• Expeditors Gets Taken Down
    Posted by on February 13th, 2007 at 3:28 pm

    At the end of last year, I decided to remove Expeditors International of Washington (EXPD) from my Buy List. The stock gained 20% for us last year. It’s a great company, but I felt that the shares were getting a bit too pricey. Through yesterday, the stock was up another 8% for the year. But that came to a halt today.
    The company reported earnings of 28 cents a share, three cents below expectations. The stock opened down 10% this morning, although it has rallied some throughout the day.
    Update: That was some rally. EXPD closed just nine cents lower.

  • Take Alcoa Out of the Dow
    Posted by on February 13th, 2007 at 1:38 pm

    Shares of Alcoa (AA) are up big today on news that the company may be the target of a takeover. The Times of London is reporting that Australia’s BHP Billiton and Rio Tinto are both considering bidding $40 billion for Alcoa.
    Personally, I’d like to see this happen. Not so much for the shareholders. Although, they deserve some reward for suffering through Paul O’Neill for twelve years. No, I simply want to see Alcoa thrown out of the Dow. If the custodians of the index won’t do it, let’s have the market do it. I can’t remember the last time a Dow stock was bought out. But that’s my point right there. Shouldn’t the Dow stock be the one doing the buying?
    Alcoa is currently the smallest stock in the Dow by market cap. (Except for GM, which — as far as I’m concerned — is no longer a stock, but an benefits management company that sells crappy cars on the side for below cost.)
    Alcoa joined the Dow in 1959. Today, the company’s market cap is roughly 0.7% of the entire Dow. But since the index is weighted by price, not market value, shares of Alcoa really make up 2.2% of the index. Alcoa has a greater weighting in the Dow than Microsoft, even though the software giant has nearly ten times the market value. In fact, Microsoft’s bank account is worth $27 billion. They could nearly buy Alcoa without breaking a sweat.
    This list shows all the changes to the Dow over the past 75 years.
    If Alcoa goes away, expect to hear a lobby for Google (GOOG) to replace it, but my vote would be for Bank of America (BAC). That’s the largest S&P 500 stock not currently in the Dow. BAC is followed by Cisco (CSCO), then Chevron (CVX), then Google.
    Here’s an interesting tidbit on the Dow. The editors of the Wall Street Journal changed the index in 1939 by tossing out IBM (IBM). They added it back in 1979. In those 40 years, IBM gained 22,000% If the editors had left the index alone, the Dow would now be about 35% higher than where it is.
    All the historical benchmarks would be different. The Dow would have cracked 1,000 in 1961 instead of twelve years later. Behold the power of one really good stock.

  • “I’m Huge!”
    Posted by on February 13th, 2007 at 10:16 am

    Michael Lewis deconstructs Todd Thomson:

    The obvious question — “What was the man thinking?” — Thomson hasn’t addressed, at least not publicly. But that shouldn’t stop the rest of us from guessing, and my guess is that the soundtrack in the back of Todd Thomson’s mind played the golden oldie from the glory days of the Wall Street alpha male:
    “Look at me: I’m huge! Because I’m huge I have special needs. Because I make this place hundreds of millions a year, I can do whatever the hell I want. Technically, Prince may be my boss but I don’t really have a boss, because without me he’s not just short and tubby but toast. I make the money. The petty rules are for the people who don’t make the money.”

  • 10-Q Detective in BusinessWeek
    Posted by on February 12th, 2007 at 4:31 pm

    Congratulations to one of my favorite stock bloggers, David Phillips of 10-Q Detective. BusinessWeek just featured his blog as a “must read” blog.

    Number Crunch
    To read SEC filings with a guide, go to this blog run by David Phillips, an investment newsletter publisher. He focuses on financial-statement “soft spots,” such as restructurings, and also takes on issues like executive pay, recently analyzing the actual compensation of $1-a-year ceos like Yahoo!’s (YHOO ) Terry Semel and Apple’s (AAPL ) Steve Jobs. Phillips delves into the data and lets others handle the witty asides, sprinkling in lines from movies and songs. On the payoff to shareholders from Semel’s low official salary, he paraphrases Tom Waits: “The big print giveth and the small print taketh away.”

  • US slowdown looms as groups miss targets
    Posted by on February 12th, 2007 at 3:57 pm

    As a bull, I’m not concerned right now about high valuations. The biggest fear I have is slowing earnings. Today, the Financial Times looks at — not falling earnings — but slowing earnings growth.

