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« November 2005 | Main | January 2006 » December 31, 2005Ukraine to Gazprom: Drop Dead The fight betweem Gazprom and Ukraine is getting worse. It looks like the state-controlled Russian company is going to shut off all supplies to Ukraine starting tomorrow: Ukrainian President Viktor Yushchenko rejected Russian President Vladimir Putin's proposal to delay a fivefold increase in natural gas prices for three months, likely leading OAO Gazprom to stop supplying the fuel to the former Soviet republic on New Year's Day. Update: Russia halts gas sales to Ukraine. Posted by edelfenbein at 6:10 PM Year-End Summary Reuters looks at the final numbers: The Dow declined 0.61 percent in 2005, breaking its streak of back-to-back gains for 2003 and 2004. I think Mr. Paulsen has it exactly right. My suspicion is that 2006 will not be a good year for the energy sector. I think certain individual stocks will stand out, but I'm not so certain about sector plays. Posted by edelfenbein at 5:07 PM The New Buy List For 2006, I going to track the new Buy List based on Friday's closing prices. All 20 stocks will be equally weighted. I'm going to assume a portfolio of $1 million, $50,000 for each position. Just in case anyone in the middle of August questions where I get my track numbers from, here are the 20 stocks, with the starting prices and number of shares: Company (Symbol)...................Price...............Shares AFLAC (AFL)...............................$46.42..........1,077.1219 Bed Bath & Beyond (BBBY)........$36.15..........1,383.1259 Biomet (BMET)............................$36.57..........1,367.2409 Brown & Brown (BRO)...............$30.54..........1,637.1971 Donaldson (DCI)........................$31.80..........1,572.3270 Dell (DELL).................................$29.95..........1,669.4491 Danaher (DHR)...........................$55.78.............896.3786 Expeditors International (EXPD)..$67.51..........740.6310 FactSet Research Systems (FDS)..$41.16......1,214.7716 Fair Isaac (FIC).........................$44.17..........1,131.9900 Fiserv (FISV)..............................$43.27..........1,155.5350 Golden West Financial (GDW)...$66.00.............757.5758 Harley-Davidson (HDI)..............$51.49............971.0623 Home Depot (HD)......................$40.48..........1,235.1799 Medtronic (MDT)........................$57.57.............868.5079 Respironics (RESP)....................$37.07..........1,348.7996 SEI Investments (SEIC)............$37.00..........1,351.3514 Sysco (SYY)................................$31.05..........1,610.3060 UnitedHealth Group (UNH)........$62.14.............804.6347 Varian Medical Systems (VAR)..$50.34.............993.2459 The 20 stocks have a combined market value of $458 billion. The average dividend yield is about 0.5%. Twelve of the stocks are in the S&P 500, six are in the S&P 400 Mid-Cap Index and two are in the S&P 600 Small-Cap Index. Home Depot (HD) is our only Dow stock. Posted by edelfenbein at 12:15 AM December 30, 2005It’s Over Well, it’s all over. The year 2005 ended on a bit of a sour note. The Dow finished the year in the negative. Today, the Dow dropped 67 points, and S&P 500 fell 6.13 points to finish at 1248.29. For the day, the S&P 500 lost 0.49% and the Buy List lost 0.90%. For December, the S&P 500 lost 0.1% and the Buy List fell 0.04%. For the fourth quarter, the S&P 500 gained 1.67% and our Buy List gained 4.68%. All in all, this has been a good time for us. Earlier I mentioned how the market likes to find certain numbers on the last day. At today’s close, the S&P 500 rose by 3.001% for the year (not including dividends). Also, Bill Miller’s Legg Mason Value Trust beat the market for the 15th straight year, although it was close. The fund returned 6.02% beating the S&P 500 with dividends by just 0.59%. Manu Daftary of the Quaker Strategic Growth Fund kept his eight-year streak alive. The broadest stock index, the Wilshire 5000, was up 4.56% for the year.
Posted by edelfenbein at 11:26 PM An Hour to Go.... It’s a pretty lousy day on Wall Street so far. Every stock on the Buy List is lower except for Frontier Airlines (FRNT). Unless things change very quickly, it looks like 2005 will be a negative year for the Dow. Today will mark the 298th straight day that the Dow will close between 10000 and 11000. The S&P 500 has been a better performer this year. Last month, the index was able to break out to new highs. As recently as two weeks ago, the S&P 500 got to 1272, a level it hadn’t seen since June 2001. But the index is still about 18% below its all-time high set in 2000. Today, the S&P 500 is in a nasty fight with 1,250. The indexes like to flirt with these year-end numbers. In 2003, the Nasdaq closed out the year at 2003.37. If the S&P ends at 1250, it will represent about a 5% gain for the year, including dividends. That’s about half the long-term average. Value has a narrow lead over growth this year, and mid-caps have beaten both small- and large-cap stocks. I’m still amazed that interest rates are so low. The 10-year bond is also stuck in a trading range. Right now, an investor can lock-in a yield of roughly 4.4% for the next ten years. In my opinion, that’s absurdly low. Several of our stocks on the Buy List (and the new Buy List) will probably grow their earnings more over the next three years than that bond will do over the next decade. I’m not so sure that stocks are a great value but they look a whole lot better than bonds. Plus, you can get about the same yield by buying a two-year bond. Posted by edelfenbein at 2:44 PM Footnote of the Year Michelle Leder of the indispensable Footnoted.org has this year's "Footnote of the Year," courtesy of Kerr-McGee (KMG): An annual stipend provided to facilitate involvement in community activities accounted for 96% of Mr. Corbett’s Other Annual Compensation in 2004. Oh dear lord. The CEO of Kerr-McGee got an effing stipend from the company to give to charity! What part of charity does he not get? (Well, I guess that would be ALL of it.) In other news, a pack of angry Chihuahuas attacked a police officer. Posted by edelfenbein at 1:01 PM Motorola I have to confess that I’ve always felt that Motorola (MOT) was a bit overrated. Maybe I’ve been a bit too harsh. Yeah it’s a good stock, but is it really that good? Nevertheless, I’m very happy to see the company have success this year. Thanks to the little Razr phone, the company has been humming along. Motorola beat earnings every quarter this year and Wall Street has been revising its estimates higher. Right now, the Street expects MOT to earn $1.29 a share. So the stock is going for about 17.5 times next year’s earnings. Investors Business Daily has more the Razr: In his third-quarter earnings conference call, Motorola Chief Executive Ed Zander said the Razr was the most popular flip-open phone this year. Now that it’s the end of the year, I can look back on all my mistakes from 2005. I should have been paying more attention to Motorola when the stock was at $15 earlier this year. All the signs were there. Posted by edelfenbein at 12:21 PM The Final Day of 2005 We’re coming down the wire, and the Dow is inches away from where it was one year ago. The Dow closed out 2004 at 10783.01. Yesterday, the