• UnitedHealth Under Fire
    Posted by on April 25th, 2006 at 9:46 am

    Today is a big day for earnings. AFLAC (AFL), Varian Medical (VAR) and Fiserv (FISV) all report today.
    The Wall Street Journal reported that the Attorney General of Minnesota is turning up the heat on the company. The stock has been under attack ever since the news of CEO William McGuire’s $1.6 billion in options became know. Plus, it appears that many of these options were “back-priced” to be more favorable for UNH execs.
    Here’s what the WSJ reported:

    Minnesota Attorney General Mike Hatch, stepping up his campaign against UnitedHealth Group Inc., urged around 135 public and private pension funds to withhold votes for four directors seeking re-election to the health insurer’s board next month.
    In a letter sent yesterday to the big investors, Mr. Hatch accused the board of failing to provide proper oversight in the awarding of stock options “in the billions to top executives” while having “awarded themselves millions of dollars in stock option opportunities.” Mr. Hatch, who is running for governor, acknowledges his letter-writing campaign is primarily “symbolic.”
    The letter was sent to a group that includes the American Federation of Teachers retirement plan and the California Public Employees’ Retirement System, or Calpers.
    Mr. Hatch’s letter comes amid scrutiny of the circumstances under which UnitedHealth Chief Executive William McGuire obtained some of the $1.6 billion in unrealized gains he holds in UnitedHealth stock options. He, and in some years at least 10 other top executives, frequently received options just before big run-ups in the company’s share price, which had the effect of making the options more profitable than they otherwise would have been.
    Last week, Mr. Hatch intervened in a federal civil suit that names as defendants Dr. McGuire, Chief Operating Officer Stephen J. Hemsley and several board members and alleges that shareholders were harmed by backdated option grants. UnitedHealth’s board also has launched a probe of its past option-granting practices, and the company has said it received a call from the Securities and Exchange Commission.

    The stock has slid from over $64 in December to $50.16 for yesterday’s close.

  • Brown & Brown’s Earnings
    Posted by on April 24th, 2006 at 9:12 pm

    BRO earned 36 cents a share for the first quarter, inline with forecasts.

    Net income per share for the quarter ended March 31, 2006 was $0.36, an increase of 16.1% over the $0.31 in net income per share reported for the quarter ended March 31, 2005. Net income rose to $50,026,000 for the first quarter of 2006, versus net income of $43,018,000 for the quarter ended March 31, 2005, an increase of 16.3%.
    Total revenue for the quarter ended March 31, 2006 was up 13.9%, to $230,582,000, compared with $202,374,000 recorded in the corresponding quarter in 2005.
    J. Hyatt Brown, Chairman and Chief Executive Officer, noted, “The wind storm capacity crunch, in coastal areas from Texas to Virginia, is the most severe that I have seen in my 47-year insurance career. This tumultuous market place, combined with softening property and casualty pricing, outside of wind-prone areas, presents challenges for our customers and our professionals. We are responding positively and aggressively in finding solutions to those needs. That being said, all-in-all we are pleased with the quarter’s results.”

  • Could a computer be the next Buffett?
    Posted by on April 24th, 2006 at 4:00 pm

    Money Magazine asks the question:

    A recent study by Goldman Sachs Asset Management concluded that while over 15 years a human manager can beat a quant fund in absolute terms, once you adjust for the extra risk the human manager had to take to get that result, the quant fund comes out ahead.
    “Quant funds are a well-established strategy for institutional investors,” says Coral Gables, Fla. financial planner Harold Evensky. “They are becoming a story for individual investors, and for most people they probably make good sense.”

    I’m a little skeptical. Computers are only as smart as the people doing the programming. My guess is that computers do well because they don’t have emotions. Vulcans, I’m sure, would make kick-ass money managers. Still, I’ll go with us humans, imperfections and all.

  • The Penny Bull Market
    Posted by on April 24th, 2006 at 11:55 am

    Thanks to the bull market in copper, the penny is about to worth more than one cent. Wow! Our money will be worth something. This is actually a serious problem for the government.
    Seigniorage—printing money for profit—is a nice little business our government has all for itself. In fact, it’s a felony if you or I try it. This is one the few purely socialized industries in the United States. You know those new “state series” of quarters? They’ve been a huge moneymaker for the Feds.
    But it was not always so. From the 1830s to the 1860s, the U.S. practiced “free banking.” Most of the currency in circulation came from privately issued bank notes. The amount of Federal currency wasn’t very significant.
    The old idea was that free banking was a disaster because the economy was dominated by lousy currency. But new research has shown that free banking was more effective than previously believed.

