Archive for the 'Stocks' Category

Sears Showcase at NY Fashion Week

Published
by
Doug
on August 13, 2008
in Business, Fashion and Stocks
. 0 Comments

One does not associate Sears with fashion. The first thing that always came to my mind are large refrigerators and lots of tools. But perhaps Sears will be able to improve its image in the world of fashion after their upcoming showcase at New York’s fasion week in September.

Sears, Roebuck and Co., a subsidiary of Sears Holdings Corp. said on Wednesday that it will unveil a lifestyle exhibit on Sept. 10 in New York’s Bryant Park, where fashion’s biggest names parade their spring collections on catwalks set up under big, white tents.

The retailer, not known for fashionable clothes, faces a hurdle convincing shoppers of its chic factor. It is also following in the footsteps of discount retailer Wal-Mart Stores Inc., whose attempt to ratchet up its fashion credentials at the same event backfired, hurting profits in 2007.

Sears’ exhibit, open to the public, will showcase brands Sears already offers in its stores, like Kenmore appliances, as well as new brands that it is introducing, like a clothing line by rapper LL Cool J.

The article also mentions how Wal-Mart’s showcase at the fashion week in 2005 was a bit of a flop. By 2007, Wal-Mart scrapped its Fashion Week plans because “[i]ts shoppers proved more interested in basic, affordable clothes than trendy fashions like skinny jeans, leaving Wal-Mart with heaps of unsold clothing to mark down.”

Hopefully this will be a net gain for Sears.

Disclosure: I own Sears (SHLD)

Alleghany Updates Quarterly Holdings Report

Published
by
Doug
on August 10, 2008
in Energy, Filings and Stocks
. 0 Comments

Alleghany Corp (Y) last Friday field its 13F-HR, its securities holdings report. There are 13 new holdings, though they are all quite small relative to their entire portfolio. However, I still would like to analyze further some of their new holdings.

What stands out most to me is that eight of these new holdings are related to the energy/oil/gas industries. In general, I think all these new holdings are in some way related to energy or construction. I guess this is not surprising considering the recent decline in oil and the sell-off of all oil- and energy-related companies.

The new holdings are (from largest to smallest investment):

  • CBI - Chicago Bridge & Iron Co
  • GLBL - Global Industries Ltd
  • TRMA - Trico Marine Services Inc
  • PBR - Petroleo Brasileiro
  • KEGS - Key Energy Services Inc
  • EOG - Eog Resources Inc
  • FTK - Flotek Industries Inc
  • MDR - Mcdermott International Inc
  • PXP - Plains Exploration & Production Co
  • STO - Statoilhydro ASA
  • XTO - XTO Energy Inc
  • CCJ - Cameco Corporation
  • NS - Nustar Energy LP

I will most likely look closely at CBI, GLBL, and TRMA. Trico Marine in particular looks appealing since it has fallen quite a bit and its Chairman and CEO recently purchased 10,000 shares.

XL Capital CEO Purchases $2 Million of Stock

Published
by
Doug
on August 5, 2008
in Filings, Insurance and Stocks
. 0 Comments

The Royal Gazette reports that XL Capital’s (XL) CEO Michael McGavick recently purchases $2 million of his company’s stock:

XL Capital Ltd. chief executive officer Michael McGavick has shown his confidence in his company bouncing back from its recent hard times by spending $2 million of his own money on the Bermuda-based insurer’s shares.

A regulatory filing on Thursday showed that Mr. McGavick purchased 110,000 XL shares on the open market at $18.19 apiece, thereby quadrupling his holding in the company he leads.

Another insider to give personal financial backing to the company was former Bermuda Governor Sir John Vereker, an XL director, who invested nearly $50,000 in its shares, also on Thursday.

Mr. McGavick has been in the XL hot seat for three months, succeeding Brian O’Hara, and has experienced a baptism of fire during one of the most difficult periods in the company’s history.

A company’s CEO purchasing large amounts of stock on the open market is a very positive sign. I’ve written about XL previously in connection to their exposure to the massive storm and flood damage Iowa saw not too long ago. XL’s stock is down over 70% for the past 12 months. I am seriously thinking about establishing a small position in XL with this recent bit of news.

