Daily Archives: February 16, 2008

Clear Channel (CCU) Sues Providence Over Buy-Out

Almost every week now a private equity or hedge fund walks away from a transaction to take a public company private. In most cases the public company boards try to keep deals on track by lowering their asking price or they take a break-up fee and allow the buyer to walk away.

There will be none of the kid gloves stuff at Clear Channel (NYSE: CCU). It has a deal with Providence Equity to buy its TV stations for $1.2 billion. The transaction was announced ten months ago and has not closed, which is hardly a good sign.

According to The Wall Street Journal "Clear Channel is suing Providence for "specific performance," a legal term which typically addresses the ability of the seller to force the buyer to complete a deal agreement."

As far as market observers can tell many banks and buy-out firms are being advised by their attorneys to turn their backs on transactions instead of getting burned by deals which have begun to look to rich between signing a buy-out agreement and actually closing. Clear Channel is making it clear that walking may have a very high price.

Douglas A. McIntyre

Posted on: February 16, 2008 – 2:06 pm in Mergers and Buy Outs

US Drugs: A “Made In China” Label (BAX)

The uproar about Heparin, a widely-used drug marketed by Baxter International (NYSE: BAX), is just beginning. As The Wall Street Journal writes "Baxter said the active ingredient for its heparin was supplied by Scientific Protein Laboratories with a manufacturing facility there and a joint-venture operation called Changzhou SPL in Changzhou, China." Tainted heparin has been blamed for four deaths and a larger number of illnesses.

The FDA claims it does not have the inspection capacity to monitor drug components made at facilities around the world and China is one of the largest supplier nations. So, what is to be done?

First and foremost, the companies which make the drugs should be required to provide their own inspections, using specific FDA guidelines, on a regular schedule. The results of these efforts should be forwarded to the FDA for approval. This would require less manpower on the agency’s part than trying to cover the world’s drug supply on its own.

The drug companies would argue that this will be costly and will squeeze margins. That is too bad. The medical community and patients should be able to assume that the pharmaceuticals which they use are safe, no questions asked. Product liability suits are probably more expensive than inspection costs.

Beyond these effort, the FDA should require that every medication, prescription or over-the-counter, carry a label if its has any components which come from facilities in China. If doctors and patients want to make medical decisions based on those labels, then let it be so, even if the treatments are not available from any other source.

Douglas A. McIntyre

Posted on: February 16, 2008 – 11:06 am in Pharmaceuticals,

This week on Stockhouse February 11 – 15

The Dow and the TSX ended higher despite late-week selling on poor U.S. economic data.

Warren Buffett made an offer to support the municipal bond insurance business that – even as it was not well received by its intended recipients – was still seen as an example of Buffett’s confidence in the economy. Bernanke spoke Thursday and drove buyers from the markets, and then Friday followed with poor economic numbers from the NY Fed’s Empire State Manufacturing Survey and Michigan’s consumer confidence report.

Read More »

Posted on: February 16, 2008 – 10:47 am in Uncategorized

Birinyi’s Top Equity Holdings (MO, AAPL, CVX, DE, XOM, GS, GOOG, MA, SLB, UTX)

Laszlo Birinyi of Birinyi Associates, Inc. is one of the more frequently watched portfolio managers by the public.  The reason is not that he is one of the largest fund managers.  But he is watched because of his (and his firm’s) prowess on recognizing substantial inflows and outflows of capital at the onslaught of a trend.  Some might argue that this is more reactionary and following, but many have used this method for years and years.  Frankly, we have watched his investing activities for years and years.

These are not at all of Birinyi’s holdings, but there many of the top holdings noted in an SEC filing this week covering his positions as of December 31, 2007.  We also did not include any of the ETF positions.  Keep in mind that many of these may have already changed, but here is the list:

  • Altria Group Inc. (NYSE: MO) 55,821 shares; $4,219,000
  • Apple Inc. (NASDAQ: AAPL) 45,691 shares; $9,050,000
  • Chevron Corp (NYSE: CVX) 48,420 shares; $4,519 ,000
  • Deere & Co (NYSE: DE) 39,750 shares; $3,702,000
  • Exxon Mobil Corp. (NYSE: XOM) 75,772 shares; $7,099,000
  • Goldman Sachs Group (NYSE: GS) 50,325 shares; $10,822,000
  • Google Inc. (NASDAQ: GOOG) 36,000 shares; $24,893,000
  • Mastercard Inc (NYSE: MA) 17,250 shares; $3,712,000
  • Schlumberger Ltd (NYSE: SLB) 53,785 shares; $5,291,000
  • United Technologies Corp (NYSE: UTX) 55,329 shares; $4,235,000

