Daily Archives: March 17, 2008

Cramer: Defensive Stocks Are The New Good Banks (PEP, KO, PG, CL)

On tonight’s MAD MONEY on CNBC, Jim Cramer noted that he wanted to look for the new banks.  Even thougfh these aren’t really banks, they are the defensive stocks that are still printing money and have cash to keep retiring stock.  In fact, these defensive stocks are some of the same ones we have noted over and over that investors are seeking.  His four picks tonight were as follows:

  • Pepsico, Inc. (NYSE: PEP) closed up 1% at $69.15 (52-week high $79.79);
  • Coca-Cola Co. (NYSE: KO) closed up 0.3% at $57.69 (52-week high $65.59);
  • Procter & Gamble Co. (NYSE: PG) closed up 0.45% at $67.05 (52-week high $75.18);
  • Colgate-Polmolive Co. (NYSE: CL) closed up 0.5% at $76.66 (52-week high $81.98).

These are among the top defensive stocks on our defensive index, and all four of these closed higher today.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 5:42 pm in Cramer, Defensive Stocks, , , ,

Thornburg Mortgage Files To Tap Securities Sales (TMA)

Thornburg Mortgage Inc. (NYSE: TMA) has filed an open shelf registration with the SEC to sell securities from time to time in the form of debt securities, common stock, preferred stock, warrants and shareholder rights.  As this is an open filing, no limit was set as to the amount and no underwriters were named.

This filing does note that certain selling security holders may also sell from time to time an unstated amount of securities.  According to filing, Thornburg will use the majority of proceeds to finance the acquisition or origination of additional adjustable rate mortgage (ARM’s) assets.  It may also use a portion of the proceeds for other general corporate purposes, which were noted as repayment of debt maturities, debt redemption, acquiring assets, capital expenditures and working capital, and for liquidity needs.  As normal, no proceeds from the sale of securities by the selling holders will go the company.

Thornburg Mortgage Inc. shares closed down 1.3% at $2.25 today, and shares have traded in a 52-week trading range of $0.69 to $28.40.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 5:14 pm in Financial Stocks, REIT, Secondary Offering,

IPO FILING: American Capital Agency Corp. (AGNC, ACAS)

A newly created firm called American Capital Agency Corp. has filed to come public.  This is a newly-organized Delaware corporation that was formed to invest exclusively in single-family residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity. 

American Capital Strategies, Ltd. (NASDAQ: ACAS) has a subsidiary called American Capital Agency Management, LLC, and it will manage the new operations.  This new IPO will trade under the ticker "AGNC" on NASDAQ.  American Capital Strategies will also purchase $50 million of the common stock offering in a private placement.

There are no operations to date, but this lists Citigroup and Merrill Lynch as the two underwriters.  This will trade as a REIT, and it almost has the same ring of some vulture fund type vehicles that have recently been filed.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 4:42 pm in IPOs, Private Equity, REIT, ,

GameStop Earnings To Set 2008 Video Game Expectations (GME)

Tuesday morning we’ll get to see earnings out of GameStop Corp. (NYSE: GME). The estimates for the largest pure-play video game retailer from First Call are $1.12 EPS on $2.89 billion in revenues.  Next quarter estimates are $0.29 EPS on $1.55 billion in revenues. Estimates for fiscal Jan-2009 are $2.23 EPS on $8.15 billion in revenues.

Analysts have an average price target north of $63.00.  Back in January we had asked if these were recession proof, and then just last week we saw some strong sales data at a time when overall sales are coming in soft elsewhere in retail.   One thing that is different about GameStop versus many other retail names is that earnings expectations have climbed slowly over the last quarter, while the opposite has been the case in other electronics sellers.    

