The company beat earnings by $0.05 at $0.65 per share and revenues rose almost 13% to $3.39 billion versus Thomson Reuters estimates of $3.38 billion.  Whole Foods even raised guidance for its Fiscal year of 2012 to a range of $2.28 to $2.32 earnings per share from a prior target of $2.21 to $2.26 and against a consensus target from Thomson Reuters of $2.27 EPS.  It also raised revenue guidance for 2012 to a range of 13.5% to 15% and that looks mostly in-line with the expected figure of $11.6 billion expected.

Whole Foods is a great growth story, it is an incredibly well run organization, and it deserves a premium over traditional grocery stores which run on razor-thin margins.  Whole Foods has far higher margins and its expansion of its own 365 private-label brand is likely going to help it capture even higher margins even though the products are generally priced lower than other organic and natural brand-label foods. 

So, everything is positive… except for our headline.  The guidance is not exactly far higher than what was already expected.  At the mid-point of its new earnings range, Whole Foods stock trades at a massive 33.9-times the fiscal September 2012 consensus estimate and it trades at 1.2-times expected revenues.

Compare Whole Foods forward 2012 valuations of 33.9-times earnings and 1.2-times sales to The Kroger Company (NYSE: KR) and Safeway Inc. (NYSE: SWY).  Kroger trades at only 10.6-times earnings and only about 0.14-times sales; Safeway trades at 12-times expected earnings and only 0.17-times total sales.
 
The good news for the bulls is that Whole Foods has always been a premium stock.  It is even easy to argue that Whole Foods will always trade at a premium to grocery chains.  It has the whole lifestyle trade attached to it.  Whole Foods is far more of a fun experience compared to most grocery stores, at least until the bill comes.  Whole Foods is arguable the biggest luxury brand that there is. 

The bad news is simple.  Valuations at some point just have to give.  At $77.93 and after the stock hit a new high of $78.31, how can it rise?  The consensus target from analysts is $79.29 and even if that gets raised it can only rise so much.  With a $13.99 billion market cap, it is worth roughly two-thirds of the combined values of Safeway and Whole Foods while it is expected to generate only about 8% of the combined sales of the two food giants.

A great company, at a price that just feels too high to justify on any traditional financial metrics.  The stock can run up on news.  It just looks too hot now under rational evaluations.

JON C. OGG

The casino and resort giant sold 1,811,313 shares of its common stock at $9.00 per share to raise gross proceeds of about $16 million before fees and discounts.  Keep in mind that this is the Harrah’s-Caesars deal which was a $15 billion buyout back at the peak of private equity.

$16 million… $15 billion… $28 billion.  Whatever it boils down to…  The figure we were counting on was up to $223.4 million in additional stock, the overwhelming majority of which would be coming from private equity owners. Apollo Global Management, LLC (NYSE: APO) is not even reacting positively to the news with a 0.8% drop down to $14.97 so far today, probably because it is not selling shares.  Paulson & Co. has the right to sell along with affiliated groups of Goldman Sachs Group Inc. (NYSE: GS).

Even a $500 million offering could have set the pace for up to a decade for all of the backers to exit their positions.

The reason that the company chose this model is likely to keep an initial higher value for a limited share float.  That establishes a fair market value that is probably higher than if the firms all sold shares in a huge offering for the market to absorb.  It allows private equity firms to liquidate in batches and it also gives those private equity firms an ability to peg a true market value to the shares rather than a theoretical value of the shares based solely upon other casino stock values.

Our take: The private equity firms should dismantled the assets into separate companies and sold them off or brought them public as smaller casino properties.

In some manner of speaking, this is far less transparent than exactly the ‘unlocking of Singapore and Macau’ values from Wynn Resorts, Limited (NASDAQ: WYNN) and Las Vegas Sands Corporation (NYSE: LVS).

Does us calling it a sham of an IPO mean that it will flop?  Not at all.  As we are publishing this, the value is up 50% from the $9.00 pricing at $13.70 on almost 3.9 million shares.  With such a low float, who knows how high it could go.  Still, if you are a ‘widows and orphans’ investor you probably better look elsewhere.

At least this IPO did not launch on the Ides of March.

JON C. OGG

A fresh filing is one that frankly shows desparation or the agony of defeat.  The combined outfits are worth billions of dollars.  While the total to be sold by Caesars Entertainment Corporation on a continuous basis is listed as being $500 million, the company noted, ” We are selling an aggregate of 1,811,313 shares in this offering. The initial public offering price of our common stock is expected to be between $8.00 and $10.00 per share.”

Wait one second here.  That is about $18.1 million in gross proceeds.  If you look back at the Top IPOs to watch you will be mystified.  The stock will trade on the Nasdaq Global Select Market under the symbol “CZR.”

