The Original B*a*r*r*o*n*s Game !

Discussion in 'Trading' started by stonedinvestor, Feb 17, 2007.

  1. Well it's with a slightly angered heart that we unveil this weekends version of The Barrons Game. Last week I stumbled onto the fact that The Street.Com in a desperate attempt to move away from Cramer- has stolen the stonedinvestors Barron's game concept. Well-not entirely stolen- while the will highlight everything in Barrons- they won't of course, be putting their money where their mouth is and they WON'T be telling you what looks REALLY good to buy. So what's the use?
    All of this should come as no surprise I had already spotted two lousy Blogs in Cyberspace trying to copy me... but it enrages the stonedinvestor that the did not contact me directly to write for them-So that I could turn them down. They know all about the stonedinvestor I assure you- mainly through my several dozen mean e-mails sent to Cramer ridiculing his picks-- I also have a " source " within the who has been telling me that quite a few minions over there follow Equity Trader closely and have tried (in vein ) to figure out SI's stockpicking methodology...if only it was that easy!

    Alright let's put our angry heart aside and peruse through the latest issue- On the cover: An angry bald man who looks exactly like my brotherinlaw! His name Nardelli Slayer! What a great name! He could go by " Nardo " to his friends or " Slayer, " wait a minute that's not his name! That's his OCCUPATION! He is Ralph Whitworth, officially titled " Activist Investor. " more on him later.

    Alan A starts off the issue noting what kind of special hell we are in investing wise-- weekly jobless claims soaring, new homes plunging, etc... VISTA release bombing-- leading to bloated inventories all over tech land... alas, we knew this was going to happen didn't we?

    Small notation Asian markets closed for WEEK of Chinese new year. Imagine that over here! With an overheated stock market! I would be a very nervous bull holding equities over such a long market closed period but god bless the Chinese they are.

    Bull mention of Sotheby's'. Bull mention of Web Ex- we'll put them in the maybe pile for more research.
    Bull piece on ERTS. Ditto we'll look at it but I'm not favoring game makers now.

    Alright interview with the guy who killed Nardelli- Ralph Whitworth, burly 51 year old. First off Mr. Whitworth I too am " burly " very much so, so. Maybe we are alike? Ok he had Paul McCartney play for his wife's B Day- perhaps we are not running in the same circles. What does he do? Well he agitates he and his partners get on boards and turn companies around and every graph you look at of his ventures go the same way- UP! JC Penny, Home Depot, Sovereign Bancorp & Prudential. What a great job! You can be an ass hole and come off to shareholders looking like a saint. Ralph started out with T Boon Pickens and I was happy to read left because he found T Boon to be a big hypocrite. He went on to form his own outfit Relational with an initial investment from CalPERS of $200 million ( note to self* contact CalPERS for loan)
    Today Rational is running $6 Billion. Ralph gets to choose his victims and them come in as a white night.. companies with strong cash flows but underperforming shares watch out! First comes the toehold investment of $100 mln from Rational ( always reject that CEO's !) then the agitating, the board seat taking- usually two and the changes come... and the stock price-- buoyed no doubt by Hedge Funds who follow this guys every move-- the stock prices head up. Home Depot is the latest victim and who am I to doubt Whitworth here? But a list of some of his other interests shows Ceridian, ConAgra Foods, Unum Provident, Natl semi & Baxter Int. I'll be looking into Baxter first. Then HD, as it will take some time, but after selling some bad performing assets if the PE can rise to 18 from 14 which it probably can in 3 years the stock price will be- $80!

    Bull piece on Jack Daniels is bringing back bad memories of the Jack Daniels shot contest I won in College with a number of 24 consecutive. After a long talk with the toilet and a difficult night I awoke to read that a fellow collegian had died that night from 6 fewer shots! Let's move on...

    At last something we can sink our teeth into: HLIT.
    Telephone entries into the triple play space is really helping Harmonic already benefiting from rollouts from cable and satellite. It's a shadowy name from the past played before- I have some hesitation here- but unlike many of these small ideas from the past few years there's no denying HLIT is still around and that says something. A definite maybe.

    Next up interview with a guy who looks like David Faber, it's the CIO of Int Equities, Harris Associates-
    David Herro. David likes big out of favor stuff like GlaxoSmithKline trading at the same level now as the mid 1990's. His biggest holding DaimlerChrysler,
    very much in the news this week. He likes other car makers too including Honda which the stonedinvestor has liked on and off as well.

