Daily Archives: March 23, 2009

Cramer Touts Dividend Growers (APD, NAT, MMM, GE)

cramer-image1It looks like Jim Cramer is doing a new feature list of companies this week that may actually grow their dividends or that have boosted dividends.  On tonight’s MAD MONEY on CNBC, Cramer noted Air Products & Chemicals Inc. (NYSE: APD) as a gasses company that said it has growing conviction.  He noted that the company’s record date or his “must own date” is March 27, and he thinks that the higher dividend would come after that.  He noted that the earnings cover the dividend 2.2-times over.  It does have a currency problem, but it would be a great weak dollar play.

Cramer also brought on CEO Herbjorn Hansson of Nordic American Tanker (NYSE: NAT) to discuss whether the company’s earnings are strong and to speak about the dividend.  He said WE SHALL NOT CUT OUR DIVIDEND, but he did say the dividend will follow the market: “Higher market, higher dividend; lower market; lower dividend.”  Hansson also noted that he’d take advantage of acquisitions when he could, but acquisitions would be made if they increased the ability to pay out the dividend.  The CEO also noted that the recent secondary was not dilutive.  Cramer said this is the only tanker stock that he would endorse right now, although the dividend reasoning may be a bit “tied to the market” for the feature reference here in a classic sense.
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Posted on: March 23, 2009 – 6:08 pm in Cramer, Dividend, , , ,

Genetech Merger Holdouts Face Dimming Hope (DNA)

money-stack-image51The hope for a higher Genentech Inc. (NYSE: DNA) buyout price is getting smaller and smaller.  After the companies agreed to a $95.00 per share merger, this was already assumed as the nearly certain outcome by most.  The company’s objections and fight for more cash have both been resolved and now it appears that the cases for holdout shareholders wanting more are systematically out of the way.
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Posted on: March 23, 2009 – 4:46 pm in Biotech, Drug companies, Law, Mergers and Buy Outs,

Inergy Raising Cash (NRGY)

money-stack-image50Inergy, L.P. (NASDAQ: NRGY) has announced an underwritten public offering of 4,000,000 common units.  As a reminder, these are L.P. units rather than shares.  The partnership intends to use the net proceeds to repay outstanding debt under its revolving working capital credit facility and its revolving acquisition credit facility.  It noted that the amounts repaid may be reborrowed from time to time for acquisitions, growth capital, working capital, and general partnership purposes.
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Posted on: March 23, 2009 – 4:07 pm in Oil & Gas, Secondary Offering,

Sears Clipped By Moody’s (SHLD)

sears-logoMoody’s Investors Service has had a pretty active day for downgrades, with Sears Holdings Corporation (NASDAQ: SHLD) being the latest of the active companies to get a credit or debt rating downgrade.  The corporate family and probability of default ratings for Sears was cut to ‘Ba2′ from ‘Ba1′ and its speculative grade liquidity rating was cut to SGL-2 from SGL-1.  More importantly, the retail giant’s outlook is stable.
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Posted on: March 23, 2009 – 3:21 pm in Analyst Calls, Retail

Goldman Sachs (GS) May Take Chinese Money To Pay Back TARP Money

bank27Chinese capital usually makes it way to the US Treasury when the communist central government buys American debt. It is the most direct route, but clearly not the only one.

According to The Wall Street Journal, Goldman Sachs (GS) may sell part of its 4.9% stake in the Industrial & Commercial Bank of China  for $1 billion, and will presumably use that money to as part of a payment to give the federal government back all the TARP money the US investment bank took last year.

Or Goldman may just keep the money. It may have concerns about the nature of its Chinese investment. The Journal writes one person familiar with the matter said Goldman’s move to reduce its ICBC stake is motivated by a desire to curb a “concentrated” position that hasn’t been hedged because of the terms of its initial agreement with the Chinese bank.

Douglas A. McIntyre

Posted on: March 23, 2009 – 2:41 pm in Banking, China,

Moody’s Joins S&P In G.E. Downgrade (GE)

ge-logo3Moody’s Investor Services has decided to join in on the downgrade of General Electric Co. (NYSE: GE).  This downgrade takes the unsecured debt ratings of GE itself and General Electric Capital Corp (“GECC”), and subsidiaries, down to “Aa2″ from “Aaa.”  The rating of the FDIC Temporary Liquidity Guarantee Program was affirmed at Aaa.
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Posted on: March 23, 2009 – 1:02 pm in Analyst Calls, Conglomerates,

The ‘Safety Premium’ In Water Investing (AWK, WTR, AWR, CWT)

water-image1We have been investigating several of the “safe sectors” for investing to identify which ones may have seen the worst or which ones could continue to have issues regardless of whether or not recent stock market strength holds up or not.  Water is supposed to be one of those immune sectors as people have to drink water every day and just about every aspect of life revolves around water.  So we are starting out with domestic water utilities, because this is the first line of defense in the water sector and the most defensive portion of the water sector.  In theory, these do not require any new community growth or new water-intensive industries for the “defensive” thesis to hold up.  We briefly wanted to review American Water Works Company, Inc. (NYSE: AWK), Aqua America Inc. (NYSE: WTR), American States Water Company (NYSE: AWR), and California Water Service Group (NYSE: CWT).
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Posted on: March 23, 2009 – 10:35 am in Defensive Stocks, Water, , , ,

Reader’s Indigestion

Reader’s Digest and friends are in serious pain. Will their prescription work?