Caesars has the following underwriters: Credit Suisse; Citigroup; BofA Merrill Lynch; Deutsche Bank Securities; KeyBanc Capital Markets; Lebenthal & Co.; and Ramirez & Co. The underwriters will have a 30-day option to purchase up to 271,697 additional shares from the company at the initial public offering price less underwriting discounts and commissions.

In the amended prospectus, the company does note that the selling shareholders may sell up to $223.4 million in common stock in the offering.  The problem is that the prospectus does not read in the normal way of other prospectus filings. The private equity firms are currently a wild card when it comes to how much may be sold.  Why the private equity owners have not broken Caesars up into bits and pieces is a mystery.  The Harrah’s acquisition is now part of the Caesars group and here is the description (as of September 30, 2011):

owned, operated or managed 52 casinos in 12 U.S. states and seven countries primarily under the Caesars, Harrah’s and Horseshoe brand names and the facilities had an aggregate of approximately three million square feet of gaming space and approximately 42,000 hotel rooms; its Total Rewards customer loyalty program had over 40 million members.

If the private equity companies were to somehow get the maximum sale off of $500 million, it could take a decade or more to exit. Maybe our idea is a silly one.  Maybe this is the private equity value game at work where the private equity firms can use the public market value of a small float for the entire organization without unloading it.  What are the odds?

FULL SEC FILING

JON C. OGG

The company is aiming to bring a site for serious collectors and sports fans and offer a broad selection from official licensees of the National Football League, Major League Baseball, National Basketball Association, National Hockey League, and the International Federation of Association Football.

Collectors can now browse collectible items by item type, sport, year, team and price.  The offerings will be from trading cards and ticket stubs to game-used jerseys and autographed sports gear.

For many of these products, the store will display the authentication source and condition rating from authentication service providers like Professional Sports Authenticator (PSA) of Collectors Universe, Inc. (NASDAQ: CLCT), and other such as James Spence Authentication (JSA) and Beckett Grading Services (BGS).

You will not find that T206 Honus Wagner baseball card for sale that we just discussed.  That is for sale for $775,000 and a higher-grade sample just sold for north of $1.5 million.  More detail on investing in the T206 Honus Wagner is here.

As far as how Amazon will assure authenticity, it noted “The emphasis on authenticated selection, combined with our A-to-z Guarantee protection on purchases, allows customers to shop the new store with confidence.”

Buyers should know that this may distort prices paid in many cases.  If a wife or girlfriend wants to buy an item for an intimate other or if a father or mother want to buy collectibles for their kids, they may not have a firm grasp on the prevailing market price ranges that should be paid.

This will not derail the eBay auction dominance nor will it kill the auction houses which auction off the really high-end items.  What it may skew is all of the items out on the market in the under-$50 to $300 priced items.  The baseball memorabilia store’s top 7 items by price are all Babe Ruth signed baseballs and the rank is from over $46,000 down to $10,950.  Thanks, but no thanks. 

Lastly, keep in mind that Amazon has been selling many collectibles items.  This launch is more of a focused effort and it means that Amazon wants to attract many more sellers. The new launch is here.

JON C. OGG

January 2012 is the first time in memory that two different samples of the T206 Wagner card have been for sale in the same month.  If you have nearly unlimited means, a T206 Wagner can end up in your collection right now.  Another T206 Wagner just sold in early January.

Published reports indicate that there may be 50 to 100 samples of the T206 Honus Wagner that exist, but there may only be around 50 in existence after speaking with industry sources.  A sale of $2.8 million for the “Wayne Gretzky” T206 Honus Wagner in 2007 set a record, and that was after the exact same card had been bought for about $2.35 million earlier that same year. 

The reason this card is so rare is known as Honus Wagner decided to have the American Tobacco Company withdraw his card from the T206 series.  The “why” this card is so rare remains a debate even today.  Only a limited number of this card made it out into the public, or at least only a few which are known to have survived.  In the late 1800s and early 1900s, baseball cards were promotional inserts for cigarettes packs and tobacco packages, as well as made for other products.  They were far from being kids’ bubble gum cards that later generations would come to cherish.

The most common belief is that Wagner was anti-tobacco and did not want his image promoting cigarettes and tobacco products to children.  Maybe, but Maybe not.  This may have simply been a contract dispute over compensation or terms.  Here is the argument for the latter case… Honus Wagner’s image appeared on cigar boxes in some of the same years around the debated time of 1909 to 1911 when the T206 cards were distributed.  Robert Edwards Auctions has auctioned two such cigar boxes in recent years, and the Baseball Almanac shows these images as well.

