Here are the top stories for the week from Value Investing News
Nuclear spinoff anyone? Take a look at ETR
Mark Sellers gives a frank talk on how hard it is to be a great investor and what traits are needed to do so. He also includes a good overview of what creates an economic moat.
The Special Situations Real Money Portfolio managed by Fat Pitch Financials is a real Coverdell Educational Savings Account turned mini-hedge fund for his son. Performance to date has been 25.4% annualized rate of return and year to day the account is up 36.3%. The month of October brought a slight decline in the account and opportunities in special situations and tender offers were scarce.
Three beaten-up stocks trading at or below 1x book value – a structured finance insurer, a building supplier, and a homebuilder.
Delta’s 3rd Quarter results…Ouch!
Most of the literature discussing Stock Advisor recommendation Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) chairman Warren Buffett focuses on the later stages of his career. By then, he was already wealthy and making billion-dollar bets on companies like Wells Fargo.
Barry Diller’s company IAC/InterActiveCorp announced that it’s splitting up into 5 separate entities. These situations usually yield undervalued securities and we should take a moment to study what the new companies will be so that we may watch the situation unfold and invest carefully.
Commentary based on Warren Buffett’s 1999 prediction.
Click on FULL STORY to read about the three approaches to value investing.
WMG Warner Music Group Corp 7.75
TWX Time Warner Inc 17.29
TTI TETRA Technologies Inc 16.08
TTEC TeleTech Holdings Inc 20.25
TOPT Top Tankers Inc 4.39
TLAB Tellabs, Inc 7.57
TDA Telephone & Data Sys Inc 21.93
TCMI Triple Crown Media Inc 4.49
TAYC Taylor Cap Group Inc 22.19
SIX Six Flags Inc 2.17
SBUX Starbucks Corp 22.90
SBSA Spanish Broadcasting … 2.24
RPM RPM International Inc 18.72
ROX Castle Brands Inc 2.20
PEIX Pacific Ethanol Inc 7.00
PDS Precision Drilling Tr 17.11
MDRX Allscripts Healthcare … 18.47
MAXE Max & Ermas Restauran … 2.89
LYV Live Nation Inc 15.99
LEAP Leap Wireless Intl Inc 38.82
JBLU Jetblue Awys Corp 6.88
JBL Jabil Circuit Inc 19.35
IX Orix Corp 84.62
ISLN Isilon Sys Inc 4.78
HME Home Properties, Inc 44.11
HLYS Heelys Inc 6.16
FRE Freddie Mac 40.49
FNSR Finisar 2.02
DITC Ditech Networks Inc 3.20
DFC Delta Financial Corp 2.27
CDL Citadel Broadcasting Corp 3.02
CBT Cabot Corporation 32.18
ALU Alcatel-Lucent 8.24
AKH Air France Klm 33.12
Bill Miller, Better than Google and Apple?, US Dollar, Bloggers vs Congress
– Another “buy” for financials
– This is a very interesting take on what could be next years tech stars.
– Want to invest in currencies? Here is an easy way.
– Americans now trust bloggers more than they do Congress
–
Andy Serwer and Barney Gimbel at Fortune got an interview with Citigroup’s (C) largest individual shareholder Prince Alwaleed who holds 3.6% of the $150 billion dollar company.
Some excerpts:
Why he withdrew his support for CEO Chuck Prince:
“You cannot come to the public and say that this normalization is expected in the fourth quarter and then three weeks later, not three months later, you come and say there is an $11 billion writeoff. This is unacceptable. That’s when the events changed completely. My backing was withdrawn dramatically. You should never commit to something that you can’t deliver. Never.”
Is he supporting Sandy Weill for CEO?
“No, no, Sandy is not seeking to be president. What Sandy likes to do is to be involved in the process of selecting a new boss. Sandy told me, “I have no aspirations whatsoever to be CEO or chairman.”
However, he would like to be involved in the process of selecting the boss for Citi because Citi can’t afford to have another loss. The situation right now is unacceptable for a bank like Citi with $2.5 trillion in assets and $120 billion of equity, and is in more than 100 countries. It’s a pity for Citibank to be in this position. It’s not right. We can’t afford to have another blunder like that. “
Who should the next CEO be?
“Frankly speaking, I don’t have anybody in mind. I trust Mr. Rubin. I trust Mr. Bischoff. I trust Mr. Parsons. The selection process has to be very careful and they should take their time finding the right guy. My recommendation and advice for them is they don’t hire anyone unless this guy has expertise in banking. I told them, next time no lawyer, please.”
Is he selling?