  • Get Ready for the Largest IPO in History
    Posted by on April 22nd, 2006 at 10:48 pm

    Coming this summer, the largest IPO in history, and it’s not a tech stock. It’s not even American.
    Rosneft, the Russian oil company, is set to go public in July. The company bought Yukos after the Kremlin forced Yukos into bankruptcy. Rosneft now has more crude oil in the ground than ExxonMobil.

  • Dell Is Below $27
    Posted by on April 21st, 2006 at 1:36 pm

    The bears have it out for Dell (DELL). The stock is down to $26.91 a share. I think this is a good time to remind everyone that Dell beat earnings last quarter. You don’t often find stocks this good going for 16 times earnings.

  • Yankees 1st Team to Top $1 Billion in Value
    Posted by on April 21st, 2006 at 9:17 am

    According to Forbes, the New York Yankees are the first baseball team to be worth over $1 billion. Forbes estimated the Yankees had $50 million operating loss.

    The Boston Red Sox were pegged with the second-highest value at $617 million, followed by the New York Mets ($604 million), Los Angeles Dodgers ($482 million), Chicago Cubs ($448 million) and Washington Nationals ($440 million).
    Tampa Bay was last among the 30 teams at $209 million.

    The Yankees are 7-7, tied for last with Tampa Bay.

  • Citigroup Cuts Dell to Sell
    Posted by on April 21st, 2006 at 9:14 am

    From TheStreet:

    The pricing advantage enjoyed by Dell is eroding as competitors adapt its inventory and supply-chain innovations, and the company needs to contemplate lower margins to preserve its franchise, Citigroup said in downgrading the stock to sell Friday.
    The brokerage slashed its price target on the computer company’s shares to $28 from $37, saying Dell must adjust its profitability expectations in order to kick start growth and market share. In premarket trading Friday, the shares slipped 74 cents, or 2.6%, to $27.50.
    “Dell management has been vocal that the business model functions optimally when PC and server units are growing above-market — this has not been the case for several quarters. Given that Dell’s price advantage has eroded to 5% or less since ’01, a margin reset is necessary to re-widen the price gap and gain share,” Citigroup wrote.
    “There is historical precedent for such a reset,” Citi wrote. “When end-market growth decelerated through calendar 2000, Dell ultimately slashed gross margin by 300 basis points in a single quarter in order to take share during the downturn and position for the next upturn.”
    Citi noted that Dell’s stock fell from $42 in July to $30 at the end of 2005, and blamed the decline on the company’s inability to outgrow the global PC market in unit terms for the first time in a decade.
    “With Dell’s highly profitable U.S. PC business going ex-growth in the first calendar quarter of 2006, further end-market end market deceleration likely, especially in Dell’s largest segments and geographies, we think the probability of a ‘margin reset’ is rising,” Citigroup said.

  • Danaher Earns 67 Cents a Share
    Posted by on April 20th, 2006 at 12:36 pm

    A few weeks ago, Danaher (DHR) raised the lower end of its guidance. It turns out, the company was right!
    Today, Danaher reported earnings of 67 cents a share, two cent more than Wall Street estimates.

    Danaher earned $216 million, or 67 cents per share, compared with $188 million, or 58 cents per share, a year earlier.
    Analysts on average expected 65 cents per share, according to Reuters Estimates, after the company said last week that results would exceed its earlier range of 61 cents to 64 cents. Danaher had previously raised its forecast in March.
    The results included 2.5 cents per share in stock options expense, as well as a 1-cent tax-related benefit and a 1-cent gain for the sale of real estate.
    Danaher, whose products range from Craftsman tools to gas station equipment and water treatment systems, said it saw broad strength across its businesses, and it was confident it would deliver positive results for the rest of the year.
    Sales rose 17.5 percent to $2.14 billion, matching the estimate the company provided last week, when it announced its biggest-ever acquisition.

    The company is trading lower today due to its conservative forecast for the rest of 2006. Danaher said that it expects to earn between 73 and 78 cents a share for the second quarter, and $3.07 per share to $3.17 a share for the year.
    Wall Street was expecting 77 cents for the second quarter, and $3.13 for the year. I think the company is simply being cautious.

  • Imagine
    Posted by on April 20th, 2006 at 10:05 am


    Imagine no possesions,

    I wonder if you can,

    No need for greed or hunger,

    A brotherhood of man,

    Imagine all the people

    Sharing all the world…

    John Lennon’s Schoolbook Fetches $226,150 in London

    April 20 (Bloomberg) — John Lennon’s schoolbook, entitled “My Anthology,” fetched 126,500 pounds ($226,150) at a London sale of rock memorabilia last night. Auction house Cooper Owen Plc had set a minimum price of 100,000 pounds for the 12-year-old’s scribbles and drawings.