Category: Articles

ValuePlays is on vacation until Wednesday September 5th

Have a safe holiday

Todd

—

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Todd Sullivan

Sent from my BlackBerry® wireless device

LSI Industries (LYTS)= 38%

MTS Systems (MTSC)= 36%

Peoples Bancorp NC (PEBK)= 33%

Virgin Media (VMED)= 33%

G&K Services (GKSR)= 25%

– I read his fist book and loved it. He has some wonderful insights into today’s market.

– Excellent article on Bernanke

– He has made himself a billionaire buying things nobody else will invest in. See what he is buying now

– Can they catch iTunes?

– This is a great regular blog section. I read it daily

Peoplesupport (PSPT)= $15,828,000

Enterprise Products (EPD)= $6,959,000

Lazard (LAZ)= $5,178,000

Concept Therapeutics (CORT)= $5,072,000

Nextwave wireless (WAVE)= $4,493,000

This list just keeps getting shorter and shorter

SPDE Speedus Corp
SNTO Sento Corp
SNTA Synta Pharmaceutical
SNIC Sonic Solutions
CAPB Capitalsouth Bancorp
CACS Carrier Access Corp
BUSU Columbus Acquisition Corp
EGLT Eagle Test Sys Inc
DEVC Devcon International Corp

Just once I long to tune in a not have them tell me how bad things just might get.

We have had quarter after quarter, year after year of growth in both economic performance, corporate profits and jobs and if you watch CNBC, there is a recession knocking on our doorstep any day now. The odd thing is it has been knocking since last year and despite that we just keep chugging along. I could see this if we were at 1% or lower GDP growth but we are at 3% plus! Expectations, which have been essentially met to date do not call for anything close to a recession anytime soon. Why are you so convinced it is going to happen? Is it the “bad news sells” theory?

Stop telling me how bad it can get please. How about a neat little switch and tell me had good things can get now that the credit crisis you were so sure would sink us all last week didn’t. We all did not lose our homes and the was no massive run on the banks. It wasn’t 1929 all over. Of course you can always fall back on old faithful, housing. But here is the thing, housing is only 4% of GDP, it just will not (and to date had not) matter as much as you want us to think.

Oh, but you are saying today, what about all those housing related job cuts? Sure is makes for a good tale except when you consider employment keeps rising and the job cuts have been happening for 6 months now. Somebody is hiring them. You seem to forget that we could not get enough of these guys when housing was booming so now that it has slowed down, demand for them seems to equal the supply. Problem? Can anyone find me a carpenter or plumber who cannot find work? Me either.

So what is next week’s catastrophe in waiting? China? Iran? Oil? Another hurricane? What, what is going to end our world next week? Just because you got caught up in the euphoria at the turn of the century and bought into the “new paradigm” that said earnings are really not that important, let’s not crap on everything now “just in case” things do turn south you can say “we told you so”. Your negativity has proven wrong for the better part if 4 years now, let’s get past it.

Tonight you can watch “Against the Tide: The Battle for New Orleans” or “American Greed”. You won’t see “American Ingenuity” or “American Successes” anywhere on the network…

The more this goes on the more I wish for Murdoch to get things rolling with his network. Please Ruppert? Please…? Yes I am begging..

– Another big thank you for the mention

– And another

– I love honesty. Don’t’ just tell me your successes but tell me what you missed to. These guys are great

– I am ashamed to see that somebody is actually arguing for lowering teacher standards in my state to appease minority applicant who can’t wrise. No wonder kids can’t today…

– More lead filled toys for our kids from China. Oh yeah, and even more

UPGRADES

InfoSpace INSP Wedbush Morgan Hold » Buy
UPS UPS Matrix Research Hold » Buy
Tyson Foods TSN Matrix Research Sell » Hold
Imax IMAX Roth Capital Hold » Buy
Tech Data TECD Citigroup Hold » Buy
Hana Biosciences HNAB Cantor Fitzgerald Hold » Buy
China Netcom CN UBS Sell » Neutral

DOWNGRADES

KVH Industries KVHI Needham & Co Buy » Hold
Cepheid CPHD Caris & Company Buy » Above Average
Talbots TLB Stifel Nicolaus Buy » Hold

“As evidenced by the recent filing of an amendment to the registration statement, we are continuing to work on the IPO and have not postponed,” a spokesman for K.K.R., David Lilly said Thursday.

