Archive for 2009

  • Blodget Vindicated!
    , December 1st, 2009 at 11:44 am

    Amazon.com (AMZN) is up to $138 a share today which is yet another new high. We’re coming up on the 11th anniversary (December 16th) of Henry Blodget’s famous $400 long-term price target for Amazon.
    The stock has since split 6-for-1 (a 2-for-1 and a 3-for-1) so the adjusted price target works out to be $66.66
    We can debate what long-term means, but if it’s 11 years, then Blodget was pretty much spot on if we assume an average return on equity of around 7%.

  • Peet’s Raises Bid to $32.50
    , December 1st, 2009 at 11:23 am

    Whatever is in that K-Cup license, someone wants its very badly.

    Peet’s Coffee & Tea Inc. raised its bid to buy Diedrich Coffee Inc., the maker of single-serve coffee packets, for the second time to $32.50 a share, topping the latest offer from Green Mountain Coffee Roasters Inc.
    Peet’s boosted the cash portion of its bid to a range of $21.26 to $22.87, plus 0.321 share of its own stock, for each Diedrich share, the Emeryville, California-based company said yesterday in a statement. The offer totals $32.50 a share at any price of Peet’s stock from $30 to $35. Last week, Peet’s offered as much as $32 a share, including $19.80 in cash, while Green Mountain raised its bid to $32 a share in cash, or $265 million.
    The companies are vying for Diedrich’s K-Cup business, the maker of prepackaged coffee cups used in Green Mountain’s Keurig brewing equipment. Green Mountain has been consolidating K-Cup manufacturing, which is about twice as profitable as collecting royalty fees, according to Mitchell Pinheiro, an analyst with Janney Montgomery Scott LLC in Philadelphia.
    “Green Mountain could counter with an increased offer, as the company seems committed to rolling up its K-cup licensees,” David Tarantino, an analyst with Robert W. Baird & Co. in Milwaukee wrote in a note. He recommends buying Peet’s and doesn’t rate the other stocks.

    This almost reads like a movie. As a business enterprise, Diedrich is pretty much a joke. But they have a license which is very valuable yet no one seems to know what it exactly entails. Let me change that — someone knows and they’re willing to pay a lot for it. Peet’s is now willing to pay $32.50 for a stock that was worth 21 cents a few months ago.
    Who needs gold when there’s coffee? (John Hempton has more.)

  • Eaton Vance’s Earnings
    , December 1st, 2009 at 11:08 am

    I also neglected to mention Eaton Vance‘s (EV) earnings report from last week:

    Investment manager Eaton Vance Corp. said Tuesday its profit jumped 39 percent in the fourth quarter on higher assets under management and lower investment losses.
    For the three months ended Oct. 31, the company earned $48.4 million, or 39 cents per share. That compared to $34.9 million, or 28 cents per share, in the year-ago period.
    Quarterly revenue edged up 2 percent to $254.1 million from $249.8 million the same time last year.
    Earnings in the latest quarter were increased by about 5 cents per share by tax adjustments primarily related to stock-based compensation.
    Last year, Eaton Vance’s investment losses cut fourth-quarter earnings by 13 cents per share. The company recorded an impairment charge of $13.2 million on investment losses.
    The performance beat Wall Street expectations. On average, analysts polled by Thomson Reuters expected earnings of 33 cents per share on revenue of $250.3 million.
    In the latest quarter, assets under management grew to $154.9 billion, up 26 percent from $123.09 billion in 2008. That helped lift quarterly investment advisory and administration fees 2 percent, to $195 million.
    For the full year, Eaton Vance earned $130.1 million, or $1.08 per share. That was down 34 percent from $195.7 million, or $1.57 per share last year.
    Thomas E. Faust Jr., the company’s chairman and CEO, noted in a release that earnings in 2010 should continue improving as a result of expense controls and favorable trends in asset management.

  • Self-Parody Alert
    , December 1st, 2009 at 1:21 am

    The reappointment of Ben Bernanke has sent Nassim Nicholas Taleb into an existential crisis. I’m not making this up.

    What I am seeing and hearing on the news — the reappointment of Bernanke — is too hard for me to bear. I cannot believe that we, in the 21st century, can accept living in such a society. I am not blaming Bernanke (he doesn’t even know he doesn’t understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible — as if we promoted every doctor who caused malpractice. The world has never, never been as fragile. Economics make homeopath and alternative healers look empirical and scientific.
    No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step. I will also structure trades with my Universa friends to bet on the next mistake by Bernanke, Summers, and Geithner. I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan.
    Bye,
    Nassim

    Take care,
    Eddy

  • Keep It Classy, Fast Money
    , November 30th, 2009 at 7:51 pm


    (Via: TBI)

  • Amazon Hits New High
    , November 30th, 2009 at 1:12 pm

    Shares of Amazon (AMZN) got as high as $135.25 today.
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    Here’s something to think about: Amazon reached its 1999 closing high of $106.69 (adjusted for splits) on December 10, 1999 — almost exactly ten years ago. The stock didn’t break that closing high until October 23, 2009.
    So was Amazon’s stock a bubble 10 years ago? Yes and no. Even if you bought at the exact top, you’ve made a very small profit (although it’s basically been erased by inflation). But still, you’ve done a lot better than the S&P 500. Excluding dividends, the S&P 500 is down about 23% since December 10, 1999.

