Daily Archives: April 2, 2007

Cramer’s Iran-Proof Stock Picks

On tonight’s MAD MONEY on CNBC, Jim Cramer discussed the ramifications of Iran if things get worse.  Cramer laid out a "what to do" plan IF you wake up one morning and the headlines are horrible about escalations.  He has 4 things for an "Iran Gone Awry" strategy just in case something goes nuts over there: 

The first thing you want is a drug company and he likes Abbott Labs (ABT-NYSE) because the drug companies don’t need a strong economy.  This one is more immune to oth other drug company problems because it is at highs.  He doesn’t like Pfizer (PFE-NYSE), Merck (MRK-NYSE), or Bristol-Myers (BMY-NYSE).  Cramer said its 16 P/E and 14% growth rate make it cheap and they sold off 2 units.  He likes its Humira drug as a multi-purpose drug and its stent looks like it may be the best out there.

You also want a company tied to oil, and he wants one that won’t get hurt if we get cut off of Middle East oil: Kinder Morgan Energy Partners (KMP-NYSE), but he warns you not to buy the wrong Kinder Morgan.  This one is a safer high-yield one to Cramer.  It transports via its pipelines and transfers other commodities besides oil and gas.

The other area is gold: Yamana Gold (AUY-NYSE) is his pick.  He’s been there talking this one up over and over and it has doubled since he called it, but he thinks it is still improving and is the best gold stock out there.  On February 11 it opened a new gold mine and it is basically free gold because the copper operations at the same mine are making the gold free.  This one trades at 11-times earnings and it has many more operations that may come on line soon.  Cramer said the company will either buy more gold companies OR will be open to a consolidation itself.

His last pick for the "top four" is actually Cash, not a stock.  He says this will allow you to gobble up the battered stocks after a crisis if it even came.  He wants you to be in the highest yielding cash accounts out there.

Oddly enough, not one of his four picks was in a war stock (defense stock).  There wasn’t even a food, water, booze or tobacco pick.  Hmmmm………

In a call-in, Cramer defended Ceradyne (CRDN-NASDAQ) as one that isn’t a one-hit wonder; and he thinks the shorts and bears are wrong.  In another call-in, Cramer said that Halliburton (HAL-NYSE) will not suffer issues from the old KBR (KBR-NYSE) investigations.  In another call-in, on SAIC (SAI-NYSE) Cramer said he is a bit worried because many cutbacks are in the consulting side where they are strong.

Jon C. Ogg
April 2, 2007

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

Posted on: April 2, 2007 – 5:25 pm in Cramer, , , , ,

ISM Commodities Survey Predicts an Inflation Up Tick

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Posted on: April 2, 2007 – 3:18 pm in Economy

First Quarter Performance vs the Rest of the Year

From Ticker Sense

The Utilities sector was the best performing of the ten major sectors in the first quarter.  The sector gained 8.44%, followed closely by Materials at 8.38%.  Consumer Discretionary, Technology and Financials were the three sectors that were down for the quarter, with Financials falling the most at -3.44%.

We looked at sector performance going back to 1990 to see how sectors have performed for the last three quarters of the year based on their first quarter performance.  For each year, we ranked each sector versus other sectors based off their first quarter performance and then took the average performance for the rest of the year for each rank.  As shown in the table below, the sectors that ranked first in performance in the first quarter have averaged a gain of 9.28% for the last three quarters of the year.  The second, third and fourth best performing sectors in the first quarter have averaged the most gains for the rest of the year.

The table shows that the sectors that perform the best in the first quarter typically perform the best for the remainder of the year as well, while those that perform the worst continue to underperform.

1stqperf_2

http://www.tickersense.typepad.com/

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Posted on: April 2, 2007 – 3:15 pm in Research

Best and Worst Performing Stocks in the Russell 3000

From Ticker Sense

The tables below highlight the best and worst performing stocks in the Russell 3000 over the past 5 days, the past 3 months, and year to date.

1wk402

3mo402

Ytd402

http://www.tickersense.typepad.com/

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Posted on: April 2, 2007 – 3:13 pm in Research

Vonage Holding Corporation: The Conspiracy Theory

From The StockMasters

Tell me your not sick of reading or hearing about Vonage (VG) and all of it’s financial & operational problems lately?  We know it’s the worst IPO in history and that Verizon (VZ) is out the shut them down over disputes with patent VoIP technology.  So how can Vonage survive as a company and what would inspire hopeful investors to buy it’s company stock that is down 80% in less than 1 year?

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Posted on: April 2, 2007 – 3:10 pm in Internet

Comments From TheStockMasters 4/2/2007

So what’s doing well today, well that would be Sotheby’s (BID) hitting a new 52-week high today at $45 and change a share.