This is an odd juncture for GameStop, and for that matter the entire video game sector.  2007 saw major gains because of video game console launches in 2006 and a series of stronger and stronger game title sales.  As this is the leader in video game retail sales in the U.S., they may be able to offer some unique insight that other more diversified retailers might not see quite as clearly.  GameStop Corp. closed down 4% today at $47.00 and its 52-week trading range is $26.50 to $63.77.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 4:21 pm in Earnings, Retail, Video Games,

ETF/ETN Launch: Chinese & Indian Currencies (CNY, INR)

The NYSE today launched the first two Morgan Stanley Exchange-Traded Notes (ETNs) with Van Eck Securities Corporation as the exclusive marketer.  These ETN launches are under the market Vectors, which are based on local currency in China and in India on their performance against the U.S. Dollar.

  • Market Vectors-Chinese Renminbi/USD ETNs (NYSE: CNY) is based on the S&P Chinese Renminbi Total Return Index, which seeks to track the performance of China’s renminbi against the U.S. dollar.
  • Market Vectors-Indian Rupee/USD ETNs (NYSE: INR) is based on the S&P Indian Rupee Total Return Index, which seeks to track the performance of India’s rupee against the U.S. dollar.

These are not your typical ETN’s, nor are they your normal ETN’s.  There have recently been other currency exchange traded notes launched on NYSE that have been geared to track the Euro, the Swiss Franc, the Canadian Dollar, the Australian Dollar, and the British Pound.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 3:57 pm in ETF, ,

The 52-Week Low Club (BSC)(LEH)(C)(MER)

Bear Stearns (BSC) For those not on the planet today, firm was bought out by JP Morgan (JPM). Shares fall to $2.84 from 52-week high of $159.36.

Lehman Brothers (LEH) Fall out from banking system problems. Drops to $20.25 from 52-week high $82.05.

National City (NCC) Bank was downgraded. Has mortgage and commericial loan exposure. Sells down to $6.66 from 52-week high of $38.32.

MFGlobal (MF) Rumors about liquidity problems takes shares down to $3.64 from 52-week high of $32.20.

CIT (CIT) Worries about its credit quality bury it at $9.55 down from 52-week high of $61.47.

Citigroup( (C) drops to $17.99 from 52-week high of $55.55.

Merrill Lynch (MER) down to $37.25 from 52-week high of $85.

Force Protection (FRPT) Losing business to rivals and will delay 10-K. Down to $1.03 from $30.

GFI Group (GFIG) The inter-dealer broker is pulled down by concerns in the sector. Down to $32.66 from 52-week high of $103.16.

Blackstone (BX) Private equity group down to $13.40 from 52-week high of $38.

Douglas A. McIntyre

Posted on: March 17, 2008 – 2:55 pm in HI/LOW, , , , , , , ,

IPO Withdrawl: Renewable Energy Group (RWE)

Renewable Energy Group has withdrawn its application to come public via an IPO.  You can probably guess the culprit: "….current market conditions do not support a public offering of the Registrant’s Common Stock at this time."

What is interesting is that this sort of undermines the agriculture and bioenergy trades.  Agriculture has remained a hot sector, but alternative energy has gone from hot to cold.

This company said in its filing that it was the largest operator, marketer and distributor of biodiesel in the U.S. under the SoyPOWER® brand.  You can see the full summary from the July filing here.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 2:19 pm in Alternative Energy, IPOs,

Companies With Big Debt Loads Take Pounding (CHTR)(BSX)(LVLT)(AMD)(MNI)

Wall St. has gone from hating financial firms with bad balance sheets to hating all companies with big pools of debt.

With the crisis which has evolved over the last few day, debtophobia has gotten progressively worse.

Some cases in point:

Charter Communications (CHTR) with $19 billion in debt and a new $1 billion junk financing is off almost 4% to $.72, near a 52-week low and down from a period high of $4.93.

Boston Scientific (BSX) took on a huge debt load when it bought Guidant. Operating income has been weak. Shares are off almost 3% to $12.20.

Level 3 (LVLT) never met a financing it did not like. Took on piles of obligations while perpetually shopping for new M&A targers. Traded to a 52-week low today at $1.68.

AMD (AMD) took on about $5 billion when it bought ATI. Today the stock moved down 2.3% to within a dollar of 52-week low.

