Archive for July, 2007

  • The Original Gilligan’s Island Theme Music
    , July 7th, 2007 at 3:18 pm

  • Today’s Jobs Report
    , July 6th, 2007 at 11:22 am

    Today’s employment report was another disappointment. The economy created 132,000 jobs last month, which is just about the pace of population growth, perhaps a bit slower.
    The unemployment officially stayed the same at 4.5%, but to be very precise, it climbed from 4.46% to 4.53%.

  • Nasdaq At 6-Year High
    , July 5th, 2007 at 10:46 am

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    Even though the S&P 500 is off its highs, the Nasdaq keeps moving along.

  • Blackstone & Hilton
    , July 5th, 2007 at 9:46 am

    Steve Schwarzman is reading my blog! Consider the evidence. Just a few days after I highlighted Hilton’s (HLT) performance over the past few years, Blackstone (BX) announces a $20 billion buyout of the hotel chain.
    Coincidence? Not likely.
    Here are some details    :

    Blackstone will pay $47.50 for each share, Hilton said in a statement. That’s 32 percent more than its closing price yesterday. Barron Hilton, the son of founder Conrad Hilton and co-chairman of the Beverly Hills, California-based company, will get $990 million for his 20.8 million shares.
    The purchase is a record for the hotel industry. Blackstone, the owner of the La Quinta lodging chain, joins Apollo Management LP and Texas Pacific Group in targeting hotel companies for their cash flow and real estate. Worldwide, hotel acquisitions more than doubled in the first half of this year, to $81.4 billion.
    “It’s a classic Blackstone play: the size, the asset class, the management and the brand,” said Michael Pralle, who ran General Electric Co.’s GE Real Estate unit, with $59 billion in assets, before resigning in June to pursue other interests.
    Including the assumption of debt, the transaction totals $26 billion. Hilton, second in the U.S. to Marriott International Inc., has more than 2,800 locations.

    What I find interesting is that going forward, the main mover of BX’s stock will probably be merger announcements, not earnings reports. I would also guess that the market will react negatively initially to most merger announcements from BX, not matter how favorable they are. That’s an unusual drive of a share price, but we may need to learn to expect it.

  • Early Close
    , July 3rd, 2007 at 10:46 am

    Not much to blog about this week. Volume is very light. Everyone, it seems, is at the beach.
    The market closes at 1 p.m. today. You’ll have to pardon me, I’m having trouble typing while holding my Mimosa.
    Ta!

  • Danaher Hits New High
    , July 2nd, 2007 at 11:37 am

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    They don’t come much steadier than Danaher (DHR). I’ll leave the technical stuff for the charting folks, but stock broke out to a new high above $76 this morning.

  • The Case for Harley
    , July 1st, 2007 at 12:23 am

    From the WSJ:

    But it isn’t hard to see why the company attracts attention. It throws off heaps of cash and has a clean balance sheet. Last year Harley posted $1.8 billion in earnings before interest, taxes, depreciation and amortization on $5.8 billion of sales.
    Numbers like that should make potential buyers salivate. But squeezing much additional profit from a company that posts net margins of nearly 18% would be hard for either a strategic acquirer or buyout shop.
    Still, there are other reasons to own Harley’s stock. Its earnings this year have been hit by a strike in February at its York, Pa., factory. Yet analysts expect profit growth of nearly 12% next year. And international sales, which account for about a fifth of its business, are booming in Europe and Japan. The company has barely scratched the surface in emerging markets such as China.
    Moreover, Harley has doubled its dividend in the past two years. With a current valuation roughly in line with the market, solid earnings growth and a healthy balance sheet, Harley could support a share price of $80 — a third higher than now. There’s clearly room for this hog to run.

    As I mentioned before, HOG has been the worst-performing stock on the Buy List this year. It was our third-best stock last year. The next earnings report, which is due on July 19, will be very interesting to see. The market currently expects $1.13 a share, which seems low.