index finished 10784.82. So in one full year, we’ve moved less than two points. The S&P 500, however, is up about 3.2% for the year, not including dividends. Small- and mid-cap stocks have done better than the large stocks. Yesterday, the S&P 500 dropped 0.30% and our Buy List gave back 0.31%. The market is down this morning. The New York Times has an interesting article on Intel (INTC). The company is planning a major shift in strategy by focusing on the consumer. Business Week has more. Posted by edelfenbein at 10:11 AM December 29, 2005The International Harry Schultz Letter The investment newsletter industry is known for having some unusual characters. The Libertarian Party has nominated an investment newsletter editor for president not once, but twice. As MarketWatch, Peter Brimelow looks at the always-contrarian Harry Schultz (sorry, Sir Harry Schultz): In person, Harry Schultz is small, polite and diffident. But his letter -- one of the oldest in the industry, in business since the 1960s -- is famously self-promoting, not to say megalomaniacal. Posted by edelfenbein at 2:50 PM What Do These Have in Common? 1. a radio station in South Dakota Give up? Answer: They all got 9/11 recovery loans from Small Business Administration. The Washington Post has the details. Posted by edelfenbein at 12:45 PM Creeping Pessimism? On Business Week’s Web site, there’s a poll asking people where the Dow will be a year from now. Obviously, this isn’t a scientific sampling but I was struck how pessimistic the answers are. The last time I check, the answers were as follows: 10,000 or below.......15.9% That means that the median is “around 11,000.” I won’t predict that the Dow will hit 12,000, but I think it’s entirely reasonable that it could. That’s a little over 10% from where it is today which is in the middle of the long-term average. Yet only one in six respondents said “12,000 or higher.” Strange. I normally would expect polls like this to be overly optimistic. Maybe I’m reading too much into this, or perhaps the public is much more pessimistic that I realized. Posted by edelfenbein at 12:21 PM December 28, 2005The Market Today Sheesh...what a snoozefest? I think traders must still be on vacation. There just ain’t much going on right now. The Dow, Nasdaq and S&P 500 all closed boringly higher today. Our Buy List gained 0.25% today to the S&P 500’s 0.13%. For the fourth quarter, we’re up 6.04% to the market’s 2.42%. Although yesterday was one of the worst days for the market in two months, it didn’t seem so bad to me. Perhaps it’s because volatility is so low. As I’ve said before, we’re in the middle of a remarkable bear market for risking-taking. It seems to be a worldwide phenomenon. This past week, the VIX (^VIX), the volatility index, again hit some of the lowest levels in over a decade. I have a hard time believing that the 10-year Treasury bond (^TNx) is currently yielding just 4.38%. Who cares about the budget deficit if we can borrow money so cheaply? The one stock that wasn’t boring was Frontier Airlines (FRNT). For the record, I still like Frontier a lot even though it won’t be on next year’s Buy List. It’s not anything against the stock, I just think Frontier is a bit too volatile to have on the Buy List. You can see why today. The stock opened at $9.25, dropped to $8.90 and rallied to close at $9.36. I noticed that Dell (DELL) is still a good buy. The shares are back below $31. The big surprise was that S&P decided to add Whole Foods (WFMI) to the S&P 500 instead of Google (GOOG). Whole Foods’ stock came close to hitting $80 a share. I’m sorry to say that I wouldn’t pay half that much. Remember Lucent (LU)? Me neither but it was apparently very popular a number of years ago. Anyway, for fiscal 2005 the company made $1.185 billion. Not bad, but here’s the really funny part: $973 million of that was due to a “pension credit.” So 82% of the company’s profits are solely related to the fact that’s pension fund is in the black. In short, I wouldn't buy it. Posted by edelfenbein at 5:36 PM The Buy List for 2006 Just in case you missed it, here's the new Buy List for 2006: AFLAC (AFL) Bed Bath & Beyond (BBBY) Biomet (BMET) Brown & Brown (BRO) Donaldson (DCI) Dell (DELL) Danaher (DHR) Expeditors International (EXPD) FactSet Research Systems (FDS) Fair Isaac (FIC) Fiserv (FISV) Golden West Financial (GDW) Harley-Davidson (HDI) Home Depot (HD) Medtronic (MDT) Respironics (RESP) SEI Investments (SEIC) Sysco (SYY) UnitedHealth Group (UNH) Varian Medical Systems (VAR) I'll start tracking these stocks beginning next week. The "buy price" will be the closing price for this Friday. Posted by edelfenbein at 10:49 AM Thoughts for 2006 I’m not going to make any broad market predictions for 2006. I’m always awful at those. Hey, I thought the Colts were going to go undefeated. The real news happens in places where most people aren’t looking. That’s the thing about financial markets. The surprises are so surprising because no one expects them. Weird, huh? We all know what’s going to happen with General Motors (GM), but who will say the same about Wal-Mart (WMT)? The only truism is that you should never say “it can’t happen.” Here are a few quick thoughts on the year ahead. Stocks to Sell Right Now I truly love my local Whole Foods (WFMI). The stock split today and it was just announced that it’s being added to the S&P 500. That’s an odd coincidence, and I’m going to take it as a sign. Whole Foods’ stock is WAY too expensive. The forward P/E ratio is slightly higher than Google’s. Simply put, Whole Foods shouldn’t be where Google is. Come to think of it, Google shouldn’t be where Google is. Every year I think Panera Bread (PNRA) is about to crash and burn and I’m always wrong. So why should I stop now. There’s no question that Panera is a big hit. The restaurants are Starbucking their way across the continent, and the company has a solid balance sheet. But still, $67? I don’t think so. No one has gotten better press this year than Hewlett-Packard (HPQ), but the company still has a long, long way to go. I can’t wait for Carly’s book, which should be coming out soon. This will be a rare instance of pride coming both before and after the fall. HPQ still doesn'timpress me. Yes, when you lay off 15,000 people, you’re able to see an improvement in your financials. The real trick is getting good press while you’re doing it. My prediction is that Mark Hurd’s honeymoon with Wall Street will come to an end. There’s something about Lehman Brothers (LEH) that I just don’t get. Every quarter they put up great numbers. I can’t put my finger on it, but I don’t see where all the growth comes from. How can they consistently do what others can’t? Maybe the company really is that good. Maybe not. Personally, I’m rooting for the yield curve Also, Google (GOOG). Sorry sports fans, not this year. There's just too much baggage. Stocks to Watch If Citigroup (C) decides to spin-off Smith Barney, that could be one of the best opportunities in years. I so want this to happen, it just makes sense. The larger Citi is weighing down a very good business unit. What will happen with Cendant (CD)? I don’t know but I’d love to see the new structure succeed. More companies on Wall Street should be broken up. Patterson Companies (PDCO) has