Archive for December, 2012

• Just Three Trading Days Left….
  Eddy Elfenbein, December 26th, 2012 at 6:39 pm

  With three trading days left in 2012, our Buy List is up 14.32% for the year while the S&P 500 has gained 12.90%.

  Including dividends, our Buy List is up 16.77% while the S&P 500 is up 15.45%.

  The Buy List’s gain from dividends has been 2.15% which is just a little bit below the 2.26% for the S&P 500.

  One more stat: If this matters to you, the “beta” for the Buy List for this year has been 1.045. Historically, it’s been around 0.955.

  For the last seven years combined, we’re outpacing the S&P 500 by a margin of 61% to 32%. I’ll have a complete rundown once trading is done for the year.

• The Slumping Yen and AFLAC
  Eddy Elfenbein, December 26th, 2012 at 12:08 pm

  I wanted to add a quick work about AFLAC ($AFL) and the falling yen. Since AFLAC does most of its business in Japan, the company’s profits are impacted by the yen/dollar exchange rate. Lately, the dollar has been crushing the yen.

  

  Basically, the stronger the yen is, the better it is for AFLAC. Conversely, a weak yen is bad for AFLAC. I should add that I don’t see AFLAC as a yen play. I prefer to look at their “currency neutral” results. But the fact is that the weaker yen will take a bite out of earnings.

  Very roughly, every one yen above 80 yen to the dollar knocks five cents per share off of AFLAC’s annual earnings. The WSJ quotes Morgan Stanley’s Ron Leven who says the exchange rate will hit 90 in the first half of 2013.

• Stocks Are Down On Boxing Day
  Eddy Elfenbein, December 26th, 2012 at 11:29 am

  I hope everyone had a nice Christmas. The stock market is open again after a closed day yesterday and a half day on Monday.

  So far, stocks are down today but it’s not too bad. The S&P 500 is hovering right about 1,420. This could be the third down day in a row. Bear in mind that we had a six-day winning streak earlier in the month.

  Ford Motor ($F) had a great day on Monday as the stock soared above $12 for the first time since April. I’m happy to see that Ford continues to hold on to those gains today.

  We had more good news from the housing market. The Case-Schiller Index reported that home values rose 4.3% in the 12-month period ending in October. That’s the biggest year-over-year gain since May 2010. It was also above what economists had been expecting.

  The price increase accelerated from a 3 percent advance in the 12 months ended September. The Case-Shiller index is based on a three-month average, which means the October data were influenced by transactions in August and September.

  Residential homebuilding has contributed 0.3 percentage point to gross domestic product on average in the first three quarters of 2012, according to Commerce Department data. The last time it added to growth for an entire year was in 2005, when it boosted the economy by 0.36 point.

  Home prices adjusted for seasonal variations rose 0.7 percent in October from the prior month, with 17 of 20 cities showing gains, according to today’s report. Las Vegas showed the biggest gain with a 2.4 percent advance, followed by San Diego with a 1.7 percent increase.

  What’s the impact for investors of recovering housing? I tried to address that recently when The Atlantic asked me to contribute to a round-up of favorite charts of 2012. Here’s my entry:

  

  This shows the Retail ETF (XRT) beating the S&P 500 this year, while the Homebuilders ETF (XHB) has absolutely creamed it. The move in the homies is much more dramatic since it’s coming off a lower base. That’s been the story this year: recovering housing slowing lifting consumers. In June, Walmart finally took out its high after 12.5 years

• Morning News: December 26, 2012
  Eddy Elfenbein, December 26th, 2012 at 7:09 am

  Abe Chosen As Japan’s Next Prime Minister

  China Beige Book Signals Limits on Rebound as Loan Demand Slips

  Refi Program Expansion Eyed

  Budget Talks Cloud Outlook

  U.S. Holiday Sales Advanced a Marginal 0.7%, SpendingPulse Says

  ‘Dairy Cliff’: Milk Prices May Double In New Year

  Toyota Poised To Reclaim World’s Biggest Carmaker Title

  VW Races With GM for 2013 China Crown as Toyota Struggles

  Russia’s Desire for Cars Grows, and Foreign Makers Take Notice

  Asiacell Seeks $1.3 Billion in Top Mideast IPO Since 2008

  Grounded Kingfisher Lacks Funding Plan -India Minister

  ICE Chief Challenges Stock Views of Trading

  The Triumphs and Failures of Deal Makers in 2012

  Roger Nusbaum: Christmas With Taleb!

  Phil Pearlman: Zeroing In On The Profound Aspect of Social Networks

  Be sure to follow me on Twitter.

• Merry Everything
  Eddy Elfenbein, December 25th, 2012 at 6:02 am

  

  I want to thank everyone who has supported Crossing Wall Street this year. This has been a great year for us. Not only has the Buy List done well, but CWS Market Review has steadily gained new subscribers.

  I particularly want to thank Marcia Hippen who makes sure my many typos are quickly corrected, and Dominic Rivera who looks over all the technical issues.

  I also want to thank several financial bloggers including Barry Ritholtz, Josh Brown, Tadas Viskanta, Howard Lindzon, Phil Pearlman. David Merkel, Joe Weisenthal, Henry Blodget, Morgan Housel, Steven Russolillo, Charles Kirk, Jeff Miller and Felix Salmon, and many, many more who have been big supporters of Crossing Wall Street.

