Daily Archives: January 8, 2009

The Pain of Chasing Warren Buffett (BRK-A, GS, GE, WFC, AXP, BNI, COP, MCO, USB)

Buffett_imageBerkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) does not go for short-term gains, and short-term losses are part of the game for investing. Warren Buffett has even told employees to only to worry about walking the straight line and everything else fall into place.  But whenever Buffett is found to have invested in a company, its stock is immediately pushed up by other investors.  After reviewing some of his portfolio holdings where his outlook is "forever," you will notice how painful that has been for investors who have chased Buffett’s picks.  Most of the public does not invest with a "forever" time frame. We have only included those stakes where Buffett has sizable investments.

You can look at the changes in his recent positions or his add-on positions in Goldman Sachs Group Inc. (NYSE: GS), General Electric Co. (NYSE: GE), and Wells Fargo & Co. (NYSE: WFC) to see how much some of these stocks have come down.  There are of course many caveats and we are certainly not suggesting that Mr. Buffett only picks stocks which go down.  He would be the first to tell you he can’t control the market, and he would also say that he doesn’t care about the stock market performance in any given short period.

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Chevron, Lower Prices, Lower Money (CVX, SLB)

Oil_well_image_2Chevron Corp. (NYSE: CVX) has just laid the second ground-breaking path in the oil sector today.  It lowered guidance "significantly."  We already noted pending layoffs at Schlumberger Limited (NYSE: LTD), but this is a different matter entirely.  As if you didn’t guess the outcome of far lower oil prices and the backside of demand destruction…

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Coach Continues To Be Economic Victim (COH)

Coach_logoIt has been long-removed since the belief that Coach, Inc. (NYSE: COH) was going to be immune from the consumer spending squeeze.  Tonight we are seeing this again with a forecast of lower earnings and lower sales.

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The 52-Week Low Club (HELE)(ISRG)(VAR)

Sunset_3Helen of Troy (HELE) Bad quarter. Sells off to $`12.01 from 52-week high of $24.70.

Intuitive Surgical  (ISRG) Weak sales numbers. Drops to $99.75 from 52-week low of $357.98.

Varian (VAR) Healthcare equipment companies get hurt on spending drop expectations. Falls to $30.04 from 52-week high of $65.84.

Douglas A. McIntyre

Hidden Cost Of Low Oil: Energy Sector Layoffs (SLB, HAL, BHI, XOM, CVX)

Oil_well_imageIf you have somehow managed to be out since last summer when the oil boom was still in full-speed, there is one issue you would not have guessed was coming this quick: layoffs in the oil patch.  We have been digging around in Houston and Dallas to get the dirt on which oil companies would begin layoffs first.  We started hearing about all sorts of cost cuts inside companies starting at the end of Q3 and things got much worse toward the end of the year.  No one inside these companies wanted to address this and merely noted that layoffs were the last thing they’d want to do until their own internal cost-cutting measures were exhausted.  It turns out that Schlumberger Ltd. (NYSE: SLB) is the first of the biggies to announce job cuts.

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Suncor Production Heads South (SU)

Suncor Energy Inc. (NYSE:SU) reports today that production from its oil sands operations averaged 235,000 barrels/day for December. In October, production averaged 258,000 barrels/day. Third quarter production averaged 261,000 barrels/day. This is not the direction trend lines should be going.

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Norway Drills More, Finds Less

Norway’s Petroleum Directorate reported yesterday that the company had drilled 56 exploration wells in 2008, of which 25 resulted in new discoveries. That’s the good news. The not-so-good news is that the new discoveries barely covered 2008 production, so there was no appreciable gain in reserves. The country invested about $18 billion in its oil industry during the year.

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Less Demand, Less Coal, Less Profit (BTU, ACI, CNX, MEE)

Coal_image Peabody Energy Corporation (NYSE:BTU) yesterday reduced its production estimates for Wyoming’s Powder River Basin and for its Australian coal mining. The company said it has produced "in excess of 200 million tons" of coal in 2008, but expects [CORRECTION] US production in 2009 in the range of 190-195 million tons.

