Leery about Lehman - Fast Money Recap (6/3/08)

Recap of CNBC's Fast Money, Tuesday June 3.

Leery about Lehman: Lehman Brothers (LEH), Financial Select Sector SPDR (XLF), Goldman Sachs (GS), Citigroup (C)

Financials led stocks down with Lehman leading the way as it attempted to deny rumors that it is raising $3 to $4 billion. Macke says LEH is trading “like a stuck pig” and while he doesn’t think it is another Bear Stearns, he wouldn’t buy the stock. Najarian observed put activity in LEH and XLF and high volatility. Finerman says LEH will have to approach the markets to get liquidity even though this will hurt the stock. Adami doesn’t think Lehman will attract an offer from Goldman Sachs or another bank. Macke said although financials were down, Goldman Sachs and Citigroup were not low enough to buy.

So Long, Hummer: General Motors (GM), Toyota (TM), Borg Warner (BWA)

Given high gas prices, GM is thinking about getting rid of its Hummer, and Toyota fell on the news. Adami would buy BWA, which makes environmentally-friendly devices for cars. Najarian commented consumers prefer smaller cars.

So Long, Jerry Yang: Yahoo (YHOO), Microsoft (MSFT)

Carl Icahn said if he manages to replace Yahoo board, he will demand the ouster of CEO Jerry Yang. Najarian notes Yahoo’s trading volume has “dried up” and if Microsoft buys Yahoo, it will be a “mercy killing” and will not be at a premium.

Buy One, Get One Free: Toll Brothers (TOL), Hovanian (HOV)

A San Diego housing developer has developed a “buy one, get one free” deal for houses. However, not all housing is bad, and Adami sees a bottom around the corner for TOL and HOV.

It’s a Gas: U.S. Natural Gas (UNG), Chesapeake Energy (CHK), Devon (DVN), Nucor (NUE), U.S. Steel (X)

Natural gas is at its highest price since 2005, and Najarian likes individual names CHK and DVN and suggests UNG for those who don’t want to take the risk of investing in individuals stocks. Steel is also strong, and Adami recommends NUE and X.

Bernanke’s Behind the Dollar: PetroChina (PTR), China Petroleum & Chemical (SNP)

Ben Bernanke said he supports a strong dollar and will not make more interest rate cuts. Tim Seymour would stay away from weak-dollar plays and thinks commodities could get hit if the dollar gets stronger. However PTR and SNP may rise in this situation.

They Oil Fall Down: Hess (HES), Sunoco (SUN), Southwest (LUV)

Bernanke’s bullish remarks about the dollar brought oil down to a 2 week low. Joe Terranova, Chief Alternatives Strategist at Phoenix Investment Partners, says oil could fall to $115 if it breaks the $120 barrier and he would short Hess, and would be long Sunoco, Southwest Airlines, Goldman Sachs and the Canadian currency. He says he’ll hold this position until June10 to 15 and then would look at natural gas and steel.

Food Shortage

The United Nations reports food production needs to increase 50% by 2030 to meet the world’s needs. Dennis Gartman says this is probably a conservative estimate, however, he would be concerned about being outright long right now, as the government creates limits on commodities trading. He thinks the results could bring corn down a dollar, wheat down $2 and oil down to $100.

Goodyear, Good Options: Goodyear Tire (GT), Nucor (NUE)

Goodyear options were bullish in spite of the 3% drop in stock price, and Najarian says the company is a play off of GM and Ford which, in spite of dismal domestic performance, have been strong overseas. He also noticed heavy call activity in Nucor.

Trader Radar: State Street (STT) traded on unusual volume on Tuesday.

The Perfect Storm: Allstate (ALL), Home Depot (HD), Gulf Island Fabrication (GIFI)

As hurricane season begins, the group discussed storm plays. Adami said ALL has a good dividend, and Najarian suggested buying after a storm, when the stock falls. Adami would stay away from retailers which blame the weather for their problems and think a disaster may solve the inventory problem in housing. Najarian would buy GIFI if hurricanes hit the gulf. Jeff Macke said a good storm would benefit Home Depot, but he added he isn’t counting on it.

Fast Messages: Genzyme (GENZ), Wachovia (WB)

Najarian says the graying of baby boomers is good news for Genzyme as a long-term investment. He also praised the company’s pipeline. Adami sees more downside for WB, and Macke would be on the other side of a healthcare rally if Hillary secures the nomination.

Final Trade: Short Dow30 ProShares (DOG), Adami: Celgene (CELG), Finerman: Aetna (AET), Najarian Norfolk Southern (NSC)

Seeking Alpha is not affiliated with CNBC, or Fast Money

Comments

[ygier:]

Im also bullish on CHK. Aubrey bought another 400,000 shares between Friday May 30th and Monday June 2nd according to Market Insider. His kids also apparently bought a large number of shares. He is really sending a message. Wonder what news will come out next to make him soo bullish??

2008 Jun 04 08:15 AM

[ygier:]

Im also bullish on CHK. Aubrey reportedly bought another 400,000 shares of his own company between May 30th and June 2nd. Im not willing to bet against him, he has great determination! Wonder what the next news will bring? Have a Happy Day.

2008 Jun 04 08:18 AM

[Ozarker:]

Whatever's good enough for Aubrey is good enough for me! Drill, drill, drill!

2008 Jun 04 08:31 AM

[20smoney:]

Love CHK... my thoughts on how to find more winners like CHK...

20smoney.com/2008/06/0.../

2008 Jun 04 09:33 AM

[omooc:]

Although I tried to read Speaking Alpha daily, I must admit that this is the first time I came across this post (Fast Money recap). I tried to view Fast Money daily - but the last segment (Final trade) is usually mumbled and not repeated. So, this post serves a very useful purpose, particularly for those slow-pokes like me.
Before typing this comment, I re-read the title of this post. I think I know one reason why it had not attracted my attention earlier -- the heading is not attractive enough. In my view, it should read: Fast Money Recap - 6/3/08: Leery on Lehman.

2008 Jun 04 09:47 AM