Archive for November, 2006

• Stock: The Latest Endangered Species
  Eddy Elfenbein, November 21st, 2006 at 12:33 pm

  One reason for the market’s bull run is that there’s simply less stock out there to buy. Daniel Gross looks at the mystery of the disappearing stock market.

  This year is shaping up to be a record for both leveraged buyouts and stock buybacks. According to Thomson Financial, buyouts worth $334.5 billion have been announced or completed so far this year, up from $115 billion for all of last year. According to Standard & Poor’s, members of the S&P 500 Index spent $325.15 billion on their own shares in the first three quarters of 2006 and have spent more than $674 billion since Jan. 1, 2005. Between buybacks and buyouts, that’s more than $1.1 trillion of stock taken out of public hands in less than two years.

• Goldilocks Lives
  Eddy Elfenbein, November 21st, 2006 at 11:06 am

  John Carney at DealBreaker notices nuance in our news media.
  AP:

  Paulson makes case for tougher enforcement of securities laws

  Reuters:

  Paulson says need to apply business rules lightly

  So which is it? As always, The New York Times has the answer:

  Treasury Chief Urges ‘Balance’ in Regulation of U.S. Companies

• Medtronic Soars
  Eddy Elfenbein, November 21st, 2006 at 10:42 am

  It’s about time Medtronic (MDT) got some love. The large-cap health care sector has been a dud this year. If you had told me that two of worst performing stocks on the Buy List would be Medtronic and UnitedHealth, I probably wouldn’t have believed you. Today, Medtronic is back over $50 a share, and it’s closing in on eight-month highs.
  I’m also standing by on Dell’s (DELL) earnings report which is due out after the close. And Google (GOOG) just broke $500 a share for the first time.
  Finally, the British soccer team (i.e., English football squad) West Ham United has been bought by…Icelanders.

• Merger to Create World’s Largest Bankrupt Airline
  Eddy Elfenbein, November 21st, 2006 at 10:23 am

  From Scrappleface:

  If the U.S. Airways buyout of Delta receives regulatory approval, industry experts said it would make the resulting company the largest of the world’s bankrupt airlines and a strong candidate for a future government bailout.
  U.S. Airways yesterday announced it would offer Delta’s creditors $8 billion in stock, cereal boxtops and S&H Green Stamps and would name the merged firm Delta Airlines, which the source called, “one of the most recognizable brand names in the non-profit airline industry.”
  “The synergies are incredible,” said an unnamed spokesman for U.S. Airways, “There’s a lot of overlap in areas of incompetence, customer dissatisfaction, mismanagement and hubris. Thanks to economies of scale, together we can achieve new levels of mediocrity.”
  The source assured investors that the new Delta Airlines stock would make “an excellent tax write off, and a great way to add balance to your portfolio of growth stocks.”

• Medtronic Earned 59 Cents a Share
  Eddy Elfenbein, November 20th, 2006 at 4:23 pm

  Medtronic (MDT) just reported earnings of 59 cents a share, three cents more than Wall Street was expecting. Revenues also came in higher than expectations.

• Today’s News
  Eddy Elfenbein, November 20th, 2006 at 2:53 pm

  Here’s a few quick items of note today.
  Lowe’s (LOW) cut its full-year forecast. If you thought that would hurt the stock, you’d be wrong. Not only is Lowe’s rallying, but so is Home Depot (HD). Home Depot also rallied after its poor earnings report, so for the time being, bad news is good news for the home improvement sector.
  The big news today is that Freeport-McMoRan Copper & Gold (FCX) is going to buy Phelps Dodge (PD) for $25.9 billion in cash and stock. Phelps Dodge is in the Morgan Stanley Cyclical Index (^CYC) so that index has having a huge day. Will anyone stop Big Copper? Incidentally, The Wall Street Journal recently hosted a debate on ditching the penny.
  On our Buy List, Harley-Davidson (HOG) made another new high today. The stock is up over 43% for the year. Medtronic‘s (MDT) earnings are due out after the close. Lastly, the Economist recently had a good story on the growth of the hedge fund industry.

• Toothpaste for Dinner
  Eddy Elfenbein, November 18th, 2006 at 6:00 am

  
  toothpastefordinner.com

• What’s Been Pushing Stocks Higher
  Eddy Elfenbein, November 17th, 2006 at 11:54 am

  Make no mistake, this rally is for real. The reason I feel comfortable saying that is that stocks have been marching higher right along side bonds. As long as those two stay together, the bull can keep charging. The time to get nervous is when you see stocks and bonds part company.
  Here’s a chart of the S&P 500 and my bond market proxy, the BTTRX mutual fund:
  
  The long-end of the yield curve has dropped about 60 basis points in the last five months.

• The Milton Friedman Choir
  Eddy Elfenbein, November 17th, 2006 at 11:39 am

  Enjoy.

• Johnson & Johnson
  Eddy Elfenbein, November 17th, 2006 at 10:22 am

  Tempting. Very tempting.
  Check out the plunging P/E ratio.