    Into the meat of the issue now and it's starting to hurt- the Brush Engineering fiasco begins. Those of you not familiar with the story here- Stoney picks BW as a top pick for 07' but gets confused by all the little small high beta crap and keeps failing to pull the trigger as the good story/ boring stock just sits at $34 forever. Stoney checks every day, Stoney checks once a week, Stoney forgets to check... Brush raises 07 earnings estimates from $1.75 to $2.75! Nice job analysts! The stock goes UP $14 MFing dollars. This one hurts.
    Other charts of interest DAKT gets slammed but right to a support line- I actually like this stock and have done VERY well with it in the past including a split and race right back up to the pre split price! I think DAKT is worth a strong look this week. IROBOT
    is a self directed, remote controlled mess of a stock.

    CNX Consol Energy is up 15% since Jan 3 five times the market... don't know why but you SHORTERS out there- heads up on this one.

    Insider highlights* NEU Newmarket is a very interesting co off it's highs with 1 buyer 160,500 shares a BIG purchase. Something called Icagen ICGN has 2 buyers with over 1.7 million shares! And another stock I'm not familiar with Dor Biopharma DORB has 4 buyers accumulating 531 thousand plus shares. On the sell side BRKR Bruker Bioscience has 3 insiders unloading a whopping 6 million 900 thousand shares! Look out below! Zimmer and Stryker are both on the sell list as well so perhaps some greater caution should be paid by yours truly to the health of the health sector!

    Lets sum up: Possible plays in this weeks issue:
    BID // ERTS // WEBX // Baxter // HD // NEU // HLIT // ICGN // DORB // DAKT.
    ( short ideas* IRBT, CNX & BRKR).

    As always please read the issue yourself and if any ideas pop out at you that I have overlooked please play along! ~ stoney
  2. At first look folks NEU Newmarket is looking interesting.
    Renaissance Technologies, started by Jim Simons, is considered one of the most successful hedge funds. Renaissance is a "black-box" fund, using sophisticated computer models to predict market movements. They have just released a disclosure statement of ownership of NEU of 5.84%.

    As we know from Barrons...
    NewMarket Chairman Adds To Stake Again
    Wednesday February 14, After shares of NewMarket Corp. (NYSE: NEU - News) fell sharply in the wake of a fourth-quarter earnings report, the 72-year-old chairman of the petroleum additives maker stepped up and bought almost $10 million in stock.

    Chairman Bruce Gottwald, who has been a director since 1962 and who previously served as chief executive officer of the company, purchased 200,000 shares of NewMarket at an average price of $49.03 on February 7th/8th, increasing his direct holdings to approximately 1,780,335 shares, or a 10.3% stake. The purchase marked the fifth time that Gottwald has bought shares of NewMarket on the open market during the past year.

    Previously, Gottwald bought 30,400 shares at $32.35 in February 2006; 8,000 shares at $36.00 in early March 2006; 112,000 shares at $42.00 in late March 2006; and 85,400 shares at $48.98 in late July/early August 2006. All told, since February 2006, Gottwald has purchased 435,800 shares of NewMarket at an average price of $42.97 per share, expending approximately $20 million in the process.

    Meanwhile, another NewMarket director also bought stock last week.

    Director Patrick Hanley purchased 1,000 shares at $46.05 on February 6th, boosting his holdings to 1.4K shares. The chief financial officer of Overnite Corporation, a subsidiary of United Parcel Service Inc. (NYSE: UPS - News), Hanley has been on NewMarket's board since 2004, and had never previously purchased the stock on the open market.

    Shares of NewMarket were trading under $1 as late as June 2002 before the company embarked on a restructuring program, and by the end of 2003, the stock was knocking on the door of $22. The following year, 2004, proved to be disappointing, as the stock shed almost -10%. It wasn't looking much better in 2005 until an end-of-year rally pushed shares of NewMarket to a close of $24.20. Last year, NewMarket caught fire, hitting an all-time high of $70.00 in October 2006, and the stock ended the year up almost 145%. NewMarket also re-instituted a dividend in 2006, the first time the company returned cash to investors since 2000.

    Although the stock had fallen about -20% from its high, NewMarket was trading fairly healthy through the end of January, finding a base in the mid-$50 area. However, after the bell on Friday, February 2nd, the company reported 4Q06 results, and the following market day, Monday, February 5th, the stock plunged more than -18% to its lowest level since July 2006.

    For 4Q06, NewMarket reported earnings, excluding special items, of $10.5 million, or 60 cents per share, up from $8 million, or 46 cents per share. However, including special items, earnings fell from $11.1 million, or 64 cents per share, to $4.5 million, or 26 cents per share. During the quarter, NewMarket replaced its 8.875% senior notes due 2010 with a new issue of 7.125% senior notes due 2016, resulting in a -$7 million, or -40 cents per share, charge.

