporation=$ 13.44
(XRIT ) X-Rite Incorporated =$ 10.69
(WLK ) Westlake Chem Corp =$ 15.47
(WLB ) Westmoreland Coal Co =$10.72
(VAL ) The Valspar Corporation =$18.77
(TXI ) Texas Industries, Inc =$46.57
(TWX) Time Warner Inc =$15.50
(TTI ) TETRA Technologies Inc=$ 13.91
(TTC ) The Toro Company =$43.12
(SHW ) The Sherwin-Williams =$ 51.38
(S ) Sprint Nextel Corporation =$11.66
(PCR) Perini Corporation =$25.18
(PBI ) Pitney Bowes Inc =$34.85
(OC ) Owens Corning New=$ 17.64
(NYB) New York Cmnty Bancor=$ 15.25
(MYE )Myers Industries, Inc =$10.99
(MWV )Meadwestvaco Corp =$26.87
(MBI ) MBIA Inc =$9.01
(HOG )Harley-Davidson, Inc=$ 36.89
(HMX )Hartmarx Corporation =$2.51
(HIRE )Hireright Inc =$8.81
(GENT ) Gentium S P A =$9.78
(GE ) General Electric Company=$ 33.14
(GDP) Goodrich Pete Corp =$18.62
(DTV ) Directv Group Inc =$19.61
(DOW ) The Dow Chemical Company =$34.80
(DOV ) Dover Corporation =$35.85
(DISH ) EchoStar Communicatio =$ 28.06
(DIS ) Walt Disney Company =$28.74
(DHT) Double Hull Tankers Inc =$9.44
Disclosure (“none” means no position):
He says the Fed has “no clue”?
Disclosure: Found this on Lizdon’s blog
ACLU, The Fed, Economic Freedom, Wal-Mart & Sears
– I just do not even know how to comment on this one. “People who have sex in public bathrooms have an expectation of privacy”. You can’t make this stuff up..
– Dave Merkel makes a good point.
– We are now #5 in the world. Why is this not being discussed? Perhaps because those running are trying to lower this with more regulation?
– Jeff Matthews has a good post on Sears and Wal-Mart..
“We are going to bring back the Starbucks experience”, Starbucks CEO, Howard Schultz. Really?
I thought they were going to emphasize the “superior ingredients” that go into their brew? I thought they were going for the “premium market” for coffee? I thought the mantra was that people would be willing to pay higher prices for all of the above?
Why, then is Starbucks removing organic milks from its stores? According to the Wall St. Journal, “Drinks with organic milk account for less than 1% of Starbucks’ beverage sales, said Michelle Gass, the company’s senior vice president of global strategy. “Far and away, the No. 1 reason people are purchasing organic milk is because [it lacks] the growth hormone,” she said.
In 2006, sales of organic dairy products in the U.S. grew 25% to $2.67 billion, making it the second fastest-growing organic food category behind meat, according to the Organic Trade Association.”
Here is why this move is just wrong. If they really only sell 1% of their drinks that way, the move is not going to save much cash. It will, however, really piss off those folks who will only drink the stuff.
Starbucks claims the move is in part to “simplify” the menu of drinks. With about 1,000 options, there had to be a far less potentially confrontational way to do it. With every retailer in the food spectrum rushing into the “organic” field, to pull out of it and gain very little financially just seems misguided.
Schultz could have used this consumer option to differentiate Starbucks from McDonald’s (MCD), now it simply appears he is desperately cutting costs to try to compete with them.
Disclosure: Long McDonalds
The recent auctions by the Fed and Bank of England show that the liquidity squeeze banks were suffering in December is easing, dramatically.
In December when the Fed held two auctions, both were oversubscribed and and ended with interest rate of 4.65% and 4.67%, above the Fed funds rate. When the Bank of England auctioned funds n December, the rate ended up being 5.95%, well over the 5.5% base rate at the time.
This is in direct contrast to the most recent auctions at both institutions. The US Fed saw demand for the funds drop precipitously and the interest rate fell to 3.95%, 30 points below the target fed funds rate. In England, the recent auction went out at 5.28%, 22 points below the current rate.
In short, banks are not clamoring and desperate for funds like they were in December. Part of this is due to recent foreign investment in the sector in Citigroup (C), JP Morgan (JPM), Merrill Lynch (MER) and others. It would also seem that banks are beginning to get a handle on what is what on their books as compared to December when people though it all might be bad.
While admittedly this does not mean the pain is gone and things are rosy, it does mean that the downward spiral we have been in for financials is leveling out. It will most likely bottoming here and will sit for a time until there is clarification that things are looking more rosy.
