Archive for December 31st, 2007
Filed under: Apple Inc (AAPL), General Motors (GM), Citigroup Inc. (C), Options
 Delta Petroleum Corp. (NASDAQ: DPTR), an oil and gas exploration and development company, recently up $3.26 to $18.60:
DPTR announced that Tracinda Corp, a private investment company of Kirk Kerkorian, will invest $684 million to acquire common stock of DPTR at $19 per share. DPTR January option implied volatility of 59 is below a level of 74 from last week and near its 26-week average of 60 according to Track Data, suggesting non-directional price fluctuations.
Volatility Index S&P 500 Options: VIX up 1.37 to 22.11.
Option volume leaders today were: XM Satellite Radio Holdings Inc. (NASDAQ: XMSR), Apple, Inc. (NASDAQ: AAPL), General Motors Corporation (NYSE: GM), Citigroup Inc. (NYSE: C) according to Track Data.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
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Filed under: Wendy’s Intl (WEN)
 It’s been a tough year for Wendy’s (NYSE: WEN). The company has struggled to grow same-store sales, and then in June, the company garnered a mention on TheStreet.com’s weekly list of the “Five Dumbest Things on Wall Street,” for “announcing once a month that it’s up for sale.”
Now, with the stock touching a 52-week low on the year’s last day of trading, Lehman Brothers analyst Jeffrey Bernstein is criticizing the company for failing to turn itself around in spite of an economic environment that should be conducive to the industry, and added that the company’s earnings and sales targets may be too “aggressive.” Bernstein also said that investors are frustrated with the lack of an outcome so far to the company’s exploration of strategic alternatives.
Shares of Wendy’s have fallen precipitously since the original announcement that the company was exploring a possible sale. Given that a cheaper share price should make the company a less expensive acquisition target, you would think that the offers would be rolling in.
Maybe the company is taking forever to mull its alternatives because there are just so many bids to choose from that it just can’t pick one. However, my experience has been that a long period of silence after a big announcement that a company is up for sale is most often indicative of a lack of offers.
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Filed under: Scandals
You will make very few friends defending the payday lending industry, the modern day loan sharks whose short-term cash loans to working people can have interest rates that soar into the triple-digits on an annualized basis.
Except they’re not really interest rates. The loans are short-term — generally about two weeks — and if you were to extrapolate the amount paid for the loan to 52-weeks, yeah the interest rate is high. But you can’t hold the loan for that long.
Payday lenders are the target of a lot of consumer groups, who charge that these lenders prey on low-income workers. Virginia is the site of the latest showdown between the industry and its critics, with one minister describing it as a “David vs. Goliath” battle in an Associated Press piece.
But it’s really more like David vs. David. The fact is that payday lending just isn’t that profitable of a business. Don’t believe me? Take a look at the margins for some of the publicly traded payday lenders — they’re actually lower than some credit unions!
That’s not to say that payday lending is good. It’s actually a terrible deal for the consumer, and something that should be avoided. The problem is that the short-term loans have high costs for everyone involved: high default rates, high overhead for the lender, and that all requires a high “interest rate” if you want to call it that. If payday lending were so profitable, wouldn’t someone else come in and do it for a little bit less money and make a fortune?
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Filed under: International markets, China, Newsletters, Stocks to Buy, Best Stocks for 2008
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
 “My favorite speculative, home run idea for 2008 is Man Sang Holdings, Inc.,” says Tony Sagami, editor of The Asia Stock Alert.
He explains, “I run at a pretty fast pace when I’m in Asia. Every day is packed with factory tours, meetings with company executives, pestering government and university leaders for their local knowledge, and hitting the streets to see with my own eyes if the zealous Investor Relations departments are feeding me overly optimistic projections.
“When I was in China in May, I completely turned my schedule upside down after visiting Man Sang Holdings, Inc. (ASE: MHJ). I re-scheduled and postponed my entire South China schedule because what should have been a one-hour meeting at Man Sang turned into two full days of tire kicking and fact checking.
“Man Sang Holdings, together with its subsidiaries, is one of the leading pearl merchants in Greater China. The company primarily sells to jewelry manufacturers, wholesale jewelry distributors, and mass jewelry merchandisers, such as QVC, in the US, Europe, and Asia.
Continue reading Best Stocks for 2008: Man Sang Holdings (MHJ) is an Asian ‘pearl’
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Filed under: China, Washington Mutual (WM), Top Picks 2007, Valero Energy (VLO), Anadarko Petroleum (APC), Chasing Value, Oil, IndyMac Bancorp (IMB), Aluminum Corp of China ADS (ACH), Bear Stearns Cos (BSC), Stocks to Buy, Intuitive Surgical Inc (ISRG)
 To quote one of my college professors (with thick Chicago accent) “Ya pays yer nickle ‘n ya takes ya bes’ shot.” This year I wrote over 200 stories and reviewed even more stocks. Going over all of this material I came up with the ones listed here as my four best and four worst of the year.
If you would have acquired these eight stocks you would be up 21.79%, about double the NASDAQ, triple the DJIA and 550% over the S&P 500. Had I followed the advice of some of my more astute readers or been more cynical about the forthrightness and leadership in the financial sector, I would have had a really smashing year. As it was, I cannot complain. I think this coming year I will have to analyze some of the feedback even more closely than I have in the past — keep those comments coming!
