Periodicals Wrap-Up for Monday, July 7th
FINANCIAL TIMES: The Financial Times reported that Bain Capital, Blackstone (BX) and General Electric’s (GE) NBC universal will acquire The Weather Channel properties from Landmark Communications for approximately $3.2B in a leveraged buy-out. The Weather Channel will be run separately…A top Goldman Sachs (GS) trader is defecting to GLG Partners (GLG), the UK’s second-largest hedge fund. Goldman’s Driss Ben-Brahim, a partner in the firm and the head of its emerging market trading business, will take over GLG’s $1.2B emerging markets special situations fund, the Financial Times reported…NEW YORK POST: Take Two Interactive (TTWO), which makes video games, will probably sign video game creator Ken Levine to a new contract. The deal would bolster Take Two’s argument that its value exceeds the $25.74 per share that Electronic Arts (ERTS) has offered as a takeover price for the company, The New York Post believes…REUTERS: Reuters reported that Deutsche Bank (DB) is the only bidder remaining for Citigroup’s (C) German retail operations. Sources said Commerzbank (CRZBY) dropped out of the running on Friday…
Weekly subtractions from the Investor’s Business Daily-100
The following are subtractions from the Investors Business Daily-100 list for the week of July 3: Sociedad Quimica Y Minra (SQM), Companhia Siderurgic (SID), Metalico (MEA), Hill International (HIL), Pericom Semiconductor (PSEM), Darwin Proffessional Underwriters (DR), Priceline.com Inc. (PCLN), China Medical Tech (CMED),Gulfmark Offshore (GLF), Intrepid Potash Inc (IPI), Concur Technologies (CNQR), Rowan Companies (RDC), Kansas City Southern (KSU), Newmarket Corporation(NEU), Morningstar Inc (MORN), Celanese Corp (CE), Wabtec (WAB), Airgas (ARG).
Weekly additions to the Investors Business Daily-100
The following are additions to the Investors Business Daily- 100 list for the week of July 3: Celgene Corp. (CELG), Plexus Corp (PLXS), Monolithic Power Systems (MPWR), Flir Systems (FLIR), Atheros Communications (ATHR), Netlogic Microsystems (NETL), Nordson Corporation (NDSN), Stanley Inc. (SXE), Devon Energy Corp (DVN), Gulf Island Fabrication (GIFI), Halliburton (HAL), Axsys Technologies (AXYS), Forest Oil Corp. (FST), Plains Exploration & Production (PXP), True Religion Appare l(TRLG), Helmerich & Payne (HP), Schnitzer Steel (SCHN), Credicorp Ltd.(BAP).
RIG: Believe company will benefit from strong deepwater market@GABE
Gabelli contends that Transocean will reap the benefits of higher day rate and term contracts in the deepwater market. The firm believes investors’ concerns about possible competition to Transocean from Petrobras (PZE) is overdone, as they note that the two companies recently signed a 10 year drilling contract. The firm maintained their Buy rating on Transocean.
ZION target lowered to $33 from $38, maintain Outperform@RBCM RBC believes management chose to hold off on a larger stock offering since it could not get the pricing it wanted, and did not see an urgency to raise new capital. They adjusted their estimates to reflect the company’s Q2 update and keep an Outperform rating.
U.S. equity futures point to a slightly higher open
U.S. equity futures are pointing to a slightly higher open as gold, oil and natural gas prices have weakened. This week kicks off the second quarter earnings season, and Alcoa (AA) will be the first of the Dow components to report tomorrow after the close. Although investors are anxious to see how profits are holding up amid rising fuel prices and overall inflation, the Wall Street Journal prefaced Alcoa’s earnings report by saying that the company will be pressured by higher costs and lower aluminum prices. The Journal did say that the outlook for aluminum is strong, based on ongoing building in emerging countries and China, but that investors will be anxious to hear the company’s comments.
