jwbir's blog

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April 13, 2007

Group Reflection

This blog focused us on specific topics within the financial world, and more importantly caused us to think actively about daily news topics. It is one thing to read the Wall Street Journal, think ok, task complete and put the journal on the recycling stack. It is infinitely better for our development to read a variety of news sources and then think how we can make plays to better our portfolios based on today’s news. Given, we actively engage ourselves occasionally, but blogging on a weekly basis did increase the frequency that we attacked and “messed around� with what we were reading.

Some of our specific feedback included:
-“I really enjoyed the blogging experience. I always follow the financial markets and the news about what is going on in the economy, and I always have an opinion about what is going on.�
-“This blog allowed me an outlet to share my ideas and insights in a written form that was not overly formal.�
-“I enjoyed not having the risk of social rejection for thinking at length. Blogging enabled me to fully develop my thoughts in a controlled atmosphere.�
-“Blogging on the financial markets is an activity that I may seriously consider continuing.�

Posted by jwbir at 01:29 AM | Comments (0) | TrackBack

The Thinner the Higher the Stock Price Right: Sony (SNE)

The thinner an object, the less the mass; less mass means higher potential to float; unlike a sheet and some hot air, Sony’s new 1.4 mm thin organic electroluminescent (OEL) screens do not require the hot air to rise. In an announcement yesterday, Sony unveiled its new 11 inch OEL models that should enter the Japanese markets next year. This schedule puts Sony ahead of the entire market and specifically competitors Toshiba and Sharp, both of which made an embarrassment out of Sony with entering the LCD market.

Features
-Less energy for use, therefore less heat produced.
-Quicker response than LCD, thus better for computer and high definition purposes.
-Thinness means more mobile with less space and weight.

Acceptability in the Market
OEL’s are already entering and to some extent commonly used in laptops, cell phones and PDA’s. The current model is relatively small at 11-inches, but larger models are on schedule for production in high and low-resolution for 2009.

Translation to Stock Price
Never buy any company because of just one product, but OEL’s are a line of products and a future standard in the industry. Combined with the growing appeal of the Wei and a recovery in Sony’s laptop sales, Sony does have a decent product mix for the next three to five years. Looking at stock performance, 52-week change of only 15.77%, combine with institutional ownership of 15.60% and debt to equity ratio of 0.394 indicates strong potential for future growth. Also as a value play, Sony (SNE) has a payout ratio of 21%. These are all strong reasons to look for an entry point into Sony.

More Financial Information about Sony (SNE)

Posted by jwbir at 01:15 AM | Comments (0)

April 12, 2007

Gambling with the Retailers

During the month of March some of America’s big retailers saw a steady increase in their sales. Nordstrom, (JWN) saw same store sales rise by 15% with analysts upgrading quarterly earnings estimates. However, there is some doubt that the upcoming spring months will bring in the same sales experienced as of late. There are three main causes that could pose potential problems that include rising gas markets, higher interest rates, and an unsteady housing market. These issues come to light after statistics were released that showed the number of Americans filing for unemployment benefits rose to a two month high. It has also not been ruled out that the Fed will not impose higher taxes to curtail current inflation. It was also seen that the fact that the US experienced warmer weather during March and the earlier date of Easter this year will lessen earning reports for the month of March. Thus, although retailers may not experience significant sales declines during April it does not appear that there will be many positive surprise story’s and suggest selling short term positions in the retail industry.

Posted by jcip at 09:16 PM | Comments (0)

April 11, 2007

The Quest for Chrysler

Over the last few weeks there have been a few bids put forth for DaimlerChrysler’s German automotive operations. In the upcoming week the bidders are expected to meet with executives from DaimlerChrysler to discus the various offers that are being proposed. Among the companies that are expected to be present among this meeting are Blackstone Group, Centerbridge Capital Partners and Magna International. However, one name that is not among the bunch is the Tracinda Corporation that made a 4.5 billion dollar bid and hoped to squeeze in as a potential candidate. It was noted, however, that many stipulations followed Tracida’s bid that could potentially make the bid less attractive. What is interesting about this situation is the fact that Tracinda, who is owned by Kirk Kerkorian has a history of challenging companies that oppose him in any way shape or form. Most sources have indicated that this will not be an issue and Chrysler will carry on with negations with the remaining companies.

Since it was announced that a possible sale of Chrysler could occur the stock has been up nearly 30 %. However a big issue that still may pose a problem in the eventual sale is the presence of a very strong labor union in Germany that could block or stall any potential deals. The stock currently trades at 83.18 and see it only falling in the next few weeks. With Chrysler currently in trouble and the fact that the stock has risen just on the idea of a sale, Chrysler is one stock that I would currently stay away from and just watch the current situation play out. For furrther financial news about Chrysler, please visit: DaimlerChrysler Financials.

