The Global Economy
Posted by Eddy Elfenbein on August 3rd, 2007 at 9:53 am

Here’s one way of looking at it:

At the start of July, Tunisia hired Daiwa Securities SMBC Co. and Nikko Citigroup Ltd. to help its central bank sell yen- denominated bonds. By the time the fund raising finished this week, Tunisia’s borrowing costs had risen by almost a quarter of a percentage point.
So the taxpayers of an African nation suffer because Joe Blow in Detroit can’t pay his mortgage.

Today’s Jobs Report
Posted by Eddy Elfenbein on August 3rd, 2007 at 9:07 am

The government reported that the economy created 92,000 jobs last month. The unemployment rate rose to 4.6%.
I went to the raw numbers and found out that the unemployment rate is 4.647%, just inches from rounding up to 4.7%.

Recent Earnings Reports
Posted by Eddy Elfenbein on August 2nd, 2007 at 11:03 pm

I need to catch up on some of our earnings reports from last week. There was a bunch, so here’s a quick rundown:
W.R. Berkley (BER) reported earnings of 92 cents a share, inline with estimates. This was a nice improvement over last year, but the stock is right at its 52-week low.
AFLAC’s (AFL) operating earnings came in at 82 cents per share compared with 75 cents a year ago. Analysts were looking for 81 cents per share. The stock soared more than 8% last Wednesday but has since pulled back. Even though they’re both insurance stocks, AFL and BER have been radically different performers this year. AFL is up 13% while BER is down 15%.
Graco (GGG) had a rotten first quarter but it made up for it last quarter. The company earned 66 cents a share, five cents more than estimates. The stock got a nice bump last Thursday and has, so far, held on to it.
Fiserv (FISV) has been a good stock for us, but not lately. The shares got taken down after the company missed earnings by three cents a share (68 vs. 71). FISV lowered its full-year guidance to $2.74 to $2.82 per share, down from $2.86 to $2.94 per share.
Respironics (RESP) had a very good earnings report. This stock is finally getting back on track and is now our top-performer this year. RESP earned 50 cents a share, two cents more than estimates and ten cents more than last year.
SEI Investments (SEIC) was our top-performer last year, rising 61%, but the shares haven’t done well this year. Earnings, however, ain’t so bad. First-quarter earnings were inline, but Q2 came in at 35 cents a share, three cents more than Wall Street’s estimate. Last year, FISV made 29 cents a share.
Varian Medical (VAR) earned 44 cents a share, which was two cents less than last year, but two cents more than expectations. The stock has pulled back some more and it’s turning into one of our big losers for the year. Varian also said that earnings will come in at the low end of expectations. Ugh.
Fair Isaac (FIC) beat consensus, but I’m getting very frustrated with this stock. The previous two earnings reports were terrible.
Nicholas Financial (NICK), our micro-cap car-loan stock, is starting to plunge in a serious way. I think it’s getting caught up in the subprime mess. Revenues were up, but EPS came in at 29 cents, two pennies below last year. The stock has dipped below $9 a share. Delinquencies are up, but the stock still seems very inexpensive to me.
Donaldson (DCI) won’t report for another month, but the company raised its dividend 11% from nine to 10 cents a share.

Fiserv Agrees to Acquire CheckFree for $4.4 Billion
Posted by Eddy Elfenbein on August 2nd, 2007 at 2:22 pm

Big news from Fiserv (FISV), one of our Buy List stocks.

Fiserv Inc., the manager of check- processing and cash machines for 17,000 companies, agreed to buy CheckFree Corp. for about $4.4 billion, adding software that runs Internet-banking services.
CheckFree shareholders will receive $48 a share, 30 percent more than yesterday’s close, Brookfield, Wisconsin-based Fiserv said today in a statement.
Fiserv’s biggest acquisition gives it CheckFree’s electronic systems for online bill-paying and technology that processes more than 1 billion transactions a year. Fiserv was outbid by Fidelity National Information Services Inc. earlier this year when it tried to buy rival EFunds Corp. for $1.5 billion.
“Electronic banking is increasing at a significant pace,” said Benton Gup, a professor of finance at the University of Alabama. “More financial-services companies are going to offer online banking if they don’t already.”
Shares of Norcross, Georgia-based CheckFree rose $8.73, or 24 percent, to $45.56 at 12:17 p.m. in Nasdaq Stock Market composite trading. Shares of Fiserv gained 7 cents to $49.26.
The combination will allow the company to eliminate about $100 million a year in expenses, Fiserv said in the statement. The sale, which the companies expect to close by the end of the year, will add more than $125 million to revenue. The purchase should add to earnings per share in 2008, Fiserv said.