McClatchy (MNI) added debt when it bought rival newspaper chain Knight-Ridder. Shares hit a new 52-week low today at $8.33.

Debt, be not proud.

Douglas A. McIntyre

Posted on: March 17, 2008 – 1:58 pm in Earnings, , , , ,

Biotech Movers & Shakers (AMGN, CRME, DNDN, GNVC, DNA, QLTI, TBRN, BBH, XBI)

Biotech’s are sliding along with all the others today. A look at the highlights and outliers:

Amgen (NASDAQ: AMGN) and Wyeth (NYSE: WYE) announced that arthritis and psoriasis drug Enbrel will now have a tuberculosis warning put on the label. Amgen down $1.27 to a nearly new low of $43.19 today with a 52 week range of $43.14 to $66.06. Wyeth shows less response–up $0.34 to $39.76, with a range of $39.50 to $62.30. 

Cardiome Pharma Corp. (NASDAQ: CRME) showed positive results in interim mid-stage data for abnormal heart rhythm drug. There is also talk of selling drug off. Shares responded with a 34% rise to $8.40 today. The 52 week range is $5.78 to $12.62. 

Dendreon (NASDAQ: DNDN) slipping after analysts question success of prostate-cancer vaccine Provenge clinical trial results that are due later this year. Down over 9% to $4.29 today.

GenVec (NASDAQ: GNVC) shares are still up after earnings call Friday. The company reported smaller than estimated losses despite a drop in revenue. The company projects higher revenues in 2008. Shares are up 5% to $1.24. The 52 week range is $0.97 to $4.72.

Genetech (NYSE: DNA) is still dipping after Friday’s earnings and projections for 2008 came up short to estimates. Down 2% to $77.15 today, the stock closed at $78.83 Friday. The 52 week range is $65.35 to $85.95.

QLT Inc. (NASDAQ: QLTI) up almost 50% on an FDA removal of blood screening and monitoring requirement for its acne treatment, Aczone. The FDA decision followed recent studies that resulted in no clinical evidence that anemia is associated with use of the drug. Shares are trading at $3.61 in early afternoon trading. The 52 week range is $2.43 to $8.40.

Trubion Pharmaceuticals (NASDAQ: TBRN) mysteriously up by 6% today. Last Thursday, the company reported widened losses, however, the losses weren’t as deep as estimated by Wall Street. Shares trading at $8.33 with a 52 week range of $5.84 to $22.46.

There is no easier way for basic investors to check how a sector is doing other than the ETF’s, and the Biotech ETF’s will describe the situation today.  The Biotech HOLDRs (AMEX: BBH) are down 2.6% at $166.05 today, and the SPDR Select S&P Biotech ETF (AMEX: XBI) is down almost 4% at $48.14.

Rachel Lopez
March 17, 2008

Posted on: March 17, 2008 – 12:30 pm in Biotech, , , , , , , , ,

Will Billionaire Joe Lewis Be Wiped Out By Bear Stearns (BSC) Collapse?

Billionaire Joe Lewis invested in Bear Stearns (NYSE BSC), buying as much as 10% of the brokerage firm.

Now, he may be out over $1 billion. On Sunday, the Times wrote that Lewis has lost about $800 million on his investment. That was before Bear Stearns accepted a $2 per share offer from JP Morgan (NYSE: JPM).

Lewis’s holding company Tavistock Group owns the Isleworth golf course in Windermere, Florida, and has stakes in companies including sporting-goods maker Puma AG, luxury-car maker Bristol Cars Ltd. and Ambrx Inc., a genetics-engineering firm. Tavistock is also developing real estate in Orlando, Florida, and the Bahamas, according to the Sydney Morning Herald.

It is probably safe to expect that he will not own all of those businesses come next month.

Douglas A. McIntyre

Posted on: March 17, 2008 – 11:18 am in Financial Stocks, ,

A Lucky Day at Cardiome Pharma (CRME)

Cardiome Pharma (NASDAQ: CRME) picked a bad day for good news.

