Archive for 2007

• Buy List Year to Date
  Eddy Elfenbein, March 9th, 2007 at 5:23 pm

  We’re holding up well. Through Friday, the Buy List is down 0.63% for the year, while the S&P 500 is down 1.09% (not including dividends).
  

• Today’s Jobs Report
  Eddy Elfenbein, March 9th, 2007 at 10:20 am

  The unemployment rate fell to 4.5% for February, although it’s still above the 4.4% it reached in October. In the last 50 years, the current jobless rate is the 102nd lowest of 600 months.
  
  The economy added 97,000 jobs last month, and the job growth numbers for December and January were both revised higher. Here’s a look at non-farm payrolls:
  

• Think Our Market Is Volatile
  Eddy Elfenbein, March 8th, 2007 at 4:09 pm

  Check out the Indian Sensex (the blue line):
  

• Fedipus Rex
  Eddy Elfenbein, March 8th, 2007 at 1:09 pm

  Bloomberg writes on the growing rift between the current Fed and the former chariman:

  Former Federal Reserve Vice Chairman Alan Blinder said Alan Greenspan may be distracting investors from the Fed’s forecast that growth will strengthen this year.
  Greenspan, who was Fed chairman for almost two decades until Ben S. Bernanke took over 13 months ago, said at least three times in the past two weeks that a recession is possible. He didn’t say one was likely.
  “It is a little bit of a problem,” Blinder, now a professor at Princeton University in New Jersey, said in an interview. “He is sort of stepping on the message. The Fed’s message is things look pretty good and in particular we are not at all worried about a recession.”
  Current Fed officials are stressing that they don’t predict a recession, even after last week’s global equities plunge and a run of weaker-than-forecast economic data. Chicago Fed President Michael Moskow said in a speech today that he’s not prepared to significantly alter his forecast for a pickup.

• JOSB Rises on Same-Store-Sales Report
  Eddy Elfenbein, March 8th, 2007 at 10:45 am

  Good news for Joe Bank (JOSB) today. The company reported that same-store-sales grew by 2.8% in February, higher than the 1.7% predicted by analysts. The stock is doing very well this morning.
  Two other things to note. Donald Tomitz, the CEO of DR Horton (DHI), said that 2007 is going to be so bad for his company, it will be homosexual: “I don’t want to be too sophisticated here, but ‘07 is going to suck, all 12 months of the calendar year.”
  Also, in the Radio Shack (RSH) conference call, someone said something. And they probably shouldn’t have. That’s pretty much all I can say. Radio Shack, if you recall, was the only stock in the S&P 500 to do well last Tuesday.

• Buy List News Today
  Eddy Elfenbein, March 7th, 2007 at 5:16 pm

  Here are a few bits of news today regarding the Buy List.
  Erin Burnett talked with Dave Roberts, the CEO of Graco (GGG). He says he doesn’t see an immediate recession.
  Nicholas Financial (NICK) had a very good day today. The stock jumped 66 cents, which is an increase of over 6.1%. As far as I could tell, there was no news on the stock.
  WR Berkley (BER) announced that it’s increasing its dividend by 20% to five cents a share. Unless I have something wrong, the old dividend was four cents a share, so the increase is by 25%. Here’s the press release. Things must be busy there.
  Finally, Danaher (DHR) raised the lower end of its guidance today. The company now sees first-quarter profits of 75 cents to 77 cents a share. The previous forecast was for 72 cents to 77 cents a share.

• John F. Baugh 1916-2007
  Eddy Elfenbein, March 7th, 2007 at 2:00 pm

  John F. Baugh, the founder of Sysco (SYY), has died.
  The company’s press release said:

  John F. Baugh, the founder of SYSCO Corporation, the $33 billion Fortune 100 global foodservice marketer and distributor, passed away March 5, 2007. His passing was 37 years, almost to the date, of the corporation’s initial public offering on March 3, 1970.
  Richard J. Schnieders, SYSCO’s chairman, CEO and president, said, “His passing is indeed a profound loss. First and foremost, John Baugh was a man of commitment — to his wife, his daughter, his grandchildren and great-grandchildren, to his faith, his community and to the company he founded that touches so many lives today. A true visionary, a legendary entrepreneur, an inspiration to friends and colleagues and a generous philanthropist, his impeccable integrity and generosity of spirit have imprinted indelibly the character of our organization.”
  John F. Baugh was born February 29, 1916 in Waco, TX. Growing up in the Depression era, Baugh began his lifelong passion with the food industry at an A&P grocery store as a stock boy at the age of 13. Eventually, he became a store manager and in 1946, he and his wife Eula Mae founded a new company, Zero Foods, and began selling and distributing frozen foods to restaurants, hotels, hospitals, schools, fast-food stores and grocery chains.
  In 1969, Americans were eating out more than ever and industry studies predicted that half of all meals would be eaten away from home by 2000. Women who had entered the workforce during World War II were continuing to work; with less time to cook they wanted more food prepared by others. Baugh envisioned a national foodservice distribution organization and shared ideas with industry friends across the country.
  His dream became a reality when Zero Foods and eight other companies joined together to form SYSCO (an acronym for SYstems and Services COmpany). At the initial public offering on March 3, 1970, the nine companies had aggregate sales of $115 million and served a $35 billion market. In 1977 SYSCO became the leading foodservice supplier in North America and has since maintained this position. In 1988, an acquisition of its next largest competitor gave the company national coverage. SYSCO’s network of 172 locations and approximately 50,000 employees now serves an industry in excess of $200 billion. Mr. Baugh published a book about the company, “The SYSCO Story…Thus Far!” in 2003.