The filing had a notable change to it. It is the firm said “The cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly. If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources in order to consummate pending transactions or finance future transactions.”

“Such financing may be significantly more costly, with terms that may be significantly more restrictive, than financing that was, until recently, available to us in the public capital markets. More costly and restrictive financing may adversely impact the returns of our leveraged buyout transactions and, therefore, adversely affect our results of operations and financial condition.” You can view the entire prospectus (BX) down 28% and Fortress (FIG) down 43% went public earlier this year and buyers of shares of both have got creamed. Prior to the Blackstone IPO I posted that ” If you believe in the “greater fool” theory then this would be an indication that these firm are at the top and the people in the know are cashing in.” A few day later I wrote “Carl Ican, in an interview on CNBC yesterday said when asked about private equity “easy money and cheap deals are going away and this will severely impact earnings at private equity”. When you add the specter of a tax increase from 15% to 35% on these entities, it is no wonder they are racing to cash in before we all realize they are due to earn much less in the immediate future.”

In short, you would have to be a person of painfully little intellect to be waiting to invest in the KKR IPO (if it happens). I also cannot imagine I have a monopoly of this opinion either. That being said, what incentive does KKR have for hitting the trough now? Why not wait until at least Blackstone and Fortress are not dirty words to investors to make a run. One would think that when the current environment improves, any IPO would fetch much more money. Unless, unless, that is, things are only going to get worse.

What if KKR fully expects is tax rate to jump from 15% to 35% when congress gets back in session this fall? I would fully expect them to have someone’s ear and probably have a good idea of what the anticipated outcome of it will be. If KKR pushes ahead now after what has happened to it’s fellow PE buddies, it can only be becase they see things getting worse down the road.

Now I do not short stocks, I am not wired that way but if I did, the whole PE area looks to me like it may be a prime target.

Here are Friday’s picks and records to date..

FRIDAY’S PICKS

Carter Worth liked General Motors (GM). Open $30.75

Guy Adami said Dell (DELL) is a buy. Open $27.24

Pete Najarian preferred Eli Lilly (LLY) for Cialis. Open $55.87

Jeff Macke recommended getting long Activision (ATVI). Open $18.57

NO PICKS FOR THURSDAY

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation week)
Adami= 19-12 Gain $35.62
Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Macke= 21-18 Gain $3.60
Pete Najarian= 13-9 Gain $24.74
Seymore= 3-2 Loss $.49
Finerman= 3-2 Gain $1.21
Stacey Briere-Gilbert= 2-0 Gain $1.61
Constance Hunter= 1-0 Gain $1.84
Carter Worth=

It looks like the Home Depot Supply unit sale that was scheduled to close today won’t get done.

Home Depot (HD) said earlier this month that it was in talks with buyers Bain Capital, the Carlyle Group and Clayton Dubilier & Rice about a restructuring of the $10.3 billion all-cash deal that was to partially fund a $22.5 billion stock repurchase plan.

According to The Financial Times, the new terms would include a lower price designed to entice Merrill Lynch (MER), Lehman Brothers (LEH) and JPMorgan (JPM) to finance the deal amid the current issues in the credit markets. The report then went on to say that the banks appear unwilling to fund the deal, even under the new terms being worked out by Home Depot and the buyers.

Surprised? I hope not. Look at it this way, what has Home Depot done right this century? They are constantly shooting themselves in the foot and the real surprise should be that this deal did not fall apart sooner.

