Daily Archives: April 2, 2008

RIM (RIMM) Rocks

Research In Motion (NASDAQ: RIMM) was up 5% after hours. That says it all, but some may want details.

RIMM released earnings today after the close and the PDA/Smartphone maker of Blackberry phones reported first quarter EPS of $0.72 on revenues of  $1.88 billion. First Call had estimates of $0.70 EPS on $1.86 billion in revenues.

RIM shipped 4.4 million smartphones in the fourth quarter and approximately 14 million smartphones during fiscal 2008..

Shares closed at $115.79 and are trading $122.15  in after-hours trading.

We had noted in our preview that options traders were pricing in a move of up to $9.50 in either direction.  Research In Motion’s 52-week trading range is $42.93 to $137.01

The news is an indiation that "small ball" tech is still doing well. Gadgets and gizmos like smartphones and video consoles still appear to be selling well. Since no one has money for gas, they can stay home and play games or talk on the phone.

The impressive number of Blackberry units shipped should also bode well fo the Apple (NASDAQ: AAPL) iPhone sales this quarter.

Douglas A, McIntyre

Posted on: April 2, 2008 – 4:15 pm in Consumer Electronics, ,

New Mortgage REIT Vulture: Cypress Sharpridge Investments, Inc. (CYS)

Cypress Sharpridge Investments, Inc. (NYSE: CYS) has filed to come public in an effort to raise capital.  The company will operate as a REIT and plans to invest all of its new capital exclusively in residential mortgage backed securities for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity.

Cypress Sharpridge Investments is a Maryland-registered corporation which is currently managed and advised by Cypress Sharpridge Advisors LLC, a joint-venture between The Cypress Group and Sharpridge Capital Management, L.P.

The company has proposed the ticker "CYS" on the New York Stock Exchange.  Lead underwriters are Bear Stearns, Friedman Billings Ramsey, and UBS Investment Bank.  Co-managers are listed as Fox-Pitt Kelton Cochran Caronia Waller and also Keefe, Bruyette & Woods.

We frequently discuss secondary offerings, special financings, restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

Some people don’t like the thought of a vulture and some don’t like the term.  We like vultures.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 2:55 pm in Financial Stocks, IPOs, REIT,

The 52-Week Low Club (SGP)(PAY)(DEEP)

Superior Offshore (DEEP) Company warns of liquidity problems. Down to $1.20 from 52-week high of $19.58.

Medarex (MEDX) Pfizer ends joint drug trial. Sells off to $7.44 from 52-week high of $18.23.

Crocs (CROX) Downgrade by JP Morgan. Falls to $15.53 from 52-week high of $75.21.

Riverbed Technology (RVBD) No big, bad news. Stock down to $13.62 from 52-week high of $52.81.

Verifone (PAY) CFO is out after restatement. Shares drop to $12.65 from 52-week high of $50.

Schering-Plough (SGP) Fitch downgrades after negative comment on key drug product. Falls to $13.91 from 52-week high of $33.81.

Douglas A. McIntyre

Posted on: April 2, 2008 – 2:45 pm in HI/LOW, , , , , ,

Packeteer Puts A Moat Around The Castle (PKTR)

Shares of Packeteer Inc. (NASDAQL PKTR) are up well over 10% on a buyout offer today.  Packeteer already rejected this buyout offer, and in fact it went and adopted a poison-pill provision.  The buyout came from two tied funds led by Elliott Associates at a $5.50 per share price.  While that is a 44% premium to the 52-week low of $3.81, it is still well under half of the $12.74 high seen over the last year.

We have actually screened this stock for our "10 Stocks Under $10" weekly newsletter, although it has never made it past the review stage.  This one came to us under our screens of 52-week lows when so many stocks were hitting them.  We’ll probably expedite a review as Packeteer said it had interest from other buyers in SEC filings.

