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Standard & Poor’s Ratings Services is putting Mr. Buffett on Watch. Berkshire Hathaway Inc. (NYSE: BRK-A) has had its ratings outlook revised to “Negative” from “Stable” along with Berkshire Hathaway Finance Corp., Berkshire Hathaway Assurance Corp., and other subsidiaries. The good news is that the “AAA/A-1+” ratings and the counterparty credit ratings were maintained. At least for now.
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Daily Archives: March 24, 2009
S&P Puts Eagle Eye On Buffett & Berkshire (BRK-A, GE)
Cramer Touting More Dividend Growers (PG, APD, NAT, MMM)
Jim Cramer’s featured list of stocks this week on CNBC’s MAD MONEY is on companies which have grown or will grow their dividends. Tonight, Cramer touted Proctor & Gamble Co. (NYSE: PG) with a current yield of 3.4%. Cramer said he normally wouldn’t back a defensive stock if we are close to a recovery, but the new money flow may debase the currency. Cramer thinks P&G is a weak currency beneficiary and he thinks its pricing power can stick with its branding. If this stock’s dividend safety sounds familiar, it is because P&G was one of our own big list of companies which we said would not cut its dividend.
On Monday evening, Cramer noted two others in detail: Air Products & Chemicals Inc. (NYSE: APD) and Nordic American Tanker (NYSE: NAT).
Also, we noted that 3M Co. (NYSE: MMM) is another stock which recently hiked its quarterly payout to holders. 3M shares are up over 20% from recent lows, and it is likely that the company would be one of the feature stocks Cramer discusses this week regarding dividend hikes.
Jon C. Ogg
March 24, 2009
Another IPO Withdrawn: Valor Computerized Systems
Valor Computerized Systems Ltd. has filed to withdraw its IPO plans with the SEC. No terms had ever been finalized, but this IPO was said to be for as much as $80.5 million in stock. This Israeli software operation filed for an IPO in early 2008 and underwriters were listed as Thomas Weisel, Oppenheimer, William Blair, and Collins Stewart. You can guess why this IPO was withdrawn: because of unfavorable market conditions that would adversely affect the offering…..
Jon C. Ogg
March 24, 2009
Eastman Kodak & Permanent Shrinkage (EK)
Eastman Kodak Company (NYSE: EK) keeps shrinking operations. It doesn’t matter what the GDP numbers and unemployment numbers are. It isn’t even a recession at Eastman Kodak. It is a depression. The company keeps shrinking itself. Unfortunately, it is not anticipated that this will change.
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AAPL NewsFlow Check: China iPhone Rumblings
There are multiple stories today about a pending iPhone deal with China, aggregated from 24/7 Wall St. partner Apple Investor News:
It started with a Macworld UK report that China Unicom had posted a website ad with iPhone photos and specifications. This adds to previous rumors about a deal between Apple and China Unicom. Apple talks with China Mobile, the largest wireless carrier, have apparently broken down several times.
This story is getting traction from some of the more credible Apple fan sites such as AppleInsider and MacRumors. What makes this even more believable is China Mobile’s plan to offer 3G network service in May.
One has to assume that an eventual iPhone deal with a China carrier is already baked into AAPL’s share price? Or is it?
Frank Cioffi, Apple Investor News.
(full disclosure: Cioffi owns AAPL shares)
Ten Major Newspapers That Will Fold Or Go Digital, An Update
Over the last few weeks, the newspaper industry has entered a new period of decline. The parent of the papers in Philadelphia declared bankruptcy as did the Journal Register chain. The Rocky Mountain News closed and the Seattle Post Intelligencer, owned by Hearst, now publishes only online. Hearst has held off closing The San Francisco Chronicle after making massive cuts at the paper. The property still may not be profitable. Advance Publications has announced a mandatory 10-day furlough and a pension freeze at nearly all of its daily papers outside Michigan. In Michigan, the company is closing the Ann Arbor News, the daily in that city, and significantly cutting back frequency of newspapers in Flint, Bay City and Saginaw. At other papers across the country changes have been made to save money. For example, The Washington Post is merging its business section into the first section of the paper. The San Diego Union-Tribune was sold to a private equity group at a price rumored to be only $50 million.
