Archive for May, 2006

• Foreign iShares Since 2003
  Eddy Elfenbein, May 17th, 2006 at 12:02 pm

  Foreign markets have been the place to be. Here’s how several foreign iShares have performed since the beginning of 2003:
  Brazil (EWZ)………………..433.95%
  Austria (EWO)……………..275.42%
  Mexico (EWW)……………..242.81%
  Sweden (EWD)…………….174.01%
  Australia (EWA)……………165.13%
  South Korea (EWY)……….162.61%
  Canada (EWC)………………161.36%
  Belgium (EWK)……………..151.58%
  Spain (EWP)…………………143.78%
  Germany (EWG)……………139.12%
  Italy (EWI)…………………..116.39%
  Japan (EWJ)…………………109.14%
  France (EWQ)………………107.73%
  Switzerland (EWL)…………98.81%
  Hong Kong (EWH)…………..97.52%
  U.K. (EWU)…………………….89.00%
  Netherlands (EWN)…………82.27%
  Malaysia (EWM)……………..68.05%
  Taiwan (EWT)…………………67.08%
  By comparison, the S&P 500 Spyders ETF (SPY) is up just 52.81%.

• Gold at 26-Year High
  Eddy Elfenbein, May 17th, 2006 at 11:49 am

  From The Onion:
  

• Three Stocks I’m Watching
  Eddy Elfenbein, May 17th, 2006 at 9:39 am

  Here are three stocks I’ve been watching.
  optionsXpress Holdings (OXPS) is an online broker. As the name suggests, the company specializes in options, an area not well-served by the larger online brokers.
  The company has experienced very fast growth. For the last quarter, sales were up 73% and profits jumped 84%. Still, it reported 29 cents per share which was merely inline with forecasts so the stock has pulled back some.
  The company now has about 180,000 customers. I’ve never used the service so I can’t say how good it is, but others seem to like. My fear is that the big online guys will move to squish OXPS.
  Cintas (CTAS) is one of the largest companies that no one knows. The company makes business uniforms and other pieces of flair.
  The stock did very well through the 1990’s, but this decade has been rough. The business is still doing very well, but its valuation has crumbled. The P/E ratio has plunged from about 60 at the beginning of 1999 to just 22 today.
  This isn’t a fast-growing business, but it’s a solid, well-run company that has consistently delivered earnings. For this year, Cintas said its expects earnings of $1.92 to $1.96 a share compared with $1.74 last year.
  Investors Financial Services (IFIN) is similar to SEI Investments (SEIC). The company provides asset-administration services for the financial services industry. IFIN had a bad first quarter but the company still sees profits for the year of $2.32 a share.

• Consumer Inflation +0.6%
  Eddy Elfenbein, May 17th, 2006 at 9:01 am

  This morning, the CPI for April came in at +0.6%, which topped forecasts by 0.1%. The core rate was 0.3%, which was also 0.1% higher-than-expectations.
  The market is not taking this well. Gold is up strongly in what looks to be its largest jump since 9/11. Gold reached $730 an ounce last week, but had fallen back.
  Hewlett-Packard (HPQ) had a great earnings report yesterday. Profits for its second quarter jumped 51%, and earnings from the PC division rose 69%. Even AMD (AMD) got a little rise out of the report. H-P also said that it will consolidate 85 data centers into six large centers. The move should help the company save $1 billion.
  Dell (DELL) reports tomorrow after the close.

• Happy Birthday Wall Street
  Eddy Elfenbein, May 17th, 2006 at 7:08 am

  On May 17, 1792, 24 brokers signed the Buttonwood Agreement:

  We the subscribers, brokers for the purchase and sale of public stock do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day on for any persons whatsoever any kind of public stock at a less rate than one-quarter percent commission on the specie value of, and that we will give preference to each other in our negotiations.

  The first shares traded were for the Royal Googloe Parchment Seeke Co. at a price of three crowns and four shillings.
  Ok, not really, but the other stuff is true.

• President Bush’s Financial Disclosure Form
  Eddy Elfenbein, May 16th, 2006 at 11:24 pm

  Just as I suspected: He’s rich.
  So is the Veep.

• Dell Below $24
  Eddy Elfenbein, May 16th, 2006 at 12:57 pm

  Shares of Dell (DELL) are now below $24. Including cash, Dell is going for less than $20 a share. Earnings are due out on Thursday.

• James Surowiecki on Hedge Funds
  Eddy Elfenbein, May 16th, 2006 at 12:47 pm

  In the current New Yorker (hat tip: Abnormal Returns):

  In the past five years, hedge funds have become a new power on Wall Street; the number of funds has doubled, to more than eight thousand, and the assets they control have tripled, to more than a trillion dollars. In the process, they’ve also become a favorite scapegoat for bad financial news, blamed for everything from inflating the housing bubble and demolishing stock prices to jacking up the price of oil. A German politician has called hedge funds “locusts” of the global economy, while William Donaldson, the former head of the S.E.C., has warned that “disaster” looms if hedge funds aren’t regulated. The title of a recent column made the point nicely: “Instruments of Satan.”

  Ouch.

• A Warning Sign?
  Eddy Elfenbein, May 16th, 2006 at 12:16 pm

  One of the general rules of the thumb on Wall Street is that the stock market tends to follow the long-term bond market. I should stress that this is a very general rule. I’ve never been a market timer, and I’m not going to start now. But I want to show you how the market often reacts.
  Here’s a chart of the S&P 500 (black line) versus the American Century Target Maturities Trust—2025 Portfolio (the gold line, symbol: BTTRX) from May 1996 to December 1999. I’m using BTTRX as a proxy for long-term bonds (it’s a mutual fund that holds the Treasuries coming due in 2025).
  
  Notice how closely the two lines followed each other, right until 1999. That’s when long-term bonds started to head down while equites continued to float upward. It was a foreshadowing of what was to come.
  Now here are the same two since the summer of 2003.
  
  It’s not exactly the same, but you can see some similarities. The BTTRX is parting ways with stocks.
  Here’s the chart one more time, since last August:
  
  Now you can really see it. The two were like waltzing partners right up to the beginning of March. Like I said, I’m not predicting a fall in equities, but the bond market could be.

• FactSet Soars on Upgrade
  Eddy Elfenbein, May 16th, 2006 at 11:58 am

  Home Depot (HD) opened lower despite its good earnings. The big surprise today is FactSet Research Systems (FDS) which is up over 9% on an analyst upgrade.

  Shares in FactSet Research, which provides financial information to investment professionals, rose sharply Tuesday, touching a fresh 52-week high, after Piper Jaffray upgraded the stock citing expected strong demand from investment banks.
  Analyst Brett Manderfeld raised his rating to “Outperform” from “Market Perform” and boosted the target stock price to $50 from $44.
  “We have increased conviction that FactSet can maintain double-digit internal growth for the next two years at least,” as investment banks increase hiring, the analyst wrote in a note to investors Tuesday.
  Manderfeld said FactSet’s investment management products, which help track portfolio composition and performance, are set to deliver higher revenue because new products such as Portfolio Analytics and Marquis “continue to gain traction.”
  The analyst also expects the company’s international operations to help bolster revenue. That division accounts for 30 percent of total revenue and is projected to grow 20 percent per year “for the foreseeable future,” Manderfeld said, adding that “the relative immaturity of this market and FactSet’s strong suite of comparable product offerings abroad” will drive the gains.