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Posted on: April 2, 2007 – 3:07 pm in Research

Large Brinks (BCO) Holder MMI Investments Now Recomends Spin-Off

From 13D Investor

In an amended 13D filing after the close Friday on Brinks Co. (NYSE: BCO), 8.3% holder MMI Investments submitted a presentation recommending that the company consider a tax-free spin-off of one of its two business segments.

The firm said, “We believe a spin-off would achieve a number of significant corporate business purposes. As a result of achieving such business purposes, we believe the aggregate value of the two companies would be more than $79 per share, a 25% premium to yesterday’s closing price. This translates into more than $700 million of total market value.”

NOTE: Brinks is also an activist target of Pirate Capital. Pirates’ managing member Thomas R. Hudson was recently added to Brinks’ Board of Directors.

A Copy of the Cover Letter:

Dear Members of the Board,

We remain frustrated with The Brink’s Company’s (“BCO”) longstanding, significant undervaluation relative to its peers. In December we presented an analysis illustrating four different strategic alternatives to attempt to address this chronic undervaluation. Since then BCO has announced no effort to address the situation and the stock has continued to languish, while two competitors have announced acquisitions and two others have proceeded down the path of separating security operations into independent, publicly-traded vehicles.

Accordingly, we have refined our thinking and are providing you our analysis calling for a tax free spin-off of one of BCO’s two business segments to shareholders on a pro rata basis as soon as possible. We have also enclosed herein a memorandum from our counsel regarding many of the pertinent issues and legal considerations arising in the spin-off process. We believe you will find, as we have, that these are eminently addressable with regard to a spin-off. We take at face value the company’s statements that they are always considering the best course to increase value. However, it is time to move from contemplation to action. We believe a spin-off would achieve a number of significant corporate business purposes. As a result of achieving such business purposes, we believe the aggregate value of the two companies would be more than $79 per share, a 25% premium to yesterday’s closing price. This translates into more than $700 million of total market value.

Please consider this promptly, and if you agree, put BCO on a path to realizing this opportunity as soon as possible. The window to capitalize on this option is open at this juncture and, as we stressed when we asked the company to sell BAX in 2005, such windows do not remain open forever. We believe the result would be two strong, viable public companies, each with market capitalizations of approximately $1.5 billion or greater. This corporate transaction is within the control of the Board to initiate and execute, but we believe you would have significant shareholder support behind you. As owners of 8.3% of the outstanding stock, we have been long been admirers of BCO’s management, operations, brands and market positions, and believe that this endeavor would ultimately result in those qualities being more fairly valued in the marketplace.

As always, we are amenable to discussing any of our points in the enclosed analysis.

Clay Lifflander

www.13dinvestor.blogspot.com

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Posted on: April 2, 2007 – 3:04 pm in SEC

Relational Investors Boosts Stake in Unum Group (UNM) to 7.49%

From 13D Investor

In an amended 13D filing after the close Friday on Unum Group (NYSE: UNM), Relational Investors disclosed a 7.49% stake (25.7 million shares) in the company. This is up from the 6.21% stake (21.3 million shares) the firm disclosed in the original 13D filing in mid-March. The firm held a 14.37 million share stake in UNM for the quarter ended December 31, 2006.

In the original 13D filing, Relational Investors said they believe that several major factors have contributed to the Shares’ undervaluation and underperformance including the Company’s history of: (i) repeated, significant, one-time reserve and settlement charges against reported earnings, (ii) poor operating results and (iii) poor forecasting. Relational said it intend to closely monitor the management’s progress toward achieving the Company’s 2007-2008 performance targets.

Link to report on original 13D filing.

http://13dtracker.blogspot.com/

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Posted on: April 2, 2007 – 3:03 pm in SEC

The 52-Week Low Club

Advanced Micro Devices (AMD) Worries about earnings and cash position seem to get worse as each day passes. Drops to $12.81 form 52-week high of $35.75.

M&T Bank (MTB) Concerns about residential loans. Down to $104.52 from 52-week high of $125.13. Not so bad.

Hovnanian (HOV) Home building stock. Used to be good investment. Down to $24.20 from 52-week high of $45.30.

Allot Communications (ALLT) Network tech company lowers financial forecasts. Down to $6.85 from 52-week high of $15.53.

TransMeta (TMTA) Comuter processor company lays off more workers, and gets "going concern" letter from accountants. Down to $.36 from 52-week high of $2.37.

Sirius Satellite Radio (SIRI). How the mighty have fallen. Drops to $3.12 from 52-week high of $5.57.

Douglas A. McIntyre

Posted on: April 2, 2007 – 3:01 pm in HI/LOW

Apple: European Union Uses Thor’s Hammer

The European Union has had enough of the iTune’s monopoly, or so they say.

According to the FT: "Apple and several major music companies are facing a European Commission antitrust probe after Brussels issued formal charges alleging that the deals that underpin the sale of music through the hugely popular iTunes platform violate competition rules."

