• Bard’s Conference Call
    Posted by on April 23rd, 2013 at 10:29 pm

    Here are some highlights of Bard‘s ($BCR) conference call:

    Diluted shares for the period were 82.5 million, as we purchased 1.5 million shares during Q1. The net result is adjusted EPS of $1.44 at the top end of our guidance range for the quarter.

    The balance sheet, as of March 31, reflects cash, restricted cash and short-term investments of $905.3 million versus $921.3 million at December 31. For the quarter, accounts receivable days were down 2.3 days, and inventory days were down 0.2 days. Capital expenditures totaled $13.2 million for the quarter.

    On the liability side, total debt was $1.4 billion as of March 31, no change from December 31. Debt to total cap at the end of the quarter was about 43%, and total shareholder investment was $1.9 billion at March 31, 2013.

    In looking at Q2, we’re expecting to see similar constant currency sales growth to what we saw in Q1. Given the previously discussed first half headwinds, we told you that our revenue growth expectations for the start of the year was flattish, and we don’t see any reason to change that.

    From an EPS standpoint, excluding items affecting comparability, we see the second quarter in the range of $1.35 to $1.39, as we continue to aggressively ramp our investment spending in both SG&A and R&D, consistent with our strategic plan.

    Wall Street had been expecting $1.46 per share.

  • CR Bard Earns $1.44 Per Share
    Posted by on April 23rd, 2013 at 4:14 pm

    CR Bard ($BCR) just reported Q1 earnings of $1.44 per share. Sales were $740.3 million. That’s up 1% from a year ago. Wall Street had been expecting earnings of $1.42 per share on sales of $728.45 million.

    C. R. Bard, Inc. today reported 2013 first quarter financial results. First quarter 2013 net sales were $740.3 million, an increase of 1 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, first quarter 2013 net sales also increased 1 percent over the prior-year period.

    For the first quarter 2013, net sales in the U.S. were $498.5 million, essentially flat to net sales of $496.2 million in the prior-year period. Net sales outside the U.S. were $241.8 million, an increase of 3 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, first quarter 2013 net sales outside the U.S. also increased 3 percent over the prior-year period.

    For the first quarter 2013, net income was $90.7 million and diluted earnings per share were $1.08, a decrease of 35 percent and 33 percent, respectively, as compared to first quarter 2012 results. Adjusting for items that affect comparability between periods as detailed in the tables below, first quarter 2013 net income was $120.7 million and diluted earnings per share were $1.44, a decrease of 13 percent and 11 percent, respectively, as compared to first quarter 2012 results.

    Timothy M. Ring, chairman and chief executive officer, commented, “We are off to a strong start executing on our strategic investment plan that we announced last quarter. It’s a credit to our teams around the world that we have been able to hit our initial targets on such a broad and ambitious endeavor. The organization is energized and committed to improve the long-term growth trajectory of the business.”

  • The Market Plunges on Twitter Hacking
    Posted by on April 23rd, 2013 at 1:20 pm

    Shortly after 1 p.m., the stock market plunged about 1% after the AP’s twitter feed was hacked. The hackers said that the White House had been attacked. Fortunately, the report was bogus and the stock market quickly got back to normal.

    big.chart04232013

    By the way, this is one of the reasons why I’m not a big fan of stop-losses (though I do use them occasionally). In the short-term, the market is highly irrational and you can get stopped out of good stocks for no good reason.

  • Preview of Ford’s Earnings Report
    Posted by on April 23rd, 2013 at 11:32 am

    From Bloomberg:

    Ford probably earned a record $2.7 billion pretax profit in North America during the first three months of the year, according to analyst estimates at Morgan Stanley and JPMorgan Chase & Co. If those predictions hold up, the strong financial performance is largely thanks to a well-received lineup of new cars, led by the mid-size Fusion and compact Focus. And with renewed demand for pickups, the company has earned the biggest U.S. sales gain among top automakers in the quarter.

    It’s early in the year and Ford faces numerous challenges, chief among them cratering demand in Europe, a weakening yen that’s giving Japanese automakers a boost in the U.S. and a poor showing in the luxury market. Still, Dearborn, Michigan-based Ford continues to impress with its ongoing reinvention of its cars and trucks.

    “The double benefit of new product in the car segments and the very strong industry pickup demand created what seems like a picture-perfect quarter for Ford in North America,” Itay Michaeli, an analyst at Citigroup Inc. who recommends buying the shares, said by phone. “They’re really in a sweet spot.”

