Gilead Back Above $40
Posted by Eddy Elfenbein on November 28th, 2011 at 10:28 am

Ugh! I take a few days off and the stock market plunges. Fortunately, we’re rallying today and gaining back much of what we lost. The market is currently up 314 points. The S&P 500 is closing in on 1,200 and the Dow is now over 11,500.

Still, last week was the worst Thanksgiving week since 1932. The Dow shed over 560 points. So far today is a good day for the cyclicals. Energy and Material stocks are leading the way while Financials aren’t too far behind.

Many stocks on our Buy List like Wright Express ($WXS), JPMorgan Chase ($JPM) and Deluxe ($DLX) are doing very well.

I was surprised to see Nicholas Financial ($NICK) get as low as $10.01 on Friday but since it was on such light volume, I wasn’t too concerned. Of course, there hasn’t been any news which ought to impact the stock greatly. NICK opened at $10.97 today and is now at $10.50. I don’t see any reason why it shouldn’t be back over $11.70 soon.

Interestingly, Gilead Sciences ($GILD) has recovered all the ground it lost since it announced the $11 billion deal to buy Pharmasset. One week ago, shares of Gilead plunged 9% on several times’ normal trading volume. If you held (as we did), you would now be ahead.

Morning News: November 28, 2011
Posted by Eddy Elfenbein on November 28th, 2011 at 4:54 am

Central Banks Ease Most Since 2009 to Avert Contagion

IMF Denies in Italy Aid Talks

Euro-Zone Shark Still Has Its Appetite

Crisis Threatens EU Sovereign Ratings: Moody’s

Indian Politicians Unite to Slam Plan for Wal-Mart Entry

Bank Of Japan Governor: Japan Faces Severe Situation

Brazilian Steel: Ternium, Tenaris Buy 27.7% Voting Stake in Usiminas for $2.66 Billion

Effects of Flooding Show in Thai Data

Oil Advances a Second Day on Economic Outlook, Syrian Sanctions

Copper Gains Most in Two Weeks on Italy Loan Report, Record Thanksgiving

Secret Fed Loans Gave Banks Undisclosed $13B

For a Weekend, at Least, Retailers See Record Numbers

Asset Sale May Be Next for AT&T

Zynga’s Tough Culture Risks a Talent Drain

Three Top BSkyB Shareholders to Vote Against Murdoch

Jeff Miller: Weighing the Week Ahead: A Deluge of Data

Phil Pearlman: Black Friday Redux: One Nation Conditioned To Shop Madly at Midnight

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Morning News: November 25, 2011
Posted by Eddy Elfenbein on November 25th, 2011 at 6:56 am

India’s Sharma Says FDI in Retail to Create 10 Million Jobs

Japan Benchmark 10-Year Yield Completes Biggest Weekly Gain Since January

Bank Of Russia Leaves Rates Unchanged, As Expected

Hungary Credit Rating Cut to Junk at Moody’s

In Debt Crisis, a Silver Lining for Germany

China Starts Probe Into U.S. Renewable Energy-Policy, Subsidies

Renewable Power Trumps Fossils for First Time

“Fair value” Accounting Rule Tweak Raises Concerns

Crude Futures Head for Second Weekly Loss on Europe; Mirae Sees Iran Risk

T-Mobile and AT&T Edge Closer to Scrapping Merger

Gap Says to Triple China Network in 2012

Russian Oil Giant Lukoil’s Quarterly Net Slumps 21% on Output Dip

Hong Kong Jeweler Plans $3 Billion IPO

John Muellbauer: How Germany Could Save the Euro

Howard Lindzon: Venting…Not Vente…AND Humor in Finance

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Morning News: November 24, 2011
Posted by Eddy Elfenbein on November 24th, 2011 at 6:50 am

German Business Confidence Unexpectedly Rises

Portugal Paralyzed by Strike

Asian Stocks Outside Japan Rebound from Seven-Week Low on China

Dollar Funding Costs Rise to Three-Year High, Reversing Decline

Oil Climbs From Two-Week Low on U.S. Stockpiles, Saudi Violence

Chocolate Binge Topping $100 Billion Boosts Cocoa

U.S. Rating by Moody’s Imperiled Without $1.2 Trillion in Cuts

Fed Seeks to Bolster Confidence in 31 Largest U.S. Banks With Stress Tests

Black Friday IPod Deals Show Stores Bowing to Buyers Amid 2% GDP

Opening Day for Shoppers Shows Divide

Deere Fourth-Quarter Net Tops Analyst Estimates as U.S. Farm Income Climbs

Microsoft Signs Nondisclosure Agreement With Yahoo

AT&T, T-Mobile Deal Hopes Crumble

Itochu Buys Stake in U.S. Oil-and-Gas Producer Samson

Ex-Olympus CEO Confident About Accounting Probe

Joshua Brown: Media Gruesome Groupon

Marc Chandler: Fiscal Union is the Only Real Solution

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Morning News: November 23, 2011
Posted by Eddy Elfenbein on November 23rd, 2011 at 6:52 am

European Banks Get ‘False Deleveraging’

