July 28, 2008
Excerpt from my MSN Money article on the coming week’s earnings:
How about we play a game, shall we? It goes like this: I say a term and you tell me the first thing that comes to your mind. Ready?
What do you think of when you hear the word recession? Did you think slowdown or inflation? What comes to mind with the word write-offs? Did you think earnings growth? How about record commodity prices? Do you immediately think of increasing revenues and profits?
I bet you thought of several phrases and words associated with a general economic slowdown, but not those above. I asked because a curious situation is occurring within our markets. For example last week many of the companies reporting earnings showed an increase in year-over-year revenues and actually beat estimates. Of course this isn’t the norm this quarter, but even so, it is a peculiar occurrence.
Of course there were also several companies that had their share of difficulty, but it was still odd to see so many results come in better than expected during a time of widespread economic problems. How does that happen? Studies have shown that analysts often overshoot estimates during bullish times and underestimate in bearish environments, but I am really referring to reported revenue, not the estimate. Does that mean companies are actually selling more and taking in more revenue?
Partial list of companies discussed: (AAPL) (MSFT) (F) (SOHU) (GOOG) (LVS) (WYNN)
July 28, 2008
Well, over the weekend the Housing Bill was passed by a 72-13 vote in the Senate. Now, we wait for President Bush to sign and all will be fixed it seems. Yeah right !
It must have been an interesting conversation that the Senators had when they discussed how the U.S. government would now be partners with homeowners their home’s future price appreciation, as long as they take a deal they cannot refuse. To be honest, I think it is unconscionable that the the U.S. government is now going to “own” a portion of the greatest asset that most people will ever have.
Of course that is only after lenders “volunteer” to write-off a portion of what they are due to help out borrowers. Also, with that, Senators also asked Santa for a new train set and a puppy Read more
July 25, 2008
I will admit it; I am in quandary. Do we really know what is going on? Do the newspapers, magazines and site that are providing us with the latest business news and insight know what is going on? How did the Holy-19 get on the list and why?
Jim Jubak is the senior markets editor for MSN Money. Previously, he served as senior financial editor at Worth magazine and as editor of Venture magazine. Jubak was a Bagehot Business Journalism Fellow at Columbia University and has written “The Worth Guide to Electronic Investing“ and “In the Image of the Brain: Breaking the Barrier Between the Human Mind and Intelligent Machines.”
Jim is also the #1 read investing columnist of the web, according to Neilsen’s.
As an investor, he says he believes the conventional wisdom is always wrong — but that he will nonetheless go with the herd if he believes there’s a profit to be made. His column, Jubak’s Journal, appears on MSN Money every Tuesday and Friday.
Also, it appears that in December 2008, there is a book coming that explains how Jim has been able to rack us those amazing gains on an annual basis. The Jubak Picks: Based on The 10 Year Stock-Picking Track Record That Has Returned More Than 300%
The ZachZone Stocks: GT Solar International, Inc. (SOLR), China Distance Educational Holdings (DL)
Stocks Discussed in this episode: U.S. Bancorp (USB) , Wells Fargo & Company (WFC), Wachovia (WB) , Adobe (ADBE), ITT Educational Services, Inc. (ESI) , Devon Energy Corporation (DVN) , Pepsi (PEP), Washington Mutual (WM), AECOM Technology Corporation (ACM),
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July 24, 2008
It is official! Bill Gates has to be the most charitable man alive. Now, he is providing a chunk of his assets to help out ailing Autonation (AN). Sure he takes a nice piece of the company and if you look at the history of this once darling/roll-up king, you will realize that this may be actually approaching a bottom.
Whether it is a brilliant move or a plan for a tax write-off is still not know, but it does appear that Autonation’s CEO Michael Jackson seems to have a plan for cost cutting and working within this difficult environment. Do we follow Gates into this without any thought? Do we then follow Lampert as he has been continuing to add to his holdings (40% now)? Maybe not.
How about a contarian play? Maybe… Whatever you think about the fate of the auto industry, this happens to be a well run company that is caught within a very bad situation. It is at a relative low and as oil prices seem to be turning and companies are waking up to the fact that they need to change their ways. This could give Autonation a boost. The biggest concern is still the consumer and their ability to buy or borrow to buy a new car.
The stock has been driven down by the weak economy and consumer pullback, but Bill Gates has used the softness to raise his stake in the auto retailer to 5.5%.
On Monday, Gates’ personal investment vehicle, Cascade Investments, reported owning 5.3 million shares, or a 2.9% stake in Fort Lauderdale, Fla.-based AutoNation. Also, the Bill & Melinda Gates Foundation reported owning 4.6 million shares, or a 2.6% stake in the company.
At the end of the first quarter, Cascade had no position in AutoNation and the foundation reported owning 800,000 shares.
Both filed as passive shareholders and indicated July 17 as the date the ownership threshold was met to trigger the filing.
The investments combined give Gates, the world’s third-richest man according to Forbes, control of 9.9 million shares, a 5.5% stake. Gates is now the company’s third-largest shareholder. Edward Lampert’s ESL Investments is AutoNation’s largest shareholder, with a 40.4% stake. Lampert has been actively buying AutoNation shares since October.
July 21, 2008
It ain’t over it seems. Apple (AAPL) aside, the big news after hours was American Express (AXP). The earnings are awful, the business is in the dumps and now AMEX wants to withdraw any 2008 forecast. Bloomberg reported:
Profit in the company’s U.S. card business dropped 96 percent to $21 million from $580 million a year earlier as provisions for losses more than doubled to $1.5 billion from $640 million. uncollectible debt in the unit rose to 5.3 percent of loans from 2.9 percent a year earlier.
After hours, my old friend Capital One (COF) was knocked for a loop on the news as well. The credit card industry has proven itself to be no better that two-bit loan sharks. They rape customers with exorbitant fees, ruin your life if you cannot pay and now lie to protect themselves. I am totally disgusted with the way they have handled themselves.