By Dave Jamieson and Jeff Horwitz, The Big Money

Even in Pleasantville, the news gets bleaker by the quarter. Back in the fall, the Reader’s Digest Association, the publishing and direct-marketing behemoth based in the Westchester County hamlet, posted an operating loss of $337 million for fiscal 2008. After a steady stream of credit-rating downgrades, Moody’s placed the company on “The Bottom Rung”—its list of companies most likely to default on their debt. And earlier this month, Bloomberg reported that RDA had retained Kirkland & Ellis’ bankruptcy practice to “explore” restructuring options, including bankruptcy.

Read more….

Posted on: March 23, 2009 – 10:18 am in Uncategorized

Existing Housing Data Could Bring New Waves of Selling

burning-house-image1It seems that there is at least a little more good news in the housing sector.  February showed a 5.1% gain year-over-year in sales of existing homes to a rate of 4.72 million annualized.  This doesn’t come without caveats.  The prices are significantly lower and supply is coming on stronger than demand.
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Posted on: March 23, 2009 – 9:16 am in Economy, Housing

Magazine Advertising May Be En Route To Worst Year Ever (WPO)(TWX)(MGP)

bear21The drop in magazine advertising pages is continuing as the first quarter ends, and it looks like Q2 will not be better. According to MIN, which tracks advertising pages for major US publications, Fortune, part of the Time, Inc. division of Time Warner (TWX), is down 30% through its mid-March issue. Rival Forbes is off 17% through the same period.

Through the third week in March, McGraw-Hill (MHP) flagship BusinessWeek’s ad pages are down 32%. Time  Inc.’s Entertainment Weekly is off 39%, Time Magazine is off 29%, and the Washington Post’s (WPO) Newsweek is down 34%.  Sports Illustrated is down 29% through the same period.

Douglas A. McIntyre

Posted on: March 23, 2009 – 9:07 am in Old Media, , ,

Green News: Carbon Credit Auction Nets $117 Million

carbon-emission-imageThe ten northeastern states that comprise the Regional Greenhouse Gas Initiative (RGGI) raised more than $117 million in its third auction of carbon emission allowances for the 2009-2012 time period. More than 31.5 million allowances were sold (one allowance (credit) permits the holder to emit one ton of carbon annually). The clearing price equaled $3.51/credit. So far, the three auctions have yielded about $263 million.
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Posted on: March 23, 2009 – 9:01 am in Green Biz, Politics

Fertilizer Makers Won’t Dance (CF, AGU, TRA)

money-stack-image49For the second time in as many weeks, CF Industries Holdings, Inc. (NYSE:CF) has rejected an offer from Agrium Inc. (NYSE:AGU), saying that “Agrium’s offer is grossly inadequate, substantially undervalues CF Industries and is not in the best interests of CF Industries and its stockholders.”  CF repeats its claim that the Agrium offer is “opportunistic,” as well as an attempt to torpedo CF’s bid to takeover Terra Industries (NYSE:TRA).

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Posted on: March 23, 2009 – 8:45 am in Agriculture, Mergers and Buy Outs, , ,

Citi Upgrades Corning (GLW) to Buy; Finally Time to Get Positive

Citi upgrades Corning Incorporated (NYSE: GLW) from Hold to Buy and raises its price target from $11.25 to $16, saying LCD glass production/sales have bottomed & should move sequentially higher.

Citi analyst says, “Our upgrade is based on three points: 1) LCD glass production/sales have bottomed & should move sequentially higher in 2Q; 2) Current glass demand now supported by restocking, but will see 2H09 hand-off to end market demand; 3) GLW should see production increase sequentially from 2Q09 through year-end, with strong positive impact on revenues, margins, EPS…

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Posted on: March 23, 2009 – 8:30 am in Uncategorized,

Fitch Ratings Looks at Refiners (VLO, FTO, TSO)

refinery-image1Fitch Ratings published a short report on the effect of the compression in crude oil spreads on refiners. We looked at this phenomenon about a month ago. Fitch concludes that the “relative cost advantage of higher complexity refiners”, that is, those that process heavy, sour crudes, “has been muted relative to less flexible sweet light peers.”  If the heavy sour crudes are not discounted relative to light, sweet WTI, refiners such as Valero Energy Corp. (NYSE:VLO), Frontier Oil Corporation (NYSE:FTO), and Tesoro Corporation (NYSE:TSO) face a period of “underperformance.”
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Posted on: March 23, 2009 – 8:26 am in Analyst Calls, Oil & Gas, , ,

Treasury’s Toxic Asset Plan Still Leaves Many Questions

geithner-imageTimothy Geithner’s plan from the Treasury to get rid of toxic assets from banks and financial institutions’ balance sheets is out.  What is certain here in the plan is that there are still many questions which are not addressed.  The plan has loosely tried to address concerns on whether or not executive pay would be an issue for those who invest in the plan.

