Daily Archives: January 7, 2007

Chinese Car Company Looks Ahead

Chery, one of the largest car companies in China and Chrysler’s new partner for building small cars, says that it should be able to sell one million vehicles in 2010. It sold 305,000 in 2006.

The good news for US car companies, especially GM, is that the Chinese auto market is obviously growing as quickly, if not more quickly, than expected. GM sold about 864,000 cars and light trucks in China in 2006. It may not grow as fast as Chery, but it would not seem inconceivable that GM’s China sales could hit 2 million by 2010. For a company that will produce a little over 9 million cars in 2007, that is not insignificant.

The other side of the coin is that Chery may be getting closer to having the financial and production capacity to start sending more cars abroad. It is believed to be planning an IPO next year, which may give it the balance sheet to consider expansion.

Of course, all that US car makers need is another competitor in North American.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 7, 2007 – 10:57 am in Autos

Will Private Equity Collapse?

BreakingViews, published in the Wall Street Journal, has made a case that the amount of money from private equity going into buyouts is rising so fast that exiting the deals will be very difficult.

The theory of BreakingViews is that private equity firms raised $320 billion last year. With debt that can be taken on in buyout deals, the capital available rises to $1.6 trillion. If a third of those deals make it to the public markets via IPOs, that is $500 billion that the market would have to absorb. In 2006, total global IPOs were less than half of that, so private equity may have a problem getting a return on its invested capital.

What makes this point of view inaccurate. First, the IPO market in the next two years may be much more robust that in 2006. "Given increased level in leveraged buyout activity…we believe that the outlook for potential IPOs is fairly robust," Wachovia analyst Douglas Sipkin said in a note this week. "Assuming it takes about two years for a private equity firm to turn its portfolio around and spin it back to the public should provide a significant IPO pipeline."

The other, very important point is that just because private equity firms raise money, they may not put its to work quickly. According to MarketWatch of the $500 billion in private equity funds raised in the last two years, only 32% has been invested.

The risks in private equity firms getting their capital back out of deals may not be nearly as great as some would assume.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 7, 2007 – 10:47 am in Mergers and Buy Outs

This Week on StockHouse January 1 to 5

A week on the Web in five minutes

Did you resolve to better manage your portfolio? One way to make good on that resolution is re-reading some of the sage advice from notable 2006 Publisher’s Notebook interviews.

http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/editorial.asp?edtID=19147

Another way to reach your financial goals (http://www.stockhouse.com/shfn/editorial.asp?edtID=19163 ) for the next year and beyond is to put your long-term goals ahead of short-term spending, said Financially Fit columnist Nancy Zambell.

Fresh highs are still ahead for the S&P500, said Mike Paulenoff in his Weekly Wizards column. (http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/editorial.asp?edtID=19151)

With a producing nickel/copper mine (http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/editorial.asp?edtID=19149) and another property expected to begin production this year or early in 2008, First Nickel (TSX:  T.FNI) could be one to watch, said Resourcex editor Doug Hadfield.

The Casey Report suggests revolutionary

France

could serve as an example of the many potential pitfalls of a fiat currency (http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/editorial.asp?edtID=19153 ).

Can a country with net oil imports continue as a member of the oil exporting cartel, OPEC? Pure Energy columnist Mike Schaeffer said

Indonesia

’s (http://www.stockhouse.ca/shfn/editorial.asp?edtid=19159 ) status should be monitored closely.

Shareholders of Sunrise Senior Living (NYSE: SRZ) called on the Service Employees International Union to help them hold the company to account for back-dating options. (http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/editorial.asp?edtID=19154 ) The Securities Sleuth also looked at Monster Worldwide and other companies accused in the back-dated options scandal.

Want a quick look at what’s hot on StockHouse? The Top Five (http://www.stockhouse.ca/redirect.asp?shpms=0&newsurl=http://www.stockhouse.ca/shfn/article.asp?edtID=19155 ) assembled by Sean Mason and Keri Korteling is a list of lists for the week.

Posted on: January 7, 2007 – 10:35 am in International Markets

Recapping Cramer’s Top 9 Picks for 2007: Value, Growth & Speculation

During the first week of 2007, Cramer appeared each night on CNBC’s MAD MONEY giving us his TOP 3 PICKS for each category for 2007.  He gave us value picks, growth picks, and speculative picks.

On Friday, Cramer gave us his Top 3 Speculative Stock Picks:
1)  Level 3 Communications (LVLT).
2)  Rite Aid (RAD)
3)  Savient Pharma (SVNT)

The Cramer Growth Picks in order for 2007 from Thursday are:   
1) New York Stock Exchange (NYX); 
2) Apple (AAPL); 
3) Cisco Systems (CSCO).      

The Cramer Value Picks in order from Wednesday are:
1) Altria (MO)
2) Goldman Sachs (GS)
3) Halliburton (HAL)

Jon C. Ogg
January 7, 2007

Posted on: January 7, 2007 – 8:00 am in Cramer