While most baseball cards rise and fall in value and can be very cyclical, that just has not been the case for a T206 Honus Wagner.  As it turns out, there are millions of people who collect baseball cards and memorabilia or who have collected in their lives.  The Wall Street Journal reported in mid-2011 that there were 3.1 million millionaires in 2010.  And the same report showed over 40,000 in North America worth $30 million or more.  Some of these people are still collectors and there is no greater prize in sports collecting than being able to flaunt a T206 Wagner.

It was not very well covered in the media, but a T206 Honus Wagner from the famed Dreier collection just sold in early January 2012 through Legendary Auctions.  It was graded by PSA, one of the industry-recognized grading services and the grading brand of Collectors Universe, Inc. (NASDAQ: CLCT).  It was graded as a “4″ (on a scale of 1 to 10).  This famed T206 Wagner sold for an undisclosed sum.  After speaking with Doug Allen of Legendary, it was a privately negotiated transaction.  Mr. Allen would not disclose the buyer nor could we get an exact price, but he quoted, “The sale was for more than $1.5 million.”  An incredible sum indeed. 

Now there is another sample of the card for sale right now, for a hefty price.  Memory Lane has a “PSA 2″ graded T206 Wagner for sale today for a whopping $775,000.00.  It is even advertised on eBay Inc. (NASDAQ: EBAY) as item #290661465614.  After speaking with J. P. Cohen of Memory Lane, this is card is on consignment and had previously been for sale at a higher price and the new price is said to be close to where offers came in for this exact card last year.

These two samples are not the only T206 Honus Wagner cards which have been sold in recent times.  A unique sample was a proof strip from the T206 set which actually belonged to Honus Wagner himself.  This was purchased at the Major League Baseball All-Star Auction by SCP Auctions (for an anonymous client) for the sum of $316,250 in 2010.  It was also SCP Auctions Inc. which brokered the record $2.8 million sale mentioned earlier of the prized Gretzky T206 Wagner.

Google’s brand value increased by 27%, the third largest gain among the top 100 brands. The second largest gain was posted by Amazon.com (NASDAQ: AMZN), which jumped 32% and moved up from 36th on the list to 26th.

The biggest loser was Nokia, which fell -15% and from 8th to 14th in the league table. Another smartphone maker, Samsung Electronics, moved up from 2 places, from 19th, on the strength of a 20% jump in brand value.

Toyota, ranked 11th, is the top automaker, barely ahead of Mercedes-Benz, with BMW in third. Among US carmakers only Ford Motor Co. (NYSE: F) made the top 100 with its ‘Ford’ brand, at 50th place behind Honda Motor Co. (NYSE: HMC) and Volkswagen.

Three brands made the list for the first time: Nissan, John Deere & Co. (NYSE: DE), and HTC Corp.

The Interbrand study ranks the top ten brands by dollar value in this order:

1. Coca-Cola Co. (NYSE: KO) – $71.86 billion
2. IBM Corp. (NYSE: IBM) – $69.91 billion
3. Microsoft Corp. (NASDAQ: MSFT) – $59.09 billion
4. Google Inc. (NASDAQ: GOOG) – $55.32 billion
5. General Electric Co. (NYSE: GE) – $42.81 billion
6. McDonald’s Corp. (NYSE: MCD) – $35.59 billion
7. Intel Corp. (NASDAQ: INTC) – $35.22 billion
8. Apple Inc. (NASDAQ: AAPL) – $33.5 billion
9. Walt Disney Co. (NYSE: DIS) – $29.02 billion
10. Hewlett-Packard Co. (NYSE: HPQ) – $28.48 billion

Paul Ausick

The company has put the quarterly hit at about $0.11 to $0.12 against its earnings per share.  J.P. Morgan downgraded the stock as a result of the accident’s impact.  Carnival’s Costa brand is countered by the other brands of Cunard, P&O, AIDA, and Ibero internationally and the Carnival brand known so well throughout North America.

What is interesting here is that by seeing a drop of 16%, it is analogous to losing one-sixth of the vale when this is about 1% of its counted ships.  It sounds like too much of a drop on the surface, but this comes at a time when the European business is rocky and at a time when promotions are high.  Things were already tough, but this made a declining situation very bad.

Carnival shares fell more than 16% on Monday in London trading, but shares are up less than 1% in London trading today.  In New York, Carnival Corporation (NYSE: CCL) shares are trading down 16.3% at $28.74 and the 52-week trading range is $28.52 to $48.13. Its market value before this accident was over $26.6 billion.

Royal Caribbean Cruises Ltd. (NYSE: RCL) is down 7.5% at $26.59 and its 52-week range is $18.70 to $49.99. Its market value was about $6.25 billion before the trading of this morning.