    On the top line, NewMarket's revenues grew 4.3% to $306.2 million. The dying TEL segment contributed $2 million in revenues for the quarter and $600,000 in operating profit. Year-over-year, NewMarket expanded gross margins in Q4 from 17.64% to 20.97%.

    "Looking out, by any measure 2006 was an outstanding year for our petroleum additive segment," Principal Financial Officer David Fiorenza told listeners on a conference call. "We continue to focus on growing our business by helping our customers to be successful in their marketplace. Our strategy is twofold. Cost management in those areas that are commodity-like in their characteristics through reformulations and new component introduction, and grow through product differentiation in areas where margins are higher. We expect that our approach in 2007 will be much the same. As in any year, there are many variables, which will determine the ultimate profit delivered for that year."

    Fiorenza said that raw material costs remain "a significant unknown" and that "despite a recent downward trend in feed stock, crude oil, and natural gas, significant volatility is still being experienced." He added that, "On the demand side, worldwide usage remains strong and our plants continue to operate at very high rates, and we see no slow down during the year."

    >> so we have TOP line growth & EXPANDING margins and a company who reorganized some debt out to 2106 from 2010 and got spanked for it- taking a 40 cent charge. No charge next QTR will mean back to the races for this stock- looks like a Street over react here. We are in a nice support zone going back to May, June and July of last summer...
  3. DAKT I am worried about a filing with the patent office by Google. Which looks to step on DAKT's new growth opportunity of outdoor advertising.

    HLIT was a $10 stock 5 years ago and a $10 stock today F em'!

    DORB & ICGN silly nothing bios.

    Baxter Health's newest project is actually a collaboration with tiny HTI. Who do you think has a recently taken big position in HTI?? He, he, he....

    BID, ERTS, HD, all look fairly priced. Going to work on WEBX later....
  4. topdown


    My Barron's play of the week is PFG. These statements got my attention:

    "In recent years, Principal has increased assets under management, organic sales and earnings per share by at least 17% annually. Each new dollar in a retirement account boosts margins because expenses don't go up as much."

    "Pension reforms approved last year could boost U.S. 401(k) assets by $3 trillion, or more than 50% by 2008..."

    Yeah - That's Trillion, with T. That's what I call growth. I'll be buying Tuesday A.M. hoping for a short-term pop from the Barron's mention, but I really consider this a longer term hold.

    Stoney - The mention of GES in the dividend column also piqued my interest. It broke-out last week on earnings surprise and positive guidance (apparently strong sales growth in Europe). You are the retail expert, so I was hoping you would have an opinion.
  5. The TKR article stood out for me, that's the kind of comapny private equity likes. Also DEO mentioned in the Brown Foreman article. You just cannot go wrong with SIN stocks these days, gambling, alcohol and tobacco. On another note, I'm playing hurt this weekend, I was walking in to the newsstand I get my Barrons at yesterday and slipped on the ice and landed on my wallet. Not a good way to start the week. end! :) :) :)
  6. Thanks for the input guys-- thanks to the day off-- I'll be matching your ideas which I may like better than my own NEU.

    PFG, GES, TKR, DEO....

    As for Guess It's really kind of weird. Here in the states kind of a forgotten brand had all those great sexy adds with the girls shooting pool etc.. And those girls were HOT! That seems top work better in Europe where I " Guess " Guess is kicking some serious ASS.
    I watched with wonder that stock's reaction last week to a stock split announcement that was institutionally driven stock action for sure. Another similar story unfolding at Mohawk Carpet without the stock split straight up!

    runningman stay upright!
  7. Guys today i do my DD on your names. NEU is trading like sh*t. There is still time to make our $ on this issue but it will be tough.

    I have an idea how to change the game. That would be to predict what will be in the next barrons before it arrives on the doorstep! Sound interesting?

    My early candidate folks is SNTA. on 2/9 Bruce Kovner bought $7 freakin' million dollars worth of stock. What's crazy is he bought at $10 and the stock is $9. Should Barrons go with it in insider actions- i have no doubt the stock will shoot to $11. This will be RESEARCH today boys! I have another one too- WNC Wabash the trucking play HUGE insider buy at $16.11 stk only $16.90! 2 ideas to think about....
  8. I think the prediction idea is a good one. I predict an article about oil drillers (BJS,NBR,HAL) and one about grain prices (ADM, CPO)
  9. I predict CHINA GOES POP! as the main story. And a bull piece on Rambus because it's the only stock I keep talking about and not buying.