• Wachovia’s CEO Ousted
    Posted by on June 3rd, 2008 at 10:56 am

    I’m glad we had Golden West Financial on our 2006 Buy List, and I was glad that Wachovia (WB) bought the company. For the tracking purposes of the Buy List, shares of Wachovia replaced the shares of Golden West. However, there was no way I was going to keep Wachovia on the 2007 Buy List. Fortunately, that decision proved correct.
    What was our good fortune was bad news for Wachovia’s CEO Ken Thompson. He was let go yesterday by the board of Wachovia. BusinessWeek reports:

    According to one Wachovia insider, Crutchfield’s downfall came when “he stopped listening” to his other executives. Likewise, it’s hard to believe Thompson didn’t get resistance from his own management team about buying Golden West—and ignored it.
    Because no one outside of Thompson and Golden West CEO Herb Sandler seemed to like the deal from the moment it was announced. Indeed, in the initial conference calls with analysts and investors after the deal, Thompson was on the defensive from the outset.
    For Thompson, the Golden West purchase gave him the beachhead in California he had long desired. It also gave him an array of creative mortgage products to pump through his broker channel. But the ink was barely dry on the Golden West deal in late 2006 when the housing bubble in markets including California and Florida began to deflate. And by early this year, the mounting losses from Golden West, coupled with deteriorating credit quality in the rest of the bank’s portfolio, began to hit Wachovia hard: The bank reported a $393 million loss in the first quarter and then amended the report in mid-May to say it really lost $708 million after a review of its portfolio of bank-owned life insurance. That forced the bank to cut its dividend by more than 40% and to sell $8 billion in new shares—a move that served to bolster Wachovia’s equity but diluted the value of existing shareholders’ stock.

  • Danaher Raises Guidance
    Posted by on June 3rd, 2008 at 10:42 am

    Danaher (DHR) bumped up the low-end of its previous guidance today. For Q2, the company now sees earnings of $1.04 to $1.07 per share. The old range was $1.02 to $1.07 per share. That’s not a big change, but it’s always good to see a reiterating during the quarter.
    For last year’s second quarter, Danaher made 94 cents a share which was a penny better than Wall Street’s forecast. From its December high to its March low, the stock dropped by 24%.

  • The Black Swan Has Been Found
    Posted by on June 3rd, 2008 at 10:25 am

    The Elite Trader spots a very troubling chart pattern.
    (Via: Ritholtz.)

  • Leucadia says boosts Jefferies stake to 30 pct
    Posted by on June 2nd, 2008 at 12:34 pm

    Always keep an eye on what Leucadia (LUK) is up to:

    Leucadia National Corp, a holding company engaged in several businesses, disclosed on Monday it boosted its equity stake in U.S. investment bank Jefferies Group Inc to 30 percent.
    Leucadia, in a filing with the Securities and Exchange Commission, said in April it acquired a 14 percent stake in Jefferies for $434 million after the banking and trading firm, which focuses on mid-cap and small companies, reported a second straight quarterly loss.
    Those shares, combined with previously purchased Jefferies stock, gave Leucadia, a New York investment firm, a 20 percent stake.
    According to the latest filing, since April 21 Leucadia acquired an additional 17.7 million shares on the open market for $321.9 million, raising its stake to 48.6 million shares. That equates to a 30 percent stake as of May 14.
    In all, Leucadia says it has invested $794.4 million in Jefferies stock.

  • If You Have an Important Meeting Today
    Posted by on June 2nd, 2008 at 9:28 am

    From the Lancashire Evening Post:

    Biscuits ‘could be key’ to business deals
    The type of biscuit served in the boardroom could make or break a business deal, according to the world’s first “business biscuit study”.
    Some 80% of business professionals believe that the outcome of a meeting can be positively influenced by the choice and quality of biscuit on offer.
    The research was commissioned by hotel chain Holiday Inn who surveyed 1,000 business professionals across the UK about their boardroom biscuit habits.
    Snackers voted the chocolate digestive their favourite boardroom biscuit, followed by shortbreads and with HobNobs claiming the third spot. Jammie Dodgers and Bourbons completed the top five.
    The survey discovered that lawyers were most impressed by a good boardroom biscuit, closely followed by those in the media and marketing industry.
    Things are not so clear-cut on the etiquette of dunking, with 52% of business professionals frowning on the practice.
    And on the question of how many biscuits to take from the communal platter, most agree that two is the magic number.
    The survey discovered that nothing says business failure quite like a crumbly biscuit with nearly 30% admitting they would turn their noses up at a disintegrating digestive.

