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Lazard Freres delivered Carl Icahn a break-up analysis of Time Warner (NYSE:TWX) in late January 2005. Icahn had bought five million shares in the media company and he wanted the board to sell the company’s cable and publishing units. Either move, he reasoned, would decrease Time Warner’s heavy debt load. Read More
Daily Archives: October 5, 2009
What Is Time Warner Worth? The 2006 Icahn Break-Up Model Revisited
Nutrisystem Scores Wal-Mart Intro (NTRI, WMT)
Nutrisystem, Inc. (NASDAQ: NTRI) has just announced that has aligned with Wal-Mart Stores Inc. (NYSE: WMT) to allow customers to purchase a Nutrisystem 14-Day Starter Program for the first time in the retail channel. This will begin rolling out nationwide at more than 3,200 Wal-Mart locations in the first week of October and will also be available on the Walmart.com website. There is a catch to this deal, but so far we are seeing a very positive reaction in Nutrisystem’s shares.
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Mosaic Misses A Low Bar, Yet Holds Up (MOS)
The Mosaic Company (NYSE: MOS) was one stock where we noted that the bar for earnings expectations was very low. The fertilizer and potash player came even lower. It posted $0.23 EPS rather than $2.65 EPS a year ago and under the $0.35 EPS target. Quarterly revenues were down 66% to $1.5 billion, versus $2.9 billion a year ago and versus estimates of $1.54 billion. It ended the quarter with cash and cash equivalents of $2.6 billion as of August 31, 2009, but the business metrics are soft despite it trying to talk up long-term demand.
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52-Week High Club
Banco Bradesco Sa (NYSE: BBD) hit a early high of $20.79 today, carried by the hype surrounding South American banks over the past few weeks. The company is also undoubtably benefiting from the “Olympics effect”.
Jefferies Group (NYSE: JEF) hit a yearly high of $28.03 following news that the company had launched its first ETF.
Och-Ziff Capital Management (NYSE: OZH) hit a yearly high of $12.74 following Friday’s announcement that the company’s flagship fund was up for the ninth month in a row.
Venoco, Inc. (NYSE: VQ) hit a yearly high of $12.12, surging over 13% after the company announced that it had successfully sold $150 in senior notes in order to repay debt.
Garrett W. McIntyre
S&P Quasi-Endorses GE’s NBC Universal Plans (GE, CMCSA)
Standard & Poor’s Ratings Services has reviewed the ramifications of reports about General Electric Co.’s (NYSE: GE) plans for NBC Universal. The ratings agency has said that a partial sale or IPO of NBC Universal would not adversely affect the AA+/Stable/A-1+ evaluation of GE’s “excellent business risk profile.” S&P had previously stated it would review the outlook or rating on GE if strategic shifts in all of GE’s portfolio of businesses jeopardized the S&P view.
GE owns 80% of NBC Universal and Vivendi S.A. controls the remaining 20%. Each November, Vivendi can offer GE notice of its intent to exercise its right to exit over the following year. This new data is on reports that GE and Comcast Corp. (NASDAQ: CMCSA) have been in discussions over forming a joint venture to take over NBC Universal ownership. This is also following indications from GE that an NBC Universal IPO is possible.
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Should Ciena Be Pursuing Nortel Assets? (CIEN, NRTLQ)
We have been looking into the report from Ciena Corporation (NASDAQ: CIEN) late this morning that the company is in advanced discussions to acquire substantially all of the optical networking and carrier Ethernet assets of Nortel’s Metro Ethernet Networks business. And early this afternoon came a press release from Nortel Networks Corporation (OTCBB: NRTLQ) that it is in advanced discussions regarding the planned sale of “substantially all assets within its Optical Networking and Carrier Ethernet businesses globally.” This is certainly not a done deal, but we want to see if this operation is worth acquiring. The answer of course is, “It depends upon the price.” And the good news is that Ciena is not trying to takeover all of Nortel.
