Archive for September, 2010

  • Crossing Wall Street Joins StockTwits
    , September 27th, 2010 at 2:07 pm

    As you may have gathered from the new look, we did a little redesign here and Crossing Wall Street is now a part of the StockTwits network!

    I owe a big thanks to Howard Lindzon, Phil Pearlman, Dominic Rivera and the whole team at StockTwits who helped in the redesign. Howard is a great guy and his team has done a wonderful job making StockTwits a valuable addition to the world of financial blogs. Time just named it one of the “50 Best Websites of 2010.”

    Please don’t worry that I’ve gone all “Hollywood.” The blog is the exact same as before. I’ll still provide my analysis of stocks and the market in general. Plus, the Buy List is still here (now in its fourth-straight year of beating the market). I’m now just looped in with many great bloggers at StockTwits. Be sure to check out the StockTwits network on the Nav bar. I’ve also hired someone to help keep my typos to an acceptable minimum.

    If you emailed me in the past 48 hours, I apologize because it may have fallen through the cracks. No worry. Feel free to email me at eddy@crossingwallstreet.com. And I welcome any feedback on the new site. Don’t be shy. Tell me what you like and what you don’t like.

  • IBM Hits New 52-Week High, Closes in on All-Time High
    , September 27th, 2010 at 11:35 am

    Shares of IBM (IBM) have been as high as $134.95 today. That may not strike you as being eventful but consider that IBM’s previous 52-week high was $134.25 from January 2010. Also, IBM’s highest intra-day price in 2000 was $134.94 reached on September 1, 2000. The all-time high of $137.69 came on September 10, 1999.

  • Yeah, I Confuse Those Too
    , September 27th, 2010 at 11:19 am

    From the BBC:

    France’s ex-justice minister Rachida Dati mixed up the words “fellatio” and “inflation” – which sound similar in French – during a TV interview.

    She told Canal Plus: “I see some [foreign investment funds] looking for returns of 20 or 25% at a time when fellatio is close to zero.”

    Within hours, the video was an internet hit on websites such as YouTube.

    Ms. Dati, now a Euro MP, later laughed off the whole episode saying she had spoken too quickly.

    Ms. Dati also said she was happy to have provided some entertainment.

    The French word for fellatio is “fellation”, which sounds similar to the word “inflation”.

    Ms. Dati left the government last year amid criticism of her management style, and gossip about her clothes and love life.

    She is now an MEP and serves as mayor of Paris’s seventh arrondissement.

    If you’re looking to make a joke about TIPs, I’m way ahead of you.

  • It’s Merger Time!
    , September 27th, 2010 at 10:55 am

    What happens when you have companies sitting on tons of cash and stock prices are depressed? The answer is mergers—lots of them. This morning, Wall Street is busy digesting a few more large-scale mergers.

    First, Alberto-Culver (ACV) is up around 20% today on the news that it agreed to be bought out by Unilever (UN) for $3.7 billion. The deal price is $37.50 per share. On Friday, Alberto-Culver closed at $31.48.

    According to Bloomberg’s numbers, Unilever is offering 14.75 times Alberto Culver’s earnings before interest, taxes, depreciation and amortization. That’s not cheap but it’s clear that Unilever wants in the U.S. market. Unilever is based in the Netherlands while nearly two-thirds of Alberto-Culver’s sales come from the United States.

    The purchase makes Unilever the biggest maker of hair conditioning products in the world, the second-largest in shampoo and the No. 3 in styling, the company said.

    Unilever entered the professional hair-product market in 2009 with the purchase of the TIGI salon brands from the creators of Toni & Guy for $411.5 million. The Alberto Culver acquisition includes Simple, a skin-care company it bought in 2009 for about 240 million pounds ($379 million).

    Personal care now represents 30 percent of Unilever’s sales compared with 20 percent a decade ago, Polman said. The unit had underlying sales growth of 7.8 percent in the second quarter, Unilever said in August, more than twice the pace of the group.

    Alberto-Culver has been a spectacular stock over the years. According to Yahoo Finance (whose numbers I don’t fully trust), the dividend adjusted return since 1984 is close to 14,000% which is over 20% per year.

    The other major merger is Southwest Airlines (LUV) deciding to buy out AirTran Holdings (AAI) for $1.4 billion. AirTran has been formed mostly from the remnants of what had been ValuJet. A few years ago, AirTran lost a bidding war for Midwest Air to TPG, the private equity outfit.

    The definitive agreement marks the first combination between major U.S. low-cost carriers and is only the second large acquisition by Southwest after it failed to capture Frontier out of bankruptcy protection last year.

    Kelly said Southwest would retain its distinct existing brand, avoiding bag fees and offering a single-class service. “This fits in beautifully with the strategy we’ve laid out, probably for the next decade,” he said.

    Southwest executives said it would take two years to integrate the airlines, though they have to navigate meshing contracts from both carriers’ unionized workforces. Southwest has yet to take the plan to employees–80% of its staff is unionized, compared with 50% at AirTran. The deal also needs to be approved by shareholders and competition authorities.

