Archive for December, 2009

  • Blodget Vindicated!
    , December 1st, 2009 at 11:44 am

    Amazon.com (AMZN) is up to $138 a share today which is yet another new high. We’re coming up on the 11th anniversary (December 16th) of Henry Blodget’s famous $400 long-term price target for Amazon.
    The stock has since split 6-for-1 (a 2-for-1 and a 3-for-1) so the adjusted price target works out to be $66.66
    We can debate what long-term means, but if it’s 11 years, then Blodget was pretty much spot on if we assume an average return on equity of around 7%.

  • Peet’s Raises Bid to $32.50
    , December 1st, 2009 at 11:23 am

    Whatever is in that K-Cup license, someone wants its very badly.

    Peet’s Coffee & Tea Inc. raised its bid to buy Diedrich Coffee Inc., the maker of single-serve coffee packets, for the second time to $32.50 a share, topping the latest offer from Green Mountain Coffee Roasters Inc.
    Peet’s boosted the cash portion of its bid to a range of $21.26 to $22.87, plus 0.321 share of its own stock, for each Diedrich share, the Emeryville, California-based company said yesterday in a statement. The offer totals $32.50 a share at any price of Peet’s stock from $30 to $35. Last week, Peet’s offered as much as $32 a share, including $19.80 in cash, while Green Mountain raised its bid to $32 a share in cash, or $265 million.
    The companies are vying for Diedrich’s K-Cup business, the maker of prepackaged coffee cups used in Green Mountain’s Keurig brewing equipment. Green Mountain has been consolidating K-Cup manufacturing, which is about twice as profitable as collecting royalty fees, according to Mitchell Pinheiro, an analyst with Janney Montgomery Scott LLC in Philadelphia.
    “Green Mountain could counter with an increased offer, as the company seems committed to rolling up its K-cup licensees,” David Tarantino, an analyst with Robert W. Baird & Co. in Milwaukee wrote in a note. He recommends buying Peet’s and doesn’t rate the other stocks.

    This almost reads like a movie. As a business enterprise, Diedrich is pretty much a joke. But they have a license which is very valuable yet no one seems to know what it exactly entails. Let me change that — someone knows and they’re willing to pay a lot for it. Peet’s is now willing to pay $32.50 for a stock that was worth 21 cents a few months ago.
    Who needs gold when there’s coffee? (John Hempton has more.)

  • Eaton Vance’s Earnings
    , December 1st, 2009 at 11:08 am

    I also neglected to mention Eaton Vance‘s (EV) earnings report from last week:

    Investment manager Eaton Vance Corp. said Tuesday its profit jumped 39 percent in the fourth quarter on higher assets under management and lower investment losses.
    For the three months ended Oct. 31, the company earned $48.4 million, or 39 cents per share. That compared to $34.9 million, or 28 cents per share, in the year-ago period.
    Quarterly revenue edged up 2 percent to $254.1 million from $249.8 million the same time last year.
    Earnings in the latest quarter were increased by about 5 cents per share by tax adjustments primarily related to stock-based compensation.
    Last year, Eaton Vance’s investment losses cut fourth-quarter earnings by 13 cents per share. The company recorded an impairment charge of $13.2 million on investment losses.
    The performance beat Wall Street expectations. On average, analysts polled by Thomson Reuters expected earnings of 33 cents per share on revenue of $250.3 million.
    In the latest quarter, assets under management grew to $154.9 billion, up 26 percent from $123.09 billion in 2008. That helped lift quarterly investment advisory and administration fees 2 percent, to $195 million.
    For the full year, Eaton Vance earned $130.1 million, or $1.08 per share. That was down 34 percent from $195.7 million, or $1.57 per share last year.
    Thomas E. Faust Jr., the company’s chairman and CEO, noted in a release that earnings in 2010 should continue improving as a result of expense controls and favorable trends in asset management.

  • Self-Parody Alert
    , December 1st, 2009 at 1:21 am

    The reappointment of Ben Bernanke has sent Nassim Nicholas Taleb into an existential crisis. I’m not making this up.

    What I am seeing and hearing on the news — the reappointment of Bernanke — is too hard for me to bear. I cannot believe that we, in the 21st century, can accept living in such a society. I am not blaming Bernanke (he doesn’t even know he doesn’t understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible — as if we promoted every doctor who caused malpractice. The world has never, never been as fragile. Economics make homeopath and alternative healers look empirical and scientific.
    No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step. I will also structure trades with my Universa friends to bet on the next mistake by Bernanke, Summers, and Geithner. I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan.
    Bye,
    Nassim

    Take care,
    Eddy