Posted by jcip at 11:11 PM | Comments (0)

Delicious Feedback

Tagging the sites that I visited with Delicious was interesting, but not terribly useful. If it was an important site, I ended up just remembering the site. If the page was incredibly deep into a website, then delicious was useful, but those pages only came around once in a blue moon. The time that we spent tagging on delicious could have been added more value as time spent on another excel or access assignment. I found BIT 200 very interesting, but I had hoped that I would get a lot more out of this class that would be directly applicable to my future career (i.e. excel and access).

The thought that comes to mind is replacing Delicious with an excel assignment composed of small tasks so that the constant activity of Delicious would not dissipate with excel. Each assignment would build on the last, and intermittent grading checkpoints could be used. A parallel version of this assignment could have been done in Access also with numerous small assignments building into one semester long assignment that would really add value to each student. Understanding how each tool in Excel and Access functions with other tools in Excel or Access is something that we did not do enough of.

This is just an idea, either way, I still found BIT 200 to be an intriguing class. To the end that I am enrolled to take BIT 311 in the fall.

Posted by jwbir at 12:44 PM | Comments (0)

Don't Play the earnings game with the oils this season!

The wait is over, earnings season is back. Alcoa (AA)kicked the season off with some stellar numbers beating earnings by 3 cents. Net income was up 9% in the first quarter. Alcoa was up 0.09% in Tuesday's session, and recently up 1.4% afterhours. Although the season started off with the right foot its not an indication that Wall Street will post the record breaking quarters it it has been posting in the last year.

The streak of record breaking quarters began two years ago when oil prices just started skyrockets. Oil companies were BANKING! They were crushing earnings estimates and increasing their earnings porjections for the next quarter (or five!!!). Thse sort of numbers will be hard to repeat even with oil trading close to its historical highs. one reason I would also be hesitant ot be holding the big oils during the earnings season is because of the issues going on in venezuela with Chavez trying to nationalize its industries. An analyst will certanly ask a question along these lines and it will be incredibly hard for executives to answer this question just because of the uncertanty surounding the issue.

Dont get me wrong, oil is a great play long term but for the next few weeks, its just too risky for me. If you're holding the big oils I would sell and the drillers I would hold. I would be buying all international for this earnings season. I would be looking at RIO, WIR and maybe GSH.

Below is a link to oil and other commodity prices
Oil and other commodities.

Copyright © Eric Medina

Posted by eamed at 02:16 AM | Comments (0)

April 10, 2007

The Gap: Risky, but its a buy!

The market is up more one reason: Takeovers. Gap is the parent company of Bannana Republic, The Gap, and Old Navy Stores. The company has been struggling recently because of laggin same stores sales. Their main source of revenue, the gap has also seen lower margins as well as lower revenue simply because of their lack of stylish designers. Their clothes were quoted as just being "not stylish, just nothing different from what we're seeing in all the other stores." The individual parts of this company are great brands, they're nationally recognized and have a history of reliability. With the recent boom in takeovers and LBO, the GAP as a company or any of its parts is a great target. By having different companies manage each store instead of the parent company managing 3 different stores will give way for efficiecies, cost cutting, new styles and better marketing. Management wants a buyout and so do the shareholders.

Pros:
• Amazing takeover target
• A great and recognized brand
• Good parent company, even better independent stores
• Recent boom in LBO and takeovers

Cons:
o Their management is just not great
o Negative sentiment on the street
o the government

To find out more information on GPS visit the websites below, you will also be able to track the companies stock price and recent upgrades and downgrades:

Stock Price and Key Statistics.

Copyright © Eric Medina

Posted by eamed at 09:36 AM | Comments (0)

Ummm tasty: Jamba Juice

Finding the next "it" product is the way to make money. When investing its very important to look at your surrounding and see what people are wearing, eating and in this case drinking. I recently took a trip to New York City where I had the opportunity to try a Jamba Juice. The reason I went into this store was simply because of curiosity. I wanted to find out why people were making 1/2 hour lines. When I got to the counter I ordered probably the most delicious drink I've ever tried. The great thing about it was that I paid $9.00 for it and even better, other people were doing the same!

As I continued my research I found that Jamba Juice has been a publicly traded company since 2003. The company since then has managed to report a quarterly loss partly because of the housing slowdown (they own most of their franchises and its real estate) and because of their continued expansion to other markets in the US.