MI target lowered to $15 from $22@RBCM RBC lowered their target following the company’s Q2 preannouncement and believes downside risks to credit remains. Shares remain Sector Perform rated.
Solar Industry: Adjusting ASP assumptions due to potential cap in Spain@CSTI
Collins Stewart cut their ASP assumptions for YGE, STP and JASO to reflect the likelihood of Spain establishing a cap on solar installations that will receive a feed-in tarif. The broker says this move will reduce industry demand in 2008 and impact industry pricing. YGE, STP and JASO remain Buy rated.
Broadcom-BRCM upgraded to Buy from Neutral@PIPR
Piper upgraded shares as they believe the Street is underestimating some of the company’s product cycles.
Auto makers hit the brakes against escalating steel prices-WSJ
Some auto makers are fighting back against steel price increases, refusing to pay surcharges and threatening legal action. Negotiations between the two sides are ongoing, reports the Wall Street Journal. “There are some customers who have accepted the surcharges and some who have not. For those who have not, we are still in negotiations,” says Aditya Mittal, ArcelorMittal’s CFO.
GMX Resources-GMXR volatility Elevated on wide share price movement GMXR, a gas exploration and production company, closed at $76.37. Morgan Keegan say’s “Based on our well model, we can justify a risked, present value analysis of GMXR shares between $120 and $125 per share.” GMXR July option implied volatility of 94 is above its 26-week average of 54 according to Track Data, suggesting larger price movement.
AMGN: See additional upside following recent rally@DBAB
Deutsche Bank believes the valuation is still attractive at current levels and raised their target price to $54 from $52.
Brokers: Recommend buying BLK into earnings following recent weakness@SBSH
Citigroup expects the best core trends in Q2 from retail brokers like AMTD and SCHW and from asset managers delivering core organic growth like BLK and TROW. The firm expects the worst core trends at ETFC, LM, FIG and MER. Citigroup recommends buying BLK into the quarter as they view the recent weakness as an “excellent” buying opportunity.
Goldman Sachs-GS says Q2 Level 3 assets at $78.09B vs. $96.39B in Q1
CF upgraded to Outperform from Neutral@FBCO
Credit Suisse upgraded CF citing valuation. Target $180.
PBR initiated with a Buy, target $92@GSCO
SU upgraded to Outperform from Market Perform@FBRC
Friedman Billings upgraded SU citing valuation. Target to $85 from $53.
SU upgraded to Overweight from Neutral@JPMS
JP Morgan upgraded SU citing valuation.
European Banks sector upgraded to Neutral from Underweight@KBWI
Keefe Bruyette upgraded the sector on valuation as they see limited downside from current levels. Included in the firm’s top picks are HSBC Holdings (HBC) and Banco Santander (STD).
MON: Corn demand concerns could create buying opportunity@JEFF
Jefferies believes perceived risks to corn demand could create a buying opportunity in the second half of 2008 as they feel a secular downshift in corn acreage is highly unlikely. The firm reiterates a Buy rating on MON shares.
Solar: Proposed Spanish 300MW cap unlikely to become law@COWN
Cowen said the proposed 300MW cap in Spanish solar subsidies is unlikely to become law as it would cause significant job losses and business closures. The firm said Outperform rated ENER and FSLR are best positioned and that ESLR, SPWR, and STP are oversold.
Plains Ex & Prod-PXP target raised to $105 from $85@Coker & Palmer
Coker & Palmer raised their target as they believe the company’s joint venture in the Haynesville Shale should generate significant growth. Shares remain Buy rated.
Biotechnology: DNA, AMGN, & CELG poised to beat@FBCO
Credit Suisse believes biotech looks particular attractive given its independence from the broader economy. The firm expects Neutral rated DNA to be a big winner but said Rituxan IMS strength seems odd, while Avastin growth is least surprising given approval in breast. The firm said Outperform rated AMGN was helped by no label change for Aranesp and that CELG’s momentum will continue. The firm continues to see PML risk for BIIB in 2H08.