been a great stock for years, but the company has fallen on hard times. Here’s an important investing lesson: Companies aren’t like sports teams that suddenly hit slumps. When earnings get hit for a few quarters, there’s usually something very wrong. I hope Patterson can get back on track. Who will do better this year, Merck (MRK) or Pfizer (PFE)? I’m not going near either one, but I’m rooting for Merck. If I were smarter, I’d make a paired trade—long Merck and short Pfizer. It could the smoothest line we’ll see all year. I can’t wait to see how well Danaher (DHR) does this year? It’s on the Buy List for 2006. The stock hasn’t done much recently even though earnings continue to grow and grow. Oracle (ORCL) is always fun to watch. This is another stock that I won’t go near. They have many problems, but I never count Larry Ellison out. Trust me, the least-important stories this year will be Ben Bernanke, the Fed or the mid-term elections. The status quo will probably hold across the board. The big story to watch is what’s happening in China. We’ve never seen anything quite like it. As Americans, we’re not used to having our economy knocked around by someone else. Other countries worry about a recession in the U.S. because it will impact them. The thought never even occurs to us. For the first time, Americans may start to worry that rough times in China will mean rough times here. The emergence of China is the story of our times. Posted by edelfenbein at 10:46 AM The Story of Wheat The Economist and I don’t have the best relationship. Sometimes it drives me freakin’ nuts. But then, just as I’m ready to bash my keyboard against my forehead, it will give me this and all is forgiven. Read the incredible, improbable and wonderful story of wheat. (Yes, wheat.) Posted by edelfenbein at 4:34 AM December 27, 2005Hedge Funds Are the New Mutual Funds So says Daniel Gross in Slate: This was the year of hedge funds. The largely unregulated pools of private capital—generally available only to institutions and the rich—have proliferated nearly as fast as adulatory articles about them. Hedge-fund managers have historically been the Garbos of the asset management world: They want to be left alone by the media, by the public, and above all, by the Securities and Exchange Commission. But in recent years—and especially in 2005—they've had a coming-out party. Aggressive hedge-fund managers are seeking to shake up management and push restructurings at blue-chip companies like Time Warner and McDonald's. Others, not content to flip stocks, have taken the reins at well-known companies, as Edward S. Lampert has done at Sears. Read the whole thing. Posted by edelfenbein at 9:49 PM The Market Today The yield curve finally inverted today. Unlike most things Wall Street freaks out about, I actually agree that this is a big deal. An inverted yield curve is when short-term interest rates are higher than long-term rates. The norm is that long-term rates are higher. Investors typically get more by shouldering the risk of having their money tied up for a longer period of time. That’s the theory anyway, and it ain’t happening now. When people aren’t paid to take risks, they stop taking them. The yield curve has often been a good barometer for future economic performance. It’s actually been a lot better than most economists. Interest rates had been headed this way for along time, but today the yield two-year Treasury note briefly topped the yield on the 10-year Treasury bond. This seemed to scare the market as stocks lost ground all afternoon. The S&P 500 lost 0.96% and our Buy List lost 0.53%. We can thank our avoidance of energy stocks to today’s out-performance. For December, the Buy List is up 0.95% to the S&P’s 0.57%. The energy sector was clobbered in today's session. Natural gas prices plunged 10% today, and they’re down 23% since Wednesday. Frontier Airlines (FRNT) did very well today. Bob McAdoo, the analyst at Prudential, raised his earnings guidance for next year by four cents a share to 12 cents. Also Boston Scientific (BSX), against all reason, logic and common sense, is sticking by Guidant’s side. Well...at least they get points for loyalty. Posted by edelfenbein at 9:06 PM Natural Gas Prices are Down 23% in the Last Three Days From Bloomberg: Natural gas plunged for a third day in New York as warmer-than-normal weather slashed demand for the furnace fuel. Posted by edelfenbein at 1:43 PM The Midday Market The Buy List is having a very good day so far. Right now, we’re up about 0.54% while the S&P 500 is off around 0.36%. Energy stocks are being hit pretty hard. Our big winner so far is Frontier Airlines (FRNT) which is up nearly 4%. Brown & Brown (BRO) has made a new high, and Commerce Bancorp (CBH) is very close to a new high. The yield curve finally—and very briefly—inverted, meaning that short-term interest rates were higher than long-term rates. I see that the yield on the five-year Treasury is very close to the yield on the ten-year Treasury. This means that investors aren’t being rewarded for lending their money for longer terms. The price for taking “time risk” is zero. As the 2005 trading year is almost over, it will be interesting to see if the Dow can hold onto its slight gain. Right now, the index is up about 80 points for the year. The S&P 500 is currently up about 4.5% for the year. Two other things to note: The Wall Street Journal reported that holiday sales were pretty strong. Also, Overstock.com (OSTK) gave an earnings warning. Something tells me this company will not have a smooth future. Posted by edelfenbein at 11:55 AM Market Report from Vietnam Take a deep breath, here's the stock market report for the Saigon Times. The Vietnamese exchange opened 2000. Trading is done in the rather unfortunately-named Vietnamese dong. I really don't know what most of this means, but I assume it's a good sign. Free enterprise seems to be catching on. Believe it or not, property prices in Hanoi rival those of New York and Tokyo. Vietnam has followed the other South Asian countries down the path of economic reform. I guess it's sort of a domino effect. Posted by edelfenbein at 4:26 AM December 26, 2005Good Fashion Sense One of the best-performing industry groups of last 10 years has been retail apparel stores. I have to admit that this is one phenomenon I never saw coming. It’s also interesting to note that oftentimes, great investments are necessarily from great inventions. Sometimes, just building a better mousetrap is all you need. Just look at the long-term charts of stocks like Abercrombie & Fitch (ANF), Chico’s FAS (CHS), Christopher & Banks (CBK), American Eagle Outfitters (AEOS) and Urban Outfitters (URBN). They’re all been big winners. Plus, there are some promising up-and-comers like True Logic (TRLG) and Aeropostale (ARO). So who’s next? Make way for Steve and Barry’s: Almost everything at Steve & Barry's -- jeans, jackets, hats, athletic pants, cargo shorts, hooded sweat shirts -- costs $10 or less, an obvious delight for holiday shoppers. But retailers across the realm, from mass-merchant discounters to higher-end clothiers, are also starting to take notice, retail experts say. They’re not public yet, but this is one to watch. Posted by edelfenbein at 6:23 PM December 24, 2005Merry Everything!!
