You Can’t Be Serious
Posted by Eddy Elfenbein on May 12th, 2010 at 3:44 pm

TheStreet.com is reporting the rumor-that-won’t-die

Netflix is spiking as rumors surface yet again that Amazon is interested in acquiring the company. (BWAHAHAHA)
These rumors have surfaced many times over the last several years in regards to Netflix, most recently in January. Each time analysts have dismissed the claims. (Duh)
While anything is possible (note the Hewlett-Packard-Palm deal), Needham analyst Charles Wolf says it is unlikely.
“Amazon would not acquire Netflix for its by-mail business, which will eventually go away” he says. While Netflix has a terrific digital-streaming business, its library consists of mostly older films. It can’t offer new releases as they are available because it is too expensive.
Amazon, itself, has a streaming pay-per-view service for new releases, and it doesn’t seem like there is a barrier preventing Amazon to offer old movies, Wolf says. “So the company has little reason to buy Netflix.”

The rumor is moronic, yet the shares are up 7.5% today. Once again, welcome to Wall Street-istan!!

Sector Forecasts
Posted by Eddy Elfenbein on May 12th, 2010 at 1:41 pm

This is from S&P. Here are the full-year operating forecasts for the S&P 500 and each sector on March 31 and again two days ago, with the percent change:

You can see that the Financials have had the biggest improvement. The only sectors with lower forecasts are the defensive ones — Health Care, Staples and Utilities.
Here’s the same table but with 2011 forecasts and the first date in April 6.

Here’s a look at the P/E Ratios based on the 2010 and 2011 estimates:

Carney to CNBC.com
Posted by Eddy Elfenbein on May 12th, 2010 at 1:33 pm

Congratulations to John Carney formerly of Business Insider, formerly of DealBreaker who has joined cnbc.com. Guest of a Guest has the details:

Following a ignominious and unexpected exit from softcore porn slide show purveyor Business Insider, writer John Carney has a new gig. He’ll be reporting for duty soon as a senior editor at CNBC.com and will serve as on air commentator for the site. No word yet on which channels he’ll be frequenting but with those looks he could be a serious threat for money honeys all across NBC Universal properties.

The Argument for Stock-Picking
Posted by Eddy Elfenbein on May 12th, 2010 at 12:12 pm

Tadas Viskantas has an excellent article arguing that we’re entering the Golden Age of Stock-Picking.

Goldman Sachs! The Musical
Posted by Eddy Elfenbein on May 12th, 2010 at 10:46 am

The New Yorker spots a musical. Here’s a sample

CARL LEVIN (D-MICH):
I want to know what you knew
And exactly when you knew it
And why you all believed
You’d manage to get through it
FABRICE TOURRE:
We didn’t prey on our clients’ stupidity
We showed them our prices and offered liquidity
CARL LEVIN (D-MICH):
To you it may have been a game
To me it all seems pretty real
I mean to make you feel shame
For how you made this shitty deal
FABRICE TOURRE:
I’m not deceitful or conniving
Did you see the picture of me skydiving?

From the Department of No Surprise
Posted by Eddy Elfenbein on May 12th, 2010 at 10:38 am

An academic report:

Recent financial collapses have focused policymakers’ attention on the financial industry. To date, empirical studies have concentrated on corporate issuer activity, such as securities offerings and class actions. This paper makes a first step in studying SEC enforcement against investment banks and brokerage houses. This study suggests that the SEC favors defendants associated with big firms compared to defendants associated with smaller firms in three ways. First, SEC actions against big firms are more likely to involve exclusively corporate liability, with no individuals subject to any regulatory action. Second, the SEC is more likely to choose administrative rather than court proceedings for big-firm defendants, controlling for types of violation and levels of harm to investors. Third, within administrative proceedings, big-firm employees are likely to receive lower sanctions, notably temporary or permanent bars from the industry. To explain this gap, the paper first investigates whether big-firm violations are qualitatively different from small firms’ violations, but finds no support for this. This paper next explores two hypotheses that could explain a systematic bias in enforcement patterns: that constraints in bureaucratic resources weaken the SEC’s negotiating position towards big firms, and that SEC officials favor prospective employers.

Danaher Declares Split and Buyback
Posted by Eddy Elfenbein on May 12th, 2010 at 10:28 am

One of my rules is to never worry about what a former Buy List stock does. Just because it rallies doesn’t mean I was wrong to sell it. After all, the stock isn’t thinking about me.
I like to keep tabs on these stocks because they’re very good companies. A stock can turn from a good buy to a bad buy fairly quickly, but an excellent company usually remains so (though not always).
I’m still a big fan of Danaher (DHR) even though I decided to cut it loose from the Buy List at the end of last year. Danaher was on the Buy List from 2006 to 2009 and it did well for us.
The stock has continued to do well and that shouldn’t come as a surprise. They raised their Q1 outlook twice and Q2 once. The company beat earnings in January and again in April. The shares are currently up about 14% for the year.
Danaher is in the news today because they just announced a 2-for-1 stock split and a 10 million share buyback (moan). Since the company pays a very small dividend, this would have been a great time to give shareholders a little more cash-love.
Danaher is an excellent stock. But it would be a whole lot more excellenter about $15 cheaper.

Gold Hits New All-Time High
Posted by Eddy Elfenbein on May 11th, 2010 at 7:19 pm

The WSJ:

Gold set an all-time record high Tuesday, a symptom of broad-based investor concerns about markets and the global economy.
The yellow metal’s traditional role is one of a “safe haven,” a place where participants turn during times of acute stress in markets. Gold’s popularity has grown on the realization that any sustained recovery from the recent worldwide recession will be a long, drawn-out process, with investors now also worried about the potential for defaults by euro-zone nations.
The nearby May gold contract settled $19.50, or 1.6%, higher, at $1,219.90 an ounce on the Comex division of the New York Mercantile Exchange, beating out the previous record high close from Dec. 3.

The Buy List YTD
Posted by Eddy Elfenbein on May 11th, 2010 at 5:05 pm

I’m pleased to report that our Buy List survived the crash of last Thursday. Through today’s trading, our Buy List is up 8.51% for the year while the S&P 500 is up 3.65% (neither figure includes dividends).

Our top performer is Jos. A Bank Clothiers (JOSB) which is up 49.16%. Our worst is Baxter International (BAX) which is down 22.46%. Fourteen of our 20 positions are up for the year.
If you’re new to the blog, for tracking purposes, I assume the Buy List is comprised of 20 equally weighted positions of $50,000 each based on the closing price of last year. I then can’t make any changes to the Buy List for the entire year. It’s locked and sealed. Then in mid-December, I’ll announce what the new stocks are for the following year.

Liz Claman Throws Out the First Pitch
Posted by Eddy Elfenbein on May 11th, 2010 at 4:22 pm

Fox Business News anchor plays it to the far right.