  • When you graph the share prices of four leading coal companies, Peabody, Arch Coal Inc. (NYSE:ACI), CONSOL Energy Inc. (NYSE:CNX), and Massey Energy Company (NYSE:MEE), the lines look like exact copies of one another.

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Retail Winners In Hard Times (ARO, APP, HOTT, BKE)

Money_stack_pic_3There are actually a few bright spots in retail despite an economy that is still getting worse and an environment where the consumer is getting poorer and less certain about their job prospects.  Among the companies highlighted are Aeropostale Inc. (NYSE: ARO), American Apparel, Inc. (AMEX: APP), Hot Topic Inc. (NASDAQ: HOTT), and The Buckle, Inc. (NYSE: BKE).

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More 3X Leverage ETF’s (MWJ, MWN)

Money_stack_pic_2If you wanted more access to leveraged ETF investing, your dreams are coming true.  Direxion announced the addition of two new Direxion Shares "3x ETFs" to its existing line- up of multi-directional leveraged funds.  Direxion launched its Direxion Mid Cap Bull 3x Shares (MWJ) and Direxion Mid Cap Bear 3x Shares (MWN) ETFs.

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Day Trader Alert (ANDS)(NAT)(DRYS)(ISRG)

Empire_2Nordic American Tanker Shipping Ltd. (NYSE: NAT) is getting hammered this morning on very active trading. details…

DryShips inc. (NASDAQ: DRYS) has little overlap in the sub-sector of shipping other than that it is shipping and it  does transport goods around the world.  DryShips is also one of the more volatile trading stocks out there in the sector.  details….

Intuitive Surgical, Inc. (NASDAQ: ISRG) is seeing its shares get pounded this morning.

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Could Palm (PALM) Bounce After Launching A New Product At CES?

A couple weeks ago, Palm (Nasdaq: PALM) Board Member, Roger McNamee, appeared on CNBC and hinted a revolutionary new product that will launch at the Consumer Electronics Show (CES).

Crunchgear has said it received information from a trusted source that Palm will launch a new large touchscreen smartphone that will have a full slide-down QWERTY keyboard. The new Nova operating system is described as “amazing” and there will be a full entree of software at launch

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Niche Trading Firm Mergers Not Dead (AMTD, SWIM, OXPS, TRAD)

Money_stack_picIt seems that the appetite for online brokerage firms to do selective M&A deals is not entirely dead.  TD Ameritrade (NASDAQ: AMTD) has announced this morning that it is acquiring much smaller thinkorswim Group Inc. (NASDAQ: SWIM).  It is paying a hefty premium of $606 million for the company, but you also have to consider what the larger firm is getting for the acquisition.

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Weekly Jobs Data: When Less-Bad Is Good

The Labor Department just released the Weekly Jobless Claims data for the week ended January 3.  While this number is arguably one that could have fluctuated wildly after the same sort of wild surprise the prior week, the results are again a surprise of "less bad" data.  It seems that companies just didn’t fire quite as many people in December as it had before.  But….

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The Misleading Nature of Government Statistics

By John Tamny  RealClearMarkets

"Macroeconomics is a tautology and a myth, a dangerous one at that, sustaining the illusion that prosperity is necessarily linked with territory, national units, and government spending in general." – Reuven Brenner, Labyrinths of Prosperity

The Labor Department is set to announce the nation’s unemployment rate tomorrow. And while the number is expected to be bad, what sometimes goes unquestioned is the reliability of the government’s calculations when it comes to the health of the economy. The view at H.C. Wainwright Economics is that its various measures of our economic health are faulty.

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Posted Without Comment: Trouble For Big Banks

From Bloomberg:

The biggest U.S. banks may face the threat of lower profits or pressure to break up under greater regulation following the financial crisis.