A good quarter is the catalyst that JMBA needs to drive up their stock price. By simply looking at the number of people in their stores as well as talking to the employees and hearing stories about how well business is going makes me confident that they will beat earnings this quarter and continue to do so in the coming quarters. Once the company has an actual PE, analyst will start covering the story and make recommendation to buy the stock.

Another thing that attracts me about the company is the high level of insider ownership. High level of insider ownership means that employees have a vested interest in the performance of the company so this is definetly a great thing that could drive up the stock. Also, the major institutional holdings are all Hedge Funds and in my book if Hedge Funds such as Citadel are buying up this stock, I'm a buyer.

Jamba's prodcts are simply great. Their great brands allows for a very high markup. This is a story similar to what we saw in the 90's from starbucks. They had negative earnings for their first few years, this didnt keep the stock from outperforming the s&p for years. Maybe juice will never be as popular as coffee but I am confident the company will deliver great results that will drive up the stock price.

JMBA is a great buy!

Pros:
• Total Cash per share: 1.68
• A great and recognized brands
• Margins per smoothie are very high
• Insider ownership: 16%
• All the hedge funds love the stock

Cons:
o Negative Earnings
o If it gets cold, people won't drink COLD DRINKS
o Competition from other coffee stores and juice makers
o Exposed to rising agricultural prices

To find out more information on JMBA visit the websites below, you will also be able to track the companies stock price and recent upgrades and downgrades:

Stock Price and Key Statistics.

Copyright © Eric Medina

Posted by eamed at 09:10 AM | Comments (0)

April 09, 2007

Why Stand in the Crossfire, Go Buy Some Pearls with RIMM

There are two pools of uncertainty in the handheld communications industry.
1. Nokia (NOK) and Qualcomm are currently disputing over not just the widely published 3G patents (which resulted in a preliminary payment by Nokia of $20 million), but also a series of smaller patents with claims pending in countries including France, the UK, Germany, Italy, and China.
2. Palm (PALM) is currently waffling in the past with no new products to compete with the new smart phone handsets or the new PDA’s. To inject new blood into the company, Palm has been subject to a whirlwind of buyout rumors. Most rumors have included Motorola, but those are just rumors. To this end Palm is a great short or put opportunity.
Research in Motion (RIMM) unveiled its new, more consumer friendly, Blackberry Pearl back in 2006. The Pearl does have competitors, namely Nokia’s line of business smart phones and Motorola’s Blackjack and in June the iPhone. RIMM has a couple of competitive advantages:
1. Respect of the business community, approval and trust is essential to gain market share in the business PDA industry. A similar case, AMD has long out performed Intel in benchmark tests for computations per second, but Intel maintained its market share because AMD does not have the respect level of Intel within the business community.
2. Niche approach (i.e. specialization), Nokia and Motorola (and Apple will) derive the majority of their revenue from the consumer market; hence their appeal should target their breadbasket market segments. Growing into a new market can be a complex and risky. Development of products specialized for business purposes can be expensive and incur smaller returns due to economies of scale. Economies of scale applies to the business handheld industry. Specializing in the business tier of the handheld communications market, has allowed RIMM to reap the competitive advantages of the economies of scale. This will have long-run effects in revenue and market share.

With handheld communications sector poised for growth as the market for handhelds is far from saturated, especially when looking at the future demand for connectivity in the developing countries (namely the BRIC countries), RIMM has upside that has yet to be realized by the market.
More information and financial figures on RIMM

Posted by jwbir at 12:53 PM | Comments (0)

Transports Are Hot

News has come out recently that Berkshire Hathaway, the company run by billionaire investing titan Warren Buffet, has picked up millions of shares in Burlington Northern, a large rail company. Berkshire has also said that it has picked up stakes in other rail companies.

Heavy transport industries, like rail and ocean shipping, is a very attractive option because in many cases it can save a lot of money or, in the case of shipping, is the only option.

Two good plays here are General Maritime and Guangshen Railway Co. Ltd.

General Maritime (GMR) is a fantastic company that operates oil tankers. As demand has increased for oil globally, there has been a big need for increased transport. GMR is running at full capacity because of this. They want to grow their fleet, and are looking for new ships to buy, but new ships will not be on the market until 2009. This indicates that the company has positive prospects far into the future. Oh, and did I mention there is an 8% dividend?

Guangshen Railway Co. Ltd. (GSH) is a Chinese rail company. GSH operates freight and commuter rail lines all over China and are mostly state owned. The state owned nature of this company suggests that it will be highly stable going forward. GSH could be huge, too. It is far less difficult to lay more rail than to create super highways. In the US, much shipping is done by truck because of the massive road network that we have, but China is not thus blessed. Rail is a great way to ship, and being state owned will help their prospects.

Transports are going to be big as international and intercontinental trade increases. Hopefully these to stocks can make you some money.