After Lumbering Along, Paper Now Profitable

Published
by
Doug
on July 31, 2008
in Canada, Commodities, Investing and Stocks
. 0 Comments

I’ve known for 4-5 months that famed value investor Seth Klarman has been invested in two paper-related companies: International Paper (IP) and Domtar (UFS). It seems that lumber and paper-related companies have been particularly out of favor. However, International had a great day, gaining nearly 14% after announcing net earnings gains of 20%. In fact, Bloomberg reported, “International Paper Soars Most in 28 Years on Profit.”

Another interesting tidbit is that with IP’s recent acquisition of a business asset from Weyerhauser, IP will soon be the world’s largest maker of containerboard and corrugated boxes. Sounds like a decent-sized moat to me.

Turning away from paper and towards lumber, the market blog from the Canadian Globe and Mail asks whether lumber be the next oil? The Canadian blog gives particular attention to Canfor Corp., Canada’s largest (or second-largest by market value) lumber producer.

Canfor’s stock has fallen over 40% in the last 12 months, yet Canfor’s CEO Jimmy Pattison has been purchasing shares and has increased his stake in the company to nearly 30%. The fact that Pattison is aligning his interests with the company is a great sign. Pattison also seems to have a history as an activist investor. Two other catalysts for a recovery of Canfor’s stock is a falling Canadian dollar or a recovery of the U.S. housing market.

Things still look pretty bad for Canfor, and most likely other lumber companies as well. A recovery can be imagined, but is not in clear view. But aren’t the bad times the best times for a value investor?

Will Sears Bail Out Low-Priced Fashion Retailer?

Published
by
Doug
on July 10, 2008
in News and Stocks
. 0 Comments

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.

Fortune’s 40 Best Stocks On Which To Retire

Published
by
Doug
on July 9, 2008
in Investing and Stocks
. 2 Comments

Fortune recently listed 40 of the best stocks on which a person can retire. They subdivide the list into 5 categories: growth and income, bargain growth, deep value, small wonders, and foreign value. As I am on the road to becoming a value investor, the “deep value” stocks are what interested me the most. So what type of stocks does Fortune consider to be deep value?

First is Applied Industrial Tech (AIT), a maker of bearings and transmission components that is a “cash-generating machine.” Second is Carlisle Cos. (CSL), a maker of construction materials, roofing and tires that “has weathered the housing crisis and should post double-digit profit increases for the next few years.”

Third is Cascade (CAE), a parts maker for forklifts and other industrial trucks. Fourth is National Presto Industries (NPK), maker of stuff from diapers to ammunition and appliances. Fifth is Pfizer (PFE), the huge pharma company.

Sixth is Regal Beloit (RBC), maker of energy-efficient motors. Seventh is UST (UST), which does chewing tobacco like Skoal and Copenhagen. And last is VF Corp. (VFC), owner of clothing brands like North Face, Wrangler, and Vans.

All these stocks have current ratios of 2.1 or higher, meaning that they all have very low debt and will most likely be persevere through the current credit crunch and economic downturn. Also, they have very low P/E ratios: all or 13 or below, except for UST which has a P/E of 16.

I myself owned VFC during 2007 making a decent short-term profit. The fact that its mentioned as a value stock makes me want to go back and look at it again. I’ve also been eyeing Phizer for 6 weeks. I know that some of its drug lines are about to expire, but still, the stock’s decline and super-low P/E ratio for such a huge company boggles my mind.

Bruce Berkowitz has lately been mentioning healthcare and pharmaceuticals as good value picks. I agree that this is a good area to be in at the moment as there seem to be an abundance of unliked stocks in this sector, but it would be prudent to choose four or five different stocks in order to diversify against risk.

Can Sentiment Turn Any More Sour on Sears?

Published
by
Doug
on July 9, 2008
in Investing and Stocks
. 0 Comments

searsOut of all the stocks I follow, Sears Holdings Corporation (SHLD) has received by far the most negative and sour treatment. People have even claimed that bankruptcy is a certain destination for Sears. Feeling that sentiment can’t get much worse and that Sears and its leader Eddie Lampert are sorely misunderstood, I finally bought some shares of SHLD yesterday.

