Thundering Turd
We know some fine folks who work at Merrill Lynch. They are at the top of their game...and sharp as tacks.
Many of them read our site...thanks for reading. And congratulations on a bang up year.
We are sorry you have to work with Richard.
Bernstein is a smart cookie who makes terrible calls. If anybody can defend his calls please email us...but we are pretty sure he has been horrible. We have no use for strategists here. At least bad ones.
These picks might work...as long as Rich had nothing to do with them…
via Tech Trader
It’s the time of year when everyone with a little extra time on their hands starts makes predictions and recommendations for the coming year. Always fun to read, rarely remembered a year later, but good blog fodder. So I’ll be passing some of them along this week.
To start things off, let’s take a look at the Merrill Lynch list of the top 10 stocks for 2007.
This is not a tech specific list; but it does include two names from the tech and telecom world. (This is by design; there is one stock for each of the 10 S&P sectors):
* Air Products (APD)
* Ambac (ABK)
* Ameren (AEE)
* Emerson (EMR)
* General Mills (GIS)
* Genuine Parts (GPC)
* Marathon Oil (MRO)
* Merck (MRK)
* Sun Microsystems (SUNW)
* Verizon (VZ)
Thank you Eric Savitz
Painting The Tape
We love to collect beautiful things here at UTC...is it any wonder that the chart of Riverbed Technology (RVBD-NASDAQ) recently caught our eye? Who needs Warhol when Riverbed is on your sheets. The long side of your sheets that is.
The first substantial pullback in the stock since its IPO was met with that age old remedy...a press release…
Riverbed Technology, Inc. (Nasdaq:RVBD - News), the performance leader in wide area data services, announced today that the Korean Ministry of Labor and Ministry of Foreign Affairs and Trade have purchased and successfully deployed Riverbed’s award-winning Steelhead® appliances to improve application performance over wide area networks (WANs). In addition, strategic Korean customers LG Electronics, Samsung Electronics, SK Shipping and Asiana Airlines have chosen Riverbed to enable collaboration between remote sites, consolidate IT infrastructure, accelerate application performance or improve data protection. Market Wire
No position here...but we want to do some work on it.
We will keep you posted.
Lock and Load
*UTC Breaking News*
Heelys Inc.’s 6.43 million-share initial public offering. lead by Bear Stearns, priced Thursday evening at $21 a share, well ahead of the expected price range of $16 to $18 a share.
Sign(s) of The Times
Homebuilding stocks caught a bid earlier this week due to comments made by Robert Toll of Toll Brothers (TOL-NYSE).
The colorful CEO of luxury homebuilder Toll Brothers, Robert Toll, stepped forward on Dec. 5 with the claim that some housing markets might be stabilizing. His comments came as a slight disconnect from the company's quarterly news: Profits plunged, customers canceled more orders, and the company took a deep hit on its property holdings... Business Week
Are the comments wishful thinking?
The change in tone struck several analysts in the Dec. 5 conference call, which came less than a month after the company’s last briefing. “You seemed like a very…I guess broken man last time. And here you are a new man,” Ivy Zelman, an analyst at Credit Suisse First Boston, told Toll Tuesday. “I’m wondering which Kool-Aid you’re drinking because I want some. No one else in the industry is willing to stick their neck out.” Business Week
Never underestimate the ability of corporate insiders to multi-task. Filling out sell tickets while simultaneously boasting about business prospects is considered best practices in many corner offices. Homebuilding executives reaped huge windfalls from insider sales over the past two years.
Watch what they do not what they say.
As promised, we recently spoke with Wayne Nef of Sniper Research. Wayne has published equity research on the homebuilders longer than nearly all of the talking heads regularly trotted out on CNBC, and we hope his comments help you make sense of the endless spin.
UTC: Tell Me about your background. And how is business?
I have covered homebuilders for about ten years and building materials stocks for about 16 years. I started my career at Value Line in 1991, and I worked as a buyside analyst for Merrill Lynch and Circle T Partners before starting my hedge fund consulting business in 2003. Don’t believe what you read about independent research dying out, our business continues to grow sequentially, primarily from hedge funds. They are good clients to have!
UTC: Fair enough. Do you talk to management teams or prefer to focus on insights drawn from independent sources?
Generally, when I begin to drill down into a sector I like to talk to my contacts within the industry. For the homebuilders this would include some of the management teams, realtors, contractors and contacts at buildng material suppliers. I also find a lot of pertinent data in the 10-Qs and conference call transcripts.
UTC: Where do you stand on Industry Fundamentals?
I believe the bulls are buying the stocks on the hopes that they will see a turn in the fundamentals this spring, and not on the fundamentals. Fundamentals are weak currently and all of the homebuilders have been cutting their guidance. Many of the homebuilders were presenting at the NYSSA 10th Annual Homebuilding Confererence (12/6/06) today, and while all were bullish about their long-term prospects, none were bullish about their prospects for 2007. Many spoke about further charges for writing off optioned land and for writing down the value of land already on the books.
Two of the companies that presented, TOL and HOV said that they may be nearing bottom in some selected markets, but that they expected things to just bump along the bottom and not be moving up anytime soon. The recent rally has brought many of these stocks back up above book value. Due to the number of charges being taken within the industry, book value is a bit of a moving target right now, thus for me to turn more bullish on this group I would need the stocks to trade at a discount to book value rather than at a premium.