I want to thank all my readers for their support. Have a wonderful holiday season and a happy, healthy and profitable New Year! - Eddy Posted by edelfenbein at 6:03 PM Patrick Byrne Goes Off His Meds Jeff Matthews nails Patrick Byrne, the loopy CEO of Overstock.com. (Via The Stalwart). Posted by edelfenbein at 4:20 PM Morgan Keegan Downgrades Bed Bath & Beyond Here's the bearish case from Morgan Keegan: We are lowering our rating to Underperform from Market Perform based on valuation and risks to near-term results. We are raising our fiscal year 2006 earnings-per-share estimate to $2.08, predominantly driven by the company's announcement that it will complete its $400 million share repurchase in fiscal 2006. Posted by edelfenbein at 3:57 PM WSJ on Gazprom
Here's a sample of the Journal's look at Gazprom, the Russian natural gas giant. MOSCOW -- Russian President Vladimir Putin signed a long-awaited decree removing all curbs on foreign ownership of shares of OAO Gazprom, the world's biggest natural-gas company, a move that will turn it into one of the world's leading emerging-market stocks. Yesterday was a fairly quiet day on Wall Street. The S&P 500 gained 0.04% and our Buy List rose 0.10%. Our best stocks were CACI (CAI), Frontier Airlines (FRNT) and Brown & Brown (BRO). Even the long weekend, the market will be closed on Monday. Posted by edelfenbein at 3:52 PM December 23, 2005Blue Line Jumps 11 Percent
OK, it’s Friday. This is for my all technician friends. Here’s the big story courtesy of The Onion: Blue Line Jumps 11 Percent I'm long blue. In other news, Brown & Brown (BRO) is at a new high and Frontier (FRNT) is back over $9. Posted by edelfenbein at 12:46 PM BW on How to Build Your Own Hedge Fund It isn't that hard. Posted by edelfenbein at 8:26 AM Private Equity Strikes Again This time, they've come for Tommy Hilfiger (TOM). Posted by edelfenbein at 7:19 AM WSJ: Foreign Firms Bailing Out This morning's WSJ has a disturbing story on C1. It looks like more foreign-based stocks are being scared off by Sarbanes-Oxley: This month, the Securities and Exchange Commission opened the door for foreign companies to bail out of their U.S. stock listings. Next year, several fed-up companies will indeed bolt. Posted by edelfenbein at 6:08 AM JetBlue, You’re On Notice OK, I’m making an official announcement: JetBlue (JBLU), you’re on notice. You got that? You’re on frickin notice pal. After today’s close, the stock will split 3-for-2 for the third time in three years! Yet the stock has done jack. Um, aren't splits for stocks that have gone (what's the word)...up? Sorry JetBlue, this just can’t be allowed. I’m writing a letter to someone. I don't get why they're splitting so much. At least do us the favor of doing something first. Like make a lot of money. It’s as if they’re trying to make their investors feel richer via a press release. "Hey, we have more crap at a crappier price! BFF!" Since the last 3-for-2 split, the stock is down about 33%. So the market kinda did its own split. JBLU is basically where it was when it went public three-and-a-half years ago. If you remember, this was the fad stock of Oh Three. Yes, I know. I’m beginning to sound like Napoleon Dynamite (freakin’ idiot!) but this could only happen on Planet Wall Street. This is why America thinks we’re insane people who have all gone crazy. It’s a bad sign when management pays more attention to the share price than to its business. Just worry about business, and the stock will follow. It ain’t magic. Stock splits do nothing for a stock. You’re no poorer or richer due to a split. It's that simple. Companies say they split to increase liquidity. Ok, fine. You can do that by a 4-for-1 split like every decade or so. Not one a year. If JetBlue was going to do three 3-for-2’s, why didn’t they just go public at a lower price? It's not like investment bankers have spines. But this makes no sense. They’re not fooling anyone. You hear me JetBlue, you’re on notice! If you do one more split, you’re no longer on notice. Then...you’ll be dead to me. You hear me, JetBlue! Dead!!
Posted by edelfenbein at 4:40 AM December 22, 2005The Market Today Outside of the strike news, today was a pretty slow day on Wall Street. Traders were pleased enough to give us the best day this week. The market rallied steadily all day. Every sector but energy was up. I have a feeling that’s going to be a theme during 2006. Just avoid energy and you’ll do well next year. Today, the S&P 500 gained 0.42% and our Buy List was up 0.40%. Apparently, Biomet (BMET) has lots of fans out there. The stock gained over $1 a share today. Forbes noted that Morgan reiterated its “overweight” rating on the stock. Of all the stocks to worry about, Biomet is not one. Frontier Airlines (FRNT) rose for the eighth time in the last nine days. This stock seems to like to move in waves. I’m still a bit puzzled by the company’s low guidance for next quarter. Maybe they’re setting the bar low intentionally, but I would be very surprised if Frontier misses this quarter. CACI International (CAI) said that it’s going to buy Information Systems Support Inc. Terms of the deal were not disclosed, but we believe it has something to do with money. Bed Bath & Beyond (BBBY) finished down 12% today. The stock is about where it was four years ago. Since then, sales have doubled and profits are up about 150%. Also, checks for the Wall Street research scandal are going out in the mail. Are you getting one? Me neither. Lastly, President Bush pardons two moonshiners. Posted by edelfenbein at 5:10 PM Danaher It's about time Danaher (DHR) gets some love. This is Forbes on one of America's best-managed companies. Electronics giant Danaher's quirky $7.7 billion (sales) product mix runs from aircraft safety equipment and submarine periscopes to infrared thermometers and hand tools. And if you mailed or received a package over the holidays, thank Danaher's Accu-Sort division, whose fixed-position lasers and scanners help sort 80% of all parcels shipped in the U.S. By imposing a just-in-time parts and manufacturing discipline, Danaher keeps inventory levels down and forces supply decisions to be made on demand. All this helps the bottom line. Five-year earnings-per-share growth has averaged 20%, ranking Danaher fourth in its sector for that metric. Posted by edelfenbein at 3:21 PM Biomet and Bed Bath & Beyond So Biomet (BMET) disappointed Wall Street yesterday. But due to its low price, the stock was upgraded today by Lehman Brothers. Well...now it’s back to almost exactly where it started. Glad that’s all cleared up. The company missed earnings by two cents a share, and it lowered guidance for next quarter. That doesn’t please me but I realize that Biomet is in a tough environment. The industry is totally freaked about the threat of price cuts. Still, Biomet has held up well and the fundamentals are very strong. The stock was too expensive at $50, and ideally I’d be a more enthusiastic buyer at a little lower price, but this is a solid stock. That’s why I’m keeping it on the Buy List for next year. Don’t let the market fool you. Now we turn to Bed Bath & Beyond (BBBY). One