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Technical Analysis Predictions For Q4 (SPY, UUP, UDN, GLD, TLT, TBT)
Maybe it is time after a 50%+ gain in the major equity indexes, or maybe it is just everyone getting into the October bearish mode. We are hearing more and more calls for a very weak equities market ahead. One of our affiliates just ran a detailed audio/video presentation showing what the charts are expecting for Q4-2009 in the S&P 500, the US Dollar Index, Gold, and even bond yields. Unfortunately this is a bad prediction for stocks and can be tracked directly by the SPDR (NYSE: SPY), or Spyders. This prediction also has some gloom forecast for the US Dollar Index, which can be tracked in the PowerShares DB US Dollar Index Bullish (NYSE: UUP) and in the PowerShares DB US Dollar Index Bearish (NYSE: UDN). That is partly for the call for much higher Gold, which can be tracked most easily in the SPDR Gold Shares (NYSE: GLD). The prediction for bonds was not as finite, but at record lows we can’t really argue with the logic that yields can only go one way unless sideways is considered a directional change.
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Conde Nast Woes, An Opportunity For The Knot? (KNOT)
The Knot, Inc. (NASDAQ: KNOT) may just have become an indirect beneficiary of the old print media world dying one publication at a time. The Wall Street Journal and CNBC have reported that Conde Nast is closing four magazines, two of which are Elegant Bride and Modern Bride. While this highlights problems in the wedding sector, it actually opens up more possibilities for The Knot’s key bridal and wedding website called TheKnot.com and for the twice-per-year THE KNOT Magazine which sells for $9.95. This highlights that weddings are not recession-proof.
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Services Sector Back To Growth, At Least Some
The service sector is now back to expanding, even officially, according to the ISM non-Manufacturing data just released. The Institute for Supply Management’s Non-Manufacturing Business Survey came in at 50.9% for September 2009, which is above that 50.0% break-even hurdle between growth an contraction and above the 50.0% that was expected in the Bloomberg economist survey. The highest reading that Bloomberg had noted was 51%. This represents 2.5% higher than the 48.4% reported in August after 11 consecutive months of contraction. Just be advised that it was only 5 of the 18 industries that reported expansion.
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Another Busy SPAC Merger Week (GHC, IAN, DSP, FTBK)
This week kicks off a month’s worth of deal votes guaranteed to keep SPACs’ volume up into November. SPACUpdate.com has noted how the asset class has already been highlighted for its resiliency and successful SPACs deals are increasingly lending credibility to new mergers being pitched to investors. On Wednesday, Oct. 7, Global Consumer (AMEX: GHC) and Inter-Atlantic (AMEX: IAN) acquisition companies will have deal votes and on the 8th, but the SP Acquisition (AMEX: DSP) proposed merger with Frontier Financial Corporation (NASDAQ: FTBK) appears to have been killed this morning.
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Today’s Best Market Rumors (10/5/2009)
Updated throughout the day.
Update 10.03 AM: NetApp (NTAP) may be on a short list of tech buy-out targets but does not appear to have any real suitors. (Barron’s)
Update 9.55 AM: CIT’s (CIT) bond swap may not solve its acute problem of access to unsecured commercial paper. (The Deal)
Brocade (BRCD) has put itself up for sale (WSJ)
Dolby (DLB), Skechers (SKX), and E*Trade (ETFC) could be buy-out targets (SIA)
Solar companies may be messing around with their accounting (Barron’s)
Cash4Gold will have revenue of $160 million this year, proof that there is not justice in life. (TechCrunch)
Douglas A. McIntyre
Top Day Trader Alerts (FOLD, BRCD, COF, FITB, SCLN, TRID, WFC)
These are this morning’s top day trader alerts and active trader alert stocks for Monday. We have more details on volume and price analysis on each stock covered at VSInvestor.com:
Amicus Therapeutics (NASDAQ: FOLD) is hitting 52-week lows on its type 1 Gaucher disease treatment disappointment.
Brocade Communications Systems, Inc. (NASDAQ: BRCD) is trading up over 13% after the company has reportedly up for sale.
Capital One Financial Corp. (NYSE: COF) and Fifth Third Bancorp (NASDAQ: FITB) are both higher despite Goldman Sachs dropping FITB in favor of COF for its Conviction Buy List.
SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) is down 7% but not as bad as it could have been after dropping its Phase 2 trial evaluating RP101 for late-stage pancreatic cancer.
Trident Microsystems Inc. (NASDAQ: TRID) is surging on higher guidance and an NXP combination of their digital TV and Set-Top box businesses.
Wells Fargo & Co. (NYSE: WFC) is up over 4% on the Goldman Sachs upgrade.
You can join our open email distribution list which goes out several times per week for reminders of the top day trader alerts, analyst upgrades and downgrades, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.
JON C. OGG
October 5, 2009
It’s Pointless to Worry About Income Inequality
John Tamny
The great Canadian economist Reuven Brenner noted in his 1983 book, History: The Human Gamble, that periods of massive income inequality frequently lead to economic innovation. Simply put, those who are not yet wealthy see those who are, and they gamble on exciting ideas in hopes of joining the existing rich at the top of the heap. As Brenner put it, “it is the perception of inequality that induces people to take risks.”
Along those lines, USA Today founder Al Neuharth wrote in 2007 about his own career path compared to that of CNN’s Larry King. Neuharth observed: “[King] was a poor Jewish kid from Brooklyn whose father died when Larry was in grade school. I was a poor German-Russian kid from South Dakota. My dad died when I was two. Larry and I both knew we’d have to take some big risks if we wanted to make it big time. He gambled on a late-night radio talk show that he got syndicated nationally in 1978. It ultimately developed into CNN’s Larry King Live. I gambled on USA Today in 1982. It became ‘The Nation’s Newspaper.’”
Nouriel Roubini Blasts The Rally With Tank-Warning
Dr. Doom, or Nouriel Roubini, has come out predicting that stocks and commodities may tank when they figure out that the recovery is far short of the recovery that is being priced in. Last night he told Bloomberg TV, “Markets have gone up too much, too soon, too fast…” More importantly, in the expected U-shaped recovery that is expected in Q4-2009 or Q1-2010, the markets are anticipating much more than what the reality is. He further noted, “Eventually markets are going to flatten out and correct to valuations that are justified.”
Roubini is also scheduled to be on CNBC this morning, and his interviews are likely to be picked up at other media outlets throughout the day. Now we just need Meredith Whitney and Julian Robertson to key in for trifecta of doom.
Again, he will be appearing elsewhere this morning, but here is the weekend video clip from Bloomberg TV.
JON C. OGG
24/7 Wall St. TV: Bankruptcies Rise Sharply
Personal bankruptcies posted a big increase in September, not a surprise as unemployment races toward 10%.
The American Bankruptcy Institute reports that the September 2009 consumer filing total reached 124,790, a 41% increase from the 88,663 consumer filings in September 2008. The number is also up 4% from August.
Consumer bankruptcies totaled 1,046,449 filings through the first nine months of 2009 which is the first time since the figure has gone over one million since the 2005 bankruptcy overhaul. Read More
Top Analyst Upgrades (COF, CMCSA, CMA, CNXT, CVG, DEPO, DTSI, QSFT, SY, WFC, WEN)
There were many more upgrades than downgrades seen early this Monday morning. These are top upgrades and positive research calls from Wall Street analysts we have seen so far:
Capital One Financial (NYSE: COF) Raised to Conviction Buy List at Goldman Sachs.
Comcast (NASDAQ: CMCSA) Raised to Outperform at Wells Fargo.
Comerica (NYSE: CMA) Raised to Neutral from Sell at Goldman Sachs.
Conexant Systems (NASDAQ: CNXT) Started as Outperform at Oppenheimer.
Convergsys (NYSE: CVG) Raised to Buy at Citigroup.
Depomed (NASDAQ: DEPO) Started as Buy at Merriman Curhan Ford.
Digital Theater Systems (NASDAQ: DTSI) Raised to Buy at Deutsche Bank.
Quest Software (NASDAQ: QSFT) Raised to Buy at Auriga.
Sybase (NYSE: SY) Started as Buy at BofA/Merrill Lynch.
Wells Fargo & Co. (NYSE: WFC) Raised to Buy at Goldman Sachs.
