Daily Archives: March 24, 2007

Critique of Barron’s Top 30 CEO Cover Story

Barron’s has run a Top 30 CEO list and 21 of the 30 are returnees to the list, but there are many on this list that either are 1) questionable or 2) don’t make much sense.  Obviously there is a lot of opinion that goes into creating lists like these, and that is a two-way street.

The 9 new CEO’s they have added are Charlie Ergen of EchoStar (DISH), Larry Fink of Blackrock (BLK), Satoru Iwata of Nintendo (NTDOY), Franck Riboud of Danone (DAN), Peter Rose of Expeditors International (EXPD), Fred Smith of FedEx (FDX), James Schiro of Zurich Financial, Ratan Tata of Tata Sons India. 

John Bowne of BP (BP) is off, as is Carlos Ghosn of Renault, as is Arthur Levinson of Genentech (DNA), as is Chip Mason of Legg Mason (LM), as is Anne Mulcahy of Xeros (XRX), as is retired Steve Reinemund of Pepsi, Shigenobu Nagamori of Nidec, as is Glenn Renwick of Progressive (PGR), and finally Rober Toll of Toll Brothers (TOL).

Most of these newbies make sense, but some of the exits from the list are odd.  Anne Mulcahy of XRX they couldn’t praise enough for a turnaround before  And they list Genentech (DNA) is off?  Is Progressive (PGR) no longer "that progressive?

The obvious returns are Warren Buffett (BRK/A), Lew Frankfort (COH), George David (UTX), Kenneth Chenault (AXP), Jeff Immelt (GE), A.G. Lafley (PG), James Sinegal (COST), Michael O’Leary (RYAAY), Richard Fuld (LEH), and Laksmi Mittal (MT).  These are the quite obvious names and anyone would love to get their insights for a day (or more), but there are some picks that could have been off.

There are several on here that could have been at risk, and some may be quite questionable in my opinion as of recent developments.  Steve Jobs of Apple (AAPL) is somewhat at risk because it is not known of his true options involvement not just at Apple (AAPL), but at Pixar which is now part of Disney (DIS). It doesn’t matter that we think Jobs is perhaps one of the most valuable CEO’s to a company. Wells Fargo (WFC) Richard Kovacevich and Angelo Mazilo of Countrywide (CFC) could both be at risk over future loans, even though they are well regarded.  John Mackey of Whole Foods (WFMI) could easily be off that list as the company stock has lost its mojo and could face severe pricing pressure (it ain’t called Whole-Paycheck for nothin’) from traditional grocers and big-box retailers.  No offense to him at because because it isn’t meant as critical, but is Bob Simpson of XTO (XTO) really the best CEO in the entire energy patch?

It was also surprising that Fred Smith of FedEx was not on this list before.  This guy’s a superstar CEO if there ever was one, and he was one of "most entrenched CEO’s" featured persons.  EchoStar’s stock is up as well to actually what is almost 6 year highs, but it was surprising to see Ergen’s name on there.  Where is Norm Wesley of Fortune Brands (FO), or Cisco’s John Chanbers (CSCO), or Brian Roberts of Comcast (CMCSA)?

Some of these international CEO’s have been left out of any critique because they just are not overly followed here in the US.  Most of these do make sense, but there are some on here that you have to wonder about and there are others that are not on the list for this year nor last year that are really surprising.  Well that’s enough on this subject so enjoy your weekend. 

Jon C. Ogg
March 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 24, 2007 – 12:38 pm in Press Digest

Unusual Options Activity (MAR 24, 2007)

Stock Tickers: DNDN, OVTI, HAL, RRI, MEDX, CHS

Unusual Options Activity is something we like reviewing as we near the end of the quarter and as we near certain events.  There were several stocks that saw highly unusual options activity Friday (March 23) and we prefer tracking options later in the week because they often give weekend insight or speculation of a weekend or imminent event.

Dendreon (DNDN) saw 21,787 APR07 $5.00 PUTS and 18,008 APR07 $5.00 CALLS. With the FDA Panel review set for next week, this one is easily explananble.  The stock rose 13% and has been the talk of the biotech traders and message boards.  It is a battleground stock with massive short sellers betting it will flop and with a huge following of traders thinking and hoping the FDA Panel backs its prostate cancer vaccine.

Reliant Energy (RRI) MAY07 $20/$20 straddle: As Reliant re-nears profitability and is back from the throws of death after the Enron collapse, it appears someone is making a bet that it either sees further stock runs or that Reliant sees a complete reversal.  The stock gapped down Friday after Bank of America cut its rating to a Sell on valuations after a 100% rise in the last year.

Halliburton (HAL) saw more than 26,000 contracts go off in the April07 $40 CALLS.  Either someone is thinking someone may try to do a deal or they are hoping for a series of sudden fortunes.  Those are about 4 weeks to maturity and had an open interest of 243,941 contracts (24 million shares leveraged).  With the tender and repurchases it is hard to know what support will be there and hard to know what is making a trader think it will go up rapidly from $31+. In fairness there was a large offset in the Puts as well, so this could quite easily be a clean up of an older trader or just a remote hedging transaction.

OmniVision (OVTI) saw quite a bit of unusual options trading interest in numerous strike prices in numerous months.  Rumors were around on every chat room, after TheStreet.cm ran a story that Eastman Kodak (EK) may be interested, and after Barron’s covered it laste in the day.

Chicos FAS (CHS) is seeing renewed CALL buying of late as the company has been looking like its recent woes have at least seen the worst and may be improving.

Medarex (MEDX) saw some unusual options activity for the May calls on initiations of its psoriasis treatment starting Phase I trials Friday (news).  Psoriasis is one of the massive potential blockbuster drugs and/or creams because the condition is widespread and depending on the severity it is very under-treated compared to many less common disorders.  But the open interest in the JAN 2008 contracts is massive because of upcoming reviews late in 2007 (contract & open interest)
$12.50 CALLS 55,390
$15.00 CALLS 36,202
$17.50 CALLS 78,288
$7.50    PUTS 12,820
$10.00    PUTS 14,960
$12.50    PUTS 36,826
$15.00    PUTS 16,261

So these are all going to be some of the issues to watch as options often show a completely unique trading pattern based around future events.

Jon C. Ogg
March 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 24, 2007 – 7:26 am in Options