According to the AP the company announced "interim midstage data showed its experimental drug vernakalant was safe and effective in treating abnormal heart rhythm, compared with placebo"

CRME shares are up 47% on the news trading 4.6 million shares well ahead of average daily volume of 600,000.

The company has somewhat troubling financials. For the September quarter, CRME lost $31.6 million compared to $12.3.

Revenue fell from $2.4 million in Q3 2006 to $1 million.

The company had $84.4 of cash at the end of the quarter. All the numbers are Canadian dollars.

In other words, CRME does not have a significant amount of cash given its burn rate.

Douglas A. McIntyre

Posted on: March 17, 2008 – 10:17 am in Pharmaceuticals,

SPAC IPO FILING: National Security Solutions Inc. (NSX, GE)

Another blank check company has joined the list of pending IPO’s.  National Security Solutions Inc. is the next SPAC or special purpose acquisition company to submit an IPO filing. The offering is targeting $200 million and each $10 unit will include one share of common stock and one warrant with a strike price of $7.50. The company intends to list on the American Stock Exchange under the symbol “NSX.U.” The book running manager for the offering is listed as Banc of America Securities.

As one would assume from its name, National Securities Solutions intends to target “businesses that develop, manufacture, market, distribute, provide or deliver products, services or software pertaining to the security and homeland defense industries.” The management believes that the homeland security industry is increasingly important and relevant today and that their management team has the expertise to identify a successful business combination that has strong growth potential but may be lacking the capital, scale, and management to succeed. According to a study by Homeland Security Research Corp., the national security industry will grow into a $170 billion industry by 2015 from $55 billion in 2006.

CEO and President, Kenneth Boyda, served as CEO and President of GE subsidiary, GE Securities and its predecessors, during which he negotiated contracts in over 40 countries and was involved in transactions in the industry totaling $4 billion. Chairman of the Board, Howard Safir, is the only person in NYC to serve as both police and fire commissioner and was also named as one of the “25 Most Influential Security Executives” by Security Magazine.

Rachel Lopez
March 17, 2008

Posted on: March 17, 2008 – 10:02 am in Defense, IPOs, ,

Ascent Solar Pounded Over Secondary Offering (ASTI)

Shares of Ascent Solar Technologies (NASDAQ: ASTI) are down over 13% this morning after the company filed with the SEC Friday to sell common stock worth $80 million.

$80 million doesn’t sound like much on the surface, but this developer of thin-film photovoltaic modules has a mere market cap of $119.5 million.  The proceeds are earmarked to be used for development of approximately 30 Megawatts of rated capacity.

The book-runner for the offering is listed as Bear Stearns (BSC), although we’ll have to see how anything related to Bear as un underwriter plays itself out over the coming weeks.   Cowen & Co., Jefferies & Co., and Merriman Curhan Ford are listed as the co-managers for the offering.

Ascent’s shares down $1.64 to $10.44 in early morning trading, which is quite a drop even for the size of this offering.  Shares closed at $12.07 Friday afternoon, and it has traded between $6.50 and $28.35 over the last 52-weeks.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 9:40 am in Alternative Energy, Secondary Offering,

Investors Searching For Defensive Safe Havens (PEP, MRK, JNJ, KO, BUD, KFT, CAG, CPB, HRL, MCD, MO, PG, CL)

Investors usually try to find stocks where they run for cover when the stock market is in turmoil.  This Monday is no exception after seeing the Bear Stearns implosion "takeunder" and the related fall in Lehman.  Those are almost never financial stocks, and you can bet those aren’t the case today.  We keep an index of defensive stocks for crummy markets.  Usually these hold up on down days or don’t fall as much as the market in general.  Today there are very few hiding spots out of our normal go-to defensive stocks.

