Q3 2009 Earnings Call

October 29, 2009 8:00 am ET

The market has spoiled investors over the past 7 months with one direction only: up. This Great Recession seems to turn into the Great Recovery. Are there any cheap growth stocks left for bargain-hunting investors?

I use following 8 criteria to select undervalued growth companies:

In an astute political move, Health and Human Services Secretary Kathleen Sibelius on Sunday said that providing citizens with the option of government-run insurance is not essential to the Obama administration's overhaul of U.S. health care. Evidently, the administration has caved on this very important issue, leaving the door open for private health insurance companies to move forward with creative products and profits for shareholders. Of course the devil will be in the details, but at fist glance Team Obama will expand health using cooperatives similar to the public/private scheme in the domestic utility industry.

Here are potential winners for investors to explore. Beware of using the insurance index ETFs as your vehicle, as the health care sub-sector is in play now, not all insurance stocks.

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Q2 2009 Earnings Call

July 30, 2009 9:00 AM ET

• Reactions to Microhoo. Reactions to the Microsoft (MSFT) and Yahoo (YHOO) search deal announced yesterday have been mixed. Some investors wondered why Yahoo agreed to a deal with no upfront fee, after previously saying any deal would be conditioned on 'a boatload of cash,' and doubts about the deal's benefits to Yahoo helped pull shares down 12% (Microsoft closed up 1.4%, and the deal may mark an important turning point for CEO Steve Ballmer). Still, others felt "dropping the dead weight of search isn’t a horrible idea" for a company that has no realistic chance of beating Google (GOOG). The deal could face antitrust concerns but will likely be approved.
• TARP exit for AmEx. American Express (AXP) has officially exited TARP after repurchasing warrants from the government for $340M. The company said the warrant buyback, along with $74.4M of dividend payments it made, provided taxpayers with an annualized 26% return. Analysts noted the repurchase price was in line with the $1.1B Goldman Sachs (GS) paid, indicating the Treasury has indeed taken a tougher negotiating stance on the warrant purchases in light of congressional pressure.
• FDIC to break up banks. In an effort to entice more buyers, the FDIC is poised to start breaking up failed banks into good and bad pieces. The goal is to sell the most distressed parts of failed banks to private equity firms and other investors that are willing to take a larger risk on bad assets. The 'good' pieces of failed banks, including deposits and branches, could then be sold to traditional banks.
• Sanofi buys out Merck's JV stake. Sanofi-Aventis (SNY) agreed to buy Merck's (MRK) half of their joint Merial animal-health venture for $4B in cash, and said the companies may work together again in the future to form the world’s largest maker of animal treatments. Sanofi and Merck had collaborated on Merial for over ten years, building it into a company with $2.6B in annual sales. The deal should help Merck allay antitrust concerns over its proposed purchase of Schering-Plough (SGP). Premarket: SNY -0.9% (7:00 ET).
• Mortgage fraud probe includes Goldman, Deutsche. A Senate panel reportedly subpoenaed financial firms including Goldman Sachs (GS) and Deutsche Bank (DB) in search of evidence of mortgage fraud during last year's market meltdown. The probe is focused on whether bankers had private doubts about the financial soundness of the mortgage-related securities they were publicly promoting. Washington Mutual, now largely owned by JPMorgan Chase (JPM), may also have been among the firms that received a subpoena.
• Citi advances asset sales. Citigroup (C) is 'moving extremely fast' on asset sales, said CEO Vikram Pandit. Citigroup announced today it had agreed to sell its stake in a Japanese asset management unit to Sumitomo Trust & Banking, Japan’s fifth-largest bank, for ¥112.4B ($1.18B).
• New help for homeowners. The White House is planning to announce new guidelines today to help homeowners struggling with Federal Housing Administration-insured mortgages. The guidelines will narrow the gap between the FHA's mortgage-modification program and the White House's foreclosure-prevention plan, and will "offer borrowers an opportunity to stay in their homes, make payments that are manageable and defer [payment of] the money owed to a later time when, hopefully, home values have improved."
• Fidelity signs IPO pact with Deutsche. Fidelity Investments struck a deal with Deutsche Bank (DB) allowing Fidelity's individual investors to participate in initial public offerings underwritten by Deutsche as of this week. Fidelity reached a similar deal last month with private equity group Kohlberg Kravis Roberts, but the Deutsche deal carries more weight because Deutsche is one of the 10 busiest underwriters of stock offerings in the U.S. For Deutsche, access to Fidelity's customers will broaden the range of IPOs it can land.
• Beige Book sees recession moderating. The Federal Reserve's Beige Book was released yesterday, and noted the recession seems to be growing less severe. Some regions said the downturn's pace has moderated, and others reported that activity is stabilizing. Retail sales are still sluggish, and wages and benefits are steady or falling in most districts. (Read the Fed's Beige Book summary)
• China seeks to reassure on monetary policy. In a volatile day of trading, Chinese stocks managed to close up 1.7% after China's central bank released a statement aimed at calming jittery investors. After the Chinese stock market fell 5% on Wednesday, its largest daily drop in eight months, the central bank pledged to maintain loose monetary policy in order to support an economic recovery and to ensure sustainable credit growth, seemingly without relying on a strict, central bank-directed quota system used in the past.
• Boeing gets squeezed. British Airways (BAIRY.PK) is pressuring Boeing (BA) to renegotiate installment payments on its 787 Dreamliner orders. Predelivery payments can total tens of millions of dollars per jetliner, and as airlines find it increasingly difficult to bankroll the payments, plane makers like Boeing are getting squeezed. In other bad news for Boeing, a contractor said yesterday that the Dreamliner's braking system is still incomplete because of a dispute over who should pay for the work, and S&P downgraded Boeing's credit rating by one notch over concerns of additional production cuts due to airline order deferrals and cancellations.
• PennyMac a few pennies short on IPO. PennyMac Mortgage Investment Trust, the distressed-mortgage investment company run by former Countrywide No. 2 Stanford Kurland and 10 other former Countrywide officials, raised $320M in its initial public offering, $80M less than planned. The company sold 16M shares at $20 each.

