Archive for August, 2013

• Morning News: August 14, 2013
  Eddy Elfenbein, August 14th, 2013 at 6:03 am

  China Plans Faster Capacity Cuts Even as Growth Slows

  Germany is Strong, But Not Nearly Strong Enough

  Brazil Sues Samsung For More Than $100 Million Over Poor Working Conditions

  Senate Pressure on Fed Pick Irks White House

  Lockhart Says QE Taper Possible at Next Three Meetings

  Rise in U.S. Retail Sales Points to Pickup in Spending

  U.S. Moves to Ground Big Air Merger

  Icahn Pushes Apple on Buyback

  Pepsi Wins Battle in Cola Wars: $21 Million CUNY Deal

  JCPenney Focus Turns To Holiday Prospects As Ackman Drama Ebbs

  Three Top Zynga Executives Are Out

  U.S. Agrees Not to Prosecute ‘London Whale’

  Brocade Cost Cuts Lift 3Q Profit, Shares Jump

  Credit Writedowns: Profitless Stocks and Levitating Stock Prices

  Phil Pearlman: Hyperloop, Return & Ridicule

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• Great Quote from Dan Loeb
  Eddy Elfenbein, August 13th, 2013 at 8:46 pm

  From USA Today:

  Hedge fund manager Dan Loeb, whose Third Point fund has reportedly bought into Herbalife, has also appeared to weigh in on Ackman in recently. On Monday, several news organizations reported that Loeb used his Bloomberg financial terminal to post a message that read: “Never interfere with an enemy when he is in the process of destroying himself.”

• When Carl Icahn Tweets, People Listen
  Eddy Elfenbein, August 13th, 2013 at 2:44 pm

  There was an old commercial that went, “When EF Hutton talks, people listen.” Today we learn that when Carl Icahn tweets, people listen.

  Here’s Carl:

  We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.

  — Carl Icahn (@Carl_C_Icahn) August 13, 2013

  And the result:

  

• My Mistake With Tupperware
  Eddy Elfenbein, August 13th, 2013 at 11:23 am

  Last year, I was seriously considering adding Tupperware ($TUP) to my 2013 Buy List. I even posted about it in November, but sadly, I decided against adding TUP to this year’s Buy List.

  Dumb move! The stock is up 36.5% YTD.

  

  Actually, it’s even worse than that because I had been looking at TUP when it was $54 in mid-October. The stock quickly gapped up to $62, and I thought the bargain was now gone. Dumb move!

  TUP closed last year at $64.10 per share. Today it broke $88! Ugh. The stock has beaten earnings in January, April and July, plus they raised their dividend by 72%. Last November, I noted that my World’s Simplest Stock measure gave TUP a price of $77.

  Last month, however, TUP lowered its full-year estimate for the second time this year. The company now expects 2013 earnings to range between $5.44 and $5.54 per share. Today, my simple stock measure says that TUP is fully priced.

• 180 Straight Days Above the 150-DMA
  Eddy Elfenbein, August 13th, 2013 at 11:02 am

  Daily volatility continues to be pretty meager this August. The stock market is currently down, but just a bit this morning. The government reported that retail sales rose by 0.2% last month, which is the fourth monthly increase in a row. Economists were expecting an increase of 0.3%. The increase for June was revised higher by 0.2% to 0.6%.

  Despite the headline miss, the details were pretty good. If we look at “core” retail sales, which doesn’t include cars and gas, that rose by 0.5% in July. That’s the biggest since December. Clothing stores saw their sales rise by 0.9% last month, which bodes well for stocks like Ross Stores ($ROST).

  Steven Russolillo at the WSJ highlights an interesting factoid: The S&P 500 has traded above its 150-day moving average for the last 180 days. That’s the ninth-longest streak since 1980. I think this is due to the market’s slow, steady upward crawl combined with the low volatility. The index is currently about 6% about its 15-DMA.

• Morning News: August 13, 2013
  Eddy Elfenbein, August 13th, 2013 at 6:44 am

  German Investor Confidence Rises as Euro Area Resumes Growth

  Contraction Shows Signs of Slowing for Greece

  German Gov’t Dismisses Report Buba Expects More Greek Aid

  Japan PM May Sweeten Sales Tax Hike With Corporate Tax Cut

  There’s A Huge, $1 Trillion Hole In Chinese GDP

  In Move for Economy, Mexican President Seeks Foreign Investment in Energy

  Musk Shows Hyperloop Transport Design for People to Cars

  BlackBerry Mulls Putting Itself up for Sale

  New Bid for Steinway Is Sweet Music to Investors’ Ears

  Murdock Clinches $1.6 Billion Dole Buyout

  EON’s Proprietary Energy Trading Loss Narrows in First Half

  U.S. Subpoenas Goldman in Inquiry of Aluminum Warehouses

  Best-Paid Women in S&P 500 Settle for Less With 18% Gender Gap

  John Hempton: Strange Stock Assessment From A Value Investor I Kind Of Admire: A Note On The Transition Of Apple Into A “Value Stock”

  Howard Lindzon: The Bitcoin Moment – F$%^#! The Winkelvoss Twins

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• All In the Family Revised Intro
  Eddy Elfenbein, August 13th, 2013 at 12:51 am

• More Thoughts on Day-Trading
  Eddy Elfenbein, August 12th, 2013 at 10:55 pm

  My post from last week on day-trading drew a lot of commentary and a fair bit of criticism. I enjoy having my views criticized, especially if it’s smart criticism. This may come as a surprise to you, gentle reader, but I’m not always right. Being challenged and challenging yourself is a way to get better.

  Here’s a smart take from Brian Lund, who’s a terrific blogger, and here’s a post from two years ago from Ivan Hoff.

  For the record, I don’t think our views are in direction opposition. Professor Noah Smith also had some kind words about my post.

• About Those Second Half Earnings
  Eddy Elfenbein, August 12th, 2013 at 1:20 pm

  Chuck Jones at Forbes has some depressing news about earnings for later this year:

  As 450 of the 500 companies in the S&P 500 have reported financial results for the June quarter FactSet estimates that revenue growth has been 1.8% (vs. a 1.2% estimate at the end of June) and earnings growth has come in at 2.1% (vs. a 0.6% estimate). A 2.1% increase would be the third lowest rate in the past four years AND if the Financial sector is removed earnings for the S&P 500 would have DECREASED by 3.1%.

  As I previewed in previous notes estimates for the Third quarter have come down fairly significantly in the past six weeks. At the end of June Third quarter revenue growth was expected to be 3.0% and has only dropped slightly to 2.9%. However, earnings growth has decreased from 6.7% to 4.3% in six weeks and was over 10% in mid-April.

  Those numbers are from FactSet. According to the numbers from S&P, the estimate for Q3 earnings has dropped from $30.27 in March 2012 to $27.17 today. The Q4 estimate is down but not as much, falling from $31.18 in March 2012 to $29.13 today.

  Analysts now expect the S&P 500 to earn $108.51 this year, and $122.37 next year. As always, I caution against putting too much faith in estimates beyond a few months out.

• The Decline of Volatility
  Eddy Elfenbein, August 12th, 2013 at 10:34 am

  Here’s the percent change for the S&P 500 every single day over the last five years. The decline in volatility is rather striking.

  I remember back when stock prices used to, you know, change from day to day. Not anymore. The S&P 500 hasn’t had a 2% up day in 11 months.

  

  The Volatility Index ($VIX) is currently just over 13. In March, it dropped to 11.05 intra-day which was the lowest reading in more than six years. I think we could make another new low soon.