JON C. OGG

Most $1 million gifts were given to small charities, which leaves large nonprofits to fight over those who are truly generous and really rich. A typical modest gift is the one given by Theresa Patnode Santmann. It was in the amount of $1 million and the recipient was Farmingdale State College. It is a small college on Long Island that probably could not survive without a few $1 million donations. Almost no one has heard of it. The Theresa Patnode Santmann gift may be more important in the scheme of things than a $100 million donation is to Harvard.

Most of the $1 million gifts were given to charities with names that most Americans would not recognize. That means these little nonprofits do not have access to the money that famous charities do.

And the rich nonprofits do get richer. Ohio State, the Mayo Clinic and, of course, Yale and Harvard were all on the list of institutions that received one or more gifts of over $30 million in 2011. Almost none of the nonprofits that benefited from $30 million or more has a name that many people would know. Branding is just as important in the world of philanthropy as it is in the world of consumer products. The wealthy would rather have their names on a building at Columbia than one at Farmingdale State College.

The year 2011 may have been a reasonably good one for philanthropic gifts, but most were given to charities that probably need them the least.

Douglas A. McIntyre

After taking a look at the “GLD” chart the concerns are growing.  Since its major move at the end of 2008 there had not been a single time that the SPDR Gold Trust shares had violated the key 200-day moving average.  If you look at the mining ETF via the Market Vectors Gold Miners ETF (NYSE: GDX), the gold bulls may argue that the mining sector violated the 200-day moving average on multiple occasions and still traded higher!  Some technicians may watch other metrics on the GLD for long-term trends but many will fear that this means that the monstrous run higher at a minimum cannot recover at the same pace.  Other technicians may argue that gold has peaked outright, just like Dennis Gartman has raised concern about recently.

It is at least somewhat interesting that Goldman Sachs recently lowered the ratings of AngloGold Ashanti Ltd. (NYSE: AU) as well as Randgold Resources Limited (NASDAQ: GOLD) this morning, both were downgraded to “Sell” from an already cautious “Neutral” rating. AngloGold is somehow up almost 1% at $41.52 today and Rangold is down 0.3% at $101.50.  Meanwhile, Barrick Gold Corporation (NYSE: ABX) was recently raised to “Sector Outperform” from “Sector Perform” by Scotia Capital.

What is so confusing for many gold bugs and investors alike is that the news headlines would make you think that gold has everything going for it.  Iran flexing its muscle… The Euro Zone debt crisis… The possibility that the Euro disappears or is altered… Sovereign debt credit rating downgrades… China’s central bank buying gold… Uncertainty… and more.  It is the rise of the U.S. Dollar again that is capping gold’s positive aspects.  Besides that, gold reached the point that many market participants just cannot afford to use the metal for anything now. 

If you go back to the “GLD” as the measurement for most spot gold investors today, that would be $157.36 as to where the 200-day moving average is now versus $154.90 after a 0.2% drop today.  The “GLD” chart below from stockcharts.com shows a 3-year history for our readers.

JON C. OGG

Dennis Gartman has already sounded the call for a bear market.  With the news that China was buying more gold and with other central banks adding gold, he said that bullish news not followed by positive price action spells a bear market.  For how long is another issue, but that is the call for now.

The big issue is the rising U.S. Dollar against the Euro as the $1.30 threshold was breached this morning.  The Euro hit a low not seen in almost a year, and frankly it begs the issue over “The Parity Call” again.  We would make the reminder that “not all parities are created equally” as the launch value of the Euro more than a decade ago was $1.18.

As far as the chart, we noted a key breakdown under the 50-day moving average just on Monday.  That has gone from bad to worse.  Much worse, if you look at the stockcharts.com chart below for the performance the 50-day issue is now a sideline event.  GOLD, VIA THE ‘GLD,’ HAS BUSTED UNDER ITS 200-DAY MOVING AVERAGE!!!  If you use static figures, GLD’s 50-day moving average is $166.10 and the 200-day moving average is $157.14.

Gold was above $1700 last Friday and it is down around $1580 now.  The “GLD” was trying to get back above $170.00 just last week, unsuccessfully, with a Friday close of $166.40… If today’s drop holds then the new price is $153.50 or so after a 3% drop yet again this Wednesday.

As a reminder, gold pays no dividend and it is really hard to eat or drink.  That is the most ultimate skeptics will tell you at any rate.

As far as silver, this was north of $32.00 an ounce on Friday and now a 7.5% drop today has silver back around $29.15 per ounce.  The iShares Silver Trust (NYSE: SLV) has fallen from above $31.00 to $28.33 today.  Let’s just say that The Devil’s Metal is becoming a very appropriate name.

If you want to see it even worse… look at the stock option trading in the “GLD” and “SLV” as of Noon today… The GLD put option volume is almost double that of the call volume traded and the SLV is even higher than that.

Your email address

subscribe

terms and conditions