After a poison-pill, it will be only "at the company wishes" that it gets acquired.  We searched Capital IQ under the takeover defenses and other provisions the company has in place are 3-year board membership terms, required advanced notice for director nominations, non-ability for shareholders to act by written consent, and no shareholder preemptive rights.

Packeteer’s above-premium buyout is almost $217 million.  Shares are up almost 13% to $5.90 today.  It’s always good to get a buyout offer after your stock has slid, but frequently management just cannot accept offers that are so much less from where shares have recently been. 

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.  You can join the open email distribution list to hear about additional M&A, spin-offs, break-ups and more.

Posted on: April 2, 2008 – 12:44 pm in Internet, Mergers and Buy Outs,

Subscriber Numbers To Dominate Research In Motion Earnings (RIMM, AAPL, PALM)

After today’s close we’ll get to see earnings out of Research In Motion Ltd. (NASDAQ: RIMM). The estimates have been ratcheted up a bit, but only ever so slightly since last week. The estimates from First Call are $0.70 EPS on $1.86 billion in revenues.  Next quarter estimates are $0.76 EPS on $2.02 Billion in revenues. Estimates for fiscal Feb-2009 are $3.49 EPS on $9.26 Billion in revenues.

R-I-M raised its guidance late in February, despite concerns seen elsewhere in the sector, with a new target of roughly 14 million subscribers for the quarter end.  When R-I-M gave its update, it put revenue in the $1.80 to $1.87 Billion range and said it saw $0.66 to $0.70 per share diluted; First Call had estimates at the time as $1.85 Billion revenues and $0.69 EPS, both are under today’s estimates.  Shares were at $104.55 after the pop from the news of its guidance hike.  Shares closed Friday at $115.34, and mid-day today shares sit north of $118.00. 

Last week the analyst target was north of $136.00 and today that stands above $137.00 after some target raises over the last three days.  This may be a bit off depending on the moment, but as of a static pricing right now, it appears that options traders are braced for a move of up to about $9.50 in either direction.  R-I-M still sits well above some of its key longer-term moving averages: 200-day moving average today is $95.22 and the 50-day moving average today is $100.48. 

Palm Inc. (NASDAQ: PALM) is now hardly a footnote despite having sold 1 million of its $99 Centro smartphones.  The thought had been that Apple Inc. (NASDAQ: AAPL) was going to release its 3G version of the iPhone later in the year.  Now some data points to May, although that still varies.  There is a quasi-consensus belief that R-I-M will have another dominant two quarters of being the smart phone leader on the enterprise level; and whether Apple’s 3G iPhone will ever truly challenge the enterprise spending is another issue entirely.

Regardless of R-I-M’s news, it frequently sees large stock price moves either way on post-earnings news.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 11:47 am in Earnings, Wireless, ,

Biotech Busine$$ Daily (CRXX, CORT, OMRI, SIRT)

CombinatoRx, Incorporated (NASDAQ: CRXX) up 8% to $3.45 on no recent developments. The 52-week range is $3.11 to $7.37. Yesterday, the company hit a 52-week low so perhaps it had nowhere to go but up.

Corcept Therapeutics Inc. (NASDAQ: CORT) up 11% today. Despite several statistically insignificant Phase III clinical trials of lead drug, a psychotic depression treatment, Corlox, the company initiated further trials in December. Friday the company entered into an agreement with Kingsbridge Capital Limited to purchase up to $60 million in new shares to finance their trials. Shares are trading at $3.60 off a 52-week range of $1.10 to $6.85.

Omrix Biopharmaceuticals, Inc. (OMRI) is still rising from an analyst assertion Monday that the biosurgery franchise unit with Johnson and Johnson leads its industry. Since Monday, shares have spiked from $13.32 to $16.04, a 20% increase. Today, shares are up 8%. The 52-week range is $11.81 to $39.07.

