Flip a Coin, Get a Job
Posted by Eddy Elfenbein on July 22nd, 2008 at 10:27 pm

Guest blogging at Paul Kedrosky’s crib, Joseph Weisenthal spots this ad from a hedgie joint on San Francisco’s Craig’s List. The final requirements are:

1) Prepare a cover letter.
2) Flip a coin 50 times. Record the results on your resume as a sequence of heads (H) or tails (T) symbols.
3) Email your cover letter and resume to us.

So what’s the deal with the 50 coin tosses? Joe thinks it could be a way to spot phonies, since the data set is hard than it looks to fake. If you were to fake it, would you have the courage to list head or tails on a row? I wouldn’t, but the odds of that aren’t unreasonably small.
Then again, 50 tosses ain’t that much. Plus, it could be done easily with the random number generator on Excel.
Some commentors think it’s a sardonic comment on the nature of investing. Could be. Although that probably doesn’t explain why they’re hiring.
My guess is that it’s a trick question. Once in the interview, they’ll ask you what kind of coin you used. Any who still deals in U.S. currency will automatically be eliminated from consideration.

The S&P Financial Index Divided by the S&P 500
Posted by Eddy Elfenbein on July 22nd, 2008 at 9:43 pm

Here’s an interesting chart. This shows the S&P Financial Index (^SPSY) divided by the S&P 500:

There are three major low points. The first is from October 29, 1990 (0.1533). The next came nearly ten years later on March 9, 2000 (0.1927). This was not simply a reflection of financials going down, but of tech going way, way up. The most recent low came last Tuesday, July 15, 2008 (0.1910).
What’s fascinating is that the last two lows hit almost exactly the same. Does this mean that financials are ready to turn around? It’s too early to say, but the sector has just had one of its best weeks in years.

Headline of the Day
Posted by Eddy Elfenbein on July 22nd, 2008 at 2:06 pm

UnitedHealth earnings fall 73%, but shares jump

It’s true. UnitedHealth (UNH) reported earnings of $337 million, down from $1.22 billion for last year’s Q2. On an earnings-per-share basis, UNH earned 27 cents compared with 89 cents last year.
Now if we exclude some big charges, UNH made 67 cents for the quarter, which is just ahead of the 64 cents Wall Street was expecting. The stock is up today, but that’s probably because investors were expecting more bad news. Earlier, the company said to expect 64 to 66 cents. If you can rally this well by beating the top end by a penny, I think it means that investors have lost confidence in management.
I can’t say I blame them. UNH said not one, but twice, that it was expecting FY08 earnings-per-share of $3.95 to $4. After its competitors lowered forecasts, UNH lowered its forecasts, not once but twice. First to a range of $3.55 to $3.60 a share, then down to $2.95 to $3.05 a share. That’s where we are today.

Bernanke Warns
Posted by Eddy Elfenbein on July 21st, 2008 at 7:06 pm

All from last week:
Bernanke warns of serious risk to growth
Bernanke warns of continued inflation threat
Bernanke warns of twin risks
Bernanke warns of inflation
Bernanke warns on growth; data fans stagflation fears
Bernanke warns of numerous economic difficulties
Bernanke warns of systemic risk
Bernanke warns of slow economic recovery
Bernanke Warns Of “Significant Downside Risks” To Economic Growth
And finally:
Bernanke strikes note of confidence

Thursday’s Earnings
Posted by Eddy Elfenbein on July 21st, 2008 at 3:12 pm

Four of our Buy List stocks reported earnings last Thursday, and overall, it was a pretty good showing.
Amphenol (APH) reported earnings of 61 cents a share, which was a big increase over the 46 cents a share it earned last year. Wall Street was looking for 58 cents a share. The company also boosted its full-year outlook to a range of $2.34 and $2.38 per share. The earlier range was between $2.26 and $2.31 per share. The stock gapped up 14.6% on Thursday. Amphenol is now going for about 21 times earnings, which is a bit high, but nothing outlandish.
Amphenol is now our top-performing stock this year, and it was our second best last year. The stock is up over 63% since we added to the Buy List 18 months ago.
Harley-Davidson (HOG) saw its Q2 earnings drop 23%, from $1.15 a share to 95 cents a share. As bad as that sounds, it easily beat Wall Street’s forecast of 76 cents a share. Obviously, the economy is having a big impact on Harley. For the full year, HOG sees earnings between $3.00 and $3.18. Still, the shares have fallen for 20 months, and don’t seem to have found a bottom yet.
Danaher (DHR), which is a very diversified stock, reported earnings of $1.09 a share compared with 96 cents last year. That beat forecasts by three cents a share. The company now sees Q3 earnings coming in at $1.09 to $1.14 per share. For the full year, Danaher raised guidance to a range of $4.34 and $4.42 per share from its earlier range of $4.30 to $4.40. The stock is going for about 18.5 times earnings which seems about right.
Stryker’s (SYK) earnings rose to 73 cents per share from 65 cents last year. This was in line with forecasts. The stock pulled back on the news, but I don’t see any reason for alarm. This was also the 30th straight quarter of double-digit sales growth. The company expects full-year profit of $2.88 per share. I like Stryker a lot but I wouldn’t mind seeing it cheaper.