day after I announce that it’s going on the new Buy List, the stock gets slammed by 10%. This is why I’m not a trader. I would be awful. But again, I’m not worried at all about BBBY. Actually, the lower price makes me like it even more. Here’s what the Wall Street Journal had to say today: The company's fiscal third-quarter earnings met targets, but sales missed analysts' forecasts, as did the retailer's profit outlook for the current quarter. Also, the recent quarter, which ended Nov. 26, marked only the second time in the last two years that Bed Bath & Beyond didn't beat estimates. I think Bed Bath & Beyond is in a similar situation as Dell (DELL). The company pared its growth downward slightly, and investors are punishing it severely. This simply comes down to perspective. Let’s not forget that companies like Dell and Biomet are consistent performers. Dell’s stock recently dropped $13 after it cut its earnings guidance by two cents a share. That means that its marginal earnings were worth 650 times earnings. I’ll always take the opposite end of that trade. Here's what I wrote about Dell six weeks ago. Posted by edelfenbein at 3:08 PM The Strike Ends Posted by edelfenbein at 1:32 PM Gazprom Watch Here’s a fascinating story from NPR (audio file). Gazprom, the Russian state-controlled natural gas monopoly is raising prices in Ukraine by 300%. This is an obvious revenge move due to last year’s anti-Kremlin Orange Revolution. I’m not trying to be an alarmist but this company is bad news. I’m surprised it hasn’t made more news in the West. Gazprom is basically the KGB is the form of an energy company. It’s incredibly powerful in Russia. The company accounts for 8% of Russia’s GDP, and 25% of its tax revenue. Imagine if one company were that powerful here. Here’s an example of how Gazprom plays. Last year, they got into a fight with Belarus, so they shut off all gas supplies in the middle of winter. The company is now the third-largest owner of oil in the world, behind Iran and Saudi Arabia. I don’t know who to fear more. I guess I’ll go with the Holocaust-denying nuke crowd, but that really doesn’t narrow it down. Ukraine could respond. Gazprom supplies gas to much of Europe and those pipelines run through Ukraine. This could get nasty. Get used to hearing more stories like this. Posted by edelfenbein at 1:02 PM Charles & Colvard Charles & Colvard (CTHR) has been one of the hottest stocks on Wall Street. Four years ago, the stock was going for about $1 a share. Since then, it’s made Google (GOOG) look like a wimp. And what happens after you gain several thousand percent? Boo-yah! Yep, Cramer profiled CTHR on "Mad Money" two weeks ago. After that, the stock got as high as $32 a share. A 3,000% plus gain in four years is always a very good thing. (Does anyone not see where this story is going?) Since you’re probably wondering what Charles & Colvard does, here’s Cramer: Charles & Colvard’s synthetic moissanite jewels cost one-tenth the price of a diamond but are “more brilliant and more lustrous than diamonds,” he said. Moissanite jewelry is carried at more than 700 J.C. Penney stores. Moissanite jewelry? Oh dear lord. So we’re talking about a business model that relies on that key “Kevin Federline” demographic. Jewelry shoppers at Penny’s! For the past 12 months, the company made 36 cents a share. That means it nearly got to 100 times earnings and slightly over 11 times sales. Note my use of the past tense. This stock was priced to perfection, and perfection never came. Yesterday, Charles & Colvard said that it’s looking forward to strong growth for the fourth quarter, but next year will be “difficult to predict.” The stock is down about 30% today. Plus, there’s this gem: Shares of Charles & Colvard plunged nearly 30 percent Thursday after the Morrisville manmade jewel maker revealed Wednesday night that it had fully vested employee and board member options to purchase 107,000 shares of its stock. Charming, no? Posted by edelfenbein at 11:27 AM IBD on Amedisys This morning, Investor's Business Daily highlights Amedisys (AMED). This is a pretty cool company. It's a very profitable operator of several home nursing centers in the Southeast. "Amedisys is riding a strong demographic wave right now," said analyst P. Jay Fortner of Cochran, Caronia Securities. "You have a lot of baby boomers getting into Medicare." Posted by edelfenbein at 4:34 AM December 21, 2005The Market Today Stocks followed a perfect arc today. The market opened higher, slowly rallied in the morning, flattened out by lunch, and gave back much of its gains during the afternoon. Still, we ended higher and that’s a nice change of pace. Despite Biomet’s (BMET) sluggish earnings, the Buy List had a decent day. The S&P 500 rose 0.25% and our Buy List added 0.53%. (By the way, have you seen our Buy List for 2006? Check it out.) Sixteen of our stocks went up and nine went down. Our big gainers were Expeditors (EXPD), Golden West (GDW) and Quality Systems (QSII). Expeditors was helped by the strong earnings report from FedEx (FDX). FedEx surged to a new all-time high. The stock is up 6,700% since its IPO in 1978. Both FedEx and Expeditors are part of the Dow Transportation Average (^DJT), which also hit a new all-time high today. The new high there is crucial to Dow Theorists. The economically cyclical sectors were very good today. The top sector today was Basic Materials (^DJUSBM). This may signal that the economy has more strength than many people think. Although, FedEx’s earnings covered the period through November; Wall Street really wants to know how well business is going right now. Interestingly, the small-caps had another big day. The Russell 2000 (^RUT) is close to a new all-time high. Bed Bath & Beyond (BBBY) just reported earnings after the close of 45 cents a share. This was in line with expectations, although sales were slightly below expectations. The stock is trading sharply lower after-hours. Anytime this stock is below $40 a share, it’s an excellent buy. Here’s some perspective: Sales grew from $1.31 billion to $1.45 billion, instead of $1.47 billion. That’s basically one-day’s worth of sales. Is that really worth $600 million in market cap? I didn't think so. Also, mad props to GroovyStocks for the profile on yours truly. And finally, pork pie-makers in England want trade protection. I really wish I were making this up. Posted by edelfenbein at 5:21 PM Salesforce.com Shares Decline on Outage This stock always seems to be in the news. Shares of Salesforce.com, a San Francisco-based provider of customer relationship management software, got zapped in afternoon trading on Wednesday after the company reportedly suffered a severe system-wide outage on Tuesday. Posted by edelfenbein at 1:54 PM Moody’s I have to admit that Moody’s (MCO) is a great company. The company just raised its dividend. It’s about to make another new high. Warren Buffett owns a large stake in it, but I think the stock is getting to be too rich at these levels. A lot of the stock's surge is due to P/E ratio expansion. That can't go on forever. If the shares come back below $50, I think it would be a great buy.
