• SEI Investments Earns 28 Cents a Share
    Posted by on July 21st, 2010 at 4:25 pm

    Today was a pretty ugly day for our Buy List. The market was down 1.28% and our Buy List was off 2.39%. Stryker (SYK) was down much more than I was expecting although Gilead (GILD) mostly sidestepped the selling pressure.
    Before the opening bell, SEI Investments (SEIC) reported Q2 earnings of 28 cents per share which was a penny ahead of the Street. Revenue dropped by 9.4% and assets under management fell as well.
    The stock dropped by 5% which is far worse than the numbers indicate. Relative to earnings, SEIC is usually on the pricey side but that’s because the business has been so consistent over the years. The drop puzzles me but I think it only makes the stock more attractive. Today’s drop basically erases the gain since the beginning of the month. I don’t see any problems for shares of SEIC.
    We’ll have three more earnings reports tomorrow.

  • Q2 Earnings from Gilead and Stryker
    Posted by on July 20th, 2010 at 9:48 pm

    Today was a good lesson on the benefits of diversity. Even though Johnson & Johnson (JNJ) was weighed down by a poor earnings report and lower guidance, the rest of the Buy List picked up the slack and we slightly beat the market today. The final score had our Buy List up 1.21% to the S&P 500’s 1.14%.
    We had two more earnings reports after the closing bell. Gilead (GILD), which has been our big dud on the Buy List, posted disappointing earnings. For Q2, they earned 85 cents a share which was two cents less than Street estimates. Boy this stock has a way of annoying me. Revenues rose 17% but again fell short of expectations.
    Gilead’s earnings report three months ago wasn’t so bad but the market punished the shares anyway. They had lowered their sales estimates due to Obamacare, which wasn’t unexpected, but the stock dropped nearly 10% the next day, which was unexpected, at least by me. The shares have continued to fall.
    To give you an idea of how pessimistic the market is, Wall Street currently expects full-year EPS of $3.61 (which isn’t totally crazy since we’re half-way done) and the stock is going for about nine times that. Did I mention that sales grew 17%? The stock was down after-hours but seems to have recovered some. I’m not giving in just yet—Gilead is a good buy.
    The other earnings report came from Stryker (SYK). I should mention that Stryker almost always reports in line or beats by a little. You never get big surprises from them which is why I like them. For Q2, they hit the Street’s consensus of 80 cents per share right on the nose. Revenue was a tiny bit below the Street but nothing to worry about.
    The good news is that Stryker reaffirmed guidance for this year. They said that EPS for this year will range between $3.20 and $3.30. They already reaffirmed this guidance a few times this year so they must be serious. The Street currently expects $3.27 which sounds about right. Last year, they made $2.95 per share.
    Stryker was down about 3.5% after-hours but I really don’t see anything in the earnings report that worries me. This is a solid company going for a decent, but not Gileadesque, price.

  • J&J Lowers Guidance
    Posted by on July 20th, 2010 at 8:23 am

    Disappointing news today from Johnson & Johnson (JNJ). The company reported Q2 earnings of $1.21 per share which was in line with estimates. For last year’s Q2, JNJ made $1.11 per share. Revenue rose just 0.6% which was below forecasts.
    The big issue is that they lowered their full-year range from $4.80 to $4.90 per share down to $4.65 to $4.75 per share. That’s a decrease of 15 cents at both ends.

    The Company’s guidance now reflects the impact of the voluntary recalls announced earlier this year of certain over-the-counter medicines and the suspension of manufacturing at the McNeil Consumer Healthcare facility in Fort Washington, Pa., as well as unfavorable changes in foreign currency exchange rates.

    Frankly, this could have been a lot worse. The stock is lower ahead of the open. Gilead Sciences (GILD) and Stryker (SYK) are due to report their earnings later today.
    Here are some other major earnings reports this morning:
    Harley-Davidson 2Q income jumps, sales drop eases
    PepsiCo’s 2Q net income slumps 3 pct on currency
    UnitedHealth’s 2Q profit rises 31 percent
    Goldman Sachs Profit Drops 82%, Missing Analysts’ Estimates
    BNY Mellon Earnings Triple as Stock Rebound Boosts Fees
    I’m impressed to see UNH raise full-year earnings guidance. The company expects full-year EPS to range between $3.40 and $3.60, which is 25 cents above the previous range of $3.15 and $3.35. The shares are just below $31.