If they had just kept Supply and announced a modest $5 billion buyback when they announced this current destined to fail operation, they would be on their way to completing it and shares would most likely be in the $40 range they were when this plan was announced. Depending on market conditions then they could have added more and done this whole thing responsibly. By shooting for the moon, The Depot just adds this to the list of mess ups.

SNIC Sonic Solutions
SMRT Stein Mart Inc
SCVL Shoe Carnival Inc
PLCE Childrens Place Retail
IOF Biofuel Energy Corp
AVAN Avant Immunotherapeut
ARTE Artes Medical Inc
ECHO Electronic Clearing House
DPTR Delta Petroleum Corp
DCU Dryclean Usa Inc

So, I write a post about the motives of folks I see defending Mr. Cramer from a Barron’s article and somehow it gets twisted into an attack on James Altucher.

First things first. I have no ax to grind with Altucher. I love it when he links ValuePlays, it drives traffic to the blog.

Now that is done, let’s get to the real point of the original post. The defenses of Cramer ranged from a flacid conspiracy theory involving Rupert Murdoch (the only thing missing from this idea was the Karl Rove or Dick Cheney link) to the show is really educational or the show is really just trying to get people to think a certain way. The conspiracy theory was so bad the writers of it should be ashamed and issue us a public apology.

Who is right? None of them probably. Like I said in the first post the show is so ambiguous that it cannot be specifically categorized. It is a little of this and a little of that and a whole lot of shtick to get ratings. BUT, when you tell people what to do you have to accept people tracking those picks ESPECIALLY when you do not do it yourself. Cramer could easily end this mess buy tracking buys and sells on the show, since he does not, others will try to do it for him and one must live with their conclusions.

So, why then try to defend the show? I mean who really cares what Barron’s thinks of the show, really. It is not like they trash a stock you own and feel differently about and their opinion has an effect on your holdings. Barron’s opinion of the show has no effect on anyones holdings.

I guess if Cramer was a friend or an associate you would want to rush to his defense. I would expect people to do that and that would be an honorable thing to do. But, if you are doing that in a post, shouldn’t you disclose that is the reason you are doing it? If you are going to try to defend a person against another due to a personal affiliation, it should be noted just as when we talk about stock we either own or do not own. If we know an association exists here and it is hidden, how then can we trust other disclosures you may or may not make?

My theory was that this was a rather transparent (in my eyes) “attempt” to endear oneself to the folks at TheStreet.com and get traffic directed to their website via the “Daily Blogwatch”. This is not to say that it would be successful, but that the defenses were an attempt to do just that. This was the only reason I could come to that blogs that disclose stock affiliations did not disclose the personal ones that lead to the Cramer defenses.

Simple? Hell no!! It would seems Mr. Altucher took the post as an insult and asked me to “apologize” here on my blog. I am sorry if he took it as an attack on him and like I have told him, it was not meant that way and based on the emails I have received from readers, he may be the only one who took it that way. He insists that he would never publish posts based on the scenario listed above. Ok. I have no reason to doubt him and still do not think I inferred that in the original post. He did say in a comment to the post that “Bill Alpert will not be linked to anytime soon”. So, I guess that means ass kissing will not work but the message is “do not write anything negative about Cramer or TheStreet.com”? I do not remember anything negative about James in the Barron’s piece.

Hell if I know. I guess time will tell. My writings for ValuePlays, The Stockmasters and 24/7 Wall St. have appeared on BlogWatch, as Altucher himself said in his comment to my original post, “countless times” (he is correct about that). If they disappear, readers can take from that what they want and if they continue to appear, I invite James to give me something that I will post here in which he can “rub my nose in it” any way he wants.

If my history proves anything I will gladly post writings that oppose me and I have gone so far as to ask for them as was the case with my Berkshire Hathaway (BRK.A) posts earlier in the summer.

We’ll see………