Sirtris Pharmaceuticals, Inc. (NASDAQ: SIRT) granted orphan-status to MELAS syndrome drug treatment, resveratrol. The designation gives Sirtris 7 years of marketing exclusivity upon FDA approval. Shares down $0.73 to $13.12 on heavy trading volume. The 52-week range of $9.50 to $21.99.

Rachel Lopez
April 2, 2008

Posted on: April 2, 2008 – 11:40 am in Biotech, , , ,

Broadpoint Securities Registers Shares Tied To Recent Private Placement (BPSG, FACT)

Broadpoint Securities (NASDAQ: BPSS) has filed on behalf of stockholders a securities offering whereby an aggregate of 7.058 million shares of common stock for a total maximum price of $12.352 million.

The independent boutique investment bank will not receive any proceeds  from the offering.  This securities registration is tied to a private placement that Broadpoint sold to accredited investors in early March.

We frequently discuss secondary offerings, special financings, restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

Broadpoint has a $127 million market cap and had recently completed some private placements of securities.  For those of you who aren’t familiar with Broadpoint, this is the one that used to First Albany Securities that used to trade as "FACT" on NASDAQ.

Its 52-week trading range is $0.99 to $1.96.  Back in 2005 this was north of $5.00 and back in 2003 and 2004 this traded north of $15.00 for a brief period of time.

Rachel Lopez
April 2, 2008

Posted on: April 2, 2008 – 10:29 am in Brokerage Firms, Secondary Offering, ,

Monotype Imaging Holders File To Sell (TYPE)

Monotype Imaging Holdings (NASDAQ: TYPE) has filed  to sell securities for selling stockholders, whom are offering 6 million shares for a proposed maximum share price of $14.60. The total maximum proposed aggregate offering price is $100.74 million. As the offering is being made by stockholders, the company will not receive any proceeds from the offering.

The lead book-runners for the transaction are listed as JPMorgan and Banc of America Sercuities.  William Blair & Company, Canaccord Adams, Jefferies & Company, and Needham & Company were listed as co-managers.

We frequently discuss secondary offerings, special financings, restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

Shares for the text imaging solutions company are down 6% to $14.61 in early morning trading. The 52-week range is $11.01 to $17.69.

Rachel Lopez
April 2, 2008

Posted on: April 2, 2008 – 10:14 am in Secondary Offering,

Who Will Buy Sirius (SIRI): If It Has To Be Sold?

Once The Justice Department cleared the merger of Sirius (NASDAQ: SIRI) with XM Satellite (NASDAQ: XMSR) and there was some anticipation that the deal would get done the shares of both companies should have gone up. A year ago, the combination was viewed as a dream deal.

If anything, the shares dropped. Sirius is below $3 and XM is below $13. The market began to realize that the year which was wasted on getting government approval was a year the companies need to stay competitive. XM has over $1 billion in debt. Refinancing it in the current market would be nearly impossible. Selling shares would lead to extremely large dilution.  As we recently noted, Goldman Sachs even put Sirius on its "Conviction Sell List" with a price target of $2.25.

Growth at Sirius has slowed considerably. In the fourth quarter revenue rose only 29% to $250 million. But, for the full year, revenue was up 45%. Subscriber deactivations in the fourth quarter were almost 540,000 compared to 330,000 in the same quarter of 2006. The firm’s net loss was $166 million. Long-term debt was almost $1.3 billion.

The market is also concerned that combining the two companies may not lead to big cost savings, at least not initially. Sirius and XM run on separate satellite platforms. As The Wall Street Journal points out "The companies’ combined 17 million subscribers have radios that aren’t interoperable. Radios that can receive signals from both companies likely wouldn’t be available for at least a year after the merger – and a year or two after that for customers who get satellite radios via new car purchases."

Sirius and XM also face competition which did not exist when they were started. Near the top of that list are HD radio, the Apple (NASDAQ: AAPL) iPhone, and a host of cellphones that download and play music.

If the new company does run into debt service problems and needs to find a buyer, the cost of the common shares is likely to be over $4 billion, unless the situation gets extremely bad. The debt of the two operations taken together is well over $2.2 billion.