Posted by edelfenbein at 1:50 PM Bed Bath & Beyond Earnings Bed Bath & Beyond (BBBY) is set to report earnings after today’s close. The stock has basically traded around $40 a share for the last 2-1/2 years. The current earnings estimate is for 45 cents a share. To give you an idea of how reliable the company is, there are 25 analyst estimates and the highest is for 46 cents, the lowest is for 45 cents. Talk about a narrow range! Last year, BBBY earned 40 cents a share. I don’t believe the company has ever missed its earnings estimate in 13 years as a publicly traded stock. The shares are rallying today:
Posted by edelfenbein at 12:29 PM The Morning Market Lots of news this morning. Third-quarter GDP growth was revised slightly lower to 4.1%. That’s still the best growth is 1-1/2 years. I think the market will shrug it off as the third-quarter started six months ago. The good news is what’s happening overseas. We have multi-year highs in Britain, Germany and Japan. The Nikkei is coming close to 16000. There's also the news from China. The Chinese government announced that its economy is really about 17% larger than it originally thought. The New York Times has more. I think we’re heading to a positive opening. FedEx (FDX) reported very strong earnings. The Google/AOL deal is now official. Calpine finally filed for bankruptcy. Here’s a timeline of Calpine’s recent history. Nike (NKE) disappointed Wall Street was a poor earnings report. The transit strike is in its second day. B of A said that it will impact Tiffany’s (TIF) business. Lastly, in Slate Adam L. Penenberg speculates on the end of Moore's Law. Posted by edelfenbein at 9:25 AM Biomet's Earnings From Reuters: Biomet Inc. (BMET) on Wednesday said its quarterly earnings rose on sales growth for its orthopedic reconstructive and dental reconstructive implants. Posted by edelfenbein at 5:23 AM The Buy List for 2006 Drumroll.... Crash! Here’s the Buy List for 2006: AFLAC (AFL) Bed Bath & Beyond (BBBY) Biomet (BMET) Brown & Brown (BRO) Donaldson (DCI) Dell (DELL) Danaher (DHR) Expeditors International (EXPD) FactSet Research Systems (FDS) Fair Isaac (FIC) Fiserv (FISV) Golden West Financial (GDW) Harley-Davidson (HDI) Home Depot (HD) Medtronic (MDT) Respironics (RESP) SEI Investments (SEIC) Sysco (SYY) UnitedHealth Group (UNH) Varian Medical Systems (VAR)
The six new stocks are Bed, Bath & Beyond, Harley-Davidson, Home Depot, Sysco, FactSet Research Systems and UnitedHealth Group. Please, make them feel at home. I think you'll get to like them. I didn’t plan it this way, but I’m surprised at how many mega-cap stocks made the list. The new Buy List represents over $460 billion in market value, which is equal to about 4% of the entire S&P 500. The real biggies are Home Depot, UnitedHealth, Dell and Medtronic. Combined, those four represent about two-thirds of the market value of the Buy List. I’m also surprised at the small number of financial stocks, although I’m going to keep stocks like Golden West, AFLAC and Brown & Brown. Any way you slice it, this is a pretty conservative list. If you're not familar with the Buy List, here's the deal. I’m not going to make any changes to the Buy List for the next 12 months. This list is set in stone (I'll make adjustments if any positions are bought out). I’m going to start tracking these 20 stocks on January 3, 2006, which is the first trading day of the new year. For track record purposes, I’m going to assume that all 20 stocks are equally weighted based on the closing price of December 30, 2005. As usual, you can assume that I own any of the stocks on the Buy List. Your pain or gain is also mine. I’m still going to track the 2005 Buy List through the end of next week. I'm looking forward to a fun and profitable 2006! Posted by edelfenbein at 2:03 AM December 20, 2005The Market Today This is truly frightening. Wall Streeters are walking today. Do these transit workers have any idea what they’ve done? Cabs are impossible to get. Some people have to carpool! I mean...ick. I don’t know how much longer this can go on. I’m all for labor unions, but couldn’t they strike during better weather. Planning, fellas! Anyway, stocks bounced around for most of the day and finished just a wee bit lower. This was the third straight down day, the most since October. Our Buy List had another rough day, although not quite as bad as yesterday. The S&P 500 lost 0.02% and our Buy List fell 0.40%. The good news is that Commerce Bancorp (CBH) raised its quarterly dividend by 9%. That’s always nice to see. Zimmer (ZMH), Dell (DELL), Biomet (BMET) and Stryker (SYK) all got hit today. Biomet comes out with earnings tomorrow. Melissa Davis at The.Street has an interesting story on Biomet and the orthopedic industry. Outside our Buy List, FactSet Research Systems (FDS) reported earnings that were three cents a share higher than estimates. This is a neat little stock. I was troubled to see Electronic Arts (ERTS) say that this quarter will be “well below” expectations. ERTS used to be a “can’t miss” stock. Also, General Motors (GM) fell to an 18-year low. The company is recalling 425,000 vans due to bad seat belts. The Dow is only up 2.5% this quarter. For the last four years, the Dow has gained at least 7% in the fourth quarter. Business Week has an article about the tech boom in Israel. Posted by edelfenbein at 5:55 PM Google Earth Here's an interesting article in today's NYT. Apparently, Google Earth is very good. Perhaps, too good. When Google introduced Google Earth, free software that marries satellite and aerial images with mapping capabilities, the company emphasized its usefulness as a teaching and navigation tool, while advertising the pure entertainment value of high-resolution flyover images of the Eiffel Tower, Big Ben and the pyramids. Posted by edelfenbein at 2:23 PM Irrational Journalism During the palmy days of the tech bubble, countless gurus assured us that “it’s different this time.” All we had to do was load up on tech stocks or day-trade the latest dot-com and we'd be set for life. Then amidst all the ruckus stepped Yale professor Robert Shiller. His book “Irrational Exuberance” was a bold warning—stock prices were too high and bound to crash. He was right and we all should have listened to him. The basic outline of this story has been written a few other places. There’s just one problem. It’s wrong. Few people have gotten further on inaccurate market predictions than Robert Shiller. But still, the media keeps repeating the same urban myth. For the record, Dr. Shiller never called the top. He had been a bear for years (since at least 1996). And he’s never said to go back in the market—he’s still a bear today. That’s been his call and it’s been terribly wrong. Since no one else is saying it, I'll say it. If investors had followed his advice, they would have missed out on a great profit opportunity. If you’re always screaming that the market is too high, you’re bound to be right one day. I’m sorry, that doesn’t impress me. I need more. You also have to tell me when to get back in again. Over the last 10 years, the S&P 500 with reinvested dividends is up over 140%. By the way, that’s only counting the S&P 500. The S&P Mid-Cap and S&P Small-Cap Indexes have both hit all-time highs recently. Also, if someone continued to buy as the market fell, their returns would have been even greater. The market is up about 60% in the last three years. Here’s Fortune’s recent article on Shiller: One of the most important lessons you can ever learn about markets is also one of the easiest to forget: Just because prices are more reasonable than they were doesn't mean they're reasonable. I'm sorry to report that it's absolutely the lesson to keep in mind now that the Dow has hit 42-year highs and crept back up near 11,000. Forty-two year highs! I hope that’s just a misprint. The Dow is at a 4-1/2 year high. How does he come to