Archive for December, 2005

• The Market Today
  Eddy Elfenbein, December 8th, 2005 at 6:12 pm

  Down, then up, then down, then a little bit up…the market was a bit indecisive today. Unfortunately, our Buy List was not in a happy place. The S&P 500 lost 0.12%, and our Buy List dropped 0.67%. Laggards included Biomet (BMET), Stryker (SYK) and CACI (CAI). Medtronic (MDT) reported that its implantable obesity device didn’t meet its goal.
  Oil cracked $60 a barrel again. I’m inclined to think this is a classic bear market rally. Although I have to admit that energy stocks have been surprisingly strong lately. The Dow Energy Index is up nearly 13% since mid-July. I’d be curious to see if it will hit a new high. Right now, I doubt it will.

• Oops
  Eddy Elfenbein, December 8th, 2005 at 2:30 pm

  Today in Japan, Mizuho Securities wanted to place an order to sell one share of J-Com Inc for 610,000 yen. Unfortunately, a “typing error” caused the trade to go off as selling 610,000 shares for one yen.
  Oops.
  To put it in perspective, that trade was for over 40 times the number of J-Com shares outstanding. So a lot of folks got a super deal on J-Com. Also, everyone’s seriously pissed at Mizuho. The company said that it lost 27 billion yen, which sounds like a lot but it’s really only $224 million.

• Buy What You Hate
  Eddy Elfenbein, December 8th, 2005 at 10:54 am

  Peter Lynch used to say, “buy what you know.” Daniel Gross says to buy what you hate:

  For the best-loved companies don’t always make good investments. Look at the companies topping the reputation chart. The top 10 are Johnson & Johnson, Coca-Cola, Google, UPS, 3M, Sony, Microsoft, General Mills, FedEx, and Intel. Of those, only Google, Federal Express, and Intel have outperformed the S&P 500 over the past three years. In the past year, only Google, Intel, and Johnson & Johnson have outperformed the S&P 500. Now look at the bottom of the reputation list. Of the six publicly traded companies in the last 11—Altria, Martha Stewart, Exxon Mobil, Royal Dutch/Shell, Tyco, and Halliburton—five have outperformed the S&P 500 over the past three years, and four have outperformed the index over the past year.

• Bill Miller Goes for 15 in a Row
  Eddy Elfenbein, December 8th, 2005 at 10:51 am

  It looks like Bill Miller, the manager of the Legg Mason Value Trust mutual fund (LMVTX), will beat the S&P 500 for the 15th straight year. This is one of the legendary streaks on Wall Street, although Miller is cutting it very close this year (see the chart below).
  Miller likes to make very concentrated bets. Nearly half of his fund is in its top 10 positions. Even though the fund has value in its name, Miller has no fear of owning aggressive growth stocks. His largest holdings are Nextel, UnitedHealth, Tyco, AES, IAC/Interactive, Amazon, JPMorgan Chase, Google, Aetna and Sears.
  

• J&J May Look Elsewhere
  Eddy Elfenbein, December 8th, 2005 at 10:14 am

  Johnson & Johnson (JNJ) must be one of luckiest companies around. They were inches away from a rotten deal that got worse each day. It featured Guidant threatening to sue them unless J&J bought them out. Then after that, the two would have to work together.
  Well, it looks like Boston Scientific (BSX) is serious. They’re really going after Guidant (GDT). Of course, the deal will crush them, but I’ll give them points for bravery. The AP noted that the deal would cut BSX’s short-term earnings and quadruple their debt. Outside that, it’s a great deal! Oh, and the huge legal problems.
  Johnson & Johnson (JNJ) released a statement saying that they believe the current offer “represents full and fair value.” BA! You gotta love putting out a statement like that. It’s one of the few times you can tell people to go to hell and sound conciliatory at the same time. I’m sure it got plently of laughs at the office.
  Now what does J&J do? I definitely think they’re still game for a merger, and that leads them right to our Buy List. The most obvious purchase would be Medtronic (MDT), but they’re too big even for J&J. In fact, MDT could jump in and make a bid for Guidant. However, looking at Guidant’s price, I don’t think we’ll see anymore offers.
  A good idea for J&J would be to go after Varian (VAR), but I think the company wants to stay independent. With Guidant out of the way, the only company left that solely focuses on pacemakers and implantable defibrillators is St. Jude Medical (STJ). In every way, I think it’s a better deal for Johnson & Johnson. The only problem is that STJ is up 7.2% in the last six trading sessions. Which has been good news for us!