Posted by jkill at 12:32 PM | Comments (0)

Del.icio.us Review

After using Del.icio.us for the course of this term I have come to the conclusion that I really do not find it that useful. I use it to make my tags, but that it really about it. I find that I am much too accustomed to using Google. After using Google for so many years as my search engine, I have learned to create search terms that will allow me to find pretty specific things with alarming alacrity. This is a very useful ability, and one that serves to render a site like Del.icio.us useless. I can remember many of my favorite and most frequently visited websites, and get to the content faster by using Google or just by simply typing in the URL. My of the articles that I tagged with Del.icio.us I will likely if not assuredly never read again. I read each of them before I tagged them, and, as such, I have already taken that information to memory. The ability to access bookmarks from any machine is a nice concept, but for a person who barely uses bookmarks anyway like me, it really is not all that great. Not to mention, I always have my laptop with me when I go places, so I am very rarely using a public computer that does not have the few bookmarks that I do use frequently.

Posted by jkill at 04:40 AM | Comments (0)

April 06, 2007

Morgan Stanley - Buy It

Company: Morgan Stanley
Ticker: MS
Exchange: NYSE
Industry: Investment Brokerage – National

Pros:

* PE of 9.69
* PEG 0.77
* Operating margin 37.56%
* Strong earnings growth

Cons:

* Sub-prime Concerns

* Hard numbers to beat going forward

Analysis:

Okay, when everyone talks about investment banks, let’s be honest, they always say Goldman first. They are a great company, a fantastic company in fact. However, a massive portion of their profits comes from prop trading operations. Morgan Stanley performs equally well, and even outpaces Goldman on some league tables across the Investment Banking arena. Additionally, Morgan Stanley recently replaced their CEO with John Mack, a former executive that was previously forced out but returned to the company. Since then the firm has performed exceptionally well. Recently Morgan Stanley launched its “World Wise� ad campaign, which is a vast departure from the way the firm previously portrayed itself. This is just another step in the turn around. Right now is a great buying time, too. They are well under their high for the year. MS is trading with the lower PE than Goldman and it has a much lower amount of risk due to the fact that its revenues are not so dependent on prop trading. One of these days, GS is going to get crushed on their trading, and MS will be the one there to pick up the pieces.

Posted by jkill at 01:20 AM | Comments (0)

April 04, 2007

Tribune Going Private

The Tribune Company is a media and entertainment company that oversees newspaper publishing, television services, radio broadcasting and entertainment operations. The privatization of Tribune has been undertaken by University of Michigan and real-estate mogul Sam Zell. Although the Tribune Company has been in shaky waters as of late, Zell feels the company can be turned around and is excited about its internet assets. After negotiations between Zell and Tribune, negotiations concluded with an accepted $34 dollar a share proposal by Sam Zell. The proposed plan, however, has been scrutinized by some as it will take on $4.2 billion in new debt. With companies such as the LA Times under the control of the Tribune Company, Zell has noted that he does not plan to break up the company except for the selling of the Chicago Cubs at the end of this year’s season. For more information about the Tribune Company please vist:
The Tribune Company.

Posted by jcip at 12:02 AM | Comments (0)

April 01, 2007

Cognos- Value and Good Fundamentals, does she have a friend?

Cognos, a business intelligence company based in Canada, beat earnings expectations last week, but amidst a very pessimistic Canadian atmosphere issued a revenue forecast below analyst expectations. For those of you that do not want to read a long sentence about Canada: Canada is currently facing record high oil prices. Consequently, Canadian stocks have been beaten down recently.

Here are the reasons to buy COGN:
1. Institutional investors own 62.80% of Cognos, which indicates strong market sentiment. The major holders include Barclays (5.01%), Harris (2.41%), and Meridian (1.18%).
2. Net income is greater than the two most relevant competitors (BOBJ & HYSL), despite having lower revenue than BOBJ.
3. Operated margins of 14.57% are the greatest of relevant competitors.
4. Price/Earnings multiple is lower than both BOBJ and HYSL (32.37, 45.81, 45.71 respectively).

Business intelligence (BI) is a very broad category, but the meat of the industry is implementing IT solutions to give managers more detailed and analyzed information so that more informed decisions can be made quicker and easier than before. With the housing slump in the states and high oil prices holding down the Canadian economy, efficiency is key for companies to continue growth. To borrow a cliché, BI solutions allow managers to “squeeze blood out of the rock� Hence, demand for BI solutions should rise over the next year.

Detailed Description of Cognos (COGN)

Financial Statements and Evaluations of Cognos (COGN)

Posted by jwbir at 05:11 PM | Comments (0)