Earnings: Thursday Before Open

• AmerisourceBergen (ABC): FQ3 EPS of $0.42 beats by $0.03. Revenue of $18.39B (+2.2%) vs. $18.11B. (PR)
• Aon (AOC): Q2 EPS of $0.76 beats by $0.02. Revenue of $1.9B (-4%) in-line. (PR)
• Art Technology Group (ARTG): Q2 EPS of $0.06 beats by $0.02. Revenue of $44M (+6%) in-line. Shares +3.2% premarket (8:20 ET). (PR)
• AstraZeneca (AZN): Q2 EPS of $1.64 beats by $0.24. Revenue of $8B (+0%) vs. $7.8B. Shares +3.5% premarket (6:40 ET). (AstraZeneca's press release (.pdf))
• Automatic Data Processing (ADP): FQ4 EPS of $0.45 in-line. Revenue of $2.1B (-4.5%) in-line. Issues downside guidance for FY '10, sees EPS of $2.29-2.39 vs. $2.44 consensus, sees revenue down 1-4%, or to roughly $8.51-8.78B, vs. $8.94B consensus. (PR)
• Avon (AVP): Q2 EPS of $0.38 beats by $0.04. Revenue of $2.47B (-9.7%) in-line. (PR)
• Barrick Gold (ABX): Q2 EPS of $0.49 beats by $0.11. Revenue of $2B (+3%) vs. $1.9B. Shares +3.5% premarket (8:10 ET). (PR)
• Becton, Dickinson and Co. (BDX): FQ3 EPS of $1.30 beats by $0.06. Revenue of $1.8B (-2%) in-line. (PR)
• BioCryst Pharmaceuticals (BCRX): Q2 EPS of -$0.23 beats by $0.02. Revenue of $4.8M (+80%) vs. $4.1M. R&D expenses decreased to $11.2M from $13.4M a year ago. (PR)
• CIGNA (CI): Q2 EPS of $1.14 beats by $0.18. Revenue of $4.5B (-8%) vs. $4.8B. (PR)
• Cincinnati Financial (CINF): Q2 EPS of -$0.03 misses by $0.21. Revenue of $874M (-5%) vs. $912M. (PR)
• CMS Energy (CMS): Q2 EPS of $0.26 misses by $0.02. Reaffirms guidance for FY '09, sees EPS of $1.25 vs. $1.27 consensus. (PR)
• Colgate-Palmolive Company (CL): Q2 EPS of $1.07 beats by $0.02. Revenue of $3.75B (-5.5%) in-line. Gross margin increased 2 points to 58.8%, driven by easing raw and packaging material costs, and continued benefit from higher prices already implemented and its ongoing aggressive savings programs. (PR)
• CONSOL Energy (CNX): Q2 EPS of $0.62 misses by $0.19. Revenue of $1.1B (-12%) in-line. (PR)
• Covidien (COV): FQ3 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-3%) in-line. (PR)
• Cummins (CMI): Q2 EPS of $0.30 beats by $0.04. Revenue of $24.3B (+525%) vs. $2.5B. (PR)
• Digital Realty Trust (DLR): Q2 FFO of $0.71 in-line. Revenue of $155M (+25.2%) vs. $161M. (PR)
• Dow Chemical (DOW): Q2 EPS of $0.05 beats by $0.14. Revenue of $11.3B (-40%) vs. $13B. (PR)
• Eastman Kodak (EK): Q2 EPS of -$0.71 misses by $0.34. Revenue of $1.77B (-28.9%) vs. $1.83B. Sees loss from continuing ops at the low end of its previous $200-400M range. Shares -0.9% premarket (8:00 ET). (PR)
• Endo Pharmaceuticals (ENDP): Q2 EPS of $0.73 beats by $0.06. Revenue of $373M (+22%) vs. $358M. (PR)
• ExxonMobil (XOM): Q2 EPS of $0.84 misses by $0.18. Revenue of $74.46B (-46.1%) vs. $71.29M. Production was down 3%. Lower margins reduced earnings by $1B. Shares -1.8% premarket (8:30 ET). (PR (.pdf))
• GrafTech International Ltd (GTI): Q2 EPS of $0.12 beats by $0.08. Revenue of $158M (-51%) vs. $143M. (PR)
• International Paper (IP): Q2 EPS of $0.20 beats by $0.20. Revenue of $5.8B (-0.1%) in-line. (PR)
• Iron Mountain (IRM): Q2 EPS of $0.25 beats by $0.02. Revenue of $746M (-3%) vs. $741M. (PR)
• KBR Inc. (KBR): Q2 EPS of $0.42 beats by $0.01. Revenue of $3.1B (+17%) vs. $2.9B. (PR)
• Kimco Realty (KIM): Q2 EPS of $0.31 misses by $0.01. Revenue of $189M (+3%) in-line. (PR)
• Mack-Cali Realty (CLI): Q2 EPS of $0.87 beats by $0.06. Revenue of $173M (-3%) vs. $167M.
