Apple Inc. (NASDAQ: AAPL) was a large gain by Appaloosa Management, with a gain of more than 500,000 shares up to 685,000 shares worth some $303 million. This of course was worth more in April. Farallon put up a new position of just over 192,000 worth some $116 million. Janus only lowered its stake by 0.5% and Apple is still its largest holding at over $3.8 billion, while Vanguard lifted its stake by about 5% worth over $23 billion.

Caesars Entertainment Corporation (NASDAQ: CZR) was a strange position on the surface, but easy to explain later. Paulson & Co. was shown to have lifted its stake to 12.37 million shares from NO SHARES at the end of 2011. The problem is that Paulson owned Caesars shares already before the IPO but it was not public before the end of 2011.

Computer Sciences Corporation (NYSE: CSC) was a 2.4 million share stake by Greenlight Capital (under David Einhorn) worth $72 million, and that was a new position. With an activism flare, maybe this can light some fire under what has been a dead tech-value stock. Another firm, Highbridge Capital Management LLC, added more than 1 million shares as a new position in the first quarter.

DaVita Inc. (NYSE: DVA) was a key addition of Warren Buffett’s Ted Weschler who grew his stake to 6,000,000 from almost 2.7 million shares. This was a doubling of the stake, but we would note that this stock has slid 10% since the end of the quarter. The overall position may be closer to break-even here, but this has a huge portion of the kidney dialysis market as of today.

Dollar General Corporation (NYSE: DG) was a surprise for us considering that we thought Warren Buffett’s new manager Todd Coombs would have added to this position rather than cutting it. Maybe the valuation premium just became too much. The March 31 stake was 3.63 million shares versus the 4.497 million shares at the end of 2011.

El Paso Corporation (NYSE: EP) saw more than one move higher. Farallon Capital added another 50% or so to end with 22.49 million shares worth $235 million in the first quarter; Paulson & Co. doubled its stake in the first quarter to 8 million shares worth over $118 million.

Encana Corporation (NYSE: ECA) is a standout because it looks small, but it is a good whale watching stock. BP Capital’s T. Boone Pickens initiated a new position of more than 1.13 million shares worth some $22.3 million.

Express Scripts Holding Co. (NASDAQ: ESRX) was a very large gain by Farallon Capital, where the position rose to over 5.65 million shares as of March 31 from only 1.17 million shares at the end of 2011. Paulson & Co. also doubled its stake in the first quarter to 3.24 million shares worth over $87 million shares. With the merger now closed, others have been looking at this despite Walgreen’s issues.

General Motors Co. (NYSE: GM) was another new position of 10 million shares worth more than $250 million. Frankly, we might have guess that Ford would have been chosen. Is it possible that this was a “politically motivated or influenced” as Buffett is such a supporter of Obama? That admittedly seems like a stretch, but if we were looking for auto exposure it would have probably been with Ford.

SIRIUS XM Radio Inc. (NASDAQ: SIRI) saw SAC Capital grow from only over 3 million shares at the end of 2011 to 98.2 million shares worth almost $217 million in the first quarter, SAC wheels and deals in shares all the time, so they could have been in and out of a lot more or less shares before, during, and after that point.

Skyworks Solutions Inc. (NASDAQ: SWKS) scored a new large stake in the first quarter by Maverick Capital. The new holdings came to over 5.8 million shares worth some $161 million at the end of the quarter, likely as an “Apple play.”

United Continental Holdings (NYSE: UAL) was hard not to miss in the whale hunting as well as Appaloosa grew its position by 500% or so up to over 7.9 million shares worth over $146 million.

Your email address

subscribe

terms and conditions

JON C. OGG

Revenue was in line with estimates at $1.71 billion.  For 2012 Cognizant forecasts $7.34 billion in revenue and profits of $3.36 per share, and that is actually under the Thomson Reuters targets of $7.54 billion in sales  and $3.45 per share in earnings.

Today’s news should not be a surprise to most investors,  Indian IT-outsourcing outfits such as Wipro Ltd. (NYSE: WIT) and Infosys Ltd. (NASDAQ: INFY) as sector leaders.  Now it is Cognizant’s turn for the drop in shares and this one is down over 15% a $59.09 and the 8 million shares traded early this morning is nearly 300% above its normal trading volume.

Wipro shares are down 1% at $9.33 and Infosys shares are down 1.2% at $45.09 in New York trading of the ADRs.

