I think its funny how Calculated Risk eschews the euphemisms of “stock offering” or “raising capital” in favor of the more blunt “stock dilution plan” in relation to Merrill Lynch.
Archive for the 'News' Category
In late April, Todd at ValuePlays posted his thoughts on the news that Starbucks would be introducing smoothies this summer. Smoothies would not be a bad idea if they were reasonably priced below $4 a drink.
Well, here’s a news release with the pricing details, flavors, nutrition info, and name of the new smoothies:
(Crain’s) — Starbucks Corp. plans to introduce a new line of smoothies Tuesday called Vivanno.
The drinks are the latest push by Starbucks CEO and founder Howard Schultz to boost sluggish sales at the Seattle-based coffee chain. The smoothies illustrate Starbuck’s strategy of offering more healthy options to attract new customers. The 16-oz smoothies will sell for $3.75 to $3.95, and initially will feature two flavors: orange mango banana and banana chocolate.
The drinks will include a banana, whey protein and Naked juice. The orange mango banana blend will have 250 calories, 16 grams of protein and 2 grams of fat. The banana chocolate blend will have 270 calories, 21 grams of protein and 5 grams of fat.
The new drinks debut tomorrow. Good luck, Starbucks.
George Will correctly states we wouldn’t be where we are today without beer.
Did you know that Adams Express was started in the 1800s, became a closed-end fund in 1929, and has paid a dividend every year since 1936? (via Investingfromtheright)
Oh, and did you know that the FDIC just took over Indy Mac, a bank with $32 billion in assets? (via FDIC, Marketwatch)
On Tuesday, the New York Times and Wall Street Journal reported that Steve & Barry’s, a clothing chain that tried to undercut competitors by selling celebrity fashion and shoes for less than $10, was preparing to file for bankruptcy protection. A private company, Steve & Barry’s had been one of the fastest-growing retailers in the country, “opening hundreds of stores selling clothes under the names of Sarah Jessica Parker, Venus Williams and Stephon Marbury.”
Today, news reports confirmed that Steve & Barry’s filed for Chapter 11 bankruptcy protection. Of particular interest is that the company’s management have held discussions with Sears Holdings Corporation (SHLD) about a possible bailout or an acquisition of some of its labels. Today’s AP news story also included the views of two analysts regarding a possible Sears deal. One analyst says this would be a bad deal, just two poor companies trying to get together. The other analyst disagreed saying that there would be a lot of people willing to go to Sears or Kmart for cheap, celebrity fashion.
As for my own personal opinion, I trust that Eddie Lampert will do the right thing. If Sears acquires Steve & Barry’s, it will be because Lampert feels it is an undervalued business or that it will help Sears become more of a retailer.
For more commentary on this story, visit ValuePlays.
Jesus, sometimes I think I could run some companies better than some current management teams. When Blockbuster announced in April that it wanted to acquire Circuit City, I thought to myself they must be stupid idiots. If that deal actually was consummated, it would be like Dumb and Dumber. Two companies destined to go down in flames separately would now go down in flames together.
However, Blockbuster just announced it has dropped its bid for Circuit City. BB’s CEO said it wouldn’t be in the best interest of the shareholders. Ya think? I bet his wife knocked some sense in to him…
Starbucks gets serious about increasing profitability: Starbucks announces it will close 600 stores.
The company, the world’s largest coffee chain, said Tuesday that it would close 600 stores in the United States beginning this year. It will lay off more than 12,000 employees in the process, the most in its history.
The plan builds on an earlier decision to close 100 stores, which are included in Tuesday’s numbers. Starbucks is retrenching in an effort to recapture the once-mighty growth it built upon venti soy lattes.
When I started reading Todd Sullivan’s blog ValuePlays a couple of years ago, he was harping about everything Starbucks was doing wrong and how they were losing to McDonald’s and Dunkin’ Donuts. The increase in commodity prices also contributed to the decline in profitability.
Now that Starbucks has its old leader, Howard Schultz, back, management might be able to turn things around a bit. Hopefully Starbucks will be able to return some lost value to shareholders. Just look at the chart…
The people of the midwest are going through a lot right now:
The storms have pounded the Midwest since the start of the month, knocking out electricity, submerging roads, destroying homes and lifting corn prices to a record. The damage may reach hundreds of millions of dollars, the National Weather Service said. Some cities, including Madison, Wisconsin, have already had nearly twice their typical annual rainfall totals.
Tornadoes have killed six people, including four teenagers at a Boy Scout camp in Iowa, since June 11.
