Filed under: Indices, Personal finance, Recession

With all the bad news out their I am reminded of the old adage that the best time to invest is “when there is blood in the streets.” With gold over $1000/oz. , Carlyle Capital collapsing, the price of crude oil surging, the U.S. dollar at levels not seen in more than a decade, there is no doubt the news today is pretty bad.

With things so gloomy, the real question for investors is whether it’s now time to step up to the plate and start buying stocks? While it certainly takes courage to buy stocks in the face of the financial storm that we are in the midst of, just like any patch of bad weather, at some point the sunshine will come out.

No one can say for sure if the stock market will drop another 20% from current levels. What can be said is that the market is sure selling at a large discount to where we were four months ago. I think that in the last century we have only had a handful of instances where the market dropped for four consecutive months. It just doesn’t happen too often. Markets always tend to overshoot in both directions, and I have a feeling that we may have overshot on the downside.

With all of today’s bad news, maybe it’s time to buy stocks.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has no position in any stock mentioned, as of 3/13/08.

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Filed under: Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), eBay (EBAY), General Electric (GE), Amazon.com (AMZN), Diageo plc (DEO), Tiffany and Co (TIF), Goldman Sachs Group (GS), Reliance Steel and Aluminum (RS), Under Armour’A’ (UA), Economic data, Anglo Amer ADR (AAUK), Federal Reserve, Raytheon Company (RTN), Bunge Ltd. (BG), Recession

The currency of our realm, the US Dollar, has been losing value for many years, but lately the results of this sad state of affairs have become increasingly more evident. Concerns are mounting on a global basis not just in the United States. The euro, once pegged at a buck, is now trading at $1.55, while gold has passed $1,000 and oil has continued its charge, breaking through the $110 per barrel mark.

While a good deal of this problem is home grown, the pain is being felt all around the world. We have read many stories about how the American economy is a smaller part of the global economy and becoming somewhat detached. This is nonsense. What has happened is that the global economy has become infinitely more integrated and like any integrated structure (the architect speaking), what occurs in one place is felt everywhere.

The Federal Reserve Board, led by Chairman Ben Bernanke, has been watching the economy in an extremely measured fashion, bordering on casual. To those who see beyond Bernanke’s calm demeanor, one should imagine a stock trader of old, holding the ticker tape up to his eyes and monitoring every change, every blip in the market as the ticker tape machine clicks away, spewing out the latest market activity.

Continue reading Serious Money: The falling dollar creates global pain — Part 1

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Filed under: Analyst reports, Bad news, Press releases

Without a doubt, I picked the worst possible time to buy MFA Mortgage (NYSE: MFA). Not long ago, I wrote about my desire to get in on MFA. Well, I did. And now I am paying for it, it seems.

I made a few buys between $7 and $10, starting at the high end of the range and then working down. Today, MFA got hit again; as I write this, it’s trading around $6 (the low for the day so far is $5.96). My portfolio is certainly getting bloodier.

The mortgage REIT sector is having a tough time because of analyst price-target reductions and falling book values. Annaly Capital (NYSE: NLY) and Anworth Mortgage (NYSE: ANH) are feeling the heat. MFA also has been doing some reduction in terms of leverage, as this recent press release tells us. I’ll be following the mnREIT story. For now, though, I’m not selling, and I think MFA is, as Merrill Ross, an analyst at Friedman Billings Ramsey, states, rather cheap at the moment (I know, I know, it can just get cheaper, can’t it…).

Disclosure: Steven Mallas owns shares of MFA common and MFA preferred shares; positions can change at any time.

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Filed under: Private equity, Blackstone Group L.P (BX)

Over the past few years, we’ve seen a flood of special purpose acquisition company offerings (or SPACs). Basically, these are public companies that raise money to pursue acquisitions. It’s a way to provide targets with some liquidity as well as a public vehicle (to do things like buy other companies).

Well, today Alternative Asset Management Acquisition Corporation (AMEX: AMV) - which is an SPAC - announced that it is merging with Halcyon, which is an alternative asset manager (founded in 1981). The deal comes to about $974 million (including $505 million in cash and notes).

Halcyon, which manages $11.5 billion in assets, operates a variety of hedge funds. In fact, some of its strategies focus on “stressed/distressed” debt categories, which has become a popular spot lately.

Then again, as seen with other publicly-traded alternative assets managers - like Blackstone (NYSE: BX) and Och-Ziff Capital Management (NYSE: OZM) - it’s been challenging.

In today’s trading, Alternative Asset Management’s stock price is up about 2.15% to $9.50 (keep mind that the company went public at $10 per share).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Newsletters, Stocks to Buy

“I am recommending shares of American Tower (NYSE: AMT), a leader in the wireless transmission space,” says industry expert Nikhil Hutheesing.

The editor of The Forbes Wireless Stock Watch explains, “The stock is down, the company has top notch customers, strong free cash flow, a growing business within the U.S. and increasingly, its building up its business in emerging markets. AMT is a strong company with strong prospects.”

“American Tower, based in Boston, is the leader in the wireless tower business. These towers are essentially real-estate for antennae of wireless service providers. The service providers need the towers because their antennae must be elevated so that their signals propagate, allowing their networks to provide wireless coverage.

“The good news, is that this is a growing business. American Tower’s CEO just recently said that he expects 2008 to be one of the best years ever for American Tower. That, of course, is great news.

“It also means that it is very likely that the company’s subscriber base will also continue to grow at a steady pace. Among its subscribers are wireless service providers-companies such as Verizon, Sprint Nextel and AT&T.