  • The Yen’s Negative Beta
    Posted by on May 29th, 2008 at 4:09 pm

    Greg Mankiw sees this chart and wonders, “Is the yen a negative beta asset?” Well, let’s take a look.
    The graph below shows the daily changes for the past year of the S&P 500 (^GSPC) on the X-axis. On the Y-axis are the daily changes of the Yen ETF (FXY). The slope of the least-squares line is the estimated Beta coefficient, which in this case is -0.3905.
    image668.png
    So, yes Professor. It is.

  • But Of Course
    Posted by on May 29th, 2008 at 8:46 am

    From The Economist‘s corrections box:

    Our Contents box last week in some editions referred to Albert Hofmann, the father of LSD, as German. He was, of course, Swiss. Our apologies.

    The “of course” is just perfect. More British would have been “apparently.”
    (Shamelessly stolen from Elizabeth Spiers.)

  • The Buy List Is Holding Up Well
    Posted by on May 28th, 2008 at 4:51 pm

    Even though the market has been a bit shaky, our Buy List is doing fine. In the last six sessions, the S&P 500 is down -2.51%, but our Buy List is up 0.12%.

  • Revenues at the Internet Stocks
    Posted by on May 28th, 2008 at 3:42 pm

    Growing sales isn’t everything, but it sure helps. Here’s a look at the growth in revenues over the last ten years at Amazon (AMZN), Yahoo (YHOO), eBay (EBAY) and Google (GOOG):
    image667.png
    The number is in millions.

  • Donaldson Raises Its Estimate for the Third Time
    Posted by on May 28th, 2008 at 12:08 pm

    More good news from another boring stock. After the bell yesterday, Donaldson (DCI) reported earnings for its fiscal third quarter of 57 cents a share. That’s six cents higher than Wall Street’s estimate, and it’s also a nice gain over last year’s third quarter when DCI netted 49 cents a share.
    I was also very happy to see that for the third time, Donaldson raised its FY 2008 earnings-per-share forecast. Back in September, the company expected EPS of $1.92 to $2.01. Then in November, they raised it to $1.97 to $2.07. In February, they went to $2 to $2.10 a share, and now in May, they’ve raised it to $2.08 to $2.13. Their fiscal year ends at the end of July.
    The company is well on its way to a 19th straight record year for earnings. For the first three quarters of this fiscal year, Donaldson has earned $1.52 a share, which is a 17% increase over the $1.30 they made last year. The only need to make another 32 cents a share in the fourth quarter to beat last year’s total, and the company expects EPS of 56 cents to 61 cents. Also, in January, the company increased its dividend for the 22nd straight year.

    Year………….Sales……………..EPS
    1990…………$422.9……………$0.19
    1991…………$457.7……………$0.21
    1992…………$482.1……………$0.23
    1993…………$533.3……………$0.26
    1994…………$593.5……………$0.30
    1995…………$704.0……………$0.37
    1996…………$758.6……………$0.42
    1997…………$833.3……………$0.50
    1998…………$940.4……………$0.57
    1999…………$944.1……………$0.66
    2000…………$1,092.3…………$0.76
    2001…………$1,137.0…………$0.83
    2002…………$1,126.0…………$0.95
    2003…………$1,218.3…………$1.05
    2004…………$1,415.0…………$1.18
    2005…………$1,595.7…………$1.27
    2006…………$1,694.3…………$1.55
    2007…………$1,918.8…………$1.83
    2008…………$2,170.0…………$2.08 to $2.13 (est)