The most appropriate buyer for the satellite radio company would be Clear Channel (NYSE: CCU) which has over 700 radio stations.  The odds that regulators would allow a de facto monopoly in the radio business puts the chances of this at is close to zero.

Since the car companies are the major conduit for satellite radio sales one of them might buy the firm to keep it operating. With market caps of under $15 billion, GM (GM) and Ford (F) are not candidates. With a $161 billion market cap, Toyota (TM) could swing a deal. But,the US car companies might raise a stink about their largest competitor providing the service. It is just the kind of thing that Congress likes to hold hearings over.

There is a theory, a weak one, that one of the telecom companies, probably Verizon (NYSE: VZ) or AT&T (NYSE: T) would want to own a satellite radio company to offer another service to bundle with cellular, broadband, TV, and landlines. The larges cable companies, Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) would have a similar incentive. Sirius and XM should have over 20 million subscribers by the end of this year. But, the analysis of how many of those customers could be "cross sold" bundled services probably would not justify the cost of an acquisition.

In the end, that leaves the satellite TV firms, Dish Network (NASDAQ: DISH) and DirecTV (NYSE: DTV). DirecTV has the larger market cap at $29 billion. That makes it a more likely buyer. The company has 17 million customers and 1,800 digital audio and video channels. DirectTV had $617 million in operating income in the fourth quarter of last year. John Malone’s Liberty Media Corp owns 470 million share of DTV. That would make Malone the key to any decision. DirecTV knows that programming and technical aspects of satellite-delivered content as well as any company.

There may be no logical home for Sirius, and that may be why the shares trade so low.

Douglas A. McIntyre

Some of these names have been discussed on our open email distribution list as well as been under review for our "Stocks Under $10" weekly newsletter.

Posted on: April 2, 2008 – 9:41 am in Satellite, , , , , , , , , , , , ,

Alpha Natural Resources Taps Financing (ANR)

Alpha Natural Resources Inc. (NYSE: ANR) filed its intent to raise an aggregate of up to $400 million through offering $250 million for their convertible senior notes due 2015 and a concurrent common share offering. 

The pricing and some of the general terms have already been reached.  They are offering 3.6 million common shares at a par-value of $0.01 per share, raising a total of $143.6 million. UBS Investment Bank and Citigroup Global markets are the joint book-running managers for the transaction.

Alpha, an Appalachian coal supplier with a $2.7 Billion market cap, will use the net proceeds from the convertible note offering and the common share offering to repurchase up to $175 million aggregate principal amount on the 10% Senior Notes due 2012.

We frequently discuss secondary offerings, special financings, restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

Shares are up $0.51, over 1$, to $41.80 this morning. The 52-week range is $15.50 to $44.58.

Rachel Lopez
April 2, 2008

Posted on: April 2, 2008 – 9:36 am in Oil & Gas, Secondary Offering,

Capstone Orders & Analyst Drive Gains (CPST)

Capstone Turbine Corp. (NASDAQ: CPST) is gapping up in pre-market activity.  The culprit is yet another order.  This was a $5 million order for 150 microturbines for hybrid electric buses from DesignLine International.  Shipments will be sent to DesignLine’s North Carolina plant through summer 2009.

Capstone Turbine is still an active pick in our "10 Stocks Under $10" weekly newsletter.  We have had this one as active on the list as one of our top picks for low-priced stocks.  With shares having hit $2.44 this morning, this represents a 100% gain since our pick.

Interestingly enough, Lazard Cap[ital Markets’ Sanjay Shrestha came out this morning and maintained a BUY rating on Capstone.  With his target being $2.50, we’d either be expecting a slight reduction in rates or a raised target from the analyst.  Our target was significantly higher in percentage terms and despite a 100% gain we have not removed this one from our list.  Since this stock has gone from an R&D stage with grant and study revenues into a production stage company, it has reached the point where many alternative energy analysts can actually begin following the company.  Shares used to trade exponentially higher than this in the earlier part of this decade.