    First quarter North American profit margin may have topped 12 percent, according to Morgan Stanley and JPMorgan. To stay there, Chief Executive Officer Alan Mulally needs to keep Ford’s vehicle lineup fresh as he strives to make further gains in the car and utility segments. That won’t be easy as a weakening yen gives Toyota Motor Corp. and Honda Motor Co. an edge.

  • Q1 Earnings Season So Far
    Posted by on April 23rd, 2013 at 10:59 am

    The latest numbers are that 131 of the 500 companies in the S&P 500 have reported so far this earnings season. Of those, 73% have beaten estimates.

    The S&P 500’s price/earnings ratio recently got to 16.22 which was its highest in nearly three years. Eighteen months ago, the market’s P/E dropped down to 11.61 which was a 20-year low.

    image1332

  • Morning News: April 23, 2013
    Posted by on April 23rd, 2013 at 7:28 am

    Euro Zone Slumps Again

    Spain Recession Deepened Slightly in 1Q – Bank of Spain

    OECD in Fresh Warning on Japan Debt

    Yen Sends Cash to Priciest Topix to JGBs Since ’11

    Obama Budget Spreads the Tax Pain

    Panel Blocks CFPB’s Chief

    Bernanke Warned by Barnier That Bank Unit Rules Risk Retaliation

    Subscribers Help Propel Netflix Gain

    Microsoft Rises as ValueAct Discloses $1.9 Billion Stake

    Caterpillar Cuts Full-Year 2013 Outlook

    STMicroelectronics Forecasts Revenue Growth Amid Wireless Losses

    Publicis Focuses on Emerging Markets as Revenue Grows, CEO Says

    Thai Billionaire Offers $6.6 Billion for Discount Retailer

    Joshua Brown: Use Hedge Funds for Proven Return Reduction

    Phil Pearlman: A Tale of Two Barron’s Covers

    Be sure to follow me on Twitter.

  • Bard’s Earnings
    Posted by on April 22nd, 2013 at 1:37 pm

    I have a quick correction on the earnings report from CR Bard ($BCR). According to their website, the earnings webcast will be tomorrow at 5 pm. My apologies for any confusion.

  • The Spike in the VIX
    Posted by on April 22nd, 2013 at 12:55 pm

    The Volatility Index ($VIX) has recently come back to life. Last Thursday, the VIX got as high as 18.20. That’s a huge turnaround from the six-year low of 11.05 reached on March 14th.

    But let’s add some perspective here. The VIX never got below 18.20 — NOT ONCE — during the entire second half of 2008 and all of 2009. That’s eighteen months.

    For investors, there are things to worry about right now, but higher volatility ain’t one of ’em.

  • The Mind of Jeffrey Gundlach
    Posted by on April 22nd, 2013 at 11:27 am

    Gundlach

    Jeffrey Gundlach is a prophet, a mathematician, an art aficionado and occasional dabbler in painting, a former drummer in a failed rock band, a sometime student of philosophy, a reciter of poetry, a blowhard, a consumer of sports automobiles and crossword puzzles, and an egotist of striking dimensions.

    He’s also a man with a genuinely original mind, as well as the manager of one of top-performing bond funds on the market. His firm, DoubleLine Capital LP, is the fastest-growing mutual fund startup in history. Its DoubleLine Total Return Bond Fund has yielded an annual average of 11.50% since its inception and amassed some $50 billion in assets. (For comparison, bond king Bill Gross’s $290-billion Pimco Total Return Fund netted an average of 6.96% for the same period.) Gundlach is also a man who inspires fierce loyalty in his subalterns. When he was fired from Trust Company of the West, his old employer, in December of 2009 and went off to start his own firm, 45 of his 65 team members quit their very comfortable jobs to step out into the great unknown with him.

    He is, in short, an individual, in the honorific sense of the word. If his pronouncements are frequently over the top, his uncanny penetration makes him hard to write off. Blowhards are quickly forgiven if they have the chops to back up their swag.

    His beginnings are ordinary enough. A Buffalo childhood in a modest, middle-class home (father an industrial chemist, mother a housewife); near-perfect SATs, back when that was a real accomplishment; four years at Dartmouth on a scholarship; summa cum laude in philosophy and mathematics. All par for the course among America’s best and brightest. After that, Gundlach enrolled in a Ph.D. program in theoretical mathematics at Yale, seemingly for lack of anything better to do.

    In an alternate universe, he would have gone on to a respectable professorial career, and his weekend gigs with his new-wave band would have made him the cool prof in the eyes of his students. But there were problems. First, there was his thesis. When he told his dissertation adviser that he wanted to prove that infinity didn’t exist, he was told that his topic was outside the “mainstream interests” of Yale’s mathematics faculty. Second, his expansive side was getting restless. Yale and the academic game were too confining. So he dropped out and moved to California, where he gigged with a couple more bands and slowly went broke.