• MasterCard (MA): Q2 EPS of $2.67 beats by $0.25. Revenue of $1.28B (+2.7%) in-line. Net revenue was up 7% on a constant currency basis. Gross dollar volume was down 0.6%; purchase volume was down 0.7%. Shares +7.2% premarket (8:30 ET). (PR)
• Motorola (MOT): Q2 EPS of -$0.01 beats by $0.03. Revenue of $5.5B (-32%) vs. $5.6B. Issues downside guidance for Q4 (Dec), sees EPS of -$0.01 to $0.01 vs. $0.05 consensus. Shares +7.3% premarket (7:45 ET). (PR)
• Mylan (MYL): Q2 EPS of $0.32 beats by $0.02. Revenue of $1.3B (+5%) vs. $1.2B. (PR)
• Newell Rubbermaid (NWL): Q2 EPS of $0.47 beats by $0.12. Revenue of $1.5B (-18%) in-line. (PR)
• Noble Energy (NBL): Q2 EPS of $0.66 beats by $0.11. Revenue of $491M (-59%) vs. $588M. (PR)
• NRG Energy (NRG): Q2 EPS of $1.56 vs. consensus of $0.74 (may not be comparable). Revenue of $2.2B (+70%) vs. $2.1B. (PR)
• NYSE Euronext (NYX): Q2 EPS of $0.51 beats by $0.06. Revenue of $1.1B (+9.5%) in-line. (PR)
• OfficeMax (OMX): Q2 EPS of $0.04 beats by $0.03. Revenue of $1.66B (-16.5%) in-line. "Given the projected weak economic climate and our anticipation of a soft Back-to-School season, OfficeMax remains very cautious in its expectations for the second half of 2009." (PR)
• Oshkosh Truck (OSK): FQ3 EPS of -$0.30 misses by $0.12. Revenue of $1.23B (-36.1%) vs. $1.38B. "For Q4, we expect solid performance from our defense and fire & emergency segments, while we expect that our access equipment and commercial segments will both continue to face tough market conditions." (PR)
• Parker-Hannifin (PH): FQ4 EPS of $0.31 beats by $0.09. Revenue of $2.2B (-34%) in-line. Shares -1% premarket (7:50 ET). (PR)
• Patterson-UTI Energy (PTEN): Q2 EPS of -$0.12 in-line. Revenue of $161M (-69%) vs. $167M. (PR)
• Regal Entertainment Group (RGC): Q2 EPS of $0.26 misses by $0.03. Revenue of $789M (+17%) vs. $769M. (PR)
• Rockwell Collins (COL): FQ3 EPS of $0.91 beats by $0.01. Revenue of $1.1B (-9%) in-line. (PR)
• Royal Dutch Shell (RDS.A): Q2 EPS of $0.62 vs. consensus of $0.93 (may not be comparable). Revenue of $63.9B (-51%) vs. $60.5B. Shares -0.65% premarket (6:50 ET). (PR)
• Sally Beauty (SBH): FQ3 EPS of $0.16 in-line. Revenue of $673M (-0.5%) vs. $684M. (PR)
• Sony (SNE): FQ1 net loss of ¥37.1B ($390M) vs. consensus of -¥110B and vs. a net profit of ¥35B a year ago. Still sees full-year loss of ¥120B. Revenue fell 19% to ¥1.6T. Shares +7.2% premarket (8:10 ET). (DJ)
• Spirit AeroSystems (SPR): Q2 EPS of $0.61 beats by $0.02. Revenue of $1.1B (-0.2%) in-line. Shares +2.3% premarket (8:00 ET). (PR)
• Taiwan Semiconductor (TSM): Q2 EPS of $0.14 beats by $0.01. Revenue of $2.2B (-23%) in-line. (PR)
• Travelers (TRV): Q2 EPS of $1.26 misses by $0.02. Revenue of $6.2B (-2%) in-line. (PR)
• Tyco International (TYC): FQ3 EPS of $0.58 beats by $0.13. Revenue of $4.2B (+0.6%) vs. $4.3B. (PR)
• Ventas (VTR): Q2 FFO of $0.68 beats by $0.06. "Our high-quality, diversified healthcare and seniors housing assets are performing very well due to demographic and need-driven demand." (PR)
• Waste Management (WMI): Q2 EPS of $0.52 misses by $0.02. Revenue of $2.95B (-15.5%) vs. $3B. Company is changing its ticker symbol to WM as of August 5, 2009. Issues downside guidance for FY '09, sees EPS of $1.95-1.99 vs. $2.02 consensus. (PR)
• Xcel Energy (XEL): Q2 EPS of $0.25 in-line. Revenue of $2B (-23%) vs. $2.6B. (PR)