Great investors like Bruce Berkowitz of Fairholme, Bill Ackman of Pershing Square Capital Management, and Bill Miller of Legg Mason have all been invested in Sears for some time. Eddie Lampert is also a substantial shareholder, controlling just under 50% of shares.

But aside from following the lead of great investors, Sears is undervalued for two main reasons: its real estate and brands. If you’d like a more substantial explanation of why Sears is a great investment, just take a look at all of the posts on ValuePlays about Sears.

“The Market Can Be A Cruel Mistress”

Published
by
Doug
on July 7, 2008
in Humour, Stocks and Videos
. 0 Comments

In Season 3, Episode 9 of the T.V. show News Radio, Beth who inherited some money asks Mr. James, the owner of the radio station, for some stock advice. Mr. James refuses to give out stock tips, saying that if one tip goes bad, he’s going to lose a friend.

Here’s the final exchange between Mr. James and Beth before he relents and teaches Beth how he invests:

Mr. James: You be careful because the market can be a cruel mistress.

Beth: Well so can I, but that’s not how I want to make my money anymore.

If you watch the entire episode, you’ll find out how the easy money is made.

On a sidenote, I felt that News Radio was an underrated show during its time on air. Phil Hartman is especially funny in his role. Watching Phil in News Radio always reminds me of how great an actor he was.

Weak Economy Slows Cargo and Idles Railcars

Published
by
Doug
on March 30, 2008
in Charts, Economy, Stocks and Transportation
. 2 Comments

The AP reports that BNSF Railway Co., the nation’s top hauler of container rail freight, is parking miles of railcars in Montana and elsewhere because there isn’t enough freight to keep them rolling:

Cars that often carry 40-foot containers of goods shipped from Asia stand like an iron fence between the Missouri River and this Montana burg known for world-class fly fishing. They stretch as far as Sandee Cardinal can see when she stands outside her home on the river’s west bank between Helena and Great Falls.

“What is that but a symbol of how America is down in the dumps right now?” Cardinal asked as she gazed at the cars that haven’t moved for about three months.

The cars parked are the type that haul cargo from ships on the coast to points inland, mainly imported goods — an area that’s starting to slow down due to the weak economy. Analysts say transportation usually is among the first sectors to show signs of a downturn in the economy and with Americans feeling pinched — employers eliminated 63,000 jobs last month amid declining consumer confidence — it could be a while before the idle cars move.

Another piece of bad news for this RR company is that Archer Daniels Midland is suing them.  ADM is accusing the 5 big railroads of violating antitrust laws in fixing their fuel surcharges. Does not sound good for BNSF, does it?

Well, here’s a chart of BNSF Railway Co. (BNI). You can make the decision for yourself whether or not you would buy long or sell short.

032808 chart of BNI

As you can see, BNI recently made a new all-time high, but if you were going to trade on this news and chart, I think there’s a high probability that BNI will retrace.

Fossil (FOSL) May Be Poised For Further Downside

Published
by
Doug
on February 14, 2008
in Charts, Short Ideas and Stocks
. 0 Comments

I always feel a little like a chump doing these charts because I’m no expert in technical analysis. But it’s fun to see whether or not I am right about my predictions! Anyways, here is the chart for Fossil (FOSL), the “the “global design, marketing and distribution company that specializes in consumer fashion accessories.”

FOSL / February 14, 2008

The chart shows a bearish symmetrical continuation triangle. The slow stochastic indicator appears to have crossed over to the downside, the stock price is near the top of its trend channel, and the retail sector is a weak one in general now that Americans are starting to hold back on spending.

I feel there is a better than average chance of profiting on this stock by shorting it or buying puts at least 3 months out. This stock is most likely going to retest $30 and then maybe $25, both areas of strong support.

Nevertheless, Fossil was recently upgraded to a “Buy” by Piper Jaffray. Fossil claims that global growth and raising the prices on its watches are going to contribute to higher earnings. We’ll soon see about that when it reports on the 19th.