In some ways it is surprising that the EU took so long. It has been chasing Microsoft over its operating system and media player monopoly for years. The Apple (AAPL) i Tunes platform is so dominant in its industry that the Europeans have really been taking their time. Of course, Apple is not based in Europe.

Several major record companies are also being investigated. These are thought to include EMI, Warner Music Group (WMG) and Sony BMG.

iTunes probably is a monopoly, but the question is open whether that is a bad thing for consumers. Music lovers can find all of their favorite hits in one place, pay very little for them, and play them on a single device that comes in several colors.

Apple now faces the double edged sword that companies like AT&T (T), IBM (IBM), and Micosoft (MSFT) have run into in the past. Success breds government regulation. Companies that do too well serving their customers are viewed as much more likely to fix prices and drive out competition.

But it is hard to say that the deal is bad for people in Europe or anywhere else. Can a competitor really sell a song for $.99 and make money? Will record companies make more if Apple has a direct competitor with signifcant market share?

It is hard to say that the status quo is bad for consumers in Europe or anywhere else.

Douglas A. McIntyre

Posted on: April 2, 2007 – 2:25 pm in Media

An Advanced Micro Devices (AMD) Bankruptcy?

"We cannot assure you that we will be able to refinance our debt, sell assets or equity or borrow more funds on terms acceptable to us, if at all." –From Advanced Micro Devices (AMD) 10-K. 

Investors often don’t pay any attention to the "risks" section of 10-Ks, which may be smart. Who wants to know all of the bad things that could happen to a company? They are even less useful when it is apparent that most of them have a 1% chance, or less, of ever occurring.

AMD currently has $3.6 billion in debt. That would not be so bad, but its business appears to be falling apart as its continues its price war with Intel (INTC). AMD has indicated that it won’t make its first quarter numbers, and a number of observers on Wall St. and in the press believe the company will have to raise money quickly. The instrument could be be an offering of convertible preferred shares.

AMD can probably get a private equity firm to put up the capital. Current shareholders might take a hit. The company’s stock is now below $12, against a 52-week high of $35.75. AMD currently trades at less than 1.3x sales. Intel trades at over 3.1x.

And, maybe the risk factor about refinancing debt or borrowing money should not even be in the 10-K. It just scares people.

Douglas A. McIntyre

Posted on: April 2, 2007 – 1:53 pm in Semiconductor

Cramer Talks Hotels & Financials (APR 2, 2007)

On today’s STOP TRADING segment on CNBC, Jim Cramer talked about Starwood Hotels & Resorts (HOT-NYSE) with the stock up 4% after the CEO "Stepped down" after losing the confidence of the board of directors.  He got thrown out after doing a turnaround here and as Coca-Cola (KO-NYSE) and he must be personally hard to take because he has actually done a good job.

The regional banks are overvalued and they would sell lower if they didn’t have the dividends.  Cramer still likes Citigroup (C-NYSE) because Chuck Prince will add severe value just when he leaves.  Cramer thinks Bank of America (BAC-NYSE) is cheaper than the regionals and the regionals may have more risks than the megabanks.  Cramer pointed to Countrywide (CFC) being down today after the CEO was on CNBC this morning.

About Goldman Sachs removing Morgan Stanley (MS-NYSE) from its conviction buy list and adding Merrill Lynch (MER-NYSE): Cramer said Merrill Lynch is the one most leveraged to subprime and Cramer thinks  these companies must be starting to profit from subprime cleanups now instead of having risk.

Jon C. Ogg
April 2, 2007

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

Posted on: April 2, 2007 – 1:47 pm in Cramer, ,

Sirius (SIRI): New Low, Again

Sirius Satellite Radio (SIRI) dropped to another multi-year low today hitting $3.14 in intra-day trading, down almost 2%.

The profound pessimism about both the company’s merger with XM Satellite (XMSR) appears to be growing, as do concerns about whether the combined company can compete with operations like Apple (AAPL) iTunes, which has just cut a deal with EMI to allow its music to be downloaded without digital rights management.

Howard Stern costs more money that a $1.29 song download, or so it would seem.

Douglas A. McIntyre

Posted on: April 2, 2007 – 1:20 pm in Uncategorized

Nokia-Siemens: WiMax Nation

The new Nokia-Siemens (NOK)(SI) joint telecom equipment venture is starting to see more demand for WiMax technology. Management from the JV was quoted by Reuters as saying:

"WiMAX will make wireless broadband much cheaper to deliver — up to 10 times cheaper than current third-generation cellular — up to 10 times cheaper than current third-generation cellular telephony networks. But, while it provides fast Internet access, it is not very well suited for wireless voice calls." 