Computer Sciences Corporation (NYSE: CSC) remains ‘challenged’ with its shares at $27.00 versus a 52-week range of $22.80 to $45.14.

JON C. OGG

In a separate issue to rank last week’s bias, we just featured the strongest stock charts in the S&P 500 Index after a poor week where the S&P fell by -1.9%.  We already showed a tempering of expectations going into earnings season, so the reactions were not really any huge surprise.

Can you derive a true earnings season bias by evaluating the post-earnings reactions of Alcoa Inc. (NYSE: AA), J.P. Morgan Chase & Co. (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC), Google Inc. (NASDAQ: GOOG), Nokia Corporation (NYSE: NOK), Infosys Ltd. (NASDAQ: INFY), Coinstar, Inc. (NASDAQ: CSTR), Mattress Firm Holding Corp. (NASDAQ: MFRM), and Computer Sciences Corporation (NYSE: CSC)?  24/7 Wall St. thinks you can find a key trend here that may help investors cover their assets this earnings season. Hopefully this review and analysis will help investors focus on the underlying issues of each major earnings report rather than getting hung up on whether just over 8% GDP growth in China is good enough and whether the PIIGS in Europe are going to keep dragging down Europe and the rest of the world.

Read Also: More Rising Dividends Expected This Earnings Season

Alcoa Inc. (NYSE: AA) managed to surprise just about everyone to the upside.  When it had just announced production cuts a week before, the aluminum giant managed to turn in a positive earnings report at $0.10 EPS rather than a loss of -$0.04 EPS expected.  The conference call talked up growth in many key segments and said that China is not as weak as it looks.  Alcoa went from $9.32 before earnings to close at $9.90 the day after and even closed at $10.17 the following day before closing the week out at $9.85.  All in all, Alcoa added 2.3% for the week.

There was a big earnings reaction disappointment from J.P. Morgan Chase & Co. (NYSE: JPM) and from Wells Fargo & Co. (NYSE: WFC).  These are the two healthiest banks and it really sets up caution for the coming junk-bank earnings from the money center group this coming week.  Both companies beat earnings and talked up their books and finances.  At the end of the day, J.P. Morgan closed down 3.6% and Wells Fargo closed down almost 3.5% after earnings.  We would pay closer attention to the book value analysis for the major financial sector earnings due this week because the sector was a great performer in the first quarter and looks to be treated rather poorly even after good earnings.

The Internet wild card was of course Google Inc. (NASDAQ: GOOG) and the earnings were clouded by a stock split that is actually a share structure shenanigan giving Larry & Sergei ultimate and complete control of the company.  The focus remains on the decline in pay-per-clicks as well, and shares fell 4% or $26.41 to $624.60 after the earnings report.  This was a drop of less than $8.00 for the whole week.

It should be of little surprise that Nokia Corporation (NYSE: NOK) issued an earnings warning.  We do not even count Nokia as a market indicator any longer and this posted a double-digit drop after warnings and then weakened further the rest of the week.  Shares are down at $4.02 now and at the weakest level in a decade.  Ask yourself this question… Do you even know anyone that still has a Nokia phone?

Infosys Ltd. (NASDAQ: INFY) is supposed to be the king of Indian IT-outsourcing, and the earnings report itself did not look bad.  The problem came from cutting its growth rates by one-third for the coming year and that spooked investors big time with a drop of 13.4% to $49.15 at the end of the week.  Infosys is now within striking distance of a 52-week low of $46.12.

One positive did come from Coinstar, Inc. (NASDAQ: CSTR) with much higher guidance.  Shares rose 7.3% to $65.78 and the stock put in a new 52-week high of $69.74 before softening up with the weak stock market tape.  The bright side here was no negative reaction from a price hike.  Go figure.  Unfortunately, it was hard to draw any major inference here into other media and movie companies.

Another bright spot came from Mattress Firm Holding Corp. (NASDAQ: MFRM) with higher earnings guidance and an acquisition which will boost its market share in the mattress sales segment.  Shares hit a new post-IPO and all-time high of $45.96 and this one gained almost 13% for the week.  Unfortunately it is going to be hard to draw much pin-action here for other retail names.

Computer Sciences Corporation (NYSE: CSC) put a hex on its turnaround story as this key contract in the U.K. is still held up and is not finalized for better or worse.  The earnings warning turned a value stock back into a value trap.  CSC closed down almost 8% for the week at $27.02 and it is a weak stock that got weaker.