The Treasury has outlined the steps for dealing with legacy assets that banks cannot currently get rid of, compromising their ability to raise capital and their willingness to increase lending.  This plan also admits the spiral being exacerbated by a negative cycle has developed where declining asset prices have triggered further deleveraging, which has in turn led to further price declines.  The funds will generate $500 billion of purchasing power of legacy assets, but ultimately this could be up to $1 trillion.
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Posted on: March 23, 2009 – 8:19 am in Banking, Financial Stocks, Regulation

Tax Deductions Compromise the Tax Debate

John Tamny of RealClearMarkets

In a 1924 speech before the National Republican Club, President Calvin Coolidge observed “that when the taxation of large incomes is excessive, they tend to disappear.” Coolidge found that in 1916, 206 people had incomes of $1,000,000 or more, but once a higher tax rate on million-dollar incomes was passed, the number dwindled–falling all the way to 21 in 1921.

In his book, The View From No. 11, Nigel Lawson, Margaret Thatcher’s former chancellor of the exchequer, answered the above riddle with great ease. The Thatcher government inherited nosebleed rates of taxation, but as Lawson quickly found, the “higher rates we inherited were frequently not paid. The well-heeled and well-advised took great pains to avoid liability through the perfectly legal use of tax shelters of one kind or another; and the tax avoidance industry flourished as never before.” Translated: When politicians target income for tax purposes, incomes change.

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Posted on: March 23, 2009 – 8:10 am in Uncategorized

Oil Sands Universe Just Got Simpler (SU, PCZ, TOT, ENY)

money-stack-image48Two of the largest players in the Canadian oil sands, Suncor Energy Inc. (NYSE: SU) and Petro-Canada (NYSE:PCZ) announced that Suncor will acquire Petro-Canada in a deal valued at $15.5 billion. Shareholders of Petro-Canada will get 1.28 shares of the new company for each share of Petro-Canada they hold, and Suncor shareholders will get one share for each share of Suncor they hold.

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Posted on: March 23, 2009 – 7:33 am in ADR, Mergers and Buy Outs, Oil & Gas, , , ,

Analysts Start Mead Johnson Coverage (MJN

Mead Johnson Nutrition Company (NYSE: MJN) has reached the end of its analyst quiet period where the firms who underwrote the deal can now begin their ratings coverage.  This was the Bristol-Myers Squibb Co. (NYSE: BMY) spin off.  If you will recall, Citigroup and Morgan Stanley were the joint book-runners on the deal.  Banc of America, Credit Suisse, J.P.Morgan, RBC, UBS, and Lazard were the co-managers of the underwriting.   These are the calls we have seen far for New analyst coverage initiations:

  • ‘Buy’ at Citigroup (joint book-runner)
  • ‘Equal Weight’ at Morgan Stanley (joint book-runner)
  • ‘Outperform’ at RBC Capital
  • ‘Neutral’ at B of A Merrill
  • ‘Neutral’ at JPMorgan
  • ‘Neutral’ at Credit Suisse

This is still up about 10% since its IPO in early February.

JON C. OGG
March 23, 2009

Posted on: March 23, 2009 – 7:06 am in Analyst Calls, Consumer Goods, IPOs

Top Analyst Upgrades & Downgrades (A, CRA, CNQR, GLW, AZO, BHP, CERN, GOL, ORLY)

These are the top pre-market analyst upgrades and downgrades we have seen with just about two hours until the market opens this Monday morning:

Agilent (A) Raised to Outperform at Credit Suisse.
Celera (CRA) Raised to Overweight at Thomas Weisel.
Concur Tech (CNQR) Raised to Buy at Piper Jaffray.
Corning (GLW) Raised to Buy at Citigroup.
AutoZone (AZO) Cut to Neutral at UBS.
BHP Billiton (BHP) Cut to Underperform at Credit Suisse.
Cerner (CERN) Cut to Hold at Deutsche Bank.
GOL Linhas Areas Inteligentes (GOL) Cut to Neutral at UBS.
O’Reilly Auto (ORLY) Cut to Neutral at UBS.

JON C. OGG
March 23, 2009

Posted on: March 23, 2009 – 6:50 am in Analyst Calls, , , , , , , , ,

Some Hope For Ford (F) As Abu Dhabi Puts Cash In Daimler

oil7Ford (F) is in the best financial health of The Big Three. Its position could improve more, at least temporarily, if its deals to cut debt and reset its contract with the UAW work well.

But, the No.2 US car company still faces the fact that no one in America is buying new cars. Sales for some auto companies are running off over 40%. Total domestic vehicle sales could be only 10 million this year, down from 16 million three years ago.

Ford may find an investor other than the US government, if it needs one as the year moves along. According to the FT, “Abu Dhabi-based Aabar Investments is to take a 9.1 per cent stake in Daimler in a €1.95bn (£1.84bn) move to bolster the German premium carmaker, becoming its largest shareholder as the company battles against the worst industry crisis in decades.” Read More »

Posted on: March 23, 2009 – 5:11 am in Autos, ,