CNBC Admits to Being a Closet Porn Channel
Posted by Eddy Elfenbein on July 21st, 2008 at 2:29 pm

Well, I exaggerate. Slightly.
Here’s CNBC’s Managing Editor Allen Wastler’s post, “Do You Need Bikinis with Business News?” You can probably guess what his answer is:

How much skin is acceptable on a business news Web site?
Believe it or not, the question comes up fairly often, especially when you are associated with a big honkin’ network. Had to address it just this morning in fact. We have a set of pictures of a fashion show in Miami. Lots of bikinis and swimwear. And in some of the shots, a lot of skin. We clipped a few from the presentation. I was accused by some staff members of being overly prudish.
Maybe so. The censored shots weren’t pornographic and they weren’t anything you wouldn’t see on the beach. And, hey, what’s the whole purpose of the presentation anyway? We’re doing it in part because we know our male-skewed audience will find it … interesting. It’s the same reason Sports Illustrated prints its swimsuit issue and networks run Victoria’s Secret stories.

Return of the Hemline Theory
Posted by Eddy Elfenbein on July 21st, 2008 at 10:07 am

Suzy Menkes writes that of course the stock market is down. That should have been obvious to anyone watching hemlines.

Fashion is always a mirror of society. Thus, in a strange forecast of what the Federal Reserve discovered in the banking system, overexposure and total transparency in the wardrobe has been followed by complex cover-ups and a downward spiral. Fashion designers now seem clairvoyant.

Here’s what I wrote two years ago when inseams were rising.
So let’s not blame Fannie and Freddie. Instead, let’s blame Angelina and Jessica.

Williams Girl Makes Good
Posted by Eddy Elfenbein on July 21st, 2008 at 9:52 am

The New York Times profiles Erin Burnett:

Every rising star needs a narrative, and Ms. Burnett believes hers is about taking risks. After graduating from Williams College in 1998, she says, she spent a forgettable year as an investment banking analyst at Goldman Sachs.
Unhappy in banking, she wrote a letter to Willow Bay, a former morning show correspondent and weekend host who had just become a co-anchor of the business news program “Moneyline” on CNN. It was a “stalker letter,” Ms. Burnett joked, but it worked: before long, she was Ms. Bay’s assistant and then a writer at CNN. But at first she didn’t want to stay in television.
“For some people, it’s love at first sight, but it wasn’t for me,” she said. Her high school classmates in Mardela Springs, Md., a farming town on the Eastern Shore, seemed to know her better than she knew herself: they voted her most likely to host a TV talk show in 20 years, because they thought she talked a lot. “It’s true,” she said. “I’m kind of a motor mouth.”
Ms. Burnett quit CNN and wound up writing the business plan for an Internet media start-up at Citigroup, the banking giant. When it came time to find an on-camera host, she decided to try it herself. From there she moved to Bloomberg, the news and data company that has become something of a farm team for CNBC. She started as a producer there before quickly snaring an anchor job.
As with any anchor role, looks play their part and Ms. Burnett’s striking features have complemented her hard work, smoothing her ascent.

Sheesh, get a room!

First They Came for the Foot Masseuses
Posted by Eddy Elfenbein on July 21st, 2008 at 9:20 am

Virginia Postrel found this article on the State of California’s bizarre campaign to crack down on…foot masseuses:

The popularity of foot massage has risen as cutthroat competition has sent prices downward. But now, business owners are dealing with a new problem: a crackdown by county and state officials who have ruled that they need licenses from the state Board of Barbering and Cosmetology.

Shouldn’t the “but now” be replaced with “as a result”?

Starbucks Closings
Posted by Eddy Elfenbein on July 18th, 2008 at 3:53 am

Starbucks released its list of 600 stores that are planned to be closed by early next year. My condolences to all the caffeine addicts out there.