    More than 22 per cent of the 400-plus S&P 500 companies to have reported results for the fourth quarter of 2006 failed to meet Wall Street expectations. This is the highest level of “misses” since the third quarter of 2004, according to Reuters Estimates.
    The spike in earnings disappointments increases the chances that corporate America will end a three-and-a-half year run of quarterly double-digit profit growth in the last quarter of 2006 rather than at the beginning of 2007, as widely expected.
    Missing earnings forecasts is particularly embarrassing for US companies because, unlike most of their European counterparts, many set their own yardsticks by providing analysts with quarterly earnings guidance.
    “The period of rapid earning growth is at an end,” said Ashwani Kaul, senior research analyst at Reuters Estimates. “Companies have reached levels of high absolute earnings and cannot be expected to continue at this pace. We are entering a low earnings growth environment.”

    This article has an unnecessary negative slant. It’s true that forecasts for earnings growth are being ratcheted back, but still only 22% of companies have missed expectations. That’s not a large amount. It’s the most in over two years, but the last time wasn’t a signal of a market top.

  • ValueWiki’s “Contributor of the Day” Contest
    Posted by on February 12th, 2007 at 11:00 am

    Here’s an interesting idea: The new ValueWiki site is offering $100 to the best daily contributor, and $500 for the best monthly one. There’s also a ValueWiki Blog.

  • The Presidential $1 Coin Program
    Posted by on February 12th, 2007 at 9:49 am

    Check out the four new $1 coins coming out this year.
    Yuck.

  • Oy Vey Maria
    Posted by on February 12th, 2007 at 12:44 am

    Maria-gate is now fit to print:

    When Ms. Bartiromo got wind of Mr. Gasparino’s reporting, she told Mr. Wald, complaining that her name was being dragged into the matter, these people say. Mr. Wald said that reporting the story was Mr. Gasparino’s job.
    Nevertheless, Mr. Gasparino never reported on Mr. Thomson’s threatened job status. He was urged to proceed cautiously with the story, but some within the network say Ms. Bartiromo’s role in the story prevented it from being fully reported.

    CNBC can’t ignore this anymore.
    Also, the old grey lady isn’t afraid to throw down 30-year-old cultural references.

    For the daughter of a restaurant owner in Bay Ridge in Brooklyn, her rise to celebrity status — there are Web sites devoted to her, Joey Ramone wrote a song in her honor and she has recently trademarked her “Money Honey” nickname — has been meteoric.
    And while much has been made of her Sophia Loren-like looks, her early career ascent was propelled by pluck, ambition and like another famous, albeit fictional, product of Bay Ridge, Tony Manero in “Saturday Night Fever,” a hunger to make it big across the river in Manhattan.

    I’m confused. If Maria is Tony, does that mean Todd Thomson is Stephanie?

  • Barron’s Hops on the UnitedHealth Bandwagon
    Posted by on February 10th, 2007 at 11:55 pm

    Glad to have them aboard:

    Few companies have been hit harder by accusations of stock-option backdating than UnitedHealth Group, the giant health-care insurer. Allegations that the company lined management’s pocket by altering the date of options grants resulted last year in the departure of former CEO William McGuire and a member of the board of directors. UnitedHealth (ticker: UNH) hasn’t filed a quarterly financial report with the Securities and Exchange Commission since last year’s first quarter, because it still hasn’t determined the accounting treatment for formerly issued options. The company faces shareholder lawsuits and investigations by the SEC, the Internal Revenue Service and the U.S. attorney for the Southern District of New York. And its shares, which once topped 63, now trade for 51.
    Yet, for all its maladies, the patient is alive and kicking — vigorously, in fact. UnitedHealth’s underlying business is strong and growing, and it is hard to imagine its fortress-like balance sheet, with $2.6 billion of net cash, can’t absorb any fines or accrued taxes the company is likely to owe.

  • The First Twin Peaks
    Posted by on February 10th, 2007 at 7:07 am

    On the weekend, I like to post fun things. Anything that keeps our minds off money and investing. Here’s something I think you’ll really enjoy. This is the very first episode of Twin Peaks.
    This episode aired on April 8, 1990 (Dow 2700). It’s hard to believe it’s been 17 years. Back then, I remember how everyone seemed to be riveted by Twin Peaks. There was nothing like it on television before.
    Even today you can see the influence of Twin Peaks in shows like 24, Lost or the Sopranos. But before Twin Peaks, all TV shows were so darn formulaic. The plots were dull, and nothing engaged viewers.
    But Twin Peaks was different.
    Not only was it odd and quirky, but it was so well done. Watching it again, I’m reminded of that. After each episode, you were dying to know what happens next. At the time, I remember walking around and the only thing people could talk about was Twins Peaks. Did you see last night’s episode? Who do you think did it?
    I don’t remember a show ever having that sort of impact. There were even Twin Peaks parties where people would bring logs and coffee and watch the show together. That’s the impact it had. What can I say but David Lynch is a genius. True, he’s out of his mind, but still a genius.
    So curl up with your favorite TV buddy. Grab a doughnut and a nice cup of Joe (damn fine coffee!), and enjoy Twin Peaks.

    Read more…