“I will sell nothing. We are selling nothing. I want to make it clear that I fully support the leadership of Citigroup and think it is a very strong company with a good future.
You remember something very important, that the average [price at which] I bought Citibank was $2.75 per share adjusted for stock splits. That’s my average. But still Citibank does not deserve to be where it is right now. It is a pity what is happening, but I hope that a big lesson is learned in the board of directors and the management of Citibank. “
Is a deal in the works?
“It is not time for that right now, for sure. I am against it now. Not at this price, for sure. It would not be fair for the shareholders of Citibank at all. I mean even after the stock went down, Citibank is still worth $160 billion. It’s still a force to be reckoned with. I mean, how many companies in the world can withstand a writeoff of $6 billion and another writeoff of $8 to $11 billion three weeks later, and still stand on its own feet? Not many”
Read the whole interview here:
“Customers are still spending for the holidays. Halloween was very good for us, so I suspect that Christmas is going to be great,” said Raul Vazquez, Walmart.com’s (WMT) CEO recently.
While overall U.S. online holiday sales are expected to rise about 20% this year, Walmart.com’s sales should jump between 40% to 60%. It would appear that the “Black Friday” Wal-Mart held the Friday after Halloween was success and that momentum is carrying over.
Vasquez said that unlike past years the retailer will post special deals on its Web site Thanksgiving day. The selected items, many of which will only be available online, can be purchased through the Web site that same day.
They are also planning special online deals for what it is calling “cyber-week”, the Monday through Friday after Thanksgiving. It will offer special deals on twice as many items as a year ago, and it will post new items on its site daily during those five days, he said.
They also have completed the roll-out of its “Site to Store” program that now accounts for 1/3 of all online transactions. It allows customers to order products on the Web site and have them shipped to a local Wal-Mart store for free. Vasquez said of the program, “It has exceeded our expectations, we expect it to rise.”
Wal-Mart is the place people turn to when times get tough and the consensus now is that they just may. That being said Wal-Mart is out front with its online site and the integration of it to the stores on such a massive scale. Sears Holdings (SHLD) has a similar program through its site but it does not compare to the Wal-Mart site in terms of ease of use and breadth of offerings. One drawback is that the Kmart and Sears sites and the merchandise is not consolidated, causing the user to have ti use both sites to find an item, not convenient.
Target, (TGT) based on what I can tell does not have a site-to-store program and that hurts them as it makes their site that much less convenient that the others.
Wal-Mart reinvented the retailing experience and now they seem to be reinventing the retailing internet one as well.
Oh yea…. If Lee Scott did not buy back at least $2 billion in stock the last quarter, time to go…
Jeez, McDonald’s (MCD) just cannot be slowed down.
McDonald’s Chief Executive Officer Jim Skinner said, “We are leveraging our menu variety and value with convenient restaurant locations and innovative marketing to deliver a restaurant experience that resonates with customers. The combined strength of these strategic initiatives continues to drive our business forward.” How good was it?
Thursday that same-store sales grew 6.9% in October, with gains across all of its regions. Systemwide sales for McDonald’s restaurants worldwide increased 14.2% for the month (8.2% in constant currencies).
In the U.S., same-store sales for the month increased 5.4%. Europe, the company’s second-largest market, reported a 6.4% rise for the month, led by France, the U.K. and Russia. Asia/Pacific, the Middle East and Africa climbed 9.4%, led by Australia, Japan and China.
Why? In a word, value. The chains value menu, which appeals to consumers pressed by higher costs for gasoline and other items is seeing sales surge. This is the reason I have been saying since January that Starbucks (SBUX) is out of luck if they think they are going to offset dairy and coffee cost increases with yet another price increase on customers. Starbucks reports on 11/15. It will be interesting to compare their commentary.
If people feel their wallet pinched, the first thing that will go is the $5 latte’.
