Archive for 2011

  • Income Tax Poll
    , October 25th, 2011 at 10:48 pm


  • Netflix -37%
    , October 25th, 2011 at 11:21 am

    Here’s an important lesson in investing.

    We come at this with all these fancy tools and numbers to try and make sense of something that is, at root, almost purely chaotic.

    As investors, we try desperately to rationalize something that’s as solid as the breeze.

    You can be slowly wrong, wrong, wrong for a long time and then suddenly be right.

    The words on a memorial to Sigmund Freud read, “The voice of reason is small, but very persistent.”

  • Ford May Bring Back Dividend
    , October 25th, 2011 at 10:09 am

    Ford Motor ($F) progressively cut its quarterly dividend from 30 cents per share to 10 cents to 5 cents, and it finally ditched it all together five years ago.

    Thanks to the recent credit upgrades and union deal, the dividend may make a comeback. In my opinion the dividend isn’t why the stock is a good value, but it reflects the company’s remarkable turnaround.

    My guess is that any dividend will start out pretty modest, perhaps eight or ten cents per share. Brian Johnson at Barclay’s Capital thinks it could be eight cents per share.

    “Ford is doing all the right things and they sure haven’t gotten any credit for it from the Street,” said Gary Bradshaw, a fund manager at Hodges Capital Management in Dallas, who recently purchased 50,000 shares below $10 to increase his Ford holding to 250,000 shares. “That’s ridiculously cheap for a company whose outlook is improving.”

  • Third-Quarter Earnings Season Update
    , October 25th, 2011 at 9:45 am

    Bloomberg has all the numbers.

    Of the 500 companies in the S&P 500, 147 have reported so far.

    Of those, 103 or 70.1% have beaten estimates.

    14 or 9.5% have been inline

    30 or 20.4% have missed estimates

    Earnings are tracking at $24.45 which is up 11.85% from last year’s third quarter.

  • The Tuesday Rally Lives
    , October 25th, 2011 at 8:17 am

    Since the stock market topped on April 29th, the S&P 500 is down by 8.02%. Yet there’s been an odd exception to the market’s downward trend: the market has done very well, on average, on Tuesdays.

    Since April 29th, the market has been open on 25 Tuesdays. Combined, the S&P 500 is up 17.16% on those days. No other day comes close.

    My guess is that it’s because the recent sell-off has largely been political in nature which explains why the important news has come over the weekend. In response, Mondays have been down while Tuesdays have been weighted with relief rallies.

    Day Gain/Loss Std. Dev. Count
    Monday -4.73% 2.10% 23
    Tuesday 17.16% 1.49% 25
    Wednesday -7.86% 1.64% 25
    Thursday -4.34% 1.96% 25
    Friday -6.50% 1.29% 25

  • Reynolds American Earns 70 Cents Per Share
    , October 25th, 2011 at 8:09 am

    Reynolds American ($RAI) just posted Q3 earnings of 70 cents per share which was three cents below estimates. The company also narrowed its full-year EPS range to $2.63 – $2.68 per share which impies a Q4 range of 67 – 72 cents per share.

    Reynolds has also raised its quarterly dividend from 53 cents per share to 56 cents per share. That makes the annual dividend $2.24 per share which comes to a yield of 5.69% based on yesterday’s close.

    “Reynolds American continues to deliver solid financial results in this challenging environment, while our transformation strategy shapes the business for long-term success,” said Daniel M. Delen, RAI’s president and chief executive officer. “This performance once again demonstrates our ability to overcome near-term challenges while continuing to position our business for future growth.”

    RAI’s board of directors has also approved a 5.7 percent increase in the company’s dividend, demonstrating confidence in the operating companies’ businesses going forward, and the company’s commitment to returning value to shareholders.

    Third-quarter results benefited from growth-brand gains at R.J. Reynolds, and strong volume and share growth at American Snuff. In addition, Santa Fe Natural Tobacco Company, Inc. again delivered excellent results, with higher volumes, share and earnings.

    “Even with a difficult economic and competitive environment, RAI and its operating companies remain focused on delivering sustainable growth, while driving innovations throughout our businesses,” Delen said. “As we continue to focus on key-brand equity building and identifying additional opportunities for growth, we believe our transformation strategy will sustain the company well into the future.

