Archive for 2007

  • Barron’s Hops on the UnitedHealth Bandwagon
    , February 10th, 2007 at 11:55 pm

    Glad to have them aboard:

    Few companies have been hit harder by accusations of stock-option backdating than UnitedHealth Group, the giant health-care insurer. Allegations that the company lined management’s pocket by altering the date of options grants resulted last year in the departure of former CEO William McGuire and a member of the board of directors. UnitedHealth (ticker: UNH) hasn’t filed a quarterly financial report with the Securities and Exchange Commission since last year’s first quarter, because it still hasn’t determined the accounting treatment for formerly issued options. The company faces shareholder lawsuits and investigations by the SEC, the Internal Revenue Service and the U.S. attorney for the Southern District of New York. And its shares, which once topped 63, now trade for 51.
    Yet, for all its maladies, the patient is alive and kicking — vigorously, in fact. UnitedHealth’s underlying business is strong and growing, and it is hard to imagine its fortress-like balance sheet, with $2.6 billion of net cash, can’t absorb any fines or accrued taxes the company is likely to owe.

  • The First Twin Peaks
    , February 10th, 2007 at 7:07 am

    On the weekend, I like to post fun things. Anything that keeps our minds off money and investing. Here’s something I think you’ll really enjoy. This is the very first episode of Twin Peaks.
    This episode aired on April 8, 1990 (Dow 2700). It’s hard to believe it’s been 17 years. Back then, I remember how everyone seemed to be riveted by Twin Peaks. There was nothing like it on television before.
    Even today you can see the influence of Twin Peaks in shows like 24, Lost or the Sopranos. But before Twin Peaks, all TV shows were so darn formulaic. The plots were dull, and nothing engaged viewers.
    But Twin Peaks was different.
    Not only was it odd and quirky, but it was so well done. Watching it again, I’m reminded of that. After each episode, you were dying to know what happens next. At the time, I remember walking around and the only thing people could talk about was Twins Peaks. Did you see last night’s episode? Who do you think did it?
    I don’t remember a show ever having that sort of impact. There were even Twin Peaks parties where people would bring logs and coffee and watch the show together. That’s the impact it had. What can I say but David Lynch is a genius. True, he’s out of his mind, but still a genius.
    So curl up with your favorite TV buddy. Grab a doughnut and a nice cup of Joe (damn fine coffee!), and enjoy Twin Peaks.

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  • New High for Sears
    , February 9th, 2007 at 11:48 am

    Speaking of publicly traded hedge funds, Sears Holdings (SHLD) is at a new all-time high today.
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    The stock is up 1,100% in less than four years.
    How hedgie is Sears? For the third quarter, Sears’ net income tripled, although its sales fell slightly. But half of what it made was due to derivatives (“total return sawps“).
    For the fourth quarter, Sears projects earnings of $4.87 to $5.39 a share, which was above Wall Street’s forecast. But this time, their derivatives lost money, and the company booked some real estate profits. Once again, the details are murky.

  • Fortress Investment Group Goes Public
    , February 9th, 2007 at 10:41 am

    The first publicly traded hedge fund just started trading. Will the 90s ever end?
    Fortress Investment Group raised $634 million from its offering The ticker symbol is FIG, which seems to have an appropriate “fall of man” vibe to it. Naturally, the stock has already doubled this morning.
    What I don’t understand is how anyone can properly analyze this company. The idea of a hedge fund is that you don’t know exactly what they’re buying or selling. And it can all change very quickly.
    Oh, listen to me and my silly worries! Who am I kidding? This stock is like a great unsinkable ocean-going vessel, plowing its way through the chilly waters of the North Atlantic. What could possibly go wrong?

  • An Internet Millionaire
    , February 9th, 2007 at 7:27 am

    Thanks to the YouTube merger, Shannon Hermes now owns $1.3 million in Google stock. How did she get the money? Well, Shannon didn’t start the company. Nor is she a venture capitalist.
    She’s YouTube’s receptionist.
    In other news, YouTube has a receptionist?
    Update: Even Maury Povich made YouTube cash: “I had no idea I even owned a part of YouTube.”

  • W. R. Berkley Rulz
    , February 8th, 2007 at 9:23 pm

    After the bell, W. R. Berkley (BER) reported operating earnings of 96 cents a share on revenue of $1.36 billion. (With insurance companies, the key number to watch is operating earnings.) This was a very good report. The Street was expecting earnings of 89 cents a share, and revenue of $1.4 billion.

  • The Subprime Fallout
    , February 8th, 2007 at 4:21 pm

    The subprime market took a beating today. Here’s how some stocks in, and near, the industry fared:
    HSBC (HBC) -2.65%
    New Century Financial (NEW) -36.21%
    Novastar Financial (NFI) -11.12%
    Fremont General (FMT) -11.04%
    American Home Mortgage Investment (AHM) -8.14%
    Impac Mortgage Holdings (IMH) -4.68%
    Countrywide Financial (CFC) -2.57%
    IndyMac Bancorp. (NDE) -2.78%
    PMI Group (PMI) -3.92%
    Radian Group (RDN) -3.23%
    MGIC Investment (MTG) -2.67%

  • Happy Birthday Nasdaq
    , February 8th, 2007 at 11:39 am

    Thirty-six years ago today, the National Association of Securities Dealers Automated Quotations was born.
    On its first day, the index rose 0.84 to close at…100.84! The index reached its low close of 54.87 on October 3, 1974, and its high of 12.3 gazillion on March 10, 2000 (well, 5048.62).
    Since 1971, the index has returned 9.34% a year, though not in a straight line.
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  • The Blue Meanies Strike Back
    , February 8th, 2007 at 11:32 am

    If you ever find yourself literally Crossing Wall Street, please — no iPods.

  • The Irrational Quest for Charismatic CEOs
    , February 8th, 2007 at 11:25 am

    Here’s part of an interview with Harvard professor, Rakesh Khurana, on his book Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs:

    Lagace: CEOs are suddenly very much in the spotlight, but you have been studying the dynamics of CEO successions for a number of years. What drove you to examine this topic in such depth? What surprised you most in your research?
    Khurana: I guess one could have accused me of being opportunistic in writing this book, but the fact is the book was finished last year and is only now getting published. I actually wrote my dissertation in 1998 on this topic.
    The common thread that got me started on studying CEOs is evident in my body of work in exploring the forces that govern the process of CEO change. I have conducted research in four interrelated areas: factors that lead to vacancies in the CEO position; factors that affect the choice of successors; the role of market intermediaries such as executive search firms in the CEO search; and the consequences of CEO succession and selection decisions for subsequent firm performance and strategic choices.
    What surprised me most was that the CEO labor market is not a market in any traditional sense of the term. Rather, it resembled more of a closed ecosystem in which selection decisions were based on highly stylized criteria that often had little to do with the problems a firm was confronting.
    Although I did not at first believe the results, the evidence was overwhelming and not pretty. The rise in the power of institutional investors has led to the creation of an “external” market for CEOs that is wracked with irrational decision making. Increasingly, the emphasis was more on bringing in a ruthless outsider to boost the performance of an under-performing company than on grooming leadership within the company. A famous CEO was preferred over a low-profile CEO, as the former was seen as a boost to public and investor confidence—and share prices—fast.