Filed under: Deals, Bank of America (BAC), Countrywide Financial (CFC)

With shares of Countrywide Financial (NYSE: CFC) trading at a 35% discount to the price that Bank of America (NYSE: BAC) has agreed to pay for the company, it appears that traders have substantial doubt about the deal’s prospects.

Of course, an FBI investigation into the company’s accounting is also doing little to boost investor confidence. If the company’s financial statements are misleading, Countrywide’s estimates of default rates could be off. And if they’re off by a lot, the company could be in big trouble.

One banker warned (subscription required) the Wall Street Journal that Countrywide’s financial position “isn’t a mark-to-market balance sheet,” which make the arguments of investors like Jon Wood that the company should be sold for something closer to its $22 book value irrelevant.

Continue reading Will Bank of America buy Countrywide? What if it doesn’t?

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Filed under: Deals, Bank of America (BAC), Countrywide Financial (CFC)

With shares of Countrywide Financial (NYSE: CFC) trading at a 35% discount to the price that Bank of America (NYSE: BAC) has agreed to pay for the company, it appears that traders have substantial doubt about the deal’s prospects.

Of course, an FBI investigation into the company’s accounting is also doing little to boost investor confidence. If the company’s financial statements are misleading, Countrywide’s estimates of default rates could be off. And if they’re off by a lot, the company could be in big trouble.

One banker warned (subscription required) the Wall Street Journal that Countrywide’s financial position “isn’t a mark-to-market balance sheet,” which make the arguments of investors like Jon Wood that the company should be sold for something closer to its $22 book value irrelevant.

Continue reading Will Bank of America buy Countrywide? What if it doesn’t?

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Filed under: Major movement, Analyst reports, Good news, NIKE, Inc’B’ (NKE), Options, Technical Analysis

Nike Inc. (NYSE: NKE) shares are rising today after a Citi analyst reiterated the stock at Buy ahead of next week’s earnings report. Also, an analyst with HSBC said he prefers investing in the stock over competitors Puma and Adidas in European markets. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NKE.

After hitting a one-year low of $51.37 last March, the stock hit a one-year high of $67.93 in December. NKE opened this morning at $58.00. So far today the stock has hit a low of $58.00 and a high of $59.81. As of 12:40, NKE is trading at $59.80, up $1.88 (3.2%). The chart for NKE looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just one week as long as NKE is above $55 at March expiration. Nike would have to fall by more than 8% before we would start to lose money.

Continue reading Nike (NKE) lifted by analyst comments going into earnings

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Filed under: Major movement, Analyst reports, Good news, NIKE, Inc’B’ (NKE), Options, Technical Analysis

Nike Inc. (NYSE: NKE) shares are rising today after a Citi analyst reiterated the stock at Buy ahead of next week’s earnings report. Also, an analyst with HSBC said he prefers investing in the stock over competitors Puma and Adidas in European markets. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NKE.

After hitting a one-year low of $51.37 last March, the stock hit a one-year high of $67.93 in December. NKE opened this morning at $58.00. So far today the stock has hit a low of $58.00 and a high of $59.81. As of 12:40, NKE is trading at $59.80, up $1.88 (3.2%). The chart for NKE looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just one week as long as NKE is above $55 at March expiration. Nike would have to fall by more than 8% before we would start to lose money.

Continue reading Nike (NKE) lifted by analyst comments going into earnings

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Filed under: Earnings reports, Technical Analysis, Stocks to Buy

K-Tron International (NASDAQ: KTII) designs and produces material handling equipment and systems for a variety of industrial markets. Principal products include feeders, mass flow meters, pneumatic conveying equipment and pressure systems. The company also sells hammer mills, wood hogs and double roll crushers, used in the electric utility, mining, and forest products industries. Subsidiary K-Tron Electronics produces electronic assemblies and controller hardware.

The firm pleased investors last week, when it said its fourth quarter profit climbed 40%. Earnings rose to $2.18 per share, compared with $1.57 per share, in the prior-year period. Quarterly sales grew 33% to $59.1 million. Annual net income soared 65% to $21.3 million and full-year revenue increased 36% to $201.7 million.

Continue reading K-Tron International (KTII): Shares advancing through positive trading channel

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Filed under: Earnings reports, Technical Analysis, Stocks to Buy

K-Tron International (NASDAQ: KTII) designs and produces material handling equipment and systems for a variety of industrial markets. Principal products include feeders, mass flow meters, pneumatic conveying equipment and pressure systems. The company also sells hammer mills, wood hogs and double roll crushers, used in the electric utility, mining, and forest products industries. Subsidiary K-Tron Electronics produces electronic assemblies and controller hardware.

The firm pleased investors last week, when it said its fourth quarter profit climbed 40%. Earnings rose to $2.18 per share, compared with $1.57 per share, in the prior-year period. Quarterly sales grew 33% to $59.1 million. Annual net income soared 65% to $21.3 million and full-year revenue increased 36% to $201.7 million.