this conclusion? After all, stocks are generally lower than back in the bubble days, and we've had four years of economic growth to rehabilitate corporate profits. His answer is simple. As he told me the other day, all the competing theories boil down to one easy-to-understand calculation: "The trailing P/E ratio for the S&P composite is still around 25, vs. a long-term average of 15." By using 10-year data, we’re going to have the earnings bust of 2001 and 2002 stuck in our readings for years to come. According to data at Dr. Shiller’s Web site, the 10-year trailing P/E ratio was also over 25 in 1992. If we used that time the market, we would have missed another great bull market. Worst of all, the 10-year trailing P/E ratio soared over 25 in 1933. That was one of the best times to buy in history. The truth is that this analysis has not been an accurate predictor of market behavior. Are we the ones being told that it's different this time? Update: Brad DeLong has more. Posted by edelfenbein at 1:25 PM Morgan Stanley’s Profits Jump 49% The profits continue for the brokerage firms. Today Morgan Stanley (MWD) reported a 49% increase in its third–quarter earnings. Net income for the three months ended Nov. 30 increased to $1.79 billion, or $1.68 a share, from $1.2 billion, or $1.09, a year earlier, Morgan Stanley said today in a statement. The firm repatriated $4 billion in foreign profit, boosting net income by 26 cents a share. Revenue climbed to $6.96 billion. Posted by edelfenbein at 10:43 AM December 19, 2005The Market Today Ugh! This was not a good day for the Buy List. Right now, I’m looking around for a red flag I can toss out onto the field for a video review. Upon further review, perhaps today didn't happen. For the record, the S&P 500 fell 0.58% today, and our Buy List fell 1.15%. Youch! It was actually worse earlier in the day. We still have our slight lead over the market for December, but I’m far too competitive to settle for a slight lead. Only four of our 25 stocks went up. Oddly, we didn’t have any major individual losses. Our biggest dud was eBay (EBAY) which dropped 2.87%. That’s not so unusual for eBay. Frontier (FRNT) had an interesting day. I was curious to see if it could follow up its huge day on Friday. FRNT opened lower today, but rallied and finished just one penny lower. Not bad. The company also reported that it’s adding two more Mexican destinations. Also, IBD ran a bullish article on the airline sector today. On Wednesday, Biomet (BMET) will report its earnings. The current estimate is for 43 cents a share. The stock has been pretty flat lately. I'd like to see a nice rally there. On the overall market, decliners beat advancers by more than four-to-one, which is the broadest sell-off since October. Outside our Buy List, Pfizer (PFE) gained 7.7%. Merck (MRK) was up almost as much, rising 7.5%. Ford (F) had its debt downgraded to junk status. I guess American car-making was a 20th century event. The semiconductor sector was weak today and oil fell again. A barrel of crude is now below $58. Small-cap stocks were especially weak today. The Russell 2000 lost 1.59%. If today did indeed happen, then I'm eagerly looking forward to tomorrow. That's what I love about Wall Street. An opening bell is never far away. Posted by edelfenbein at 6:13 PM Rydex Funds The Rydex family of mutual funds offers some interesting mutual funds for investors. Generally I shy away from trading, but if you’ve got mad trading skillz the Rydex funds can leverage your returns (or losses). For example, the Rydex Titan 500 fund aims to double the daily move of the S&P 500. The Tempest 500 fund aims to double the opposite of the daily move of the S&P 500. This is what hedge fund managers try to do all the time. This is another example of the tools of Wall Street’s pros being brought to the masses. Here are some of Rydex’s other funds: Mekros aims to do 1.5 times the Russell 2000 Here’s some more info on Rydex. Posted by edelfenbein at 2:53 PM Liftoff for Lipitor Our Buy List is having a rotten day so far. No one stock is getting killed, but everything seems to be down about 1%. The only plus is that Medtronic (MDT) hit a new 52-week high. The market is being thrown off balance today. The huge gainer is Pfizer (PFE) which is having its best day in 20 years. The company won its big Lipitor patent suit. This is a big, big victory for Pfizer. I’ve been very worried about the company lately. I had mentioned before that I was impressed by its big dividend increase. This is good news, but the stock still has a long way to go. Pfizer’s news is also helping Merck (MRK). Both Merck and Pfizer are Dow components, so the Dow 30 is outpacing the Nasdaq and S&P 500 today. Even the entire health care is moving up thanks to Pfizer. That makes me even more discouraged that our health care stocks like Biomet (BMET), St. Jude (STJ) and Stryker (SYK) aren’t responding. As I said, the market seems really off balance today. I can’t figure out what’s going on. For example, the three-month T-bill yield is trading higher while the 10- and 30-year bond yields are lower. That’s not so unusual but we haven’t seen anything like it recently. Due to the narrower yield curve, bank stocks are lagging the market. Health care stocks are leading the market higher and industrials and utilities are the poorest sectors. That's a rather odd combo. Here’s a random thought I’m throwing in: Home Depot (HD) seems unusually cheap right. I have to confess that I’m not a big fan of the stores. Whenever I go there, the stores always have that Saigon ’75 feel to them. It’s complete mayhem. The aisles are jammed and the hoards of folks are carrying off anything not bolted down. I guess that’s good for business. Still, I’m always tempted to grab my purchase and bolt to a chopper liftoff from the roof. Wall Street currently expects HD to earn $3.03 a share next year (the fiscal year ends at the end of January ‘07). That’s just under 14 times earnings, which is fairly cheap. Last month, the stock had a great earnings report. HD earned 72 cents a share, four cents more than estimates. Lowe’s is probably the better company, but I’m skeptical that its P/E ratio should trade at a 25% premium to Home Depot’s. Here's a three-year chart on Home Depot. You can see that the trailing P/E looks pretty reasonable.
Posted by edelfenbein at 12:28 PM Does the Weather Affect the Stock Market? One professor says that there's definitely a possibility that it may: Professor Ben Jacobsen’s paper “Is it the Weather?” confirms that there is definitely a strong seasonal effect in stock returns in many countries: stock market returns tend to be significantly lower during summer and autumn months than they are during winter and spring. Click here for the paper. Posted by edelfenbein at 5:58 AM December 18, 2005Albert Einstein: Physicist, Investor From the Independent: Albert Einstein and his scientific achievements are world-renowned. Less well-known are his successes as a stock market investor. But it turns out that, in less than 20 years, he and his adviser turned a few thousand dollars into more than $250,000. Posted by edelfenbein at 6:35 PM The Colts Finally Fall The Colts are finally beaten! Thanks to Michael Turner's 83-yard rumble, San Diego beat Indianapolis 26-17. Here's the TradeSports contract for Indy to win. You can see that Turner's run came shortly after 4 p.m. Posted by edelfenbein at 4:23 PM The Undercover Economist "A funny thing seems to be happening to economics writing: it's getting better." Roger Lowenstein is always a good read. Here he is in today's NYT on Tim Harford's "The Undercover Economist." Posted by edelfenbein at 1:11 PM Accounting Footnotes Ellen Simon takes a closer look at accounting footnotes: One-time charges Posted by edelfenbein at 1:03 PM December 17, 2005Weekend Link-A-Rama Here are a few links that you might enjoy this weekend.