  • Behavioral Finance Hedge Fund Can’t Cope With the Irony and Insults of the British
    Posted by on July 19th, 2010 at 1:35 pm

    The FT profiles MarketPsy Capital, a hedge fund that attempts to invest based on investor psychology. The fund scans newspaper articles, blogs and message boards in an effort to see how the crowd feels about a stock.
    There is, however, one small snag:

    But it is not perfect. For now, MarketPsy trades only US stocks, as its linguistic analysis cannot cope with the irony and insults on British message boards and blogs.

  • Where the Hell is Beeks?
    Posted by on July 19th, 2010 at 1:22 pm

    A British financier named Anthony Ward recently bought a lot of cocoa—and by a lot of cocoa, I mean 241,000 tons.
    This is more than the entire supply of cocoa in Europe. It appears as if Ward is trying to corner the market, and cocoa prices are now at a 33-year high. Over the last two-and-a-half years, cocoa is up more than 150%.
    Thanks to Ward’s mega-buy, you’ll probably have to pay more for you next candy bar purchase.

  • Indian Court Rules that Hindu Gods Can’t Trade Shares
    Posted by on July 17th, 2010 at 11:49 pm

    ganesha.jpg
    Well, that’s cleared up.

    An Indian court has ruled that Hindu gods cannot deal in stocks and shares, after an application for trading accounts to be set up in their names.
    Two judges at the Bombay High Court yesterday rejected a petition from a private religious trust to open accounts in the names of five deities, including the revered elephant-headed god, Ganesha.
    “Trading in shares on the stock market requires certain skills and expertise and to expect this from deities would not be proper,” judges P.B. Majumdar and Rajendra Sawant said, according to Indian newspapers.
    The trust, owned by the former royal family of Sangli, in western Maharashtra state, of which Mumbai is the capital, brought the case after successfully securing income tax cards and savings accounts for the deities.
    But National Securities Depository Limited rejected the trust’s application for permission to open trading accounts, arguing that it would be difficult to take action against the gods in the event of irregularities.
    “Gods and goddesses are meant to be worshipped in temples, not dragged into commercial activities like share trading,” the judges said.
    Ganesha, also known as Lord Ganpati, is one of the most popular and well-known gods of the Hindu pantheon and is worshipped widely in Mumbai and Maharashtra.

  • Happy Friday
    Posted by on July 16th, 2010 at 6:26 pm

  • Minor Earthquake Hits DC!
    Posted by on July 16th, 2010 at 5:37 am

    I was woken up this morning by a very minor earthquake that hit the Washington, DC area. The USGS reports that it was a 3.6 quake and centered about 20 miles northwest of Washington.
    I’m fine but unlike a lot of West Coasters, I had never felt an earthquake before!
    Update: Here’s some of the destruction.

  • $1.07 a Share
    Posted by on July 15th, 2010 at 5:10 pm

    Goldman wins. They have to pay $550 million which comes to $1.07 a share.

    The penalty is the largest ever levied by the Securities and Exchange Commission against a Wall Street firm, the agency said in a statement announcing the accord today. Under the deal, Goldman Sachs acknowledged it made a “mistake” and that marketing materials for the instruments had “incomplete information,” the agency said.
    “This settlement is a stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing,” SEC Enforcement Director Robert Khuzami said in the statement.
    Goldman Sachs created and sold the CDOs in 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles, the SEC said in an April 16 lawsuit. Billionaire John Paulson’s firm earned $1 billion on the trade and wasn’t accused of wrongdoing.

  • SEC To Have “Significant” Announcement on Goldman at 4:45 pm
    Posted by on July 15th, 2010 at 3:42 pm

    Shares of Goldie (GS) are up on speculation that they’ve reached an agreement with the Federales.
    When the news first came out three months, I was not impressed with the SEC’s case. I felt that at most, Goldman would pay a fine.

    Overall, I have to say that I’m not terribly impressed with the SEC’s case against Goldman Sachs (GS). Perhaps there’s more to it, but it seems pretty weak to me. My guess is that Goldman will eventually write a $200 million check to the feds, maybe less. To add some perspective, GS lost about $12 billion in market cap today. That could buy the New York Times (NYT) more than six times over.

    The day the SEC’s case was announced, shares of Goldman plunged from $184.27 to $160.70. I got several emails asking if GS was a buy. I said no. Fortunately, I got that right and GS fell as low as $129.50 on July 1. The stock has bounced back and it’s up again today. The outlook for the stock will be a lot better once this case is out of the way.