Wendy’s/Arby’s (NYSE: WEN) Started as Buy at SunTrust Robinson Humphrey.
You can join our open email distribution list which goes out several times per week for reminders of the analyst upgrades and downgrades, top day trader alerts, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.
JON C. OGG
Top Analyst Downgrades (AMD, FOLD, AMAG, FITB, PLCM, TIVO)
These are this Monday morning’s top early-bird analyst downgrades or cautious research calls from Wall Street firms:
Advanced Micro Devices (AMD) Cut to Market Perform at FBR.
Amicus Therapeutics (FOLD) Cut to Neutral at JPMorgan
AMAG Pharmaceuticals (AMAG) Cut to Hold at Jefferies.
Fifth Third Bancorp (FITB) Cut to Buy from Conviction Buy List at Goldman Sachs.
Polycom (PLCM) Cut to Market Perform at Wells Fargo.
TiVo (TIVO) Started as Neutral at JPMorgan.
You can join our open email distribution list which goes out several times per week for top day trader alerts, analyst upgrades and downgrades, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.
JON C. OGG
Brazil Olympic Stock Plays Feeling Lofty (EWZ, BRF, BZF, BBD, BRP, BTM, BAK, PDA, EBR, ABV, ELP, SID, CPL, ERJ, GFA, GGB, GOL, ITUB, NETC, PBR, TAM, TNE, TSP, VALE, VIV, VCP)
Investing into emerging markets where the Olympics are headed is supposed to be a safe bet, in theory. Despite a flat close for stocks in the U.S. on Friday, Brazilian shares rose almost across the board Friday after last week’s decision to send the 2016 Summer Olympics to Rio de Janeiro. It was huge for the iShares MSCI Brazil (NYSE: EWZ) gaining 1.9% to $67.30 ($26.64 to $68.50 is the 52-week range) and the Market Vectors Brazil Small-Cap ETF (NYSE: BRF) rose 1.5% to $39.76 (its 52-week range is $23.68 to $40.42). The WisdomTree Dreyfus Brazilian Real (NYSE: BZF) currency ETF rose 0.54% to $25.89.
Outside of the ETF investing, this story becomes one where stocks may still have great growth prospects. But if you are a value investor or one who does not like to chase stocks when they are close to yearly or all-time highs, then there is a problem. So many of these stocks are hitting highs or are so close that you have to wonder just how much upside is there. Using 52-week highs and all-time highs is of course not the only metric for valuations, but you might be surprised as you read through a summary of the major Brazilian stock performances on Friday alone. Throw in the Brazilian Real currency versus the US Dollar component as these are all ADRs and it adds in yet another element.
Banco Bradesco S.A. (NYSE: BBD) is the huge Brazilian bank and its shares rose 1.8% at $19.94, with a 52-week trading range of $7.40 to $20.20 and an all-time high north of $24.00.
Brasil Telecom Participacoes S.A (NYSE: BRP) is a telecom player in Brazil and its shares rose 2.9% to $52.33, with a 52-week trading range of $22.00 to $53.49 with highs in 2007 and 2008 hitting north of $80.00.
Brasil Telecom S.A. (NYSE: BTM) is a telecommunications services provider whose shares rose 3.3% to $26.28 and its 52-week trading range is $9.49 to $26.55 and it was in the mid-$30’s in early 2008.
The Improbable Success Of Cash4Gold
Cash4Gold is a low-rent business that buys cheap TV time to promote its program for people to send it gold in exchange for cash. Turn that old jewelry into money.
It turns out that Cash4Gold is an outstanding business. According to TechCruch and The New York Post, the company made $30 million on $90 million in revenue and sales are on track to hit $160 million this year. Read More
Henry Paulson’s Little White Lie
It seems that Henry Paulson was a bit too optimistic about the prospects of several banks which received TARP funds at the end of last year. The Treasury Department’s inspector general Neil Barofsky reports that the Department “lost credibility” when its top officials claimed that the first capital injections from the $700 billion financial rescue were for healthy banks. At the time, Bank of America (NYSE:BAC) and Citigroup (NYSE:C) were actually in a great deal of trouble. Read More
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