    Suddenly, he decided he wanted to be rich. It was the 80s, and in the 80s if you wanted to be rich, you were an investment banker. So he called up Trust Company of the West, offered them his services as a mathematician, landed an interview, and started his first real job. He would stay at that job a quarter of a century, becoming manager of a $500-million fund at age 28 and pulling down a million dollars a year by age 30. When the financial crisis hit in 2007, his TCW Total Return fund still averaged an amazing 9.1% annually for the next three years. His team was by now managing almost all of TCW’s assets. Gundlach had made himself into that rarest of creatures in American business: someone who is irreplaceable.

    Except that TCW didn’t understand that. In December of 2009, in what seems an act of incomprehensible self-sabotage, they fired him, charging he was conspiring to pilfer the company’s staff, steal its databases and client lists, and start his own firm. The charges were unjust, thus impelling Gundlach to…raid the company’s staff, reconstruct its client lists, and start his own firm. TCW filed suit; Gundlach filed a countersuit—and won, collecting $67 million in unpaid wages for himself and his associates. Meanwhile, he and they were frenetically scrambling to scrape together capital for their new mutual funds. Even with the litigation cloud hanging over them, they still succeeded in aggregating $7 billion inside their first year, largely on the strength of Gundlach’s reputation for delivering results.

    How those results are obtained principally involves mortgage-backed securities, of both the guaranteed and the non-guaranteed variety. The former are insured by the government corporations Fannie Mae and Freddie Mac and yield lower returns, making them more popular when the market is bearish, while the latter are issued directly by banks and other financial institutions and thus carry more risk, causing them to yield higher returns when the market is in its bull phase. Thus far, Gundlach’s distinctive blend of the two in his bond portfolio has continuously trumped other players in the game.

    But Gundlach isn’t given to boosterish optimism. Lately his thinking has taken a prophetic turn, and a gloomy one at that. He’s always been one to look at the big picture—he’s one of the analysts who correctly predicted the subprime-mortgage debacle—and in the next few years he foresees several national economies entering what he calls “Phase Three,” which entails defaulting on their national debts and receiving further government stimulus-spending as triage. This, he says, will cause inflation to spike, but also create unprecedented opportunities. Other of Gundlach’s views are equally visionary: he advocates, for example, abolishing the Fed. Not exactly received wisdom, but Gundlach’s keenness and conviction can make almost any idea interesting.

    Gundlach has consciously cultivated a flamboyant style: Mondrian paintings in his office, quotations from the Great Books at meetings, unflagging self-promotion. But these mannerisms are mere epiphenomena of a mind unafraid to voice its ideas, or to call nonsense when it sees it. As such, he is a rare commodity, an American original. Ralph Waldo Emerson: “A man or a company of men, plastic and permeable to principles, by the law of nature must overpower and override all cities, nations, kings, rich men, poets, who are not.”

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  • Microsoft Continues to Rally
    Posted by on April 22nd, 2013 at 11:18 am

    The stock market is down a bit this morning. The S&P 500 currently stands at 1,552.88 which is 2.37 points lower from Friday’s close. The index is trading just above its 50-day moving average. We briefly dropped below the 50-DMA last week. Gold, however, is up strongly today. The metal is currently up $29 per ounce to $1.425. The economic news this morning was that existing home sales dropped 0.6% last month to an annualized 4.92 million units. That was a bit of a surprise. Economists were expecting an increase to 5.01 million.

    Caterpillar ($CAT), which is a Dow component, is making news this morning. The company had a terrible earnings report and it slashed guidance. Wall Street had been expecting earnings of $1.40 per share; instead CAT earned $1.31 per share. Previously, CAT said it expected full-year earnings to fall between $7 and $9 per share. Now they say it will be $7 per share. Still, the overall earnings picture looks decent. The latest numbers show that 106 companies in the S&P 500 have reported earnings so far. Of that, 72% have topped estimates.

    We have one standout on our Buy List today and that’s Microsoft ($MSFT). Shares of the software giant broke $31 per share earlier today. MSFT is now at a seven-month high. The catalyst for today’s rally is the news that an activist hedge fund has taken a massive stake in the company. CNBC said that ValueAct Capital will soon announce that it has a $2 billion position in MSFT. Bear in mind that the entire company is worth more than $250 billion. Since the earnings report came out, Microsoft is up by 7%.

    CR Bard ($BCR) is due to report later today. Previously, the company warned us that 2013 would be a rough one but that growth would pick up next year. Wall Street currently expects earnings of $1.43 per share which is a big drop from the $1.61 per share Bard made for last year’s Q1.