Just last week we added another low priced alternative energy stock to that "10 Stocks Under $10" weekly newsletter and the target range for that would look for a 50% to 100%+ gain if the various target scenarios are reached. 

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 8:45 am in Alternative Energy, Analyst Calls,

Medarex Tanks On Pfizer Study Halt (PFE, MEDX)

Medarex Inc. (NASDAQ: MEDX) Saw shares plummet in pre-market trading.  Pfizer Inc. (NYSE: PFE) has ended a Phase III clinical trial of tremelimumab in patients with advanced melanoma after a review of interim data showed that the drug was not better than standard chemotherapy.  Unfortunately, Medarex was the beneficiary of CP-675,206 (tremelimumab), and it would have received a large stream of royalties had this worked.

While this is obviously bad news, this probably should have been expected after its prior disclosures.  The company had previously disclosed that results and hopes seen in early trials had not come to fruition in larger and broader study groups.  It’s too bad, too.  Metastatic melanoma (skin cancer that spread to other parts of your body) is currently a death sentence. 

Shares are down 16% in pre-market activity this morning to $7.80.  Its 52-week trading range is $7.70 to $18.23.

Obviously there are concerns over any biotech when a molecule fails to generate results.  But we would note that Medarex has a significant candidate pipeline and has many active partnerships with other major drug and biopharma players.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 8:15 am in Biotech, Drug companies, ,

Hansen Medical Taps Secondary Market (HNSN)

Hansen Medical, Inc. (NASDAQ: HNSN) announced last night the pricing of a spot secondary offering via Morgan Stanley as the sole underwriter for the deal.

The size indication of 2.5 million shares that had just been indicated yesterday was bumped up to 3.0 million shares.  The company stock closed up $0.52 at $14.58 in yesterday’s trading.

We frequently discuss secondary offerings, special financings, restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

This is also one that Cramer had given a huge endorsement to in referring to it as the next Intuitive Surgical. What is interesting here is the company’s "regulatory update" on this spot secondary offering:

  • Hansen Medical, Inc. is continuously receiving new information regarding the performance of the Sensei system during procedures as the number of procedures using the Sensei system increases…… the Company is continually evaluating events that may require adverse event reporting to the FDA under its MDR regulations and anticipates having to do so in the future. The FDA requires reporting of all adverse events to the extent that the device cannot be conclusively ruled out as a contributing factor. We believe, based on our analysis of these events to date, that the MDR reports will not materially impact our current regulatory status. However, the FDA may request further information, which potentially could delay the Company’s pending 510(k) application, or which could result in further regulatory action.

Hansen shares are indicated down 5% at $13.85 in pre-market trading this morning; and its and its 52-week trading range is $13.48 to $39.42.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 7:55 am in Medical, Secondary Offering,

Best Buy Gives The ‘All-Clear’ Signal (BBY, CC)

Electronics, entertainment, and appliance retail giant Best Buy Co, Inc. (NYSE: BBY) has just posted earnings.  This last quarter was a 10% rise to $1.71 EPS in a revenue gain to $13.418 Billion.  First Call had estimates at $1.65 EPS on $13.19 Billion in revenues.

The company is also forecasting a roughly 7% rise in its next fiscal year earnings to $3.25 to $3.40 EPS.  It also forecast revenues of $43 to $44 Billion on a comparable store sales gain of 1% to 3%.  First Call has Fiscal February-2009 estimates at $3.31 EPS on $43 Billion in revenues.

For the last quarter, its comparable store sales year over year were actually down 0.2% and total revenues grew by 4%.  Both numbers would have been higher, with the total gain at 9%, had it not been for the lost week compared to the same quarter in 2007.

The company has a remaining authorization of $2.5 billion for the repurchase of its common stock with no stated expiration date.