  Ulrich Boser of Slate recently profiled Sysco and its products.

• Does Media Alarmism Pose a Threat to Your Children?
  Eddy Elfenbein, March 7th, 2007 at 1:37 pm

  The Wall Street Journal is at it again. The newspaper ran an article today about possible back-dating of stock options after 9/11:

  Amid the stock-market swoon that followed the Sept. 11, 2001, terrorist attacks, dozens of companies granted stock options to top executives or other employees. Now, some of those companies are saying the grants were in fact made weeks later — and backdated.
  The disclosures are the latest wrinkle in a backdating scandal that involves more than 140 companies and has resulted in more than 70 firings or resignations of corporate officials. The new information suggests some executives profited from the market’s plunge following Sept. 11 by manipulating options grant dates.

  Larry Ribstein writes:

  Let’s put this in perspective. The fact that the backdaters picked a date that has been depressed by tragedy has nothing whatsoever to do with what the backdaters did or didn’t do wrong.

  I usually don’t pass along quotes like this without comment, but Ribstein says all that needs to be said.
  This isn’t the first time the WSJ has tried to attach 9/11 to back-dating. Last summer, the same three authors of today’s story wrote:

  On Sept. 21, 2001, rescuers dug through the smoldering remains of the World Trade Center. Across town, families buried two firefighters found a week earlier. At Fort Drum, on the edge of New York’s Adirondacks, soldiers readied for deployment halfway across the world.
  Boards of directors of scores of American companies were also busy that day. They handed out millions of bargain-priced stock options to their top executives.

  At the time, I wrote:

  Not very subtle is it? The soldiers readying for deployment was nice touch. Those evil corporate plutocrats just couldn’t wait to profit off 9/11.
  But hold up, how exactly did those boards know that the options grants were, as the Journal points out, “bargain-priced”? The answer is, they didn’t (assuming the options were at-the-money). More importantly, they couldn’t have known. The grants were based on nothing more than faith in the future, which was hardly in overabundance at the time.
  It’s true that stocks nosedived when the markets reopened, but that doesn’t by itself mean the options were a bargain. After all, the market had already been falling and it continued to fall for more than a year. In fact, the S&P 500 was still below its pre-9/11 level nearly three years after the attacks (and, of course, those soldiers readying themselves).

  John Carney sums it up nicely:

  Yelling “9/11” in an argument is usually a sure sign you’ve already lost it. It’s a desperate, pathetic move. So maybe there is something hopeful about the resort to it on the front page of the Journal. Maybe it means that the official backdating storyline is becoming less plausible.

  Exactly.

• 1987 Redux Redux
  Eddy Elfenbein, March 7th, 2007 at 11:45 am

  The New York Times ran an article saying that the bulls retreat was turning into a “rout.” Not to be outdone, Barclays Capital put out a report which compared the current market to the one in 1987. Yikes! And the Financial Times piled on saying that the sell-off “appear to have been exacerbated by an unusual wave of derivatives activity on the part of hedge funds and big banks.”
  Heavens! Scary stuff. The good news is that all these articles came out during last spring’s correction.
  You say you forgot about that one? Well, I don’t blame you — it only lasted a month, but no matter. The media can easily recycle these stories. Just use the “find/replace” function. Take out May, add March and…Presto!…you’re on your way.
  On the bullish front, the FT’s Alphaville Blog notes some recent comments by Abby Joseph Cohen:

  • No changes to Goldman’s baseline forecasts.”These already reflect a notable deceleration in economic and profit growth in 2007, but there is no recession on the horizon.”
  • Valuation support is intact for US equities. “Our estimated fair value for year-end 2007 remains 1550, suggesting that the S&P 500 is now about 11% under priced…The strength of US corporate balance sheets, especially among the companies in the S&P 500, and strong ROEs, should also offer some ballast in a rocky market environment. We assume that margins will move lower in many industries this year, but from record-high levels to still-high levels.”
  • GS forecast has long presumed a deceleration in economic growth this year. “Importantly, core inflation is not expected to rise dramatically.”

• The Obama Portfolio
  Eddy Elfenbein, March 7th, 2007 at 9:52 am

  
  Check out the senator’s portfolio.