Other key market pundits and their holdings:
Bill Gates
Carl Icahn
Warren Buffett
George Soros

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 9:47 am in Insider Activity, , , , , , , , , , ,

George Soros Top Equity Holdings (AAPL, AUXL, BFLY, CBI, CMG, CRUS, COV, MAPP, POT, SVNT)

This week we got to see critical SEC filings showing holdings of many key and influential investors.  Included in these filings were billionaire George Soros, a billionaire whom is loved by some and much less ‘well thought of’ by others over his currency trading history of over his MoveOn.org attempts.  Either way, investors still watch Soros.  These are the holdings of Soros Fund Management LLC as of December 31, 2007.  These were listed as the top holdings and are not at all his entire positions.  Soros Fund Management LLC was listed as having some $2.269 Billion in the total filing, and these positions here only equate to $360+ million, so there are many more positions.  As with all of these holdings, these positions may have changed or been eliminated as of the dates noted.  Here is a summary of his larger positions with a dollar amount provided by Soros as filer and a share count:

  • Apple Inc. (NASDAQ: AAPL)   $32,000,000;  161,550 shares
  • Auxilium Pharma (NASDAQ: AUXL)   $36,473,000;  1,216,180 shares
  • Bluefly Inc. (NASDAQ: BFLY)   $36,451,000;  48,601,156 shares… an old favorite of his…
  • Chicago Bridge & Iron Co. (NYSE: CBI)   $29,743,000;  492,100 shares
  • Chipotle Mexican Grill, Inc. (NYSE: CMG)  $32,404,000;  220,332 shares
  • Cirrus Logic Inc. (NASDAQ: CRUS)   $24,376,000;  4,616,666 shares
  • Covidien, Ltd. (NYSE: COV)   $32,194,000;  726,900 shares
  • MAP Pharmaceuticals (NASDAQ: MAPP)   $71,374,000;  4,076,169
  • Potash Corp. (NYSE: POT)   $37,933,000;  263,500 shares
  • Savient Pharmaceuticals (NASDAQ: SVNT)   $25,002,000;  1,088,461 shares

As Soros himself says …."Contrary to the tenets of market fundamentalism, financial markets do not tend towards equilibrium; they are crisis prone."   

Other billionaires and their holdings filed this week:
Bill Gates
Carl Icahn
Warren Buffett

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 9:17 am in Insider Activity, , , , , , , , , ,

Will Whole Foods Earnings Prove Downgrade Wrong? (WFMI)

On Tuesday we’ll get to see earnings out of Whole Foods Market Inc. (NASDAQ: WFMI). The estimates from First Call are $0.36 EPS on $2.42 billion in revenues.  Next quarter estimates are $0.34 EPS on $1.91 billion in revenues. Estimates for fiscal September 2008 are $1.82 EPS on $9.71 billion in revenues.

Analysts have an average price target north of $46.00.  Options were of little use in predicting what sort of move was coming because of Friday’s expiration and because of a sharp share price decline.  Shares did recently bounce off of a $35+ level, which was essentially the same level they bounced of last summer.  The stock is right around critical long term levels because the 50-day moving average is $39.46 and the 200-day moving average is $41.88.  That 200 day moving average was a sharp resistance level earlier this week and it acted as resistance back in December as well. 

Whole Foods saw its stock get shelled by some 4% to $39.12 on double volume after Lehman cut its rating to Underweight on Friday ahead of numbers.  Whole Foods Market Inc.’s 52-week trading range is $34.14 to $53.65.

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 8:41 am in Earnings,

Wal-Mart Earnings Key For Retail (WMT, COST, TGT)

Tuesday we’ll get to see earnings out of Wal-Mart Stores Inc. (NYSE: WMT). The estimates from First Call are $1.02 EPS on $106.9 billion in revenues.  Next quarter estimates are $0.74 EPS on $92.29 billion in revenues. Estimates for fiscal Jan-2009 are $3.43 EPS on $405.81 billion in revenues.

Analysts have an average price target north of $54.00.  We are not using options as a guide because expiration is a month out and we just rolled after yesterday’s options expiration date.  At $49.44 this one has held up quite well and has done far better than many troubled retailers.  Wal-Mart’s chart is probably offering quite a bit of support as its 50-day moving average is $48.44 and its even more firm 200-day moving average is $46.50. 

What a difference a year makes.  A year ago we were all calling for Lee Scott to step down after years of not performing, but now it seems he can operate well in a slow economy when other stores can’t torpedo his efforts as easily with a flood of better off clients.   