In the past this wouldn’t have been good enough to please growth investors, particularly as earnings are down slightly from previous reports.  But this appears to be viewed as an "all clear" sign with a scenario that isn’t deteriorating more rapidly for the company.  Best Buy stock is up almost 7% at $46.40 in pre-market trading, and its 52-week trading range is $38.75 to $53.90.  When we did our weekend preview of these earnings for Best Buy, its shares were at $40.56.  That is nearly a 15% change since last Friday.

This is being viewed with such relief this morning that even Circuit City (NYSE: CC) shares are trading up over 3% in pre-market indications.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 7:25 am in Consumer Electronics, Earnings, ,

Trina Solar Locks-Up Supply Pacts (TSL)

Trina Solar Limited (NYSE: TSL) has announced that it has signed a long-term polysilicon supply agreement with a subsidiary of GCL Silicon Technology Holdings Ltd.

Under the terms of this agreement, GCL Silicon Technology will supply Trina Solar with virgin polysilicon supplies that are sufficient to produce roughly 2,600 MW of solar modules in total over an eight-years period.  Trina will begin accepting delivery of polysilicon supplies at predetermined prices in April of 2008.  That won’t be a steady or constant annual yield as the start deliveries are likely far smaller today than would be expected several years out.

Trina Solar noted that it has now secured about 95% of its estimated silicon feedstock requirements for 2008, which represents an equivalent of about 195 MW based on a production target of 200 to 210 MW of module output.

Trina Solar shares are up close to 4% at $34.00 in early pre-market trading, and its 52-week trading range is $25.88 to $73.06.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 7:03 am in Alternative Energy,

Top 10 Pre-Market Analyst Calls (AFL, CROX, DKS, DWA, EXPD, ERIC, POT, STT, UST, XTO)

Below are the top analyst calls we are focusing on this Wednesday morning:

  • AFLAC (NYSE: AFL) cut to Neutral from Buy at UBS.
  • Crocs (NASDAQ: CROX) cut to Neutral from Overweight at JPMorgan.
  • Dick’s Sporting Goods (NYSE: DKS) cut to Neutral from Buy at UBS.
  • DreamWorks Animation (NYSEL DWA) started as Neutral at UBS.
  • Expeditors International (NYSE: EXPD) cut to Neutral at UBS.
  • LM Ericsson (NASDAQ: ERIC) cut to Neutral at HSBC Securities.
  • Potash Corp. (NYSE: POT) target Raised to $240 From $200 at CIBC.
  • State Street (NYSE: STT) cut to Market Perform from Outperform at KBW.
  • UST (NYSE: UST) cut to Neutral from Buy at Goldman Sachs.
  • XTO Energy ((NYSE: XTO) started as Outperform at Morgan Keegan.

Jon C. Ogg
April 2, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 2, 2008 – 6:52 am in Analyst Calls, , , , , , , , , ,

Financial Blog Wars Heat Up

A looks at comScore data for January and February show that the battle between the two largest financial blogs, Seeking Alpha and BloggingStocks, is getting more competitive.

In February, Seeking Alpha had 797,000 unique visitors. BloggingStocks had 2.385 million. The numbers were much closer together in January.

In February, Seeking Alpha had about three million total pages viewed, compared to about five million in January. The BloggingStocks figure was five million in both months.

BloggingStocks is owned by AOL. Seeking Alpha is independent. 24/7 Wall St. recently put the SA value at $15 million. Blogging has come of age.

Douglas A. McIntyre has written for Seeking Alpha and currently writes for Blogging Stocks

Posted on: April 2, 2008 – 6:15 am in Uncategorized

Yahoo! Finance And AOL Money Jockey For Top Spot

The top spot among American financial sites has become more of a two-horse race each month. In February AOL Money has 83.1 million visits and Yahoo! Finance weighed in with 81.1 million. MSN Money was in the No.3 spot with 50.9 million according to comScore

Fox Business continued its online assault against CNBC. For the month, Fox had 1.44 million visitors to CNBC’s 1.9 million.