  • Clinton in Bed with Goldman Sachs
    , November 30th, 2009 at 12:47 pm

    But this time, it’s Chelsea:

    Chelsea Clinton, daughter of ex-US President Bill Clinton and Secretary of State Hillary Clinton, is engaged to marry her long-term boyfriend.
    She is marrying Marc Mezvinsky, a banker at Goldman Sachs, with whom she became friends as a teenager.
    A spokesman for former President Clinton confirmed that the couple got engaged over last week’s Thanksgiving holiday.

    Congratulations to the happy couple.

  • Girls Can’t Trade
    , November 30th, 2009 at 11:21 am

    Not too sure about this one:

    What does traders’ success on the market floor depend on? Earlier studies have shown that one’s level of testosterone did affect one’s daily results. Since “prenatal androgens have organizing effects on the developing brain, increasing its later sensitivity to […] testosterone”, it would make sense that prenatal androgens also have a structural effect on a trader’s results on the long term.A surrogate marker is commonly used to define one’s exposure to prenatal androgens: the second-to-fourth digit length ratio, noted 2D:4D. Such market has been found to predict professional athletes’ performance. In this paper, the autors test the hypothesis that a high exposure to prenatal androgens as indicated by 2D:4D would also predict traders’ long-term profit.

  • Spotting the Bubble In Dubai
    , November 30th, 2009 at 10:28 am

    Here’s what I wrote about Dubai four years ago:

    I’ve been thinking about what’s the biggest investment bubble in the world right now. After careful consideration, I decided that Baidu (BIDU) comes in a close second. In fact, it’s so close that it has the syllables right, just in the wrong order. Not even Baidu can match what’s going on now in Dubai.
    Dubai is one of the emirates of the United Arab Emirates. This city is being built up so quickly it’s almost like science fiction. The Burj Al Arab (pictured above) is the largest hotel in the world. It’s over 1,000 feet tall and sits on an artificial island just off the beach. Each room comes with its own butler. The hotel is so big, the Statue of Liberty can fit in the atrium. Pedestal too. (If you’re interested in staying there, here are some details.)
    The world largest building is also being built here. Oh, did I mention the new airport? It will be the size of Heathrow and O’Hare combined. It doesn’t end there. There’s the Dubai Waterfront. I don’t even know how to describe this one. It’s basically a giant artificial city being built on the water. Imagine the Tower of Babel, but with WiFi. The development will be larger than the island of Manhattan. Nearly one of every four construction cranes in the world is currently in Dubai. This is just absurd.
    As you might expect, Dubai has a stock market and it’s doing rather well. I believe this is the entire listing. Their market is making our Nasdaq bubble look like a wimp. In the last 12 months, the Dubai market is up 162%. In the 12 months before that, it was up 181%. Going back three years, the Dubai market is up over 1,000%. One observer said that Dubai is “like Singapore on steroids.”
    There’s also an indoor ski slope, and an underwater hotel is being planned. The city is being flooded with workers from all parts of the world. According to a survey, Dubai will need 150,000 new housing units a year.
    This is a good time to remember that there’s an interesting correlation between market crashes and the largest buildings in the world. The Empire State Building went up just as our market crashed. The Petronas Towers were built as the Asian Tigers fell apart. The World Trade Center and Sears Tower accompanied the crash of the early 1970s. Even the Nasdaq’s shiny new office was opened just before its bubble burst.
    The price of oil is already well below its high price. What’s good for consumers here isn’t good news for Dubai. I think Dubai is ready for a fall.

  • Online Sales Rise
    , November 30th, 2009 at 9:48 am

    I don’t put a great deal of faith in Black Friday numbers. It’s true that this is an important time of year for many retailers, but the direction of their businesses can hardly be measured accurately in just one day’s total.
    If there is good news, then it seems to be that online buying is higher than it was one year ago. The Internet tracking firm comScore says that e-commerce sales on this past Friday were up 11% over a year ago. Online sales for Thanksgiving Day were up 10% from last year.
    While these numbers are encouraging, I think their significant is dwarfed by the jobs market. Once new jobs are created, it will signal that consumer spending will trend in the right direction.