The 24/7 Wall St. analysis was criticized by a number of papers on this list and other analysts who follow the newspaper industry. But, not one of the ten papers would say that it would stay open for the next 18 months. Papers who told us that they were making money would not answer the question of whether their profits were based on GAAP or some bogus measurement like adjusted EBITDA. None of the papers would answer that simple question. Read More
Traders Betting Both Sides On DryShips Earnings (DRYS)
Investors and traders alike seem to be taking both sides of the trade ahead of the highly anticipated DryShips, Inc. (NASDAQ: DRYS) results. The shipper is expected to report earnings after the close and First Call has non-GAAP estimates at $0.66 EPS and $209.55 million in revenues. Where this gets interesting is what lies just beyond earnings estimates.
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Heads You Win, Tails I Lose
A bad-asset bailout that only private equity could love.
By Mark Gimein of The Big Money
One of the oddest quotes coming from a government official in the lead-up to today’s new toxic-asset plan was this one from White House economist Cristina Romer: “What we’re talking about now are private firms that are kind of doing us a favor, coming into this market to help us buy these toxic assets off banks’ balance sheets.” The italics are mine, but, even without them, the idea that private-equity managers will do the government a favor jumps out at you as clearly as if it were outlined in bright lights.
Allergan May Join Sector Takeover Waves (AGN, GSK, DNA, PFE, WYE, MRK, SGP)
If the rumor mill has any truth to it, then Allergan Inc. (NYSE: GSK) may by the next biotech takeover target. There is roughly $150 billion in new equity investor capital that can be put to work in this space now that Genentech Inc. (NYSE: DNA) is being bought by Roche and that Pfizer Inc. (NYS: PFE) is buying Wyeth (NYSE: WYE) and that Merck & Co. (NYSE: MRK) is buying Schering-Plough (NYSE: intra-day trading trends for day traders and options volume at Volume Spike Investor. And then there is the deeper down assumed valuation assessments using forward P/E’s and other balance sheet data at Biohealth Investor.
Allergan has now just crossed over the 10 million share mark and shares are up 11.7% at $48.23. In today’s world of the market whip-around and the world of M&A, we won’t be shocked if Allergan denies the rumors saying they would rather be an acquirer. Nor would we be shocked if the company halts or just says “No Comment!” in response to this.
Jon C. Ogg
March 24, 2009
Gold’s Value Without Fear & Inflation (GLD, GDX, ABX, GFI, GG, NEM)
The recent move in gold may be saying something about how to value the commodity in an environment of low inflation and in an environment where fear brings less of a premium. The London gold price today is down around $920/ounce. That’s about $25/ounce lower than yesterday’s close and gold had been down about $30/ounce earlier. In fact, that decline reflects what may be a topping trend in gold prices for the last 30 days. For the past year gold prices have trended upward, but the last thirty days have turned down. The SPDR Gold Shares (NYSE: GLD) ETF is almost flat for the past 30 days and for the past year. The Market Vectors Gold Miners Index (NYSE: GDX) is down about 20% for the year and about flat for the last 30 days.
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First Solar to Build New Mexico Solar Plant (FSLR)
First Solar, Inc. (NASDAQ:FSLR) will build a 30 megawatt solar PV plant in northeastern New Mexico to supply power to a wholesaler that serves nearly 1.5 million customers in four Western states. The contract is said to be the largest ever granted by a US electric cooperative to a PV maker.
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Officials Hint AIG Systematic Risks Are Gone, Repayment To Follow (AIG)
If you trust your government and its officials in what they say regarding the overall health of the system, there may be some good news out there on a systematic-risk basis regarding American International Group (NYSE: AIG). Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and New York Fed President William Dudley are signaling the weakness of oversight over AIG and systematic risks and what needs to be done ahead via regulation and oversight. But there is a more important notion here that is more of an inference in what all three officials might be signaling rather than any official statements. What they are generally saying is that the AIG systematic risks from creating the 1930’s has passed now that the government expects to get its money back. If this interpretation gets carried over into additional speeches, then it is growing more and more likely that you already have seen “most of the worst.”
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Citigroup (C) Shares Give It All Back
Maybe Wall St. is not so in love with the Treasury’s plan to buy toxic assets after all.
Citigroup (C) is trading at $2.86 this morning, which is where it changed hands last Friday.
