Archive for June, 2006

  • Fibonacci on the Stock Market
    , June 6th, 2006 at 1:11 pm

    Over the weekend, I saw the Da Vinci Code. Since I’m the only person in the world left who hasn’t read the book, I felt a certain duty to see the film. The movie is OK, but a bit long. The plot revolves around several hidden messages buried in the works of Leonardo Da Vinci. Think “Paul is Dead” goes Gnostic.
    I noticed that Fibonacci numbers make a brief appearance in the film. If you’re not familiar with Fibonacci numbers, there are many people in modern finance who take them very seriously. There’s even an entire school of thought that believes that the stock market is a giant code and Fibonacci numbers are the decoding mechanism. I wish I were making this up.

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  • Home Solutions of America Down 34%
    , June 6th, 2006 at 11:56 am

    Home Solutions of America (HOM) is crashing today. The cause is an alert from Stocklemon.com (I LOVE that name). Apparently, Home Solutions has been doing some naughty things:

    Just two short weeks ago, Home Solutions of America (AMEX:HOM) was hitting new highs. On the cusp of the new hurricane season, the market was searching for the next great “hurricane story” stock. That was the precise moment when insiders of HOM were selling their positions in large quantities.
    What do they know that you don’t know ?
    Is this really a hurricane play, or is it no more than a lot of hot air that hit an updraft of misunderstood news and hysteria? You will not believe what we found out.

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  • More Volatility
    , June 5th, 2006 at 5:56 pm

    I keep having to update this statistic: Since May 11, the S&P 500 has had five daily falls of greater than 1.1%. In the six months before that, it had one. Today, the Dow Jones Oil & Gas Index (^DJUSEN) was down over 3%.

  • Homebuilders This Decade
    , June 5th, 2006 at 3:14 pm

    Here’s how the Dow Jones Home Construction Index (^DJUSHB) has done since the beginning of the decade:
    dj_hom.bmp
    The sector is down about 25% since April 5.

  • Easily Pronounced Stocks
    , June 5th, 2006 at 3:04 pm

    An academic study finds that easily pronounced stocks do better (via the Kirk Report.)

    One explanation might be that bigger companies simply have more marketing people to dream up a catchy title, or certain business sectors may naturally tend towards simpler, more pronounceable names. But after a thorough statistical analysis, the psychologists concluded that there was no link between a company’s type or size and its stock performance.
    To prove the point, the pair finally analysed how well companies performed on the basis of their three-letter stock ticker code, which a company doesn’t determine itself. Amazingly, pronounceable codes such as KAR still tended to do much better than unpronounceable ones such as RDO. Once again, the pair invested their fictitious $1,000, and found that the fluent codes were $85 up on the first day, although the portfolio was just $20 ahead after a year.

  • Severance Furniture?
    , June 5th, 2006 at 12:37 pm

    From Michelle Leder at Footnoted.org:

    Here at footnoted.org, we’ve seen all sorts of strange severance agreements from a plane to a Porsche. But the severance package outlined in this agreement filed by Manntech (MTEX) late Friday is definitely one of the stranger ones.
    That’s because the company’s former chief legal officer apparently asked for — and received — her office furniture as part of the deal. That’s in addition to a consulting agreement that will pay her $10K a month for the next year. Oh, and there’s also her company car thrown in for good measure. But both of those are pretty standard compared to the office furniture, which the filing very specifically spells out as consisting of “the executive desk, executive chair and two side chairs”. There’s no word in the filing on who will foot the moving expenses, but our bet is on Manntech.

  • The Refinery Oligopoly
    , June 5th, 2006 at 12:13 pm

    Here’s James Surowiecki on oil refineries in the latest New Yorker:

    In a normal marketplace, of course, high prices and profits would drive companies to expand, in an attempt to capture more of the market, or else new players would emerge, hoping to outmaneuver a risk-averse establishment. But the refining industry isn’t a normal marketplace. For one thing, refineries are huge investments—a new one costs at least two billion dollars—and they take a long time to open. This means that although refiners might make more money by opening new facilities and thus serving more customers, they’d rather take the sure money than gamble. It also means it’s hard for new competitors to raise enough capital to enter the market at all.
    What’s more, over the past fifteen years refiners have been buying each other up, creating an industry that’s highly consolidated. In 1993, the five biggest refiners in the U.S. controlled thirty-five per cent of the market. By 2004, they controlled fifty-six per cent. And refining is primarily a regional business. The government allows different states to use different formulations of gasoline—some formulations burn cleaner than others—and in some urban areas a federal requirement determines what formula can be used, depending on the quality of their air. That makes it hard to ship gas across state lines, and shrinks the number of refiners that provide a particular blend of gas, giving each refiner more power. As a result, in many areas the refinery business is more like an oligopoly than like a competitive market. In 2002, a Senate report identified “tight oligopolies” operating in twenty-eight states; in California in 2003, ninety-five per cent of the refining market was in the hands of just seven companies.

  • The Fall of the Dollar
    , June 5th, 2006 at 11:57 am

    This chart says it all:
    dollar1.bmp

  • Introducing Condé Nast Portfolio
    , June 5th, 2006 at 11:30 am

    We knew that Conde Nast was coming out with a new business magazine. We knew that Joanne Lipman was going to be the editor in chief. What we didn’t know was the magazine’s name.
    It was a battle between Quote and Portfolio. Portfolio won.

    Joanne Lipman, the magazine’s editor in chief, said she liked the name because it conveyed several meanings: a corporate portfolio of brands, a personal financial portfolio and a collection of one’s best artwork.
    “It worked on every level for us,” Ms. Lipman said in an interview in her Times Square office. Better yet, she said, the title reflected the magazine’s content.
    “This is serious business journalism — investigative, narrative, profiles — a commitment to long-form journalism, and telling that story with great design and art,” she said. “This is not a lifestyle publication,” she added. “This is a business publication.”

    The first issue is due out next year. Their Web site is www.cnportfolio.com. Gawker, naturally, has more.

  • Danaher CEO raises low end of Q2 profit outlook
    , June 5th, 2006 at 9:53 am

    More good news from Danaher:

    Diversified manufacturer Danaher Corp. expects to report second-quarter earnings of 75 cents a share to 78 cents a share excluding items, President and Chief Executive Officer Lawrence Culp said in a statement on Monday.
    The low end of the forecast was slightly higher than the company’s previous forecast of 73 to 78 cents, Culp said. It came as Culp spoke at an investor conference in New York.