    Kelly said there was little overlap between the two networks, allowing Southwest to expand after halting its rapid growth during the recession. Atlanta–a key business market where AirTran competes with Delta Air Lines Inc. (DAL)–is one priority, as are smaller cities where it could use its target’s Boeing 717s. Southwest plans to keep the 717s and utilize AirTran’s orders for Boeing 737-700s, which mirror its own core fleet. Southwest is also looking at larger 737-800s that would be aimed at more congested airports.

  • Morning News: September 27, 2010
    , September 27th, 2010 at 8:04 am

    The 10 Costliest U.S. Housing Markets in Pictures

    Stock Index Futures Inch Higher as M&A in Focus

    Unilever Agrees to Buy Alberto Culver for $3.7 Billion

    Treasury Said to Prepare AIG Exit, Repayment Plan

    China Imposes a Steep Tariff on U.S. Poultry

    Wal-Mart Offers to Buy South Africa’s Massmart for $4.2 Billion

    Takefuji Says Eyeing Restructuring Measures; Investors Spooked

    How Americans’ Love Affair with Debt Has Grown

    Mazlan Othman Named Ambassador to Theoretical Extraterrestrials

  • Ignore the Dow
    , September 26th, 2010 at 6:19 pm

    Unless it’s across 10,000, I haven’t paid attention to the Dow in years. The S&P 500 is by far the better index. On top of that, consider this stunning fact: Caterpillar’s stock is responsible for 40 percent of the Dow’s climb since the beginning of the year. That’s crazy!

    If not for Caterpillar Inc., the world’s most widely-followed stock index would be up just 2.5 percent this year instead of 4.1 percent. Take out gains from the next three biggest contributors to the index — McDonald’s Corp., DuPont Co. and Boeing Co. — and we would be sitting on losses.

    “It’s all about Cat,” marvels BNY ConvergEx strategist Nicholas Colas in a recent report. “Names like Microsoft, Cisco, Bank of America and Intel might be large companies but as far as Dow impact goes, they are tiny.”

    The difference is that the Dow is weighted by price. To compute the Dow, you add up the 30 stocks and divide the sum by a divisor (currently 0.132129493) and, bingo. The S&P 500, however, is done by adjusting by the actual market value of each stock which makes much more sense.

  • NICK at $9.33
    , September 26th, 2010 at 6:07 pm

    Earlier I had noted that shares Nicholas Financial (NICK) had suddenly sprung to life. As it turned out, Thursday and Friday were the two heaviest trading days in over two months. The stock jumped from $8.35 on Wednesday to as high as $9.33 just before the close on Friday. That was NICK’s highest price in over three years. The stock finished the week at $9.01.

    I have no idea what’s caused the sudden interest in NICK. It’s a small stock so it doesn’t take a lot to cause some waves. I don’t have much else to say except I still think it’s an excellent stock and it should be going for around $12 per share.

  • A Little Bit Late
    , September 24th, 2010 at 12:04 pm

    Eighteen months and 70% after the bottom, Steven Pearlstein of the Washington Post tells us “Yes, it may finally be time to get back into stocks.”

    Finally? This is honestly one of the silliest columns I’ve read in a long time. What else can you say about a gem like this?

    As I see it, the biggest risk to stocks right now is the prospect that radical Republicans might win control of Congress, setting up a political stalemate with a veto-wielding president that almost surely put an end to the Dow’s 2,700-point Obama rally.

    The Obama rally? Even if you’re a hyper-partisan, how can someone really say that the Republicans are the biggest threat to stocks? Not inflation or deflation. Not taxes. Not a double-dip. Not an oil spike or Iran. None of those. The real threat is…political stalemate! Looking at the 1990s, that was a pretty good time for stocks and it was marked by political stalemate.

  • NICK Suddenly Wakes Up
    , September 24th, 2010 at 10:26 am

    Yesterday the Buy List only fell modestly compared with the rest of the market thanks to strong gains for Bed Bath & Beyond (BBBY) and Nicholas Financial (NICK). I have no idea why, but NICK seems to have suddenly woken up from its slumber. Who knows? Sometimes stocks do weird things. Yesterday was NICK’s heaviest volume in over two months. It even broke $9 per share today.

    Today looks like it will be a good day for us. So far, 19 of the 20 Buy List stocks are up. The only one that’s down is BBBY.

  • Morning News: September 24, 2010
    , September 24th, 2010 at 9:57 am

    Greenberg: Can an ETF Collapse?
    Yes, it May Finally Be Time to Get Back into Stocks
    Apple Passes PetroChina to Become Second-Largest Stock
    Wall Street Futures Signal Firmer Open
    German Business Confidence Unexpectedly Increases
    Obama Asks Wen for More Action on Yuan
    Petrobras Raises $70 Billion in World’s Largest Share Sale
    Amazing Horned Dinosaurs Found on ‘Lost Continent’
    Ida Blankenship speaks! Actress Randee Heller on the ‘Mad Men’ loopy secretary
    Getting Made The Scorsese Way (Mandatory reading for all Goodfellas fans)