The new website launched by TheStreet.com, Mainstreet, made its debut in the rating with just over 1.3 million visitors. TheStreet itself had 4.7 million, keeping it well ahead of BusinessWeek online and The Motley Fool

Google Finance remains the great mystery on the list. It visits jumped to 6.6 million, well above the 3.4 million it posted in January. The site did not seem to change anything so perhaps investors are being drawn to its odd combination of interactive charts and Google News.

Douglas A. McIntyre

Posted on: April 2, 2008 – 6:04 am in Internet

China Bribes Nigeria: The Oil Markets Go Up For Auction

If China can’t come by oil in the open market, it can send a big check to a country with oil which could use a few bucks. According to the FT "China has offered export guarantee facilities worth up to $50bn to encourage investment in Nigeria in a bold strategy to woo Africa’s biggest oil producer."

And, why not? China needs the oil to fuel its 10% a year GDP growth. The great African nation needs that capital.

Of course, if China can corner the market of much of the oil coming out of Nigeria, the net effect may be to raise oil prices to other consuming nations. When so much black gold goes to one nation, it cuts the supply considerably.

The move by China may also set a precedent for the Balkanization of the oil markets. There is nothing substantial to prevent the US from making similar arrangement with Canada, Mexico, or one of the Middle Eastern nations.

The China play could break the pact between supplying and consuming nations which has lasted for decades. Oil was essentially "pooled" and available to all nations at the same price. The philosophy was the underpinning of OPEC.

The markets have concerns that oil prices gyrate now. A market where buyer and seller pair off into groups could completely disrupt international pricing. Trading oil will be like going to the track. The Racing Forum is on sale for $2 and the $100 windows just opened for betting.

Douglas A. McIntyre

Posted on: April 2, 2008 – 5:36 am in Oil & Gas

How Does A Market Move Up 400 Points On Bad News?

Rally caps were out in force yesterday with the Dow moving up almost 400 points. How and why it did that in a day of predominantly bad news is hard to fathom. The FT mentioned that much of it was short covering. The pink-colored paper noted "bankers and analysts cautioned that the rally could also reflect the large number of hedge funds and other investors who had bet that prices would go down and were retreating from short positions"  But that is an inadequate explanation for such a big surge

The list of negative data posted as the day went on was a shaking of the foundations of the US economy. It has been a very long time since car sales fell 18% at the nation’s largest auto company, GM (GM). The head of sales at Ford (F) said that company expected the second quarter to be worse than the first.

For some reason, Wall St. saw the fact that Lehman (LEH) raised $4 billion as good news. It is not. The notion that a major investment bank had to go into the market for that kind of capital can only be viewed well in light of the fact that it got any money at all. When a major US financial companies have to raise one cent, the storm flags are out.

Notable as well, Reuters reports spreads on junk bonds, or corporate debt rated below "Baa3" by Moody’s Investors Service and "triple-B-minus" by Standard & Poor’s are at 821 basis points over comparable Treasuries — or levels not seen since December 2002, according to Merrill. To put that in English, the smart money is betting that things will get worse and companies which have mediocre balance sheets will be hit with defaults over the next several months.

Cash continues to move into 10-year Treasuries, a safe-haven for big institutional investors who don’t like the look of the equity and bond markets. Those firms could miss out on a big rally, but they don’t think so.

At base, the market has to believe that most of the subprime problems which kicked-off all the trouble are coming to an end. That projection is for suckers. Nationwide, 1.5 million subprime adjustable-rate mortgages will reset to higher interest rates this year – with May and June being peak months, according to CNN Money. Congress will move at its own glacier-like pace and will miss any window that might save the poor souls who own these homes.

The optimism in traders in never ending. It is how they make their living. For them, trading the market up is like breathing  But, they ought to read the newspapers.

Douglas A. McIntyre

Posted on: April 2, 2008 – 5:20 am in Economy, , ,