Bank of Greece: Greece Faces Last Chance to Stay in Euro Zone

Euro Zone Heads for Contraction

Belgium, France Lead Govt Bond Market Losses Wednesday

International Monetary Fund Offers Short-Term Credit as Insurance for Nations

Crude Oil Drops After German Bond Sale Signals Deepening of Euro Crisis

3rd-Quarter U.S. Growth Revised Down to 2 Percent

Financial Finger-Pointing Turns to Regulators

Fed to Test Six Big Banks for Euro Stress

U.S. Postal Service Hires Evercore for Restructuring Advice

F.C.C. Seeks Review of AT&T Merger With T-Mobile

Groupon’s I.P.O. Pop, Now Deflated

Merck to Pay $950 Million Over Vioxx

Black Friday Deals See Stores Bowing to Shoppers

Epicurean Dealmaker: Sovereign Triviality

Paul Kedrosky: Going Public Decreases Innovation

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Medtronic Earns 84 Cents Per Share
Posted by Eddy Elfenbein on November 22nd, 2011 at 11:23 am

Before the opening bell, Medtronic ($MDT) reported earnings of 84 cents per share which beat expectations by two cents per share. Overall, this was a solid quarter:

Sales increased for the company’s insulin pumps and heart pacemakers. Weakness persisted in its businesses that sell implantable heart defibrillators and products for spinal surgery, which together make up about 40 percent of revenue.

Medtronic Chief Executive Omar Ishrak told analysts on a conference call that he expects the pressure on those units to eventually reverse as macroeconomic conditions improve.

The company also reiterated its estimates for this year which is a diluted EPS ranging between $3.43 and $3.50. The stock is up about 3.5% today.

Here’s a look at Medtronic’s quarterly results for the past several years:

Q3 GDP Revised Down to 2%
Posted by Eddy Elfenbein on November 22nd, 2011 at 10:43 am

The initial estimate was 2.5% but today it was revised down to 2%.

The economy in the U.S. expanded less than previously estimated in the third quarter, reflecting a drop in inventories that points to a pickup in growth as 2011 comes to a close.

Gross domestic product climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate, revised Commerce Department figures showed today in Washington. The median forecast of 81 economists surveyed by Bloomberg News called for no revision. Excluding stockpiles, so-called final sales climbed 3.6 percent, the most since last year’s fourth quarter.

Gains in retail sales, manufacturing and housing this quarter, combined with lean inventories, raise the odds the world’s largest economy will pick up. At the same time, unemployment and stagnant wages mean consumer spending has been fueled by reductions in savings that cast doubt on whether increases will be sustained into 2012, just as the risks from government cutbacks and the European debt crisis intensify.

Here’s your fun stat of the day: Real GDP growth over the last 15 quarters = 0.09%.

America’s New Age of Plenty
Posted by Eddy Elfenbein on November 22nd, 2011 at 10:18 am

Fascinating article from Edward Luce at the Financial Times:

Because of better technology, notably breakthroughs in drilling, the US all of a sudden realises it is sitting on a century’s worth of gas supply. When Mr Obama came to office, the country faced projections of rising natural gas imports from places like Qatar.

The same technology has unlocked ever-growing estimates of once inaccessible “tight” oil lurking beneath America’s rocks. In its immediate neighbourhood, Alberta’s huge expanse of “tar sands” contains oil reserves that rank Canada second only to Saudi Arabia. In Brazil, recent advances in offshore oil drilling will relegate Venezuela into second place in the region.

Without any real input from Washington, windfalls just keep dropping into America’s lap. Welcome to a new age of plenty.

Morning News: November 22, 2011
Posted by Eddy Elfenbein on November 22nd, 2011 at 6:39 am

France’s AAA Status in Tatters as Yields Surge

Ireland Faces $26 Billion Fall in Drug Exports

Spain’s Borrowing Costs Skyrocket

Debt Crisis Lurches Toward Heart of Euro Zone as Rifts Grow

Tokyo Exchange Bid Values Osaka Securities at $1.68 Billion

China Herd Follows the Shorts

Gold Rebounds From One-Month Low as Sovereign-Debt Concerns Stoke Demand

Supercomittee Failure Poses Threat to U.S.

As Layoffs Rise, Stock Buybacks Consume Cash

Hewlett’s Profit Falls 91%, But It Beats Expectations

Netflix Stock Plunges, After Rental Giant Sells $400 Million in Stock, Debt

KKR Near $7 Billion Deal to Buy Most of Oil and Gas Producer Samson

U.S. Trustee Faults MF Global Customer Committee Proposal

A Blow to Pinstripe Aspirations

Roger Nusbaum: Is The Market Frustrated?

Jeff Miller: Investors’ Guide to the Supercommittee Failure

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Nike’s Incredible Track Record
Posted by Eddy Elfenbein on November 21st, 2011 at 3:28 pm

Nike ($NKE) is one of those great stocks that doesn’t get nearly as much credit as it deserves. In 1984, the shares were going for less than 50 cents each (split adjusted).

Just a few weeks ago, NKE hit an all-time high of $97.68. That’s a gain of more than 21,000% in 27 years which is about 22% annualized. Not many hedge funds can do that. The S&P 500 is up about 610% over the same time span.

I should add that those numbers don’t include dividends and Nike just raised its dividend by 16% to 36 cents per share. The new dividend works out to a yield of 1.6%.

In early 1997, Nike got to be super-expensive — over $36 per share (again, split adjusted). Three years later, when the market was peaking, Nike was down to just $13. Still, Nike has managed to rebound and outperform the market even when we measure from its early 1997 peak.

I like the company a lot but the stock is rather pricey. I think NKE would be a much better buy if it dropped down to $70.

The chart below shows Nike’s stock along with the S&P 500. For comparison, I’ve given the S&P 500 the same starting base as Nike.