Defensive Stocks Higher:

  • PepsiCo (NYSE:PEP) $68.67 (+$0.22; 0.32%)
  • Merck (NYSE: MRK) $41.18 (+$0.21; 0.51%)   
  • Johnson & Johnson (NYSE: JNJ) $63.30 (+$0.65; 1.04%)   

Defensive Stocks Lower:   

  • Coca-Cola (NYSE:KO) $57.43 (-$0.10; -0.17%)   
  • Anheuser-Busch (NYSE: BUD) $45.68 (-$0.52; -1.13%)   
  • Kraft Foods (NYSE: KFT)    $29.79 (-$0.08; -0.27%)   
  • ConAgra (NYSE: CAG) $21.15 (-$0.13; -0.61%)   
  • Campbell Soup (NYSE: CPB) $31.41 (-$0.28; -0.88%)   
  • Hormel Foods (NYSE: HRL) $40.16  (-$0.36; -0.89%)   
  • McDonalds (NYSE: MCD) $53.82 (-$0.96; -1.75%)   
  • Altria (NYSE: MO) $70.25 (-$1.53; -2.13%)
  • Procter & Gamble (NYSE: PG) $66.62 (-$0.12; -0.18%)   
  • Colgate Polmolive (NYSE:CL) $75.99 (-$0.29; -0.38%)   

Sometimes there is just no good place to hide.  The good news is that last night and in the wee hours of this morning things were looking far worse than they are right now.

Read More »

Posted on: March 17, 2008 – 9:28 am in Defensive Stocks, , , , , , , , , , , , ,

What Stocks Aren’t Dropping, Much (MSFT)(GE)(CSCO)(INTC)(DELL)(QCOM)(AAPL)

For those intrepid enough to go into the market today, there are some stocks that are down under 1%. Some are even up slightly.

A shopping list for the insane: Micrsoft (NASDAQ:MSFT), GE (NYSE:GE), Cisco (NASDAQ:CSCO), Intel (NASDAQ:INTC), Dell (NASDAQ:DELL), Qualcomm (NASDAQ:QCOM), and Apple (NASDAQ:AAPL).

Who says tech is dead.

Douglas A. McIntyre

Posted on: March 17, 2008 – 8:42 am in Economy, , , , , , ,

EMC Offers More Juice For Iomega (EMC, IOM)

Iomega Corporation (NYSE: IOM) has announced that it has received a revised unsolicited non-binding indication of interest from EMC Corporation (NYSE: EMC – News) over its prior unsolicited buyout offer.  EMC has indicated that it is prepared to offer up to $3.75 per share of Iomega, subject to completion of due diligence.

Iomega’s board of directors has determined that the revised acquisition proposal would reasonably constitute a superior proposal from ExcelStor.  As permitted by the ExcelStor Purchase Agreement, Iomega’s board of directors has authorized Iomega to furnish information to EMC and enter into discussions with it regarding its most recent proposal.

As part of the ExcelStor Purchase Agreement, Iomega must provide the Selling Shareholders with at least 2 business days notice prior to entering into discussions with or furnishing any information to EMC in response or with respect to the EMC acquisition proposal. Iomega did provide notice to the selling shareholders on Friday, March 14, 2008.  In December, 2007, Iomega signed a merger agreement with ExcelStor to issue some 84 million shares in exchange for all outstanding ExcelStor common stock.

A week ago, Iomega rejected a prior $3.25 per share buyout offer from EMC.  As far as how this ranks, Iomega has seen shares trade between $2.26 to $5.75 over the last 52-weeks.  This merger dance may not yet be over, but this time EMC is warming up to the idea.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 8:31 am in Mergers and Buy Outs, Technology Companies, ,

Sovereign Funds Run And Hide (C)(JPM)(BSC)(MER)(LEH)(WM)

Just a few months ago, sovereign funds could not get enough stock and debt in financial firms like Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER).

When the time came to bail-out Bear Stearns (NYSE: BSC) or put money up to finance a buy-out deal for the brokerage by JP Morgan (NYSE: JPM), the sovereigns were out of sight.

Several other financial companies may need capital quickly. At the top of that list is Lehman Brothers (NYSE: LEH). Washington Mutual (NYSE: WM) may need assistance, too.

It no longer matters if sovereign funds have a political agenda for their investments. They have left the building. The Fed is, in effect, alone. It political agenda is to save the economy starting with Wall St.