Earnings: Wednesday After Close

• AFLAC (AFL): Q2 EPS of $1.20 beats by $0.06. Revenue of $4.3B (flat) vs. $4.7B. Announced planned acquisition of Continental American for $100M. (PR)
• Agnico-Eagle Mines (AEM): Q2 EPS of $0.01 misses by $0.11. Revenue of $139M (+58%) vs. $126M. EPS includes noncash currency loss of $0.12/share and stock option expense of $0.03/share. (PR)

• Akamai Technologies (AKAM): Q2 EPS of $0.40 misses by $0.01. Revenue of $205M (-2.7%) vs. $211M. (PR)

However, a survey by analysts has confirmed that for the time in months July has seen a net fall in short interest on S&P 500 futures largely as a result of a massive 92 percent fall in short bets on the stock of the government-controlled American International Group Inc., or as it is publicly known, AIG. Shorts in Assurant Inc (AIZ), which provides health insurance for mobile housing units also fell, while stocks of Valero Energy Corp. (VLI) saw a significant rise in short interest. Those interested in forex trading online, especially carry traders see these as encouraging developments for the future of the global markets.

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

People want to feel secure. National security and the military provide assurance that a country’s citizens will be protected, thus allowing them to focus their attention on other interests and endeavors. National security is so large that no government can do it all alone. They all partner with companies like Northrop Grumman Corp (NOC) to provide the best defense products at the lowest price.

The past several months have been characterized by tremendous volatility and a lot of negative news regarding the state of the economy as a whole. Given the uncertainties in the global economy, investors are wondering whether they should cash out their portfolios and simply wait for the storm to end.

I think that this would not be a good move, especially for the dividend investor who already has a diversified portfolio of income producing stocks. Such an investor will be more focused on the dividend raises that his or her stocks deliver.

Since the last time I wrote about my portfolio, things have been volatile. Here are my actions since then:

New Buys

Q1 2009 Earnings Call

April 30, 2009 09:00 am ET

• Chrysler Ch. 11 imminent. Talks between Chrysler lenders and the Treasury broke down Wednesday, making it all but certain that the automaker will file for bankruptcy today. Government officials say everything is in place to ensure the company makes it through court quickly, possibly in as little as a few weeks. Even as the automaker prepares for a likely bankruptcy, Obama said he's hopeful Chrysler will be able to push forward with a Fiat alliance.
• GM bondholders prep counteroffer. General Motors' (GM) bondholders plan to reject GM's April 27 debt exchange offer, and to present a counteroffer that would give them control of the automaker. Sources say the counteroffer proposes that bondholders and a UAW retiree medical fund both exchange all their claims for equity stakes of 58% and 41% respectively. Common shareholders would be left with 1% ownership. A committee representing bondholders will present the alternative plan to the auto task force today. Shares +3.9% premarket (7:00 ET).
• FOMC: recession is easing. As expected, the FOMC kept rates steady at 0-0.25%. The committee pointed to signs of economic improvement, and forecast a gradual recovery amid market weakness: "Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability." Even as the FOMC took note of some 'green shoots' in markets, it left the door open to boosting emergency financial programs if necessary. (Read the FOMC statement)
• 100+ PPIP applications. More than 100 firms applied to participate in PPIP, the Treasury's toxic-asset purchase program. At least five will get preliminary approval by May 15, at which point they can begin raising the expected minimum of $500M in private capital. (Read the Treasury's statement)
• Lewis ousted as chairman. A shareholder proposal removed Bank of America (BAC) CEO Ken Lewis from his position as chairman of the board, a possible precursor to his eventual replacement as CEO. The proposal passed narrowly, with 50.34% of the vote. Board member Walter Massey will assume the chairman's post.
• State Street probed over mortgage securities. Massachusetts' top securities regulator launched a probe into whether State Street Corp (STT) misled pension funds over the risk level of certain investments. In particular, regulators are investigating whether State Street represented mortgage-backed securities as low-risk vehicles, and whether funds marketed as safe held 'potentially inappropriate' derivatives, swaps and other securities. A State Street spokeswoman declined to comment.
• FBI probes Freddie losses. The FBI is reportedly investigating possible accounting violations at Freddie Mac (FRE), trying to determine whether the mortgage giant improperly delayed the recognition of billions of dollars of losses. The losses, incurred from 2001-2004, were connected to derivatives contracts and are due to be gradually recognized in quarterly earnings statements over the next several years.
• IBM offers pre-stimulus financing. IBM (IBM) is offering $2B in financing to customers who want to invest in broadband and healthcare technologies but are waiting to receive government stimulus funds. Since much of the government funding won't reach companies until 2010 or later, IBM sees this as a way to "jump-start those investments and jump-start the benefits."
• Budget approved. Congress approved a $3.5T budget outline for 2010, which includes special funds to pay for sweeping changes in health care, education and energy. Democrats said their budget outline will cut the deficit by more than 50% in five years. Republicans argued the reduced deficit projections omit costs, such as disaster relief, from future-year expenditures.
• IACI goes match-making. IAC/InterActiveCorp (IACI) is in talks to buy Yahoo Personals, Yahoo's (YHOO) online dating service. Yahoo has considered selling the matchmaking site in the past, and CEO Carol Bartz has expressed her interest in selling or shuttering non-core businesses. The dating site could be worth around $500M.
• Time Warner, AOL prepare to part. Time Warner (TWX) said it's preparing to move ahead with a spinoff of all or part of its struggling AOL unit, and a decision is expected 'very soon.' The company also plans to buy back Google's (GOOG) 5% stake in AOL.
• Visa beats forecast on cost cuts, debit use. Visa (V) posted better-than-expected quarterly results (see details below) as the company increased prices and cut costs. The company also benefited from consumers' increased reliance on debit cards The number of Visa-branded cards grew 8% globally to more than 1.7B, while the number of transactions processed on its network climbed 9%.
• Starbucks to focus on value. Starbucks (SBUX) narrowly beat expectations for quarterly earnings (see details below) on cost cuts. Trying to re-brand itself for the economic times, Starbucks plans to launch a multimillion dollar campaign challenging the view that coffee is an expensive luxury. The company will also selectively lower prices on some of its popular drinks while slightly raising prices on larger, more complex beverages.
• MGM finds project financing. MGM Mirage (MGM) and Dubai World reached an agreement with lenders to fully finance their $8.5B CityCenter project in Las Vegas, and Dubai World dismissed its lawsuit against MGM. The project is on track to open in December 2009.
• Apple builds chip-design team. Apple (AAPL) is shifting strategy with plans to build its own team for chip design. The company hopes the move will shield Apple's work from rivals and lead to the development of exclusive features for its gadgets.
• GDP worse than expected. Advanced Q1 GDP was -6.1% vs. consensus of -4.7% and last quarter's -6.3%. Personal consumption increased 2.2% vs. consensus of +0.9% and prior -4.3%. The price index rose 2.9% vs. consensus of +1.8% and prior +0.5%.
• BoJ holds rates steady. Bank of Japan kept its benchmark rate unchanged at 0.1%. The bank will release its economic outlook today, and will likely forecast a deeper contraction than the 2% drop predicted three months ago.