Read Also: Four Top IPOs to Watch This Coming Week

So, the vote is in if you just look at the broad market reaction on each and filter out all of the other noise.  The long and short of the matter is that if you look at the core economy companies here and filter out the few bright spots, Wall Street is not really wanting to pay up for what appear to be decent earnings.  After a huge first quarter, it seems as though the bias is leaning toward only rewarding companies which really exceed expectations.  Now we know what to be braced for going into the coming week as the real earnings season floodgates open wide.

You are invited to join or free daily email list to hear about upcoming earnings trends, market trends, IPOs, market rumors, M&A, private equity, and also to get our daily feature stories delivered right to your inbox each morning.

Your email address

subscribe

terms and conditions

JON C. OGG

In a move that is becoming almost too routine here, CSC’s management team announced that the company would now be posting a loss in the fiscal fourth quarter.  If this company is going to post a loss then it cannot even be counted as a value stock.  This is where value in technology became a value trap of magnificent proportions.  The company talked about a much weaker than expected outlook on core earnings as well.  That U.K. pact continues to be an issue: The U.K. National Health Services contract was supposed to be at an agreement by the end of March but CSC noted on Tuesday evening that the two parties have not yet reached a binding agreement and that discussions are continuing.

CSC shares are paying the price for this today.  Shares are down over 7% at $26.05 and the 52-week trading range is $22.80 to $51.43.

JON C. OGG

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include S&W Seed Co. (NASDAQ: SANW), Calix Inc. (NYSE: CALX), Computer Sciences Corp. (NYSE: CSC), Silicon Graphics International Inc. (NASDAQ: SGI), and Teekay Tankers Ltd. (NYSE: TNK)

After the first half hour of trading this morning, S&W seed is up nearly 26% at $5.82 after posting a new 52-week high of $6.19 earlier. Volume is about already about 40x the daily average of about 12,500 shares traded. The seed supplier reported better-than-expected earnings this morning.

Calix is up about 35% at $11.59. Volume is already equal to the daily average of about 360,000 shares traded. The broadband communications provider beat earnings expectations last night.

Computer Sciences is up nearly 25% at $32.99. Volume has already surpassed the daily average of about 2.4 million shares traded. The enterprise software company reported a loss for its third quarter on writedowns, but adjusted EPS handily beat expectations.

SGI is down more than -24% at $10.88. Volume is about 7x the daily average of 540,000 shares traded. The high-performance computer maker posted weak quarterly earnings and cut its forecast for the full year.

Teekay Tankers is down more than -12% at $3.98. Volume is already about 10x the daily average of about 512,000. The shipping company this morning priced a secondary stock offering of 15 million shares at $4/share.

Paul Ausick

The earnings previews are for the following: Akamai Technologies, Inc. (NASDAQ: AKAM); Atmel Corporation (NASDAQ: ATML); Cisco Systems Inc. (NASDAQ: CSCO); Computer Sciences Corporation (NYSE: CSC); Enbridge Inc. (NYSE: ENB); Groupon Inc. (NASDAQ: GRPN); Ingram Micro Inc. (NYSE: IM); IntercontinentalExchange Inc. (NYSE: ICE); Level 3 Communications Inc. (NASDAQ: LVLT); Moody’s Corporation (NYSE: MCO); News Corp. (NASDAQ: NWSA); PAA Natural Gas Storage L.P. (NYSE: PNG); Plains All American Pipeline L.P. (NYSE: PAA); Prudential Financial Inc. (NYSE: PRU); Ralph Lauren Corporation (NYSE: RL); Reynolds American Inc. (NYSE: RAI); Sprint Nextel Corporation (NYSE: S); Time Warner Inc. (NYSE: TWX); Vical Inc. (NASDAQ: VICL); Visa Inc. (NYSE: V); and Whole Foods Market Inc. (NASDAQ: WFM).

We have compiled earnings preview on each company using Thomson Reuters consensus estimates and added color on each if applicable.  Some are market moving, some are sector moving, and some are just interesting for traders to watch around the earnings reports.

Akamai Technologies, Inc. (NASDAQ: AKAM) has estimates of $0.40 EPS and $311.26 million in revenues.

Atmel Corporation (NASDAQ: ATML) has estimates of $0.09 EPS and $401.5 million in revenues.    Growth is gone, but it still screens as value.

Cisco Systems Inc. (NASDAQ: CSCO) has estimates of $0.43 EPS and $11.23 billion in revenues.  Preliminary preview notes are available.