The same holds true for Bank of America (BAC)
Douglas A. McIntyre
Coal Prices Falling; Will Iron Ore Follow? (BHP, KOL)
The FT reports that contracts between some large coal producers and steel and power companies show coal prices falling by as much as 60% Australia’s BHP Billiton Ltd. (NYSE:BHP) and Japan’s Mitsubishi Corporation have reportedly agreed to a coking coal price of $128-$129/metric ton with Nippon Steel. That is down almost 60% from last year’s price.
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Deutsche Bank Believes GE Capital (GE) Losses Can Be Funded Internally
Deutsche Bank provided some updated thoughts on General Electric (NYSE: GE) following last week’s GE Capital investor day. The firm said their central assumption is that GE Capital losses can be funded internally.
The firm said, “Our major takeaway was the high sensitivity of losses to macro inputs. As such, while a GECC pre-tax loss of ~$4bn seems appropriate given our current outlook, this could meaningfully accelerate if the global economy steps down again. Therefore
Will 50-Day Moving Averages Hold Up This Time? (DIA, SPY, QQQQ)
Yesterday’s major rally may have brought on more than just the garden variety panic buying seen in prior panic buying waves. So far we have profit taking being seen early on, but the DJIA and the S&P 500 crossed above their respective 50-Day Moving Averages in yesterday’s move. This is more easy for traders to track in the major ETF’s, so we ran these for the DIAMONDS Trust (NYSE: DIA), SPDRs (NYSE: SPY), and the PowerShares QQQ (NASDAQ: QQQQ).
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About Great Depressions, David Brooks Isn’t Serious
By John Tamny of RealClearMarkets
In a recent New York Times column, David Brooks took the Republicans to task for a “totally misguided” approach to our economic problems that in his view amounts to “no.” While Brooks acknowledges that the various solutions offered up by the Democrats have their shortcomings, to him it is the Republicans who aren’t being serious.
First up, he questions why “the Republicans have decided to demand a fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.” To that, it could be replied that maybe, at long last, the GOP has figured out that “fiscal stimulus” is a tragic contradiction in terms. Maybe the GOP is finally getting serious? One can hope.
Top Analyst Upgrades & Downgrades (BIDU, CERN, CLF, DE, DIET, LDK, MRVL, MCHP, NVO, YSI)
These are the top pre-market analyst upgrades and downgrades we have seen early this Tuesday morning with about two hours until the market opens
Baidu.com (NASDAQ: BIDU) Started as Buy at Deutsche Bank.
Cerner (NASDAQ: CERN) Cut to Hold at Auriga.
Cliffs Natural Resources (NYSE: CLF) Raised to Outperform at FBR.
Deere (NYSE: DE) Started as Buy at Jefferies.
eDiets (NASDAQ: DIET) Cut to Hold at Canaccord.
LDK Solar (NYSE: LDK) Cut to EqualWeight at Morgan Stanley.
Marvell Tech (NASDAQ: MRVL) Started as BUy at Deutsche Bank.
Microchip Tech (NASDAQ: MCHP) Raised to Overweight at Thomas Weisel.
Novo Nodisk (NYSE: NVO) Raised to Hold at Citigroup.
U-Sture-It Trust (NYSE: YSI) Raised to Outperform at Baird.
Jon C. Ogg
March 24, 2009
Hedge Fund Withdrawals May Hit New Record
If the economy is going to keep getting worse, why shouldn’t hedge funds, where managers can make millions of dollars a year, share in the suffering? It actually looks like they may.
According tothe FT, hedge funds investors surveyed recently are expecting big withdrawals this year. “A survey of investors by Deutsche Bank found a third expect more than $200bn to be withdrawn, after a net $155bn was taken out last year.” To add insult to injury, the poll also found that investors expect 20% of existing hedge funds to close in 2009. That means fewer firms to take money from the Treasury to buy toxic bank assets.
Douglas A. McIntyre
Russia: Oil Prices Are Going Back Down
Falling oil prices are particularly bad for Russia. A large part of the country’s GDP comes from exporting its vast supply of crude and gas.
So, it is especially surprising that a senior Russian official is predicting that oil will fall again after advancing above $50 recently. Read More
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Today’s top tickerspy Indexes Domestic Telecom ... +2.6% Stem Cell Stocks +2.3% Pain Management S... +2.1% Ethanol and Biofu... +1.9% Savings and Loan ... +1.8% 
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