  On Twitter, I now have over 8,400 followers. I get lots of good feedback everyday. There are literally too many people to list here but in particular I want to thank George Acs, Todd Sullivan, Heidi Moore, Paul Kedrosky, Jeff Reeves, Kevin Whalen and the Epicurean Dealmaker for their continued support.

  I want to wish everyone a happy, healthy and profitable 2013.

• “Are You Guys Just Incompetent Or What?”
  Eddy Elfenbein, December 24th, 2012 at 2:32 pm

• Last Year’s Deletions are up 31.7%
  Eddy Elfenbein, December 24th, 2012 at 12:50 pm

  A reader emailed to say he’d crunched the numbers:

  This is just a crude analysis-

  Your deletions last year averaged 31.7% in 2012, and your new adds averaged 25.06%. Both outpacing the SPX and the 2012 buy list by a good amount.

  I’m thinking to mimic your 2013 adds + 2013 deletions.

  Congrats on being so consistent!

  Perhaps someone could make an ETF out of my Buy List deletions.

  But seriously, most of that 31.7% gain is due to Gilead Sciences which had an amazing year. I should add that I’m breaking a rule I often advise investors to follow — don’t worry about what stocks do after you sell them. It doesn’t do you any good. So I’ll just pretend that I’m ignoring Gilead.

  In other news, last year Eric Jackson at Forbes collected some market picks for 2012. Mine have held up fairly well.

  Top Long: Hudson City Bancorp, HCBK
  Top Short: Starbucks, SBUX
  YE S&P Target: 1,450

  The S&P 500 is currently at 1,426 so I wasn’t too far off. Hudson City is up 29% for the year and that doesn’t include a generous dividend. Starbucks, however, is up about 17% for the year which is pretty good.

• Morning News: December 24, 2012
  Eddy Elfenbein, December 24th, 2012 at 7:50 am

  European Markets Steady Despite Fiscal Cliff Fears

  Greece Not Doing Enough Against Rich Tax Dodgers, Say EU/IMF

  Buying Back Greek Debt Rewarded Hedge Funds

  China To Crack Down On “Malicious” Trademark Registrations

  India to Buy More Russian Fighter Jets, Helicopters

  Americans Miss $200 Billion Abandoning Stocks

  Dealers Tighten Treasuries Grip as New Fed QE3 Suppresses

  Bullish Wagers Drop to Six-Month Low on U.S. Budget

  White House Reverses Itself, Lifts Political Block on FDA Approval of GM Salmon

  Pinnacle to Buy Ameristar Casinos for $869 Million

  All the World’s a Game, and Business Is a Player

  Economy Weighs on Shoppers in Final Holiday Weekend Dash to Mall

  A 2013 Guide to Better Behavior in Business

  Pragmatic Capitalism: The Unemployment Rate Increased in Zero States in November

  John Hempton: Fushi Copperweld: A Christmas Present From The China Development Bank And Abax Captial To Arb Funds

  Be sure to follow me on Twitter.

• Johnny Carson & Benny Goodman
  Eddy Elfenbein, December 22nd, 2012 at 9:10 pm

• The 2013 Buy List
  Eddy Elfenbein, December 21st, 2012 at 1:39 pm

  The wait is over. Ladies and gentlemen, here’s the 2013 Crossing Wall Street Buy List:

  AFLAC ($AFL)

  Bed Bath & Beyond ($BBBY)

  CA Technologies ($CA)

  Cognizant Technology Solutions ($CTSH)

  CR Bard ($BCR)

  DirecTV ($DTV)

  FactSet Research Systems ($FDS)

  Fiserv ($FISV)

  Ford ($F)

  Harris Corporation ($HRS)

  JPMorgan Chase ($JPM)

  Medtronic ($MDT)

  Microsoft ($MSFT)

  Moog ($MOG-A)

  Nicholas Financial ($NICK)

  Oracle ($ORCL)

  Ross Stores ($ROST)

  Stryker ($SYK)

  Wells Fargo ($WFC)

  WEX Inc. ($WXS)

  There are five new stocks and five stocks that I’m removing. The five new stocks are Cognizant Technology Solutions ($CTSH), FactSet Research Systems ($FDS), Microsoft ($MSFT), Ross Stores ($ROST) and Wells Fargo ($WFC). Cognizant and FactSet are both returning members of the Buy List.

  The five stocks I’m removing are Hudson City Bancorp ($HCBK), Johnson & Johnson ($JNJ), JoS. A Bank Clothiers ($JOSB), Reynolds American ($RAI) and Sysco ($SYY). I don’t necessarily consider the stocks I’m removing to be Sells.

  Note that we’re turning over just one-fourth of our Buy List. You don’t have to go madly in and out of stocks to beat the market.

  For tracking purposes, I assume the Buy List is a $1 million portfolio that’s equally divided into 20 positions of $50,000 each. The “initial price” will be the closing price on December 31, 2012. The market will be closed on New Year’s Day, and the new list will take effect once trading starts on Wednesday, January 2nd.

  As usual, this list is locked and sealed, and I can’t make any changes for the next 12 months. I may have to make adjustments along the way for any buyouts or mergers that may occur. If I do, I’ll be sure to explain exactly what’s happening.

  I’ll also periodically adjust my Buy Below prices. Please note that these aren’t “price targets.” They’re guidance for optimal entry prices. The reason we do this is so no one chases after one of our stocks and gets a lousy price.