• Buy List Earnings from Stryker, Lilly and SEI Investments
    Posted by on October 21st, 2009 at 11:16 am

    This is a bit strange. Lilly is down today on good news and Stryker is up on bad news. I don’t get it, but I didn’t write the rules.
    Eli Lilly (LLY) earned $1.20 a share which was 18 cents better than estimates. The company also raised EPS guidance for next year to $4.30 to $4.40 from their earlier estimate of $4.20 to $4.30. The stock was up in the pre-market but is down now. I have no idea why, but Lilly is a great stock.
    Stryker (SYK) is our big winner today. The company said it earned 69 cents a share for the third quarter which matched estimates. The company also cut its 2009 EPS forecast to $2.90 and $3 from $3.12 to $3.22, but that’s hardly a big deal since it’s just one more quarter.
    SEI Investments’ (SEIC) business got hit hard last year, but it’s recovering nicely. The company earned 27 cents a share for the third quarter which is a 50% jump from the 18 cents a share it earned a year ago. They beat the Street by two cents a share.
    Cognizant (CTSH), Danaher (DHR) and Sysco (SYY) are all at new 52-week highs today.

  • No More Historical Comparisons Graphs
    Posted by on October 21st, 2009 at 9:54 am

    Starting today, I refuse to look at any more charts that contain five or more squiggly lines, one labeled 2009, another labeled 1929, another 1974, another 1379. Enough!
    These charts were kind of fun to look at a few months ago, but seriously, markets don’t trace out precise patterns from decades ago. On the morning of October 19, 1987, the WSJ famously ran a similar chart comparing the Dow’s current run with the market’s run-up in 1929, but there was one major difference. They altered the x-axis to make it a better fit. Once you start toying around with the data, you can make anything fit.

  • NYT: Thin Line Separates Insider Trading and Research
    Posted by on October 19th, 2009 at 11:05 pm

    The NYT makes some good points about the Rajaratnam case:

    A close reading of the two criminal complaints filed so far, and an associated civil complaint filed by the Securities and Exchange Commission, suggests a web in which hedge fund managers, analysts, corporate executives, and consultants and other people outside Wall Street traded tips — sometimes for money, sometimes for other tips, and sometimes for little more than the promise of unspecified future favors.
    Not every trade that the complaint outlines was profitable. In fact, Mr. Rajaratnam’s hedge fund, the Galleon Group, lost millions of dollars buying shares of Advanced Micro Devices, the computer chip maker, after learning that the government of Abu Dhabi planned to invest in A.M.D., according to the complaint. The investment did occur, but A.M.D. stock plunged between August 2008, when Galleon began buying, and October 2008, when the deal was announced.
    At other times, Mr. Rajaratnam received information from an unnamed witness who is cooperating with the government investigation. But the complaint does not state whether Mr. Rajaratnam knew the ultimate sources of the information he received from the witness. Nor does it allege that Mr. Rajaratnam paid the witness for the information.
    Still, the existence of a cooperating witness — along with the fact that prosecutors wiretapped some of Mr. Rajaratnam’s conversations — gives them a great advantage in the case, said David S. Ruder, a law professor at Northwestern University and a former chairman of the S.E.C. The conversations may help show that Mr. Rajaratnam knew the information was valuable and that he should not be trading on it, Mr. Ruder said.
    “It gets you around the mens rea, or state of mind question,” he said. “If you know it’s coming from an insider, or if you have strong reason to believe it’s coming from an insider, you’re in trouble.”

  • How to Argue
    Posted by on October 19th, 2009 at 10:42 pm

    This is slightly off-topic but I wanted to highlight an excellent post written by Phil Birnbaum at his Sabermetrics Research site. This is one of my favorite blogs on sports statistics. Phil doesn’t post often, but when he does, the posts are consistently outstanding.
    In the post, Phil rips apart an argument that purportedly shows anti-French discrimination in the NHL. I certainly understand if the topic isn’t of interest to you. Even if you’re not interested, you may want to check it out because it’s a perfect example of how to argue.
    I sometimes think that learning how to present a case is a lost art. Phil’s post is methodical and clear-headed. He sticks to the facts, uses logic and questions assumptions. Reading Phil reminds me why I get so annoyed with people like Matt Taibbi because they take facts out of context, use false symmetries, mix up causation or simply betray their point in froth of “style.” Phil argues the way it should be done.