Computer Sciences Corporation (NYSE: CSC) has estimates of $0.58 EPS and $3.98 billion in revenues.  As a reminder, CSC has warned on earnings.  This one shows up as a value stock in all sorts of investor screens but it is a value trap.

The unofficial closing bells put the DJIA down about 2 points to 12,291.73 (-0.02%), the NASDAQ rose more than 6 points (0.25%) to 2,625.20, and the S&P 500 rose 0.01% or less than 1 point to 1,265.47.

There were several analyst upgrades and downgrades today, including VMWare Inc. (NYSE: VMW) raised to ‘outperform’ at Oppenheimer; Yahoo! Inc. (NASDAQ: YHOO) maintained ‘buy’ with a price target of $18 at BofA/Merrill Lynch; Sony Corp. (NYSE: SNE) Japanese target price cut by Barclays; Electronic Arts Inc. (NASDAQ: EA) maintained ‘buy’ with a $28 price target at BofA/Merrill Lynch; and Sempra Energy Inc. (NYSE: SRE) reiterated as ‘buy’ with a $61 target price at Argus. Delphi Automotive (NYSE: DLPH) received four ratings this morning: initiated as ‘outperform’ at Credit Suisse; started as ‘buy’ at BofA/Merrill Lynch; started as ‘overweight’ at JPMorgan; and started as ‘outperform’ at R.W. Baird.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Cal-Maine Foods Inc. (NASDAQ: CALM) is up nearly 5% at $35.84; and DemandTec, Inc. (NASDAQ: DMAN), which is being acquired by IBM Corp. (NYSE: IBM), is down about -0.04% at $13.13. This is the beginning of a very light week for earnings.

Other standouts from today include the following stocks:

Sears Holding Co. (NASDAQ: SHLD) is down about -26% at $33.95, a new 52-week low. The department store has announced that it will miss its previous earnings forecast by at least 50% and that it will close another 100-120 stores. See more coverage here and here.

Computer Sciences Corp. (NYSE: CSC) is down more than -9% at $24.06. The technology and IT services company has said it may have to take a $1.5 billion writedown on a UK contract. More coverage here.

Parlux Fragrances Inc. (NASDAQ: PARL) is up more than 72% at $5.98, after posting a new 52-week high this morning of $6.60. The perfume maker is being acquired by Perfumania Holdings Inc. (NASDAQ: PERF) for about $170 million.

Whirlpool Corp. (NYSE: WHR) is down more than -8% at $46.95. The appliance maker, which makes products for Sears, is caught in that company’s dismal announcement.

Magnum Hunter Resources Corp. (NYSE: MHR) is up nearly 19% at $5.54. The oil & gas producer has raised its production estimate from 10,000 barrels/day of oil equivalent to 12,500 barrels/day.

Stay tuned for Wednesday. Here are the noteworthy events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
11:30 a.m. – Four-week T-bill auction

Your email address

subscribe

terms and conditions

Paul Ausick

After the first hour of trading this morning, Sears is down about -20% at $36.66, after posting a new 52-week low earlier of $36.36. Volume is already about 3x the daily average. The department store has announced that it will miss its previous earnings forecast by at least 50% and that it will close another 100-120 stores. See more coverage here.

Parlux is up nearly 80% at $6.23 after posting a new 52-week high of $6.60 earlier. Volume is already 20x the daily average. The perfume maker is being acquired by Perfumania Holdings Inc. (NASDAQ: PERF) for about $170 million. Estimated per share price is $7.91-$8.55.

Magnum Hunter is up nearly 16% at $5.41. Volume is already equal to about 70% of the daily average. The oil & gas producer has raised its production estimate from 10,000 barrels/day of oil equivalent to 12,500 barrels/day.

Computer Sciences is down more than -7% at $24.53. Volume is heavy, about one-third of the daily average so far. The technology and IT services company has said it may have to take a $1.5 billion writedown on a UK contract. More coverage here.

Endeavor is up more than 9% at $7.01. Volume is already about a third of the daily average. The oil & gas company has announced that a subsidiary will purchase producing assets from ConocoPhillips Corp. (NYSE: COP) for about $330 million. The assets include current production of about 10,000 barrels/day of oil equivalent and proved and probable reserves of 33 million barrels.

Paul Ausick

An SEC filing from Tuesday shows that things have not improved on its contract negotiations.  Things have deteriorated.  The age of austerity may be at fault.  For CSC investors, the hope is that this is just austerity.