We’re Back Up
Posted by Eddy Elfenbein on August 2nd, 2007 at 11:19 am

Sorry, we had some technical difficulties earlier today. I’d explain it to you, but you probably wouldn’t understand. Let’s just say it’s related to the subprime fallout.

Buy List Since 2006
Posted by Eddy Elfenbein on August 1st, 2007 at 2:05 pm

Here’s a look at how our Buy List has done going back to the beginning of last year:

We were fairly even with the market until this spring, but we missed the big surge in cyclical stocks. However, we’ve held up a lot better during the recent sell-off. We were over 10% behind the S&P, now we’re 7% behind.
Our relative volatility has plunged in the past few months. Since February, the Buy List is about 12% less volatile than the S&P 500.

Crimson in the Red
Posted by Eddy Elfenbein on August 1st, 2007 at 10:59 am

From the WSJ:

Harvard University’s endowment fund has graduated some of the most sought-after money managers in the hedge-fund world.
Now one of those stars is teaching Harvard a lesson of its own.
In the past month, the university lost about $350 million through an investment in Sowood Capital Management, a hedge-fund firm founded by Jeffrey Larson. Mr. Larson managed Harvard’s foreign-stock holdings until 2004, when he left to set up Sowood, which recently lost more than 50% of its value amid bad bond investments.
Mr. Larson isn’t the only high-profile former Harvard-endowment manager with a mixed record since leaving the ivory tower. Jack Meyer, Harvard’s former top investment manager, last year raised a $6 billion hedge fund, Convexity Capital, including an initial $500 million investment from Harvard. While Convexity’s returns were subpar early on, its performance has improved lately, according to people familiar with the figures.

(Via Joe DealBreaker)

Murdoch Wins
Posted by Eddy Elfenbein on August 1st, 2007 at 9:42 am

It’s over. Murdoch won his bid for Dow Jones (DJ). This was a silly spectacle and after a lot of drama the only thing Bancroft family did was embarrass themselves.
Here’s all you need to know:

DJ’s stock has barely moved in a generation. That last uptick is from Murdoch’s $60 a share offer.

The King and Buy
Posted by Eddy Elfenbein on August 1st, 2007 at 9:30 am

It turns out that one of Thailand’s best investors is the king:

Mondays are different in Thailand. It’s the day of the week on which the world’s longest-reigning monarch, Bhumibol Adulyadej, was born.
And in this Southeast Asian nation, the sidewalks, trains, ferries and food stalls selling fiery curries take on a canary- colored glow as Thais — from chief executive officers to street sweepers — pay respect to their king by dressing in the royal color of yellow.
Investors are finding reasons to be enthusiastic about Bhumibol too: The $5 billion of shares that the 79-year-old king controls through the Crown Property Bureau, the asset management company established by Thailand’s government, are weathering the nation’s vicissitudes better than most.

The Dividend Aristocrats
Posted by Eddy Elfenbein on July 31st, 2007 at 11:02 am

S&P tracks its list of “Dividend Aristocrats,” these are S&P 500 stocks that have increased their dividend every year for the last 25 years.
Here’s the list ranked by current dividend yield:
FHN 5.51%
BAC 5.34%
ED 5.29%
USB 5.21%
PFE 4.92%
BBT 4.81%
CMA 4.73%
RF 4.68%
FITB 4.43%
MO 4.09%
KEY 4.09%
CINF 3.55%
LEG 3.44%
GCI 3.24%
LLY 3.12%
KMB 3.10%
SNV 2.85%
GE 2.83%
JNJ 2.72%
BUD 2.69%
PPG 2.68%
CLX 2.61%
MTB 2.60%
KO 2.59%
ROH 2.58%
ABT 2.57%
AVY 2.56%
VFC 2.51%
CBSS 2.47%
CB 2.27%
PEP 2.27%
PG 2.24%
SWK 2.21%
EMR 2.20%
MMM 2.15%
MCD 2.05%
SLM 2.01%
WWY 2.01%
ADP 1.96%
WMT 1.90%
SHW 1.77%
GWW 1.57%
SVU 1.54%
FDO 1.50%
DOV 1.43%
MHP 1.34%
ADM 1.34%
STT 1.28%
BDX 1.25%
JCI 1.17%
LOW 1.14%
SIAL 1.01%
STR 0.95%
TGT 0.90%
WAG 0.85%
NUE 0.84%
BCR 0.75%
CTL 0.56%
PGR 0.19%