UPGRADES
First Solar FSLR Merriman Curhan Ford Sell » Neutral
Cooper Tire CTB KeyBanc Capital Mkts Buy » Aggressive Buy
Maguire Properties MPG Stifel Nicolaus Sell » Buy
Enterprise GP Holdings EPE Wachovia Mkt Perform » Outperform
Tyson Foods TSN Wachovia Underperform » Mkt Perform
WebMD Health WBMD Needham & Co Hold » Buy
Greenfield Online SRVY Needham & Co Buy » Strong Buy
China Grentech GRRF Susquehanna Financial Neutral » Positive
Nortel NT Credit Suisse Underperform » Neutral
Middlesex Water MSEX Boenning & Scattergood Market Perform » Market Outperform
Sun Healthcare SUNH Bear Stearns Peer Perform » Outperform
NetLogic NETL CIBC Wrld Mkts Sector Perform » Sector Outperform
Foster Wheeler FWLT Citigroup Hold » Buy
Ashland ASH Credit Suisse Underperform » Neutral
Stantec SXC Brean Murray Hold » Buy
HLTH Corp HLTH Friedman Billings Mkt Perform » Outperform
First Solar FSLR CIBC Wrld Mkts Sector Perform » Sector Outperform
Ship Finance Intl SFL Citigroup Sell » Buy
Town Sports Intl CLUB Banc of America Sec Sell » Neutral
Eaton ETN Bernstein Mkt Perform » Outperform
Total S.A. TOT JP Morgan Neutral » Overweight
FirstMerit Corp FMER Lehman Brothers Underweight » Equal-weight
Coeur d’Alene Mines CDE JP Morgan Neutral » Overweight
Somaxon Pharma SOMX JP Morgan Underweight » Neutral
PG&E PCG Jefferies & Co Hold » Buy
DOWNGRADES
Nastech Pharm NSTK BMO Capital Markets Outperform » Market Perform
Goldman Sachs GS Wachovia Outperform » Mkt Perform
Sotheby’s BID Banc of America Sec Buy » Neutral
Kinross Gold KGC CIBC Wrld Mkts Sector Outperform » Sector Perform
Kenexa KNXA CIBC Wrld Mkts Sector Outperform » Sector Perform
Kenexa KNXA Brean Murray Buy » Hold
Quebecor World IQW CIBC Wrld Mkts Sector Outperform » Sector Perform
Quebecor World IQW UBS Buy » Neutral
McCormick & Schmick’s MSSR Morgan Joseph Buy » Hold
Bankrate RATE RBC Capital Mkts Outperform » Sector Perform
Baidu.com BIDU RBC Capital Mkts Outperform » Sector Perform
Sotheby’s BID JMP Securities Mkt Outperform » Mkt Perform
Hologic HOLX RBC Capital Mkts Outperform » Sector Perform
InnerWorkings INWK Jefferies & Co Buy » Hold
Kinross Gold KGC Credit Suisse Outperform » Neutral
ING Groep ING Bear Stearns Outperform » Peer Perform
Global Cash Access GCA JP Morgan Overweight » Neutral
Maidenform Brands MFB Brean Murray Buy » Hold
Kenexa KNXA Susquehanna Financial Neutral » Negative
Primus Guaranty PRS Lehman Brothers Overweight » Underweight
AMR Corp AMR UBS Neutral » Sell
Air Tran Holdings AAI UBS Buy » Neutral
Nice Systems NICE Banc of America Sec Buy » Neutral
Bankrate RATE CIBC Wrld Mkts Sector Perform » Sector Underperform
Brown-Forman BF.A JP Morgan Overweight » Neutral
Gol Intelligent Airlines GOL Deutsche Securities Buy » Hold
Friday’s Picks
Tim Seymour recommended Alcoa (AA).Open $37.66
For the second day in a row Guy Adami said Short Dow30 ProShares(DOG) was a buy. Open $59.95
Karen Finerman liked Watts Water Technologies (WTS).Open $27.80
Pete Najarian preferred Boston Scientific (BSX). Open $12.49
Thursday’s Results
Tim Seymour liked Gold Fields (GFI). Open $18.10 Close $18.93 GAIN
Guy Adami recommended shorting the Dow with Short Dow30 ProShares (DOG). Open $59.46 Close $59.95 GAIN
Karen Finerman liked her financials trade; long Goldman (GS) Open $214.18 Close $209.01 LOSS and short Lehman (LEH). Open $55.96 Close $56.11 LOSS
Pete Najarian liked Evergreen Solar (ESLR). Open $13.65 Close $15.99 GAIN
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= 43-25 = 64%
John Najarian= 13-4 = 76%
Jeff Macke= 47-33 = 58%
Pete Najarian= 31-30 = 51%
Tim Seymore= 5-3 = 62%
Karen Finerman= 26-16 = 61%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
WM Washington Mutual Inc 18.84
WL Wilmington Trust Corp … 33.41
WGO Winnebago Industries, Inc 22.94
WB Wachovia Corp 39.37
TXA Tribune Co New 58.50
TWX Time Warner Inc 17.46
TWC Time Warner Cable Inc 25.93
SIX Six Flags Inc 2.64
SHLD Sears Hldgs Corp 121.08
SBUX Starbucks Corp 23.08
PJC Piper Jaffray Cos 41.88
PFE Pfizer Inc 23.04
OMX Officemax Inc Del 25.10
OMC Omnicom Group Inc 46.42
MER Merrill Lynch & Co., Inc 51.97
MDT Medtronic, Inc 45.42
MDC M.D.C. Holdings, Inc 36.52
MCO Moodys Corp 37.18
MBI MBIA Inc 30.16
LVLT Level 3 Communication … 2.85
LUV Southwest Airlines Co. 13.00
LTD Limited Brands Inc 19.33
KKD Krispy Kreme Doughnut … 2.68
KSS Kohl’s Corporation 48.42
JWN Nordstrom Inc 32.29
HD Home Depot, Inc 28.46
DBRN Dress Barn Inc 13.62
DBD Diebold, Incorporated 36.99
CYBX Cyberonics Inc 11.95
CX Cemex Sab De Cv 26.59
CC Circuit City Stores, … 6.94
C Citigroup, Inc 31.98
BXC Bluelinx Hldgs Inc 3.90
BSC The Bear Stearns Comp … 95.92
Lost in the commentary in yesterday’s earnings release from Wal-Mart (WMT) was the fantastic international results.