Earnings: Thursday Before Open

• Alliant Energy (LNT): Q1 EPS of $0.30 misses by $0.24. (PR)
• Ashland (ASH): FQ2 EPS of $0.64 beats by $0.34. Revenue of $2.0B (-3.4%) vs. $2.1B. (PR)
• BorgWarner (BWA): Q1 EPS of -$0.12 beats by $0.08. Revenue of $819.5M (-45.3%) vs. $854M. (PR)
• Cardinal Health (CAH): FQ3 EPS of $0.97 beats by $0.02. Revenue of $24.9B (+8.9%) vs. $24.0B. (PR)
• Celgene (CELG): Q1 EPS of $0.44 beats by $0.01. Revenue of $601M (+29.9%) vs. $602M. (PR)
• CIGNA (CI): Q1 EPS of $0.69 misses by $0.22. Revenue of $4.8B (+4.5%) in-line. (PR)
• CMS Energy (CMS): Q1 EPS of $0.30 in-line. Revenue of $2.1B (-3.6%) in-line. (PR)
• Colgate-Palmolive (CL): Q1 EPS of $0.97 beats by $0.01. Revenue of $3.5B (-5.7%) vs. $3.6B. (PR)
• Comcast (CMCSA): Q1 EPS of $0.27 beats by $0.04. Revenue of $8.4B (-5%) vs. $8.8B. (PR)
• Covidien (COV): FQ2 EPS of $0.69 misses by $0.16. Revenue of $2.7B (+11.3%) vs. $2.6B. (PR)
• Digital Realty Trust (DLR): Q1 EPS of $0.70 beats by $0.03. Revenue of $149M (+30.2%) vs. $147M. (PR)
• Dominion Resources (D): Q1 EPS of $0.97 beats by $0.09. Revenue of $4.8B (+9.8%) vs. $4.1B. (PR)
• Dow Chemical (DOW): Q1 EPS of $0.12 beats by $0.33. Revenue of $9.1B (-38.7%) vs. $11.7B. Shares +1.4% premarket (6:50 ET). (PR)
• Eastman Kodak (EK): Q1 EPS of -$1.34 misses by $1.01. Revenue of $1.5B (-29.4%) vs. $1.6B. (PR)
• Entegris (ENTG): Q1 EPS of -$0.34 misses by $0.09. Revenue of $59M (-60.2%) vs. $71M. (PR)
• EQT Corp. (EQT): Q1 EPS of $0.55 misses by $0.01. Revenue of $260M (-1.6%) vs. $310M. (PR)
• ExxonMobil (XOM): Q1 EPS of $0.92 misses by $0.03. Revenue of $64.03B (-45.2%) vs. $54.03B. Shares +0.6% premarket. (AP)
• GrafTech International Ltd (GTI): Q1 EPS of $0.04 beats by $0.03. Revenue of $134M (-53.8%) vs. $153M. (PR)
• International Paper (IP): Q1 EPS of $0.08 beats by $0.12. Revenue of $5.7B (+0%) vs. $6.3B. (PR)
• Iron Mountain (IRM): Q1 EPS of $0.20 beats by $0.08. Revenue of $723M (-3.5%) vs. $722M. (PR)
• KBR (KBR): Q1 EPS of $0.48 beats by $0.05. Revenue of $3.2B (+27%) vs. $2.9B. (PR)
• Kellogg (K): Q1 EPS of $0.89 beats by $0.10. Revenue of $3.2B (-2.7%) in-line. (PR)
• Kimco Realty (KIM): Q1 EPS of $0.43 misses by $0.01. Revenue of $194M (+2.7%) vs. $191M. (PR)
• LKQ Corp. (LKQX): Q1 EPS of $0.23 beats by $0.02. Revenue of $518M (+5.3%) vs. $523M. (PR)
• LM Ericsson Telephone (ERIC): Q1 EPS of $0.54 misses by $0.17. Revenue of $49.6B (+12.2%) vs. $42.3B. Shares -5.8% premarket (6:50 ET). (PR)
• Motorola (MOT): Q1 EPS of -$0.10 beats by $0.01. Revenue of $5.4B (-27.9%) vs. $5.55B. Shares -16% premarket (7:00 ET). (PR)