• Toll Brothers’ Earnings
  Eddy Elfenbein, December 8th, 2005 at 9:17 am

  Toll Brothers (TOL) reported great earnings this morning, but it cut its forecast for next year. The company now sees next year’s earnings coming in around $4.79 to $5.27 per share. Toll also put its 2007 earnings outlook into doubt.

• The Top 15 Stocks of the Decade
  Eddy Elfenbein, December 8th, 2005 at 8:44 am

  Jon Markman lists the Top 15 stocks of the decade:
  Hansen Natural……………………….3,739%
  KCS Energy…………………………….3,251%
  IRIS International…………………..3,248%
  Amedisys ………………………………3,181%
  Quicksilver ……………………………2,929%
  American Healthways …………….2,801%
  Cheniere Energy……………………..2,746%
  Chico’s FAS ……………………………2,367%
  XTO Energy…………………………….2,363%
  Palomar Medical Technologies….2,225%
  Quality Systems………………………2,142%
  Ceradyne………………………………..2,038%
  Central European Distribution ….1,841%
  Holly………………………………………1,752%
  Tractor Supply………………………..1,293%
  Titanium Metals………………………1,183%

• The Best Investing Sites
  Eddy Elfenbein, December 8th, 2005 at 5:22 am

  The Wall Street Journal looks at some of the best Web sites for investors:

  One of the best sites we found was MSN’s MoneyCentral. It took only about two minutes to create our portfolio here, one of the shortest set-ups. The site provides dozens of specific ways to analyze stocks, with another 50 features offered through a quickly downloadable “Investment Toolbox” — for example, price indicators, stock-split details and real-time stock-price charts.
  MoneyCentral is very navigable and user-friendly, offering sections like “Get It Done” that lets investors quickly jump around to different areas. Still, there wasn’t much bond information, and the news offerings on the smaller stocks and funds were slim.
  Yahoo’s finance site also offers a lot of detail about portfolio holdings, good real-time news from wire services, and neatly distinguished stock, mutual-fund, and bond centers. It is not the best organized, however, and can overwhelm users with all of the data available. Views of aggregated portfolio holdings are tough to follow, and setting up our portfolio here took the longest — close to seven minutes — since it took a while to figure out how to enter all of the data. Better research and real-time quotes can be purchased for a monthly fee of $11 to $14.
  SmartMoney.com, which is part-owned by Dow Jones (which also owns The Wall Street Journal) offers some of the best charting on the Web. Charts are big and readable, and price changes can be tracked easily. The site itself also offers plenty of market news. Creating and monitoring a portfolio here, however, can mean muddling through quite a few advertisements and pop-ups.
  Morningstar.com, which is more known for mutual-fund research, offers an impressive portfolio tracker that can also include bonds and cash holdings, unlike some of the other sites surveyed. It’s also easy to dig into market-index data at the site.

• The Market Today
  Eddy Elfenbein, December 7th, 2005 at 6:10 pm

  This was a sluggish day for the market. The S&P 500 lost 0.50% and our Buy List fell 0.43%. For December, the Buy List is beating the S&P 500 1.74% to 0.63%. Today, only five of our stocks were up and 20 were down. The big winner was Stryker (SYK) which announced that it raised its dividend by 22%, from nine cents a share to 11 cents.
  Here’s a follow-up for you. It was five weeks ago that Brown & Brown (BRO) was downgraded by Sandler O’Neill. That day, the stock fell from $27.86 to $26.94. Today the stock closed at $29.56. Overall, financial stocks were the laggards today. Commerce Bancorp (CBH) fell 2.8%, Progressive (PGR) lost 1.1% and AFLAC (AFL) lost 1.0%
  Gold rose today for the seventh time in eight sessions. The metal is now up to $517.80. Many investors believe that the price of gold is an indicator of future inflation. Historically, it has been but I’m skeptical of the relationship now. Gold has become very popular with investors in the emerging economies of China and India.
  Copper, however, is a different story. The metal jumped to an all-time high of $2.0315 a pound. There’s concern that railroad workers in Chile are going to go on strike. Copper has been a much better bellwether of the economy.
  There aren’t many earnings announcements right now. In two weeks, one of my favorite stocks, Biomet (BMET), reports its earnings. How’s this for a consensus? There are 24 analysts who have forecasts. The highest is 43 cents a share. The lowest is 42 cents a share.
  And finally, Boston Scientific (BSX) said that it expects to sign a definitive merger agreement with Guidant (GDT) by the end of December and to close the deal in the first quarter of 2006.

• Falling Gas Prices
  Eddy Elfenbein, December 7th, 2005 at 3:53 pm

  From GasBuddy.com.
  
  I’m old enough to remember when we thought $2.12 was expensive.