  • Morning News: October 25, 2011
    , October 25th, 2011 at 6:29 am

    Spain Slipping on Deficit Increases Chances of Contagion

    EU Signals Fund Leverage Needs More Talks

    Trichet Urges Euro Finance Ministry

    Vatican Calls for Oversight of the World’s Finances

    Oil Rises to 12-Week High as Demand Signals Spur Bull Market

    In Cautious Times, Banks Flooded With Cash

    BP’s Profit More Than Doubles

    Deutsche Bank Beats Estimates on Consumer Banking

    UBS Reports 39% Drop in Quarterly Profit After Trading Loss

    Netflix’s Quarterly Loss of Subscribers Worse Than Forecast; Shares Plunge

    Texas Instruments Profit Falls as Demand Slumps

    Car Carriers Profit on Record Demand

    Cigna Agrees to Buy Healthspring to Expand Medicare Business

    The Divergent Fortunes of Saab and Volvo

    Joshua Brown: Jeff Benjamin on the Absolute Return Scam

    Paul Kedrosky: Today in Not Being Bullish Enough

    Be sure to follow me on Twitter.

  • S&P 500 = 1,253
    , October 24th, 2011 at 3:11 pm

    This is turning into a very good day for the market. The S&P 500 has been as high as 1,256.55 which is another post-August 3rd high. The index’s 200-DMA is well within sight.

    The cyclicals are leading today’s rally. I think the good news from Caterpillar ($CAT) helped the entire sector. The Morgan Stanley Cyclical Index ($CYC) is up more than 2.8% bringing it back over 900. The Consumer Index ($CMR), by contrast, is barely positive.

    Smaller stocks tend to be more weighted with cyclicals and we’re seeing the small-stock indexes doing much better than their larger-cap cousins today. The Russell 2000 ($RUT) is up more than 3.28% while the Russell 1000 ($RUI) is up just 1.61%.

    Our Buy List is now in positive territory for the year. Bed Bath & Beyond ($BBBY) hit another 52-week high. Deluxe ($DLX) and Wright Express ($WXS) have also been very strong. The only weak spots are Abbott Labs ($ABT) whose position is probably due its strength from last week, and Reynolds American ($RAI) which is losing ground after competitors delivered some disappointing earnings reports.

    Notice how strong small-caps have been (the black line is the Russell 2000) compared with the large-caps (Russell 1000 in gold) since the middle of the day on Thursday:

  • Best Months for the Dow of the Last 50 Years
    , October 24th, 2011 at 10:06 am

    We still have a week to go in October but this is shaping up to be the best month for the Dow in ten years, and one of the best in the last 50 years:

    Jan-76 14.41%
    Jan-75 14.19%
    Jan-87 13.82%
    Aug-82 11.47%
    Oct-82 10.65%
    Oct-02 10.60%
    Apr-78 10.56%
    Apr-99 10.25%
    Nov-62 10.09%
    Aug-84 9.78%
    Oct-98 9.56%
    Oct-74 9.48%
    Dec-91 9.47%
    Jul-89 9.04%
    Feb-86 8.79%
    Apr-01 8.67%
    Jul-09 8.58%
    Nov-01 8.56%
    Oct-11 8.55%
    Apr-68 8.51%

  • Oracle Buys RightNow for $1.43 Billion
    , October 24th, 2011 at 9:40 am

    Here’s interesting news from Oracle ($ORCL). The company is making a move into the cloud computing market by buying RightNow for $1.43 billion.

    The deal calls for Oracle to pay RightNow ($RNOW) shareholders $43 per share. This is interesting because not that long ago, Larry Ellison dismissed cloud. This is Oracle biggest acquisition since picking up Sun Micro more than two years ago.

    So what does RightNow do?

    RightNow’s primary product is its CX Suite, a platform that allows companies to engage with their customers through the Web, social media and contact centers. For instance, with its “cloud monitor,” businesses can track and manage conversations on Twitter, YouTube and Facebook related to their brand. RightNow, based in Bozeman, Mont., has nearly 2,000 clients.