• Mylan Laboratories (MYL): Q1 EPS of $0.33 beats by $0.05. Revenue of $1.2B (+12.6%) in-line. (PR)
• Newell Rubbermaid (NWL): Q1 EPS of $0.20 beats by $0.12. Revenue of $1.2B (-16%) in-line. (PR)
• Newmont Mining (Holding Company) (NEM): Q1 EPS of $0.44 beats by $0.02. Revenue of $1.55B (-20.1%) vs. $1.40B. (PR)
• Noble Energy (NBL): Q1 EPS of $0.59 beats by $0.15. Revenue of $441M (-57%) vs. $598M. (PR)
• NRG Energy (NRG): Q1 EPS of $0.70 beats by $0.25. Revenue of $1.7B (+27.3%) vs. $1.2B. (PR)
• NYSE GROUP (NYX): Q1 EPS of $0.43 beats by $0.04. Revenue of $1.1B (+0.2%) in-line. (PR)
• OfficeMax (OMX): Q1 EPS of $0.23 beats by $0.07. Revenue of $1.91B (-17%) vs. $1.95B. (PR)
• Omnicare (OCR): Q1 EPS of $0.64 beats by $0.03. Revenue of $1.6B (+0.3%) in-line. Shares +3.3% premarket (8:10 ET). (PR)
• Oshkosh Corporation (OSK): FQ2 EPS of -$0.24 misses by $0.04. Revenue of $1.3B (-26.9%) vs. $1.5B. (PR)
• Owens Corning (OC): Q1 EPS of $0.04 beats by $0.08. Revenue of $1.1B (-20.6%) vs. $1.2B. (PR)
• Patterson-UTI Energy (PTEN): Q1 EPS of $0.11 misses by $0.03. Revenue of $296M (-41.3%) vs. $319M. (PR)
• Pennsylvania Real Estate Investment Trust (PEI): Q1 EPS of $0.71 beats by $0.03. Revenue of $73M (-0.8%) vs. $67M. Shares +1.2% premarket (8:10 ET). (PR)
• Pride International (PDE): Q1 EPS of $0.87 beats by $0.01. Revenue of $549M (+1.7%) vs. $555M. (PR)
• Procter & Gamble (PG): FQ3 EPS of $0.84 beats by $0.04. Revenue of $18.4B (-8%) vs. $18.9B. Shares +2.1% premarket (8:00 ET). (PR)
• Rayonier (RYN): Q1 EPS of $0.33 beats by $0.04. Revenue of $274M (-0.3%) vs. $286M. (PR)
• Regal Entertainment Group (RGC): Q1 EPS of $0.14 misses by $0.02. Revenue of $666M (+6.2%) vs. $651M. (PR)
• Sepracor (SEPR): Q1 EPS of $0.85 beats by $0.16. Revenue of $330M (+2.9%) vs. $329M. (PR)
• Spirit AeroSystems (SPR): Q1 EPS of $0.45 beats by $0.05. Revenue of $887M (-14.4%) vs. $859M. (PR)
• Starwood Hotels & Resorts Worldwide (HOT): Q1 EPS of $0.14 beats by $0.10. Revenue of $1.1B (-23.7%) in-line. (PR)
• Taiwan Semiconductor Manufacturing (TSM): Q1 EPS of $0.01 beats by $0.02. Revenue of $1.2B (-57.9%) vs. $1.1B. Shares +4.5% premarket (8:00 ET). (PR)
• The Travelers Companies (TRV): Q1 EPS of $1.34 beats by $0.03. Revenue of $5.7B (-8.0%) vs. $6.1B. (PR)
• Tyco International (TYC): FQ2 EPS of $0.55 beats by $0.14. Revenue of $4.15B (-14.7%) vs. $4.2B. (PR)
• Viacom(B): Q1 EPS of $0.29 beats by $0.03. Revenue of $2.9B (-6.8%) vs. $3.0B. (PR)
• Watson Pharmaceuticals (WPI): Q1 EPS of $0.58 beats by $0.09. Revenue of $667M (+6.5%) vs. $638M. Shares +6.0% premarket (8:05 ET). (PR)
• Xcel Energy (XEL): Q1 EPS of $0.38 beats by $0.01. Revenue of $2.7B (-11%) vs. $3.1B. (PR)