Sprint (S) has already made the decision to use WiMax for its new North American wireless broadband network. The company is spending $3 billion and has large infrastructure partners including Motorola (MOT) doing the build-out.

The news has to be a headache for Qualcomm (QCOM). It builds the core 3G technology for much of the world and is in an IP and licensing fight with its largest customer, Nokia (NOK). Its stock has already been pulled down by concerns that its fights over patents rights could go on for another year or two.

For the time being, Viva WiMax.

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

Posted on: April 2, 2007 – 1:05 pm in Wireless

Sun Microsystems: More Layoffs Appear Needed

When new CEO Jonathan Schwartz took over in June 2006, Sun Microsystems (SUNW-NASDAQ) announced an 11-13% workforce reduction, and many investors thought that Sun was serious about getting costs under control and returning to obvious, not maybe, profitability.  When the company first made the announcement they estimated that this, along with other cost-cutting measures, would save the company between $480 and $590 million by the fourth quarter of 2007 after charges. 

Based on the company’s latest quarterly report, total headcount (as of 12/31/06) stood at 34,600, down from 38,300 in March of last year, a 9.5% reduction.  Only about half of the drop was related to the planned reductions, with the remainder due to regular attrition that was simply not replaced. 

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Posted on: April 2, 2007 – 12:53 pm in Corporate Governance, Earnings, PC Companies, Semiconductor, Shareholder Issues, Technology Companies, , , ,

Cramer Questions First Data Options Trades

On today’s WALL STREET CONFIDENTIAL on TheStreet.Com, Jim Cramer noted the First Data (FDC) buyout.  He said the he was looking at the options contracts in the $27.50 and $30 calls, and he said there was no reason to buy those contracts unless you knew a deal was coming.  Those option buys were highly suspicious according to Cramer and he even said they were blatant.  He thinks this deal demonstrates that the stock market overall is undervalued if they are doing deals like this.  Cramer said as far as other names in the group, he still likes Mastercard (MA-NYSE) and Verifone (PAY-NYSE) in the transaction side of the business. 

Jon C. Ogg
April 2, 2007

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

Posted on: April 2, 2007 – 12:07 pm in Cramer, Financial Stocks, Mergers and Buy Outs, Options

ZION – Zions BanCorp: Growth through Acquisition

04/02/2007

For a small western bank, Zions has turned itself into a formidable banking conglomerate in a few short years. Starting in 1997, Zions started acquiring banking operations and expanded its footprint under several different brand names.

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Posted on: April 2, 2007 – 11:16 am in Banking

ISE: Equity & Index Trading Volumes Still Soaring in March

The largest equity options exchange in the U.S based on volumes, International Securities Exchange Holdings (ISE), reported that March trading volumes were up 32% YoY, at 2.8 million daily contracts to 2006’s level of 2.1 million contracts.  Aggregate volume for the month of March was 62.3 million, a gain of 27% YoY.

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Posted on: April 2, 2007 – 11:13 am in Exchange News

Sun Loses It Hot Hand

Sun Microsystems (SUNW) has had the hot hand in the server and storage business. Data from research firms showed it taking share from heavy weights like IBM (IBM) and Dell (DELL).

But, Bernstein downgraded the stock from "market perform" to "underperform". It indicated that Sun’s business has not been doing well over the last quarter.

But, Sun’s stock has been getting expensive. It traded for $3.81 last July. It recently moved above $6.50. The Bernstein sell-off has brought it down to $5.85.

This quarter may be the most critical for Sun in a couple of years. The new management has cut costs and people. And, the purchases of See Beyond and Storage Tek have bulked up revenue. But, Sun still needs to demonstrate that it can grow without acquisitions, and that revenue is running up fast enough to get operating margins from its lower costs.

If the quarter is bad, the belief that Sun is headed for a turnaround will take a mighty blow.

Douglas A. McIntyre

Posted on: April 2, 2007 – 9:46 am in Technology Companies

2007 Top Stock Picks: Pundit Scorecard

Stock Tickers: LVLT, MO, GS, RSH, AMGN, YHOO, AMZN, GILD, LEH, UTSI, BBBY, RAD, SVNT, NYX, AAPL, CSCO, HAL, SLB, LUV, BUD, DEO, HIG, DOW, ROH, COP, DO, GD, PAYX, PEP, TSM.

So we are now past Q1, and it’s time to see how the pundits did out of the "Top Picks for 2007".  On a dividend and price adjusted basis, the Dow Jones Industrial Average was down roughly 1% for the quarter; the NASDAQ was up less than 1%; and the S&P 500 was up just marginally above flat.  So, this wasn’t exactly a barn stormer of a quarter.

Jim Cramer is a man that has to take a lot of heat from critics, but out of his 9 picks 7 of them are up on the year as of Friday’s close. 

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Posted on: April 2, 2007 – 9:25 am in Analyst Calls, , , , , , , , ,