Disclosure: Long Citi, none in others
UPGRADES
Donnelley & Sons (RRD)= CL King Neutral » Strong Buy
Quidel (QDEL)= Pacific Growth Equities Neutral » Buy
Sunpower (SPWR)= Pacific Growth Equities Neutral » Buy
First Solar (FSLR)= Pacific Growth Equities Neutral » Buy
Blue Nile (NILE)= AmTech Research Sell » Neutral
PNM Resources (PNM )= Lehman Brothers Equal-weight » Overweight
VistaCare (VSTA)= Deutsche Securities Sell » Hold
Temple-Inland (TIN)= Citigroup Hold » Buy
Sunpower (SPWR)= Wedbush Morgan Buy » Strong Buy
PNM Resources (PNM)= RBC Capital Mkts Underperform » Sector Perform
Penn Natl Gaming (PENN)= Jefferies & Co Hold » Buy
Mattel (MAT)= Needham & Co Hold » Strong Buy
Cbeyond Comms (CBEY)= Needham & Co Hold » Buy
New Oriental Education & Technology (EDU)= Piper Jaffray Neutral » Buy
Clorox (CLX)= BMO Capital Markets Market Perform » Outperform
Silver Wheaton (SLW)= RBC Capital Mkts Underperform » Sector Perform
FormFactor (FORM)= JP Morgan Underweight » Neutral
Vertex Pharm (VRTX)= Banc of America Sec Neutral » Buy
Boston Scientific (BSX)= Banc of America Sec Neutral » Buy
Supervalu (SVU)= Banc of America Sec Sell » Neutral
FMC Corp (FMC)= Banc of America Sec Neutral » Buy
Affiliated Computer (ACS)= Credit Suisse Neutral » Outperform
Kindred Healthcare (KND )= Lehman Brothers Equal-weight » Overweight
Diageo plc (DEO )= Lehman Brothers Equal-weight » Overweight
Estee Lauder (EL)= UBS Sell » Neutral
Tellabs TLAB (UBS)= Neutral » Buy
Roper Inds (ROP)= Friedman Billings Mkt Perform » Outperform
ADC Telecom (ADCT)= Morgan Keegan Mkt Perform » Outperform
DOWNGRADES
SMSC (SMSC)= Canaccord Adams Buy » Hold
PFF Bancorp (PFB)= B. Riley & Co Neutral » Sell
Quiksilver (ZQK )= B. Riley & Co Buy » Neutral
Boeing (BA )= AmTech Research Buy » Sell
Cabela’s (CAB)= Piper Jaffray Buy » Neutral
Owens-Illinois (OI)= Deutsche Securities Buy » Hold
Consolidated Comms Illinois (CNSL)= Citigroup Hold » Sell
Prudential Plc (PUK)= Bear Stearns Outperform » Peer Perform
ING Group (ING)= Bear Stearns Peer Perform » Underperform
Regal Entertainment (RGC)= Wedbush Morgan Buy » Hold
CIBC (CM)= Citigroup Buy » Hold
LifeCore Biomed (LCBM)= JMP Securities Mkt Outperform » Mkt Perform
Petro-Canada (PCZ)= Credit Suisse Outperform » Neutral
Packeteer (PKTR)= Jefferies & Co Buy » Hold
F5 Networks (FFIV)= Jefferies & Co Buy » Hold
Deutsche Telekom (DT)= JP Morgan Neutral » Underweight
Vodafone PLC (VOD)= Lehman Brothers Overweight » Equal-weight
Aruba Networks (ARUN)= Jefferies & Co Buy » Hold
Autodesk (ADSK)= Jefferies & Co Buy
Warren Buffett’s Berkshire Hathaway (BRK.A) added to its Burlington Northern (BNI) holdings on Monday and Tuesday.
Through its National Indemnity subsidiary, Berkshire added 141,400 shares on 1/14 at $78.18 a share and 807,400 shares on 1/15 at $77.69 each.
This brings Berkshires total holding in the railroad to 62,529,018 shares.
Disclosure: None
Thursday’s Picks
Jeff Macke says buy Pfizer (PFE) = $23.40
Guy Adami likes Johnson & Johnson (JNJ)= $68.31
Karen Finerman recommends shorting Lehman (LEH)= $58.06
Pete Najarian thinks Tibco (TIBX) = $7.50 is a buy.
Wednesday’s Results
None
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 3-1
Jeff Macke= 4-2
Tim Seymore= 2-1
Guy Adami= 3-4
Pete Najarian= 2-3
Karen Finerman= 2-3
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%
(TPL) Texas Pacific Land Trust= $ 37.00
(TOPS) Top Ships Inc =$2.54
(TNK ) Teekay Tankers Ltd=$ 15.00
(TNB ) Thomas & Betts Corpor = $ 43.43
(TM) Toyota Motor Corp =$99.56
(SGMS) Scientific Games Corp=$ 19.61
(SBLKW) Star Bulk Carriers Corp=$ 2.00
(S ) Sprint Nextel Corporation =$11.89
(NCX) Nova Chemicals Corp =$26.87
(NCT ) Newcastle Invt Corp =$10.05
(MSO ) Martha Stewart Living =$ 5.54
(MSHL) Marshall Edwards Inc =$2.15
(MOT ) Motorola, Inc =$14.10
(KUB) Kubota Corporation =$28.85
(KNL ) Knoll Inc =$12.99
(KMX ) CarMax, Inc =$16.81
(HBC ) HSBC Hldgs Plc =$74.75
(HAR ) Harman International =$ 39.63
(FLEX ) Flextronics Intl Ltd =$10.16
(FIGI ) Fortress Intl Group Inc =$4.20
(C ) Citigroup, Inc =$26.23
(BWLD) Buffalo Wild Wings Inc=$ 20.20