Areas of Des Moines, Iowa, are under a voluntary evacuation order after the Army Corp. of Engineers advised that the Des Moines River will be close to the top of the city’s levees today, officials said. Some 1,200 volunteers in the city of 199,000 have helped shore up defenses against the rising water with sandbags.
And this from the NYT:
By now, one prospect — a notion no one wants to ponder but is impossible to avoid — has begun to emerge in Iowa, as well as in Indiana, Minnesota and Illinois: the possibility that this summer might prove to be something like 1993, when the torment of flooding resulted in widespread personal misery and loss, as well as economic cost of $20 billion.
Needless to say, things are really sucking at the moment for them.
What I’m most interested in are the effects of these storms. The most obvious effect is upon crops. The price of corn is up 25% this month. This will also increase the production costs for ethanol plants, possibly causing some to shut down.
Then there’s the insurance businesses that sell policies to the farmers to insure their crops; they are obviously going to take a big hit. Bloomberg has reported that crop insurance sales have surged over the years:
Premiums paid to crop insurers jumped 43 percent last year to $6.6 billion, while the number of policies declined, according to the U.S. Department of Agriculture. That means Wells Fargo & Co., Ace Ltd. and American Financial Group Inc., the largest providers, bolstered revenue without having to do more work.
They’ve also been lucky, avoiding catastrophes like the 1993 flood along the Mississippi and Missouri Rivers, and the 1988 drought that ruined production in Kansas. In the worst years, claims may cost insurers five times annual premium revenue.
“The thing that’s making the numbers looks so much better on crop insurance is higher grain prices,” said Art Barnaby, 60, a professor of agricultural economics at Kansas State University in Manhattan, Kansas.
Crops that are more valuable need more liability coverage, said Barnaby, who helped develop crop insurance policies in the 1990s. “If you’re a grain farmer or crop insurance company, either one, you’re better off,” he said.
The growth in crop insurance, which has been profitable every year but one since the 1993 flood, comes as most of the U.S. property and casualty industry stagnates. Overall sales fell to $508 billion last year from $512 billion in 2006, according to the National Association of Insurance Commissioners in Kansas City, Missouri. The decline occurred as rates dropped for workers’ compensation, factories and airplanes.
With disasters like this month of flooding and storms comes opportunity. The market often overreacts to bad news, grossly misvalues stocks, and creates opportunities of which the intelligent investor can take advantage.
Investigating these insurance companies that are bound to take a hit is something I should do. These are the companies mentioned in the news I have read:
- Wells Fargo (WFC)
- Ace Ltd. (ACE)
- American Financial Group, Inc. (AFG)
- EMC Insurance Group (EMCI)
Corn prices reach an all time high, so why not tax those greedy farmers? If we want a windfall profits tax on oil companies then why not the same for these greedy farmers who are enjoying high prices for their commodities? However, farmers and agriculture, for whatever reason, have a special place reserved for them in the hearts of politicians.
There is no way anyone would tax a farmer. As the Tax Foundation points out, farmers receive huge subsidies every year.
So why do politicians treat farmers and oilmen differently? I think it has something to do with the stereotype that farmers are poor and oilmen are conniving and rich. Most of the simple-minded politicians respond to certain words and concepts in simple, predictable ways:
Housing: Good
Oil: Bad
Small business: Good
Corporations: Bad
Farmers: Good
Foreign: Bad
Jobs: Good
Middle Class: Good (because everyone is in it)
Rich: Bad
Mark Hulbert writes about a new study that has found that over the long term, stocks dropped from an index generally outperform those that are added. The study is entitled “The Long-Term Impact from Russell 2000 Rebalancing.”
Google recently announced it is provding free, real-time quotes on NASDAQ securities. I suspect that it won’t be long before there are free real-time quotes for all securities on the other major exchanges.
Alphaville reports that Lehman is not doing so well and people are starting to lose confidence in it once again. Lehman might soon go the way of Bear Stearns.
Mish writes about more evidence that shows we are in a recession, namely pointing to a NYT article describing how state and city government have not yet cut back on their budgets. When budgets are cut back, the economy will worsen.
The economy is clearly not what it once was. Americans and Maconites are cutting back on spending and are stopping by the local pawnshops and eBay to pick up some extra cash in exchange for the crap they don’t need.
Americans unload prized belongings to make ends meet. (AP)
Pawn shops receive more traffic as times become financially tougher. (Macon.com)
Low Spending Is Taking Toll on Economy. (New York Times)
Big Retailers Scaling Back Expansion Plans and Shutting Stores. (New York Times)