What is interesting about Wal-Mart is that it has been a winner in the slowing economy.  Sure, its last sales barely grew for same store sales.  But as the nation gets more strapped for cash, feels less optimistic, and is generally more fearful of the future, it seems that they are heading over to Wal-Mart more and more.  The company needs to be very careful not to cut too much.  While we do expect some figures for the periods ahead, we actually won’t be surprised if the discount retail giant holds off on many long-term targets.

Besides every single retailer in the country watching, y9ou can imagine that CostCo Wholesale (NASDAQ: COST) and Target Corp. (NYSE: TGT) are going to be paying close attention to Lee Scott & Friends.

Wal-Mart Stores Inc.’s 52-week trading range is $42.09 to $51.48.

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 8:21 am in Earnings, Retail, , ,

Tech Investors Eager For Hewlett-Packard Earnings (HPQ, DELL)

After the market closes on Tuesday we’ll get to see earnings out of Hewlett-Packard Co. (NYSE: HPQ). The estimates from First Call are $0.81 EPS on $27.59 billion in revenues.  Next quarter estimates are $27.42 billion in revenues. Estimates for fiscal Oct-2008 are $3.80 EPS on $117.79 billion in revenues.

Analysts have an average price target north of $57.00.  With Friday being options expiration date, we aren’t using options as a predictor until only the March option comparisons can be made on Tuesday.  While this one was enjoying a steady run in 2007, its chart has been hampered lately.  While shares bounced off of $41.00 or so in both January and February, H-P shares are trading well under the key moving averages: $46.85 is its 50-day moving average and $47.69 is its 200-day moving average.

As Dell (NASDAQ: DELL) shares have been under pressure and are much farther off of 2007 highs, you can imagine the PC-Giant in Austin will be figuring how to react to this earnings report as well.  Dell reports earnings at the end of February.

Hewlett-Packard Co.’s 52-week trading range is $38.15 to $53.48, so its stock is in a bit of a long-term no man’s land as of now.  It seems that the easy times of Mark Hurd’s turnaround have been seen.  Now we’ll have to see if his cost cuts and margin expansion work well in what feels like a bear market and what is definitely a cooling economy.

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 8:01 am in Earnings, PC Companies, ,

A Split-Up Of Bond Insures Would Hurt Banks (MBI)(ABK)

If muni-bond insurers like Amback (NYSE: ABK) and MBIA (NYSE:MBI) are forced to break into two pieces, some banks could be badly hurt. The halving of the firms would leave the muni piece of the businesses in one set of companies and the more risky structured investments pieces to operate on their own.

According to Reuters, if insurer FGIC is made into two companies "investment banks that traded with FGIC would be forced to take losses." Those banks probably include Citigroup (NYSE:C), Societe Generale, and UBS (UBS). 

Reuters reports further that "banks are generally facing the risks of big writedowns from hedges they put on with bond insurers."

Douglas A. McIntyre

Posted on: February 16, 2008 – 7:49 am in Banking, , , ,

Bill Gates Personal Stock Holdings (MSFT, CNI, FSCI, OTTR, LGBT, PNM, RSG, SIX, FMX, TV, BRK.A)

Below are most of the equity holdings listed for Bill Gates’ own Cascade Investment, L.L.C. as of December 31, 2007.  These were disclosed in a filing late in the week.  Keep in mind that these are not tied at all to Microsoft (NASDAQ: MSFT) and these also do not include the Bill & Melinda Gates Foundation either.  This also does not include any ETF holdings.  These are not quite all of his holdings inside of Cascade, but these are the bulk of the holdings:

Company (Ticker)                                                  Value                 Shares
Berkshire Hathaway (NYSE: BRK-A)             $573,480,000       4,050
Canadian National Rail (NYSE: CNI)           $1,589,028,000     33,859,544
Fisher Communications (NASDAQ: FSCI)  $17,298,000          455,700
Fomento Econmico Mexicano (NYSE: FMX)$412,617,000        10,810,000
Grupo Televisa S.A. (NYSE: TV)                      $467,803,000       19,680,400
Otter Tail Corp. (NASDAQ: OTTR)                  $88,455,000          2,556,499
PlanetOut Inc. (NASDAQ: LGBT)                    $3,240,000             521,739
PNM Resources Inc. (NYSE: PNM)               $150,569,000         7,019,550
Republic Services Inc. (NYSE: RSG)            $852,483,000         27,192,451
Six Flags, Inc. (NYSE: SIX)                              $20,728,000           10,210,600

If you want to see Mr. Gates’ new best friend’s holdings (that would be Warren Buffett) you can see all of those here for the same period.

Or you can see Carl Icahn’s top equity holdings as well.

Jon C. Ogg
February 16, 2008

Posted on: February 16, 2008 – 7:41 am in Insider Activity, , , , , , , , , , ,