Archive for January, 2007

  • Buy List to Date
    , January 17th, 2007 at 10:33 pm

    I’m happy to report that the Buy List has gotten the year off to a good start. In just ten days of trading, the 20 stocks on the Buy List are up an average of 2.73% compared with 0.87% for the S&P 500.
    Here’s how the 20 stocks have done:

    Ticker Company YTD Return
    BBBY Bed Bath & Beyond 10.26%
    JOSB Jos. A Bank Clothiers 9.40%
    SEIC SEI Investments 5.34%
    APH Amphenol 5.28%
    AFL AFLAC 4.48%
    GGG Graco 4.29%
    VAR Varian Medical Systems 4.14%
    FDS FactSet Research Systems 4.07%
    UNH UnitedHealth Group 3.57%
    HOG Harley-Davidson 3.36%
    RESP Respironics 2.99%
    DHR Danaher 2.89%
    FIC Fair Isaac 1.53%
    MDT Medtronic 1.48%
    FISV Fiserv 1.32%
    BMET Biomet 0.97%
    DCI Donaldson -1.47%
    NICK Nicholas Financial -2.03%
    SYY Sysco -2.77%
    BER WR Berkley -4.55%

  • Crossing Wall Street Now Being Studied at Wharton
    , January 17th, 2007 at 9:57 am

    Seriously. Under “What Not to Do.”

    This is just a little after the course refresher note. I was just doing my web due diligence and I saw a piece at SeekingAlpha that offered some quantitative analysis of the bonds versus stocks for the last months of 2006. The analysis is comically flawed. Have fun with it, and rest assured that no (not even one!) Stat 434 student could make such fundamental, logical errors. Were not talking fancy details here, just stone cold stupidity (mixed with a nice dose of ignorance).

    Professor Michael Steele calls my analysis “comically flawed” because I did a regression of prices instead of price changes.
    ROFLMAO
    OK, maybe it’s not that comical.
    Well, I’ll never make that mistake again. In any event, the point I was trying to make was that the stock and bond markets had been rising together until about one month ago. Since then, the two markets have parted ways.
    Here lookie:
    image394.png
    The S&P 500 is the blue (left scale). The American Century Target 2025 fund (BTTRX), which I used as a bond proxy, is the red (right scale).
    Note that even the recent up-and-down move in the BTTRX is mirrored by an opposite move in the S&P 500.

  • Amphenol’s Earnings Report
    , January 17th, 2007 at 9:26 am

    Amphenol (APH) reported earnings this morning of 83 cents a share, two cents more than Wall Street was expecting. This was a 40% increase over last year’s total. Sales rose 30% to $659.4 million.
    The company also laid out its future guidance:

    For the first quarter, the company expects earnings between 80 cents and 82 cents per share on sales between $635 million to $645 million. Analysts are looking for earnings of 80 cents per share on sales of $647.7 million.
    For the full year, Amphenol sees earnings between $3.45 and $3.55 per share on sales between $2.65 billion and $2.71 billion. Analysts are expecting earnings of $3.49 per share on sales of 2.7 billion.

    Going by yesterday’s close, Amphenol is selling for about 18 times 2007’s earnings. The company also annouced a 2-for-1 stock split for late-March.

  • Ameritrade: Keeping It Real
    , January 16th, 2007 at 2:17 pm

    image393.png
    Ugh! Ameritrade (AMTD) is one of those stocks that I kick myself over. It was an obvious buy 18 months ago and I missed it. (The blue line is the price on the left scale, the yellow is the EPS on the right scale.)
    In October, the company won my “Earnings Guidance for the Year” award when it changed its FY07 EPS range to $0.98 – $1.22 from $0.99 – $1.21. Glad they cleared that up.
    It was only a few months ago that the online brokers took a beating when Bank of America (BAC) announced its free online trading offer (30 trades a month for accounts over $25,000). This morning, Ameritrade reported earnings of 28 cents a share, six cents better than estimates. Profits grew by 69%. The stock is up big in today’s trading.

  • NASDAQ 2500!
    , January 16th, 2007 at 11:59 am

    I nearly forgot to mention this. On Friday, the NASDAQ Composite (^IXIC) broke 2500. Since I’ve blocked out much of late-1990s, I think this is a new all-time high. It may have gone higher, I don’t remember. Anyway, here’s a long-term chart:
    image392.png
    Yep, that’s an all-time high baby!

  • Bed Bath & Beyond Makes New 52-Week High
    , January 16th, 2007 at 10:25 am

    Shares of Bed Bath & Beyond (BBBY) hit a new 52-week high this morning. Lower gas prices basically act like a tax cut for consumers. FactSet (FDS) and SEI Investments (SEIC) are also at new highs.

  • The Buy List So Far
    , January 11th, 2007 at 10:58 am

    I’m happy to report that our Buy List is off to a good start for 2007. As of mid-day today, we’re up about 1.36% compared with 0.39% for the S&P 500. Of course, this is only the seventh day of trading, so a lot can change, but it’s nice to get a fresh start out of the gate.
    Our biggest winner so far is Joe Bank (JOSB), which is one of our new stocks for this year. It’s up 8.9%. Our second-best stock is Bed Bath & Beyond (BBBY) which is up 7.2%. SEI Investments (SEIC) was our biggest winner from last year, and it made a new 52-week high this morning.

  • Long-Term Performance By Market Cap
    , January 10th, 2007 at 12:30 pm

    Over the last eighty years, small-cap stocks have been the best-performing size category of stocks. I got this data from Professor Ken French’s Web site.
    He divided the market into ten “size deciles.” What’s interesting is that it’s almost perfectly rank-ordered–the largest stocks did the worst, the smallest did the best.
    image390.png
    The data covers from mid-1926 through November 2006. Here’s the annualized return by decile:
    Lowest…………………13.588%
    Third……………………12.504%
    Fourth………………….12.371%
    Fifth…………………….12.128%
    Second………………..12.120%
    Sixth……………………12.015%
    Seventh………………..11.861%
    Eight……………………11.414%
    Ninth……………………10.950%
    Biggest…………………9.703%
    Here’s the same chart, but I divided all deciles by the largest decile (which is the flat line).
    image391.png
    You can see that small-cap outperformance is very cyclical with the last “up” cycle starting seven years ago.

  • Hollywood & Hedge Funds
    , January 10th, 2007 at 10:31 am

    Many hedge funds have taken a beating this year, but Stark Investments got whacked due to its bomb at the box office:

    When news broke that Benjamin Waisbren had been fired as Hollywood frontman for Stark Investments, moviedom shuddered.
    Hedge fund managers such as St. Francis, Wisconsin-based Stark have become piggy banks for the U.S. film industry. Since 2005, these funds and private equity investors have committed $4.5 billion to movies, betting the box office can beat the markets.
    Movie industry bible Variety called Waisbren’s abrupt exit in May a “bellwether” for the future of fast money in Hollywood. A former bankruptcy lawyer who led equity creditor committees for America West Airlines Inc. and WorldCom Inc., Waisbren, 49, had convinced his bosses at Stark that Hollywood could be structured like any other investment, albeit with more glitz.
    Stark, which manages $9.4 billion, ended up getting soaked by “Poseidon,” the 2006 remake of “The Poseidon Adventure,” which sank at the box office. Stark executives declined to comment for this story.

  • Computer is So ’06
    , January 9th, 2007 at 4:44 pm

    First Dell drops “Computer” from its name. Now Apple Computer is just Apple. Nobody wants to be seen as “just” a computer stock anymore.