  • CNBC Reports Bogus Press Release
    Posted by on October 19th, 2009 at 5:14 pm

  • Fannie Mae, Freddie Mac Price Targets Cut to $0
    Posted by on October 19th, 2009 at 3:59 pm

    Keefe, Bruyette & Woods lowered its rating on Fannie (FNM) and Freddie (FRE) to $0.
    They also downgraded the stock to “Underperform.” Of course, if you think it’s going to $0 that makes sense.
    Both stocks trade a little over $1.

  • S&P 1100
    Posted by on October 19th, 2009 at 3:41 pm

    For a very brief moment, the S&P 500 jumped over 1,100, saw its shadow and ran back below.
    Someone’s been dumping lots of NICK today (and buying it as well). The stock is poised to have its biggest volume today in five months. The ask is currently at $6.88. I wouldn’t mind buying more if it goes lower.

  • Rosenberg Rewrites History
    Posted by on October 19th, 2009 at 2:13 pm

    If you’re in the business of making market calls, you’re going to wrong. That’s just how it is. I’m wrong all the time. So is Jim Cramer. It happens. But I won’t tolerate someone trying to run away from their calls. There’s no excuse for that.
    For the second time, David Rosenberg is trying to rewrite history and claim that he was neutral at the bottom. First he claimed it a few weeks ago and again today. As Joe Wisenthal points out, Rosenberg claims he “turned agnostic” in March.
    Bullshit. That’s just complete bullshit.
    Check out these stories.
    March 9, 2009

    Merrill Lynch & Co.’s chief North American Economist David Rosenberg said today the S&P 500 may bottom out at 600 in October, lowering his estimate after the benchmark’s decline last week.

    April 2, 2009

    Based on the outlook for corporate profits and the typical trough P/E multiple that characterized recession bear markets, it would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time.

    At every point, Rosenberg discounted the rally (see here, here and here). After the market experienced a stunning rally, this is what he said in September.

    I never did turn bullish enough at the lows, which is true. But I did turn neutral and while I did see the prospect of a complete throw-in-the-towel move towards 600 on the S&P 500, I can recall putting in print that the good news was that the bear market was about 95% over. Why quibble about another 60 points at that juncture. And, in the name of keeping an open mind, in my final report at Merrill Lynch, I played a game of Devil’s Advocate with myself … what if I was unduly bearish?
    I didn’t stay bearish at the lows, which is contrary to popular opinion. I was basically neutral. And I continued to — still do, by the way — frame what we have experienced in the context of a bear market rally as opposed to the onset of a new secular bull market (the first you rent, the second you own). I am always skeptical of rallies that are purely premised on technicals and liquidity but bereft of a solid economic foundation. While green shoots did appear in the economic data, all the growth we have seen globally, and in the U.S.A. in particular, has come courtesy of unprecedented government stimulus. We see nothing organically in the economy to get us excited.

    I’ll quibble about 60 points because it was a lot more than 60 points. We’re now up more than 400 points since then and Rosenberg said that bottom could come in October (i.e. now).
    You simply can’t say that you’re neutral but you see the prospects of a big move down. That statement makes no sense. It can be used to say anything, which is another way of saying it means nothing.
    If the market were at a new low now, then I doubt Rosenberg would say he had truly been agnostic in March.

  • Buy List +38%
    Posted by on October 19th, 2009 at 12:28 pm

    Thanks to today’s rally, the Buy List is up 38.2% for the year. Sysco (SYY), Danaher (DHR) and Cognizant (CTSH) are all at new 52-week highs. Eaton Vance (EV) hit one earlier today and Amphenol (APH) isn’t far behind. Nicholas Financial (NICK) has traded at $7 a share several times over the past two months but can’t seem to get one penny above it.

  • Loonie Closing in on Greenback
    Posted by on October 19th, 2009 at 11:23 am

    While Wall Street is celebrating the Dow being over 10,000, there’s another milestone coming up: The Canadian dollar is about to reach parity with the U.S. dollar.
    fredgraph101909.png
    Seven years ago, a loonie was worth about 60 cents.