At international stores, net sales rose 19.2% to $7.19 billion. In October, the company’s operations in the United Kingdom, Brazil and China continued their recent positive performance. Sales throughout Brazil continue to be driven by a stronger price position, in-stock improvement and a recovery of disposable income.
Total company sales for the month rose 8.4% to $27.92 billion. At Wal-Mart stores, same-store sales were flat, while net sales rose 5% to $17.44 billion. Same-store sales at Sam’s Club warehouse stores rose 2.7%, boosted by strengths in fresh food, grocery, video games and office supplies. Sam’s Club net sales rose 5.3% to $3.3 billion.
What will be very interesting is too see how the “Black Friday” after Halloween will affect November sales. Initial reports are that is was a large success both online and in the stores. As the consumer feels pinched (assuming they do) Wal-Mart will benefit from this.
Now, if Lee Scott & Co. is looking at the same reports I am, I have to hope they are plowing money into both the overseas operations and stock buybacks. That is where they are going to realize the best value for the money spent.
Apple monopoly?, Bloggystyle, Cuomo, WaMu
– Here is Adam’s aggregation
– Just what we need, another dipshit AG trying to make a name for himself screwing things up.
– Buy the financials…
Some highlights from Bernanke’s testimony to congress today.
“Although the problems with subprime mortgages initiated the financial turmoil, credit concerns quickly spilled over into a number of other areas. Importantly, the secondary market for securities backed by prime jumbo mortgages also contracted, and the issuance of such securities has declined significantly. Prime jumbo loans are still being made to prospective home purchasers, but they are at higher spreads and have more-restrictive terms. Concerns about mortgage-backed securities and structured credit products (even those unrelated to mortgages) also greatly reduced investor appetite for asset-backed commercial paper, although that market has improved somewhat recently. In the area of business credit, investors shied away from financing leveraged buyouts and from purchasing speculative-grade corporate bonds. And some larger banks, concerned about potentially large and difficult-to-predict draws on their liquidity and balance sheet capacity, became less willing to provide funding to their customers or to each other.
To be sure, the recent developments may well lead to a healthier financial system in the medium to long term: Increased investor scrutiny of structured credit products is likely to lead ultimately to greater transparency in these products and to better differentiation among assets of varying quality. Investors have also become more cautious and are demanding greater compensation for bearing risk. In the short term, however, these events do imply a greater measure of financial restraint on economic growth as credit becomes more expensive and difficult to obtain.”
Going forward:
“In the days since the October FOMC meeting, the few data releases that have become available have continued to suggest that the overall economy remained resilient in recent months. However, financial market volatility and strains have persisted. Incoming information on the performance of mortgage-related assets has intensified investors’ concerns about credit market developments and the implications of the downturn in the housing market for economic growth. In addition, further sharp increases in crude oil prices have put renewed upward pressure on inflation and may impose further restraint on economic activity. The FOMC will continue to carefully assess the implications for the outlook of the incoming economic data and financial market developments and will act as needed to foster price stability and sustainable economic growth.”
In short, the economy is good, credit is tight, financials will be fine, long term this is good, oil sucks. Will oil seep into the system? To date it has had a limited effect on the consumer. This does bear close watching though.
I had no idea YouTube was an investor’s information site also. Tilson talks about Wal-Mart (WMT).
Tilson is someone whose opinions are worth listening to. He speaks to the Citigroup’s (C) Chairman’s “tarnished” reputation.