Federal Reserve officials have made tackling the issue of firms that are too big to fail a priority. Options may include banning or restricting activities that could threaten the stability of the financial system, analysts said.

“Rates of return are going to be smaller,” said Vincent Reinhart, a former director of the Fed’s monetary-affairs division who is now resident scholar at the American Enterprise Institute in Washington. “That will be the quid-pro-quo for having the government safety net.”

Douglas A. McIntyre

Wal-Mart (WMT) Gets Stunned By International

Water_lilies_2No matter how badly the retail industry was in December, Wal-Mart (WMT) still managed to post improved same-store sales of 1.9%. But, that was the only good news the company could manage.

The world’s largest retailer cut its earnings estimates for Q4 to $.91 to $.94 from its previous figure of $1.03 to $1.07.

The champion of Wal-Mart’s earnings gains over the last four years knifed it in the back.

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Sears (SHLD): A Ray Of Sunshine

Sunset_2The holiday season went poorly at Sears (SHLD), so it may still have to close scores of stores and lay-off thousands of people.

Same-store sales at Sears stores fell 12.8%. As odd as it may see, K-Mart did much better with the comparable figure being down only 1.1%. That added up to a weighted average for the whole company of a 7.1% drop.

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Analyst Downgrade Onslaught Continues (ASML, CMG, FORM, GFIG, ICE, KLAC, MSSR, MPEL, MRG, PEET, PRXI, PHM, RGLD, JAVA, TCK, TER, UDR, VNO)

Burning_money_pic_2This morning was a shocker on just how many analyst downgrades and very negative calls were out from Wall Street analysts.  The sad part is this is only part of the onslaught that we are still seeing.

  • ASML (NASDAQ: ASML) Cut to Market Perform at FBR.
  • Chipotle (NYSE: CMG) Cut to Neutral at Piper Jaffray.
  • FormFactor (NASDAQ: FORM) Cut to Market Perform at FBR.
  • GFI Group (NASDAQ: GFIG) Cut to Hold at Deutsche Bank.
  • IntercontinentalExchange (NYSE: ICE) Cut to Hold at Deutsche Bank.
  • KLA-Tencor (NASDAQ: KLAC) Cut to Market Perform at FBR.
  • McCormick & Schmick’s (NASDAQ: MSSR) Cut to Neutral at Piper Jaffray.
  • Melco Crown (NASDAQ: MPEL) Cut to Hold at Deutsche Bank.
  • Morton’s Restaurant Group (NYSE: MRG) Cut to Neutral at Piper Jaffray.
  • Peet’s Coffee & Tea (NASDAQ: PEET) Cut to Neutral at Piper Jaffray.
  • Premier Exhibitions (NASDAQ: PRXI) Cut to Neutral at Merriman Curhan Ford.
  • Pulte Homes (NYSE: PHM) Cut to Neutral at JPMorgan.
  • Royal Gold (NASDAQ: RGLD) Cut to Sector Underperform at CIBC.
  • Sun Microsystems (NASDAQ: JAVA) Cut to Sell from Neutral at Goldman Sachs (added details).
  • Teck (NYSE: TCK) Cut to Neutral at UBS.
  • Teradyne (NYSE: TER) Cut to Market Perform at FBR.
  • UDR Inc. (NYSE: UDR) Cut to Sell at Goldman Sachs.
  • Vornado (NYSE: VNO) Cut to Neutral at Goldman Sachs.

Jon C. Ogg
January 8, 2009

Activist Burkle Going After Whole Foods (WFMI)

Whole_foods_logoWhole Foods Markets Inc. (NASDAQ: WFMI) has a new activist in its ranks.  An SEC filing showed that Ron Burkle’s Yucaipa Cos. investment vehicle is now holding a 7% stake in the organic and high-end grocery store operator.  The filing shows a 9.81 million share stake was taken.  This will also make it one of the top 4 shareholders if the most recent data is accurate. 

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