Continue reading K-Tron International (KTII): Shares advancing through positive trading channel

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Filed under: Deals, Rumors, Rants and raves, Berkshire Hathaway (BRK.A), Washington Mutual (WM), Wells Fargo (WFC)

Yesterday I heard one of many rumors about what might happen to Washington Mutual (NYSE: WM) and this one concerned “my pal Warren“ having an interest in acquiring a position in the bank. At first I paid no attention but then I thought about how beautiful that would be. For Warren Buffett, it would elevate business to an art form, something he is admired for the world over.

In a previous post, Icahn should raid WaMu before Chase or Wells — Act III, I had some thoughts about the corporate raider and value builder and all the strategic ramifications these intertwined companies might have; but that was all business.

For Warren Buffett, the Oracle of Omaha and chairman of Berkshire Hathaway (NYSE: BRK.A), a merger would surely be a thing of beauty. You see my fantasy goes like this: Berkshire acquires shares of WaMu in the open market, building a position as Buffett so often does in an undervalued company until he controls 8% to 10% of the stock. He then takes a seat on the board and creates his own merger & acquisition committee. From there, he negotiates a buyout with none other than Wells Fargo (NYSE: WFC) another bank he holds a major position in, a position that has been growing.

Continue reading Icahn no, but Buffett and WaMu? — Act IV

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Filed under: Deals, Rumors, Rants and raves, Berkshire Hathaway (BRK.A), Washington Mutual (WM), Wells Fargo (WFC)

Yesterday I heard one of many rumors about what might happen to Washington Mutual (NYSE: WM) and this one concerned “my pal Warren“ having an interest in acquiring a position in the bank. At first I paid no attention but then I thought about how beautiful that would be. For Warren Buffett, it would elevate business to an art form, something he is admired for the world over.

In a previous post, Icahn should raid WaMu before Chase or Wells — Act III, I had some thoughts about the corporate raider and value builder and all the strategic ramifications these intertwined companies might have; but that was all business.

For Warren Buffett, the Oracle of Omaha and chairman of Berkshire Hathaway (NYSE: BRK.A), a merger would surely be a thing of beauty. You see my fantasy goes like this: Berkshire acquires shares of WaMu in the open market, building a position as Buffett so often does in an undervalued company until he controls 8% to 10% of the stock. He then takes a seat on the board and creates his own merger & acquisition committee. From there, he negotiates a buyout with none other than Wells Fargo (NYSE: WFC) another bank he holds a major position in, a position that has been growing.

Continue reading Icahn no, but Buffett and WaMu? — Act IV

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Filed under: Consumer experience, Commodities, Agriculture, Recession

Oil’s at a record peak, transportation costs are going higher, and grocery prices are increasing. But there’s a great white hope for fans of frozen yogurt, Gorgonzola, and chocolate malts, as dairy prices are supposed to stay relatively steady or even fall in 2008.

The U.S. Department of Agriculture noted that while milk prices jumped 12% in 2007, they will be under control this year thanks to a 1.1% increase in the cow population and a 1.7% boost in the average output per cow. Overall milk production is expected to rise 2.7% in 2008, faster than the 2.1% growth seen last year.

Declines in wholesale milk prices trickle down to the consumer and could shave off prices on the retail end for bottled milk. Ephraim Liebtag, an economist with the USDA’s Economic Research Service, told CNN/Money that the overall price tag for dairy goods (including cheese, butter, and yogurt) is expected to rise 3% this year, slower than last year’s 7.5% hike in overall dairy products. This modest advance would be relatively good news for American consumers, who are budgeting for a 4% hike in food purchased in the stores or at restaurants.

Continue reading Dairy prices not likely to mooo-ve much higher

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Filed under: Consumer experience, Commodities, Agriculture, Recession

Oil’s at a record peak, transportation costs are going higher, and grocery prices are increasing. But there’s a great white hope for fans of frozen yogurt, Gorgonzola, and chocolate malts, as dairy prices are supposed to stay relatively steady or even fall in 2008.

The U.S. Department of Agriculture noted that while milk prices jumped 12% in 2007, they will be under control this year thanks to a 1.1% increase in the cow population and a 1.7% boost in the average output per cow. Overall milk production is expected to rise 2.7% in 2008, faster than the 2.1% growth seen last year.

Declines in wholesale milk prices trickle down to the consumer and could shave off prices on the retail end for bottled milk. Ephraim Liebtag, an economist with the USDA’s Economic Research Service, told CNN/Money that the overall price tag for dairy goods (including cheese, butter, and yogurt) is expected to rise 3% this year, slower than last year’s 7.5% hike in overall dairy products. This modest advance would be relatively good news for American consumers, who are budgeting for a 4% hike in food purchased in the stores or at restaurants.

Continue reading Dairy prices not likely to mooo-ve much higher

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