Archive for March, 2007

  • A Stock, a Plan, a Short: Yahoo
    , March 24th, 2007 at 7:46 pm

    Now that Yahoo’s Panama is showing early signs of success, Valleywag asks if it’s time to stop bashing the company:

    It’s surely the best news for Yahoo in a while, and we’d love, in principle, to find another big company to prod. But it doesn’t change the basics: Yahoo makes less than half what Google produces in revenue for every search query; it needs much more than a one-off 10% lift in clickthroughs if it is to challenge Google’s strengthening grip on the search market.
    The narrative remains the same. Yahoo wasted time schmoozing in Hollywood while allowing two Stanford students to build a better search engine. Google has eclipsed Yahoo. Terry Semel’s failure is not absolute: Yahoo is growing much more strongly than most media companies. But it is relative. Yahoo, not Google, should have owned the internet.

    Ouch. But it’s true. I don’t get how Yahoo is a $31 stock. I wouldn’t touch it for half that. Yahoo is going for 43 times 2008’s earnings; Google, just 25.

  • Myths About the Developing World
    , March 24th, 2007 at 9:14 am

    Fascinating presentation by Hans Rosling.

  • The Buy List So Far
    , March 23rd, 2007 at 4:43 pm

    With a week to go in the first quarter, the Buy List is up 2.39% compared with 1.26% for the S&P 500 (this doesn’t include dividends). The Buy List is a tiny bit less volatile than the S&P 500 (average daily swing of 0.781% compared with 0.785%).
    Here’s the chart:
    image449.png
    Here’s the stock-by-stock breakdown:
    Jos. A Bank Clothiers (JOSB)……………………………………….21.12%
    FactSet Research Systems (FDS)………………………………..16.22%
    Respironics (RESP)…………………………………………………….10.94%
    Bed Bath & Beyond (BBBY)………………………………………….8.14%
    Amphenol (APH)…………………………………………………………6.68%
    UnitedHealth Group (UNH)………………………………………….5.17%
    Donaldson (DCI)………………………………………………………..4.18%
    AFLAC (AFL)………………………………………………………………3.57%
    Graco (GGG) ……………………………………………………………..2.88%
    Biomet (BMET)……………………………………………………………2.74%
    Fiserv (FISV)……………………………………………………………..2.04%
    Nicholas Financial (NICK)…………………………………………..1.78%
    Varian Medical Systems (VAR)……………………………………1.26%
    SEI Investments (SEIC)……………………………………………..1.23%
    Danaher (DHR)…………………………………………………………-0.23%
    WR Berkley (BER)…………………………………………………….-4.38%
    Fair Isaac (FIC)…………………………………………………………-5.31%
    Medtronic (MDT)………………………………………………………..-6.71%
    Sysco (SYY) …………………………………………………………….-10.34%
    Harley-Davidson (HOG)…………………………………………….-13.15%

  • Bon Voyonage
    , March 23rd, 2007 at 2:11 pm

    Last year I wrote about Vonage‘s (VG) impending IPO:

    The offering is oversubscribed. But the price of voice-over-Internet protocol (VoIP) is plunging. And so will Vonage’s share price.

    I was right. In ten months, the shares are down about 80%. As an experienced market professional, I know how to judge a company’s future profit potential. For example, if the company says that it may never be profitable, that’s usually a good sign. Meaning, a bad sign. Either way, that’s about the only thing Vonage has gotten right.
    Now the company has been slapped with an injuction. It’s barred from using a patented technology from Verizon (VZ). One Wall Street firm just put a $1 target price on the shares. Why so optimistic?
    image448.png

  • Blogroll
    , March 23rd, 2007 at 10:22 am

    If you haven’t had a chance, please check out my blogroll. I’ve added some new names in the past few weeks like Bill Rempel, Matthew Ash, Brett Steenbarger, Yaser Anwar and Maoxian.

  • Wallstrip Promo’d on Fast Money
    , March 23rd, 2007 at 8:30 am


    Here’s the show with DR himself.

  • The Blackstone Group’s Prospectus
    , March 22nd, 2007 at 4:13 pm

    From the SEC’s Web site. Here’s a sample:

    Our Growth Strategy
    We intend to create value for our common unitholders by:
    •generating superior investment performance across our asset management platform;
    •growing the assets under management in our existing investment fund operations;
    •expanding our asset management base by raising new investment funds;
    •increasing our investment of our own capital in our funds;
    •expanding our advisory business; and
    •entering into complementary new businesses.
    Why We Are Going Public
    We have decided to become a public company:
    •to access new sources of permanent capital that we can use to invest in our existing businesses, to expand into complementary new businesses and to further strengthen our development as an enduring institution;
    •to enhance our firm’s valuable brand;
    •to provide us with a publicly-traded equity currency and to enhance our flexibility in pursuing future strategic acquisitions;
    •to expand the range of financial and retention incentives that we can provide to our existing and future employees through the issuance of equity-related securities representing an interest in the value and performance of our firm as a whole; and
    •to permit the realization over time of the value of our equity held by our existing owners.

    Blastonechart.jpg

  • This Just In…
    , March 22nd, 2007 at 11:09 am

    Human Beings Still Important at Citigroup

  • Applying Warren Buffett’s Investing Philosophy to Basketball
    , March 22nd, 2007 at 10:54 am

    Courtesy of Heat coach Pat Riley:

    Coach Pat Riley said he would be surprised if his players weren’t keeping an eye on the standings.
    “I think there’s no doubt that this week or the next two weeks are going to determine a lot of positioning,” he said. “So, it’s like looking at the stock market every day.
    “We can’t get preoccupied with it, because sometimes that gets in the way of playing games.”

  • The Impact of Interest Rates on Equities
    , March 22nd, 2007 at 8:32 am

    Now that the Federal Reserve has lifted its tightening bias, I wanted to take a look at the impact of lower interest rates on the stock market.

    Since 1962, there have been 11,250 days when stocks and bonds have traded on the same day. The yield on the 90-day Treasury rose on 4,845 days, fell on 4,925 days and stayed the same on 1480 days.

    On all the days when the T-Bill yield rose, the S&P 500 lost a combined 61.9%. Annualized, that works out to a rate of -4.9% (just capital gains, not dividends).

    On the days when the T-Bill yield fell, the S&P gained a combined 1,739.1%, or 16.1% a year.

    Interestingly, the market did the best when rates stayed the same. The S&P gained 182.3%, or 19.4% a year.

    With long-term rates (10-year T-Bond), the impact is much more dramatic.

    The 10-year yield rose on 4,885 days for a combined S&P loss of 98.8%, or -20.5% a year. That’s basically a bear market.

    The yield stayed the same on 1529 days for a combined S&P gain of 89.4%, or 11.1% a year.

    But here’s the kicker: When the 10-year yield fell (4,836 days), and long-term bonds rallied, the S&P 500 gained an amazing 86,631%, or 42.5% a year.

    Probably the most fascinating stat is that all of the stock market’s net capital gains have come when the 10-year yield is 65 or more basis points above the 90-day yield (that happens about 70% of the time). The yield curve hasn’t been that positive in 15 months.

    Anything less than 65 basis points, including a negative yield curve, works out to a net equity return of a Blutarsky. Zero Point Zero.