The company disclosed all the way back in May 2011 it had “substantially completed negotiation of the terms of a memorandum of understanding with NHS which set forth the key terms of a reduction in the scope and related contract value of the parties’ agreement relating to the NHS IT program.”  Between May 2011 and the end of September 2011, U.K. government reviews of the NHS IT program occurred and U.K. government officials confirmed that they would continue to work with existing suppliers to determine the best way to deliver services in a way that allows the local NHS trusts to exercise choice while delivering the best value for the expense. 

It was further disclosed that the parties have been engaged in further discussions relating to the MOU since mid-November 2011, including a proposed contract amendment with different scope modifications and contract value reductions than those contemplated by the MOU.  The problem is here: “CSC recently was informed that neither the MOU nor the contract amendment then under discussion would be approved by the government.”  The company said that it expects that the parties will continue discussions in January 2012.

Due to the circumstances, CSC will recognize a material impairment of its net investment in the contract in the third quarter of fiscal year 2012… the company is unable to estimate the amount of such impairment… The failure of the parties to enter into a contract amendment, a significant delay in entering into a contract amendment or the execution of a contract amendment on terms unfavorable to CSC would result in a material impairment of CSC’s net investment in the contract and could have a material adverse effect on CSC’s consolidated financial position, results of operations and cash flows.

• “However, depending on the terms of such an amendment or if no amendment is concluded, such impairment could be equal to the Company’s net investment in the contract, which, as of November 30, 2011, was approximately £943 million ($1.5 billion).”

As you might have expected, CSC has withdrawn its previously disclosed fiscal year 2012 financial guidance.  Shares are down over 7% at $24.44 and the 52-week trading range is $22.80 to $56.61. With shares under $25.00 and with Thomson Reuters having (prior) earnings estimates of $3.73 EPS in March-2012 and $3.88 EPS in March-2013, the “value stock” screen shows a blended forward 2012-2013 price/earnings ratio of about 6.5-times expected earnings.  The problem is that those figures will come down greatly now. 

Our question is whether or not the $0.20 per quarter dividend, now 5 straight quarters in, is safe.  When the first $0.20 payout was made in December 2010 the CSC share price was around $47.00.  Now that price is under $25.00 and the new dividend yield is now 3.2%.

CSC now has a market capitalization rate of only $3.8 billion.  Its net tangible assets and total equity have come down this year while its long-term debt had increased slightly in the last two quarter-end reports.

Unfortunately, this is just not good regardless of how you measure it… Unless you were selling this one short.

JON C. OGG

We had many key calls that stood out this week in shares of the following: Alcatel-Lucent SA (NYSE: ALU); Amazon.com Inc. (NASDAQ: AMZN); Apple Inc. (NASDAQ: AAPL); Cisco Systems Inc. (NASDAQ: CSCO); Computer Sciences Corporation (NYSE: CSC); Corrections Corporation of America (NYSE:CXW); Dean Foods Company (NYSE: DF); Enterprise Products Partners LP (NYSE: EPD); Genworth Financial Inc. (NYSE: GNW); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Groupon, Inc. (NASDAQ: GRPN); The Home Depot Inc. (NYSE: HD); Melco Crown Entertainment Ltd. (NASDAQ: MPEL); Pier 1 Imports, Inc. (NYSE: PIR); SurModics Inc. (NASDAQ: SRDX); Teva Pharmaceutical Industries (NASDAQ: TEVA); Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX); and YRC Worldwide. Inc. (NASDAQ: YRCW).

We have broken each of these calls out and added in color where applicable.

Alcatel-Lucent SA (NYSE: ALU) can’t get off the floor and it keeps disappointing.  Shares even closed at $1.99 after seeing a year low of $1.92 on Friday.  Alcatel’s chart looks almost the same as the chart of late-2008, but it cannot blame the market this time.  We saw three downgrades worth noting this last week: Cut to Sell at Citigroup; Cut estimates and target at Argus; and Cut to Neutral at BofA/Merrill Lynch.

Amazon.com Inc. (NASDAQ: AMZN) had two big calls this last week.  The main call was on Friday when Nomura issued a very unenthusiastic NEUTRAL rating.  The other call came on Thursday when Zacks added it to the STRONG SELL list.  With valuations still very high and with profit margins running razor-thin, it seems that at least some caution should prevail unless the holiday season is going to blow the doors of the hinges here.