Douglas A. McIntyre

Posted on: March 17, 2008 – 8:16 am in Private Equity, , , , , ,

CSX Rides The Reading Railroad (CSX)

CSX Corp. (NYSE: CSX) has made several announcements this morning for shareholder initiatives. The railroad giant sees first quarter 2008 EPS at $0.74 to $0.77 EPS and put full-year EPS at $3.40 to $3.60 EPS.  First Call has estimates for Q1 at $0.63 EPS and fiscal 2008 at $3.05 EPS.  Its guidance through 2010 is now being put at 18% to 21% for compounded annual EPS growth, up from 15% to 17%.

It is also targeting its $3 Billion share buyback to be completed by year-end 2009, which is a new authorization of $2.4 Billion in addition to the $600 million available under its existing share buyback plan.  In total, this represents about 15% of the market cap. 

The railroad giant is also boosting its $0.18 dividend up to $0.20.

One interesting development is that CSX is also filing a lawsuit against The Children’s Investment Fund and 3G Capital Partners alleging violations of federal securities laws.  As a result of it trying to show the share swap violations and other initiatives that the two funds have engaged in, the company has rescheduled its annual shareholder meeting.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 8:10 am in Dividend, Earnings, Stock Buybacks, Transports,

BMC Acquires BladeLogic For Data Center Automation (BMC, BLOG)

BMC Software (NYSE:BMC) has announced that it will acquire BladeLogic (NASDAQ:BLOG) for $28.00 per share of BladeLogic common stock.  The data center automation company acquisition is valued at $800 million, net of cash acquired.  According to BMC, BladeLogic will add a significant, high-growth revenue stream to BMC, accelerating the company’s long- term growth expectations for revenues, earnings, and cash flow.

As far as what BMC is getting, here is part of it.  BladeLogic has a large installed base of Fortune Global 500 customers:

  • 21 of the top 100 global companies,
  • 3 of the top 10 aerospace & defense companies,
  • 7 of the top 25 commercial and savings banks,
  • 3 of the top 5 securities companies,
  • 2 of the top 3 entertainment companies,
  • 2 of the top 3 general merchandisers,
  • 7 of the top 12 pharmaceutical companies,
  • and 7 of the top 10 telecommunications companies.

BladeLogic shares were actually up more than 50% from 2008-lows before this deal was announced. BladeLogic closed at $23.61 on Friday, and its 52-week trading range is $14.51 to $31.71.  BMC Software’s market cap before any initial dilution from this merger was listed as just under $6.5 Billion.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 7:12 am in Mergers and Buy Outs, Software, ,

CME Acquiring NYMEX

It’s official.  The CME Group Inc. (NYSE, Nasdaq: CME) is acquiring NYMEX Holdings, Inc. (NYSE: NMX).  The commodities and futures exchanges announced a definitive agreement where CME will acquire NYMEX on the terms previously announced. 

NYMEX shareholders will receive 0.1323 shares of CME Group Class A common stock and $36.00 in cash for each share of NYMEX common stock.  This equates to approximately 12.5 million shares and cash of $3.4 billion, and NYMEX will ultimately hold approximately 18.6% of the combined company.   This generates a purchase price of $100.30 before any dilution to CME shares.  NYMEX shares closed at $95.34 Friday, and the 52-week trading range is $86.61 to $148.00.

Shareholders of NYMEX can elect to receive either CME stock or cash for each share of NYMEX, although the cash and stock amounts will be determined by proration in the event that cash elections are either greater than or less than a mandatory cash component of approximately $3.4 billion.   CME may choose to increase the cash amount if NYMEX shareholders elect to receive more than $3.4 billion in cash, under certain circumstances.

The combined exchanges will now offer commodities and futures offerings in almost every major asset class and in cash, over-the-counter and regulated markets.  There were many out there that questioned whether or not the merger between the CME and the CBOT should have been allowed by regulators.  You can imagine the questions this brings up.

Jon C. Ogg
March 17, 2008

Posted on: March 17, 2008 – 7:00 am in Exchange, Mergers and Buy Outs, , , , ,