Here are the results of the indices from December 28, 2006 through December 27, 2007 for comparison:
Continue reading Chasing Value: My best and worst picks of 2007
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Filed under: Earnings reports, Law
On Friday, Merge Technologies Inc. (NASDAQ: MRGE), doing business as Merge Healthcare, announced horrible financial results and a formal SEC investigation into the company’s financial statement troubles.
The stock has been on a freefall since December 2005, when it hit a high of around $30 per share. It has now fallen to under $1.50 per share, with the price wavering between $1.04 and $1.46 in the last few weeks.
In 2005 and into early 2006, the company was flying high following a takeover of Cedara Software, purchased for $325 million in an all-stock transaction. But Merge has been struggling to file restated financial statements for 2004, 2005, and 2006. Improper revenue recognition related to software and maintenance contracts, as well as improper booking of goodwill and net deferred tax liabilities related to the Cedara purchase have caused Merge to file the restatements.
Now the company is fighting for its life. Revenue for Merge’s second quarter was $14 million, down 55% compared to the second quarter of the prior year. The net loss for the quarter was almost $11 million, or 32 cents per share. This is an improvement over last year, which saw a $211 million loss, or $6.27 per share.
It’s still bad news though, as revenue for the six months ended June 30 is down 37% over the prior year. The third quarter will be dismal as well. The company has no lines of credit and is depending on cash flow to fund operations. Cash has been dwindling over the past year and is now down to $22 million as of September 30. And all (or substantially all) of the goodwill on the books will be written off, about a $124 million hit that will really hurt .
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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Filed under: Newsletters, MasterCard Inc’A’ (MA), Stocks to Buy, Best Stocks for 2008
 For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
 “My favorite conservative stock for 2008 is Mastercard (NYSE: MA),” says Ken Kam, who first added the stock to the ‘Best Ideas’ portfolio of his Marketscope newsletter in June.
“With the financial sector getting killed as the credit crisis expands, investors are scrambling for quality and safety in financials — the largest sector of the S&P 500. Mastercard fits the bill because of the reasons we liked it in the first place — no credit.
“Until recently, most investors thought of Mastercard as a credit card company. Its comparables were American Express, Capital One, and Discover — all credit card companies that HOLD credit card risk on their balance sheets. Mastercard does not.
“Mastercard processes the transactions and charges an interchange fee. The credit crunch spiraling its way through the market is affecting consumers. Access to credit has dried up so it is difficult, if not impossible, to get new mortgages or home equity loans.
Continue reading Best Stocks for 2008: Ken Kam gives credit to Mastercard (MA)
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Filed under: Earnings reports, Analyst upgrades and downgrades, Technical Analysis, Stocks to Buy
Bally Technologies (NYSE: BYI) designs, manufactures, operates and distributes advanced gaming devices and associated information systems. Products include reel-spinning slot machines, video slots, wide-area progressives and lottery games, as well as an array of casino management, slot accounting, bonusing, cashless operation and table management systems. Bally also owns and operates the Rainbow Casino in Vicksburg, Mississippi.
The company pleased investors earlier in the month, when it announced fiscal Q1 EPS of 37 cents and revenues of $189 million. Analysts had been expecting 27 cents and $180.7 million. Gaming equipment gross margins increased from 32-46% (yr/yr). Management also guided FY08 EPS to $1.55-1.85 ($1.41 consensus) and FY08 revenues to levels above $865 million ($843.08M consensus). Roth Capital subsequently reiterated its “buy” rating on the stock and boosted its price target to $60.
Continue reading Bally Technologies (BYI) shares form bullish ‘flag’
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Filed under: Indices, Market matters, Money and Finance Today, Technical Analysis, S and P 500
 During the first two months of the year, small and mid-cap shares were the stars of the show, relative performance-wise.
But with each successive swoon in the broad market — beginning in late-February, late-July, and mid-October, respectively — the shares of the biggest companies seemed to gain ground at the expense of their lighter-weight counterparts.
By the end of the year, the smallest capitalized shares had borne the brunt of the selling pressure.
Continue reading Size mattered during 2007
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Filed under: Oil, Stocks to Sell, Technology
Usually as the year winds down we get an endless list of recommendations for the next year which generally are just a rehash of the previous years hottest stocks. Taking a different approach, my short of the year for 2008 is First Solar (NASDAQ: FSLR).
First Solar makes solar-power modules with a thin-film semiconductor technology that doesn’t use silicon. The stock is up 809% YTD, and with everyone jumping on the solar energy bandwagon, a lot of people think it’s going to rise another couple hundred percent in ‘08. Well, with earnings estimates forecasting 65-70% growth in EPS for ‘08, the stock is far too expensive. With a PE nearing 200, this has bubble written all over it.
I am not saying it’s a bad company, just a bad investment for investors looking for stock ideas. Based on valuation, the stock has gotten too far ahead of itself and should drop. The real kicker could be if the price of crude oil drops in ‘08. A drop of 10-20% in the price of crude would send all these solar, ethanol and other alternative energy stocks dropping faster than saying the words “there is no global warming.”
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 12/31/07.
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