Posted by edelfenbein at 10:26 AM December 16, 2005The Market Today Are the Elliott Wavers onto something? Once again, the Dow couldn’t break through 10940, which is one of those pesky Fibonacci numbers. Today, the Dow got to 10940.34 before backing off. The high for the year is 10950.55, reached back in March. Coincidence? Not bloody likely! The overall market dropped for the second straight day. The S&P 500 gave back 0.28% and our Buy List fell 0.15%. However only seven of our stocks were up, 17 were down and one was unchanged. Our big winner today was Frontier Airlines (FRNT) which jumped 46 cents, or 5.6%. The airline sector was particularly strong today. Medtronic (MDT) is another stock that’s been strong recently. The stock is very close to a new 52-week high. Volume was heavy for today’s session. Today was a “quadruple witching” day when futures and options on stock indexes and individual stocks expire. Oil dropped nearly $2 a barrel today. That’s very good news. I’m still holding to my thesis that we’re in a bear market for risk-taking. The VIX (^VIX) fell to 10.15 today, which is very close to a 12-year low. The index was slightly lower this past summer. I’ve also been talking about the “dual market,” energy and everything else. Today was a perfect example. Look at the performance of the sector spyders for today: Health Care............0.25% Everyone is not only bunched together, but barely moving, and then there’s energy at the extreme. There’s just so little volatility in this market. Outside our Buy List, Oracle (ORCL) fell 1.09%. I expect that next week will be slow. We’ll get another update on third-quarter GDP. I’m rooting for another upward revision. Also, Biomet (BMET) reports earnings, as do two other stocks I like Bed, Bath & Beyond (BBBY) and FactSet Research Systems (FDS). Today’s link: The Stock Bandit. Enjoy. Posted by edelfenbein at 5:34 PM WSJ: AOL Nears Deal With Google The Wall Street Journal is reporting that Time Warner (TWX) is close to a deal with Google (GOOG) for AOL. Microsoft (MSFT) has apparently been shut out. The deal won't likely be finalized until next week after Time Warner's board meeting on Wednesday. Posted by edelfenbein at 12:57 PM Oracle's Earnings Oracle (ORCL) reported its earnings after yesterday’s close. Let’s start with the good news. No one was seriously injured or maimed. That’s not always a given when your CEO owns his own jet fighter. The bad news is that Oracle’s profits skidded 2%. All told, the company netted 15 cents a share but charges for its acquisition binge shaved off four cents a share. At this price, I think Oracle’s stock is a bit cheap but I’m not a buyer. No way. The company faces several major problems. Obviously, the most important is that its core business simply isn’t growing that fast. Last quarter, database license sales grow by just 5%. I’m sorry but that’s pretty dismal. That stock has been stuck in neutral for the last few years and I’m not sure things will get better any time soon. The thing about Oracle is that it’s still overwhelmingly a database stock. If anything, the database market has become even more competitive. You have Microsoft and IBM closing in. I’ll give Larry & Crew credit for realizing the trouble they’re in. They understand that something must be done, and quick. Hence, the acquisition boom. Let’s just say that Oracle has made a lot of investment bankers happy this year. And it’s not just Siebel and PeopleSoft. Oracle has spent $16 billion this year on over a dozen acquisitions. That’s almost as much as Steinbrenner. But it’s the buying spree that makes me nervous. The three most terrifying words on Wall Street are growth, acquisition and by. At the high-end of enterprise software, there’s nobody left. It’s just SAP and Oracle—that’s it. Look at what happened to Siebel earlier this year. It’s almost as if Larry saw the ghost of Christmas Future. The Siebel board fired their CEO after less than a year, and was able to get Oracle to take the bait for a buyout. OK, even I’m not that cynical, but still...it happened. The shareholders want action. If Oracle’s stock continues to go nowhere, Larry may need his fighter for self-defense. (Although I’m partial to the idea of Redwood being declare a no-fly zone.) If not air or land, there’s always the sea. Ellison also owns the world second-largest yacht, a 450-footer. I’m guessing that’s a par three. Don’t get me wrong. I love Larry. He’s a genius. If anybody can pull off a swarm of blockbuster deals, he can. I’d love to be his wingman (or first mate), but Oracle has to start putting up better numbers. Then it’ll be worth a serious look.
Addendum: Wall Street Folly has the transcript of Oracle's conference call. Posted by edelfenbein at 5:52 AM December 15, 2005The Market Today Slow day today. The S&P 500 barely budged and ultimately closed lower by 0.14%. Our Buy List was just behind it, falling 0.22%. As usual, energy was the most extreme group. This time it was the poorest sector. CACI International (CAI) was our laggard today, which isn’t much of a surprise after yesterday’s big rally. The stock was also downgraded by Morgan Stanley. Our auto insurer, Progressive (PGR) reported results for November. They were down slightly but nothing to worry about. Zimmer Holdings (ZMH) announced a big $1 billion share repurchase program. For me, I’d rather get the money. Danaher (DHR) raised the low end of its 2005 earnings guidance. That’s such a neat little stock. Tim Hanson, at the Motley Fool, has more on “The Best $17 Billion Company You Don't Know.” Outside the Buy List, I’ve been trying to find a reason why Health Management Associates (HMA) is below $23 a share. It might be there but I haven’t found it yet. Still, hospital stocks scare me. Posted by edelfenbein at 6:35 PM First Marblehead Is First Marblehead (FMD) a screaming buy? Tom Brown, of BankStock.com, is one of my favorite banking analysts. He’s been a super bull on shares of First Marblehead for a long time. The company is a servicer of student loans. In June, the stock plunged after one of its clients, Collegiate Funding Services (CFSI), said it was going to offer its own private student-loans product. Shares of FMD are being hit again today as JPMorgan Chase (JPM) said it’s going to buy out Collegiate Funding. What does Brown have to say? “In all, this deal makes me more positive than ever on First Marblehead." You can read the rest of his commentary here. Posted by edelfenbein at 2:25 PM Charles Schwab Jumps to NASDAQ Charles Schwab (SCH) has decided to abandon the NYSE for the NASDAQ. That's a nice victory for the Naz to get one of Wall Street's own. The new symbol will be SCHW. Posted by edelfenbein at 12:51 PM Not Satire But French A dumb French law is upsetting a dumber European Commission. France warned over ban on stock market listing for sports clubs Posted by edelfenbein at 12:46 PM "I wait for the blowup, then invest" Fortune talks with Richard Rainwater. Rainwater is no crackpot. But you don't get to be a multibillionaire investor—one who's more than doubled his net worth in a decade—through incremental gains on little stock trades. You have to push way past conventional thinking, test the boundaries of chaos, see events in a bigger context. You have to look at all the scenarios, from "A to friggin' Z," as he says, and not be afraid to focus on Z. Only when you've vacuumed up as much information as possible and you know the world is at a major inflection point do you put a hell of a lot of money behind your conviction. Posted by edelfenbein at 12:40 PM Today’s Inflation Report The government reported that inflation last month was the lowest since the Truman administration. I don’t get too worked up over the monthly inflation reports. I think too many market watchers overrate the threat of inflation. The fact is that we haven’t had a seriou |