Continue reading Forbes wireless expert: American Tower (AMT) poised to rise

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Filed under: Private equity, Blackstone Group L.P (BX)

This week, the Blackstone Group LP (NYSE: BX) announced its Q4 results. It was no surprise that there was plunge in profits (down 89%).

The company’s chairman, Stephen Schwarzman, said that “Down cycles are not fun, but they form the basis for enormous future profitability at Blackstone.”

Well, today Blackstone released its 10-K report and yes, there’s a section on his compensation.

Adding things up, Schwarzman pulled down a cool $350.2 million last year from cash distributions. Also, keep in mind that he netted $684 million from Blackstone’s initial public offering (he still has a $3.97 billion equity stake).

Oh, and Schwarzman gets an annual salary of $350,000.

Somehow, this seems fun to me.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Forecasts, Launches, Coca-Cola (KO), PepsiCo (PEP), Marketing and advertising

It is tough day for the market as traders express their concerns over a possible recession, surging crude oil prices and persistent weakness for the U.S. dollar. The tumbling dollar hit new lows against the euro and surging gold prices that reached $1000 an ounce made investors set off a major selloff. Coca-Cola Co. (NYSE: KO) is joining the general market anxiety, despite optimistic comments from its CEO.

In a statement to India’s Economic Times newspaper, Neville Isdell, the company’s Chief Executive, declared he believes that both the tumbling dollar and an expansion in emerging markets will help the company achieve global growth during this year. As key elements, Isdell cited Coca-Cola’s plans to spend more money on marketing, offer new products on the market and make some strategic acquisitions.

Isdell’s optimistic statement came despite Wednesday’s report from industry publication Beverage Digest showing that United States soft drink sales volume slipped 2.3% to 9.92 billion cases last year. The report also unveiled that the weak sales numbers came as a result of consumers’ preferences for other drinks such as bottled water and teas.

Continue reading Coca-Cola (KO) aims to get strong global growth

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Filed under: Sun Microsystems (JAVA), Options, Technical Analysis, Economic data, Recession

Sun Microsystems Inc. (NASDAQ: JAVA) stock is declining with the rest of the tech sector as economic indicators today have investors worried once again that the economy is headed for a recession. The Commerce Department reported that retail sales dipped by 0.6% in February, below economists’ predictions of a 0.2% gain. California research firm RealtyTrac Inc. also reported that home foreclosures in February rose 59.8% over the year-ago period. Plus, some pretty bad news came from the Carlyle Group, too. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on JAVA.

After hitting a one-year high of $26.04 last March, the stock hit a one-year low of $14.20 in January. This morning, JAVA opened at $16.54. So far today the stock has hit a low of $16.35 and a high of $16.74. As of 12:35, JAVA is trading at $16.61, down %0.35 (-2.1%). The chart for JAVA looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $20 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. This particular trade will make a 14.1% return in four months as long as JAVA is below $20 at July expiration. Sun would have to rise by more than 20% before we would start to lose money.

JAVA hasn’t been above $20 since December and has shown resistance around $17.50 recently. This trade could be risky if the economy bounces back, but even if that happens, this position could be protected by resistance JAVA might find around $18, where it has topped out over the past month.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in JAVA.

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Filed under: Earnings reports, AutoNation Inc (AN), Technical Analysis, Stocks to Buy

America’s Car-Mart (NASDAQ: CRMT) operates 94 automotive dealerships, located primarily in the smaller urban markets of eight South-Central states. The dealerships focus on selling and providing the financing for basic, affordable cars, trucks and sport utility vehicles. Competitors include AutoNation (NYSE: AN) and CarMax (NYSE: KMX).

The company pleased investors last week, when it announced that closing underperforming branches and beefing up advertising initiatives generated fiscal Q3 EPS of 28 cents and revenues of $71.1 million. Wall Street analysts had been looking for 27 cents and $67.2 million. Looking ahead, the Jeffries analyst noted that the firm is able to internally fund its growth and is therefore not much impacted by the current credit crunch. Being focused on the used car market, the company was expected to be a relative outperformer in the current economic environment.

Continue reading America’s Car-Mart (CRMT): Shares moving in bullish ‘flag’

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Filed under: McDonald’s (MCD), Options, Technical Analysis, Economic data, Recession

McDonald’s Corp. (NYSE: MCD) shares are rising today despite an overall weak market that got a litany of bad news. There was bad news on the housing front in terms of higher foreclosures. There was bad news about the credit industry from Carlyle. There were weak retail numbers. Oil hit $110 and gold hit $1,000. Yet investors are pushing McDonald’s higher today, perhaps with the expectation that bad economic news is actually good for MCD, as casual diners may downgrade their habits to fast food as their wallets get pinched. 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 MCD.

After hitting a one-year low of $42.50 last March, the stock hit a one-year high of $63.69 in December. MCD opened this morning at $53.40. So far today the stock has hit a low of $53.40 and a high of $54.61. As of 12:45, MCD is trading at $54.36, up $0.66 (1.2%). The chart for MCD looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $50 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. This particular trade will make a 13.6% return in just over one month as long as MCD is above $50 at April expiration. McDonald’s would have to fall by more than 8% before we would start to lose money.

MCD hasn’t been below $50 by more than a few cents since September and has shown support around $53 recently. This trade could be risky if the US economy continues to worsen, but even if that happens, this position could be protected support the stock might find just above $50, where it bounced back in January.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in MCD.

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