Jim Cramer’s “Mad Money”
Thursday’s show, Cramer told viewers that although stocks are the most important element in a balanced portfolio, he cautioned viewers that “there are a lot of other things you have to do if you want those investments to pay off.” Cramer identified “three necessities” that he said all investors “need to have taken care of” before they invest in the stock market. (1) credit card debt — given the high interest rates, even a great investor can have his gain canceled out by credit card debt. (2) health insurance — he told viewers not to invest a penny in the markets until they have health insurance. Cramer says, “Medical emergencies are the biggest cause of bankruptcy.” (3) disability insurance — Cramer stressed how easily investors can get “wiped out” by unexpected hospital bills. Next, After taking care of the “necessities,” Cramer told viewers they need to prepare for retirement. He said it isn’t enough to just mindlessly save money into a 401k plan. Cramer told viewers they need to stay diversified and play an active role in the management of their savings plans. He recommended S&P 500 index funds as a better proxy for the market’s high-quality names. Cramer still advocated investing in bonds, but contrary to conventional wisdom, recommended only two-thirds of a portfolio be in bonds at retirement age. Also, Cramer suggested making 401K contributions as the market dictates, rather than evenly throughout the year. “Pay attention to the market,” said Cramer, “contribute twice your normal contribution any month the market is down.” Cramer’s final piece of retirement advice was that there is more to investing than just 401k plans. He said individual IRAs are the perfect way to supplement a 401k, giving investors a superior vehicle for managing retirement investments. During the show, Cramer took a question from a caller who asked him what it meant to do homework on a stock. Using Caterpillar (CAT) as an example, Cramer said investors need to put in time, reading a company’s earnings reports, news stories and annual reports in order to make an intelligent decision on a stock.
Fast Money position recap- Adami Owns (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Najarian Owns (AAPL), (AMLN), (ANR), (NOK), (NUE), (TSO), (XLF), (YHOO), (HD); Najarian Owns (WFMI) Puts, (MER) Puts, (WFMI) Puts, (HBC) Puts; Najarian Owns (MYGN) Calls, (SLB) Calls, (WM) Calls, (WLT) Calls; Finerman Owns (GS); Finerman’s Firm And Finerman Own (TIP), (FLS), (GLNG); Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm And Finerman Own (GE) And (GE) Puts; Finerman’s Firm Owns (MSFT), (SUN), (TSO), (TWX), (VLO); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm Owns (HUN) Calls; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (BNI), (YHOO), (LUV), (CME), (GOOG), (SU), (INTC), (FXC), (IYT), (XLF), (FCX); Terranova Owns Dollar Index Futures
Terranova is chief alternatives strategist at Phoenix Investment Partners;; Phoenix Investment Partners Ltd. Owns (RWX), (DBC), (DBV), (IGE), (AAI), (ALK), (AMR,) (APA), BP plc, British Airways plc, (CHK), (CVX), (COP), (CAL), (DAL), ENI SPA, (FCX), (XOM), Gazprom, (HA), (HES), (HOC), (HSE), (JBLU), Lukoil, (MRO), (MUR), (OXY), Petrobras Intl Fin, Petro-Canada, (POT), (PBR), Petroleos De Venezuela, (QAN), (RJET), Royal Dutch Shell plc A Shares, (SKYW), (LUV,) (SU), (TSO), Texaco Capital, Total SA, (UAUA), (LCC), (VLO).
Market looks to bounce on a pullback on oil. Tech shares and fertilizer plays look to bounce the most so far in premarket. Let’s see if this early bounce can manifest into something bigger but I’m not holding my breath. I have my list of shorts and longs and will let the market range for the first part of the day and week to gauge the supply/demand levels of the market in this oversold condition. Earnings are now up to bat and reactions to the earnings will be more important than the results themselves. Pick plays with a high probability of success, have focus and patience. Plan the trade and trade the plan. Good luck and great trading.
Submitted By 
's
