• Analysts Were Way Off
    Posted by on February 18th, 2009 at 12:29 pm

    I prefer to use trailing Price/Earning Ratios, though it’s not the only metric I use, when looking at stocks. The problem with forecasts is how far wrong you can be. The guys at Bespoke have tracked how poorly analysts did this past earnings quarter. Just four-and-a-half months ago, Wall Street saw a rosy future.
    6a00d8349edae969e2011278f9a1c328a4-800wi.png
    It’s actually worse than that. If I understand the chart correctly, it shows the sum of the previous four quarter earnings. Wall Street analysts weren’t even close this earnings quarter.

  • Hedgies to Consolidate
    Posted by on February 18th, 2009 at 12:25 pm

    From Bloomberg:

    Hedge funds are looking to consolidate after record investment losses and customer withdrawals cut assets by 37 percent in the second half of 2008, squeezing their main source of fees. As many as 40 percent of the 9,000 hedge funds and funds of funds may disappear in the next two years, according to Karamvir Gosal, a New York-based investment banker at Jefferies Putnam Lovell. While some will return money to investors and shut their doors, mergers and acquisitions will be more prevalent than in the past.
    “The conditions at the moment lend themselves to a surge in M&A activity in the hedge-fund world,” said Udi Grofman, a partner at Schulte Roth & Zabel LLP, a New York-based law firm that advises hedge funds. “We’ve already seen some players looking to take advantage of the low valuations and get their foot in the door, particularly when it comes to managers specialized in areas that are likely to be active in the near future, like mortgages and distressed debt.”

  • Yesterday’s Close
    Posted by on February 18th, 2009 at 12:23 pm

    The Dow finished yesterday at 7,552.60 just 0.31 point above the November 20th close which was the lowest close since March 2003.

  • New York Times’ Share Price Less Than Sunday Newspaper Price
    Posted by on February 17th, 2009 at 10:46 pm

    Check out this very ugly chart:
    image770.png
    Shares of NYT (NYT) dropped 29 cents today to close at $3.77. The Sunday paper goes for $4 at the newsstand.
    Maybe they could save costs by printing the paper on their stock certificates.

  • Yes We Can!
    Posted by on February 17th, 2009 at 4:29 pm

  • Obama Signs
    Posted by on February 17th, 2009 at 3:38 pm

    Congratulations bill, you’re a law.

    President Obama on Tuesday signed the $787 billion American Recovery and Reinvestment Act into law.
    But he’s far from being able to declare “mission accomplished.”
    “Today does not mark the end of our economic troubles,” Obama said before signing the bill at the Denver Museum of Nature and Science. “But it does mark the beginning of the end — the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs; to provide relief for families worried they won’t be able to pay next month’s bills; and to set our economy on a firmer foundation.”

  • Fourth-Quarter Earnings
    Posted by on February 17th, 2009 at 2:15 pm

    According to the latest numbers I have from S&P, fourth-quarter S&P 500 earnings reports are 85% in. The number for operating earnings looks to be $5.77 which is down from $15.22 from the fourth quarter of 2007. The “as reported” earnings negative.
    I doubt operating earnings will crack $50 for all of 2009. Here’s a look at the S&P 500 and operating earnings for the past few years.
    image769.png
    The black line is the S&P 500 and it follows the left scale. The gold line is operating earnings and it follows the right scale. The two lines are scaled at a ratio of 16 to 1 so when the lines cross, the P/E Ratio is exactly 16.
    What’s interesting is that the earnings multiple hasn’t changed much over the past few years. You can also see how much of 90s rally was due to multiple expansion.

  • SEC Charges Stanford Financial in $8B Fraud
    Posted by on February 17th, 2009 at 1:44 pm

    Finally:

    The Securities and Exchange Commission today charged a prominent Texas businessman and three of his companies with an $8 billion fraud in the sale of certificates of deposit. The case appears to mark one of the largest alleged frauds by a money manager in U.S. history.
    Robert Allen Stanford and his companies sold $8 billion of CDs — guaranteed fixed-income investment products — to investors by “promising improbable and unsubstantiated high interest rates,” the SEC said in a statement. The agency named in its complaint Stanford International Bank Ltd., based in Antigua, and related firms based in Houston.
    The SEC said the firms falsely claimed that their deposits were safe, that more than 20 analysts monitor the investments, and that yearly audits were being conducted.
    In addition, one of Stanford’s companies falsely told customers that it was not exposed to the $50 billion Ponzi scheme allegedly orchestrated by Bernard L. Madoff, the SEC said.

  • Shoichi Nakagawa at the G7
    Posted by on February 17th, 2009 at 1:39 pm

    If you haven’t seen it, here’s Shoichi Nakagawa sounding a bit drunk at the G7 meeting.

    He’s resigned.

  • Medtronic’s Earnings
    Posted by on February 17th, 2009 at 12:57 pm

    Unlike most of the market, Medtronic (MDT) is having a good day today. The stock is up on decent earnings.

    For the quarter ended Jan. 23, Medtronic reported net income of $723 million, or 65 cents a share, up from $77 million, or 7 cents, a year earlier. Excluding acquisition-related charges, earnings rose to 71 cents a share from 63 cents.
    Net sales rose 2.6% to $3.49 billion, or 6% excluding foreign-currency changes.
    Analysts surveyed by Thomson Reuters were expecting earnings, excluding items, of 70 cents on revenue of $3.51 billion.

    This is good to see. Last quarter’s performance was not comforting. Here’s a look at MDT’s sales and earnings for the past few quarters:
    Quarter………..EPS………….Sales
    Jul-01…………$0.28………..$1,455.70
    Oct-01………..$0.29………..$1,571.00
    Jan-02………..$0.30………..$1,592.00
    Apr-02………..$0.34………..$1,792.00
    Jul-02…………$0.32………..$1,713.90
    Oct-02………..$0.34………..$1,891.00
    Jan-03………..$0.35………..$1,912.50
    Apr-03………..$0.40………..$2,148.00
    Jul-03…………$0.37………..$2,064.20
    Oct-03………..$0.39………..$2,163.80
    Jan-04………..$0.40………..$2,193.80
    Apr-04………..$0.48………..$2,665.40
    Jul-04…………$0.43………..$2,346.10
    Oct-04………..$0.44………..$2,399.80
    Jan-05………..$0.46………..$2,530.70
    Apr-05………..$0.53………..$2,778.00
    Jul-05…………$0.50………..$2,690.40
    Oct-05………..$0.54………..$2,765.40
    Jan-06………..$0.55………..$2,769.50
    Apr-06………..$0.62………..$3,066.70
    Jul-06…………$0.55………..$2,897.00
    Oct-06………..$0.59………..$3,075.00
    Jan-07………..$0.61………..$3,048.00
    Apr-07………..$0.66………..$3,280.00
    Jul-07…………$0.62………..$3.127.00
    Oct-07………..$0.58………..$3,124.00
    Jan-08………..$0.63………..$3,405.00
    Apr-08………..$0.78………..$3,860.00
    Jul-08…………$0.72………..$3,706.00
    Oct-08………..$0.67………..$3,570.00
    Jan-09………..$0.71………..$3,494.00