Earnings: Wednesday After Close

• AFLAC (AFL): Q1 EPS of $1.22 beats by $0.06. Revenue of $4.82B (+12%) in-line. Total investments and cash of $61.7B down 1.7% Y/Y. Shares -2% AH. (PR)
• Agnico-Eagle Mines (AEM): Q1 EPS of $0.35 beats by $0.26. Revenue of $111M (-10.5%) vs. $72M. Shares +1.7% AH. (PR)
• Akamai Technologies (AKAM): Q1 EPS of $0.43 beats by $0.03. Revenue of $210M (-1%) in-line. Announces $100M share repurchase. Shares +5.1% AH. (PR)
• Annaly Capital Management (NLY): Q1 EPS of $0.56 beats by $0.01. Shares +1.1% AH. (PR)
• Assurant (AIZ): Q1 EPS of $1.17 misses by $0.26. Revenue of $2.09B (-4.1%) vs. $2.24B. Shares -3.7% AH. (PR)
• Biomed Realty Trust (BMR): Q1 FFO of $0.51 beats by $0.06. Revenue of $94M (+39.4%) vs. $85M. (PR)
• Boston Properties (BXP): Q1 FFO of $1.36 beats by $0.11. Revenue of $377M (+1.6%) vs. $366M. (PR)
• CB Richard Ellis Group (CBG): Q1 EPS of -$0.03 misses by $0.05. Revenue of $890M (-27.7%) vs. $983M. Shares -0.15% AH. (PR)
• Cliffs Natural Resources (CLF): Q1 EPS of -$0.07 beats by $0.07. Revenue of $465M (-6%) vs. $528M. Shares -2.5%. (PR)
• Citrix Systems (CTXS): Q1 EPS of $0.32 beats by $0.01. Revenue of $369M (-2.1%) vs. $359M. Announces up to $300M share buyback. Shares +5.1% AH. PR)
• Covance (CVD): Q1 EPS of $0.63 beats by $0.02. Revenue of $441M vs. $429M. Sees full-year EPS of $2.50-2.70 vs. consensus of $2.88. Shares flat AH. (PR)
• Crown Castle International (CCI): Q1 EPS of $0.02 beats by $0.08. Revenue of $403M (+8.7%) vs. $392M. Shares +7% AH. (PR)
• Duke Realty (DRE): Q1 FFO of $0.50 in-line. Revenue of $238M (+5%) vs. $219M. Sees full-year FFO of $1.85-2.15 vs. $1.81. Shares flat AH. (PR)
• Equity Residential (EQR): Q1 FFO of $0.57 beats by $0.02. Revenue of $515M (+2.5%) vs. $523M. Shares flat AH. (PR)
• Express Scripts (ESRX): Q1 EPS of $0.86 beats by $0.04. Revenue of $5.42B (-1.2%) in-line. Full-year guidance in-line. Shares +1.3% AH. (PR)
• First Solar (FSLR): Q1 EPS of $1.99 beats by $0.48. Revenue of $418M (+112.4%) vs. $403M. Shares +13.4% premarket. (PR)
• Flextronics International (FLEX): FQ4 EPS of $0.03 misses by $0.01. Sees FQ1 revenue of $5-6B vs. $6.2B consensus. Shares -3.3% AH. (PR)
• Genco Shipping (GNK): Q1 EPS of $1.32 beats by $0.06. Revenue of $96.7M (+5.4%) vs. $96M. Shares +0.5% AH. (PR)
• Green Mountain Coffee Roasters (GMCR): FQ2 EPS of $0.50 beats by $0.14. Revenue of $193M (+60%) vs. $178M. Sees full-year EPS of $1.47-1.53 vs. $1.31. Shares +20.4% AH. (PR)
• Harman International (HAR): FQ3 EPS of -$0.84 misses by $0.40. Revenue of $598M (-42.1%) vs. $668M. Suspends dividend. Shares -4.7% AH. (PR)
• JDS Uniphase (JDSU): FQ3 EPS of -$0.03 in-line. Revenue of $281M vs. $285M. Sees FQ4 revenue of $265-285M vs. consensus of $290M. Shares -12% AH. (PR)
• Kaiser Aluminum (KALU): Q1 EPS of $0.81 vs. consensus of $0.42. Revenue of $266M (-33.4%) vs. $277M. Shares +1.7% AH. (PR)
• LSI Logic (LSI): Q1 EPS of -$0.03 beats by $0.01. Revenue of $482M vs. $469M. Shares -0.2% AH. (PR)
• Northeast Utilities (NU): Q1 EPS of $0.60 beats by $0.05. Revenue of $1.59B (+4.8%) in-line. Shares -4.9% AH. (PR)
• Oceaneering International (OII): Q1 EPS of $0.80 beats by $0.12. Revenue of $435M (-0.2%) vs. $461M. Shares flat AH. (PR)
• O'Reilly Automotive (ORLY): Q1 EPS of $0.47 beats by $0.07. Revenue of $1.16B (+80.1%) in-line. Shares +3% AH. (PR)
• Owens-Illinois (OI): Q1 EPS of $0.55 beats by $0.19. Revenue of $1.52B (-22.5%) vs. $1.66B. Shares +11.3% AH. (PR)
• ProLogis (PLD): Q1 EPS of $0.66 misses by $0.04. Revenue of $455M vs. $245M. Shares -3.5% AH. (PR)
• Realty Income (O): Q1 EPS of $0.45 misses by $0.01. Revenue of $82.9M vs. $81.9M. (PR)
• Ryland Group (RYL): Q1 EPS of -$1.76 misses by $0.74. Revenue of $265M (-36.3%) vs. $235M. Shares -1.8% AH. (PR)
• Skechers (SKX): Q1 EPS of $0.18 beats by $0.27. Revenue of $343M (-10.8%) vs. $333M. "We are continuing to monitor our expenses and inventory levels to ensure maximum profitability in this soft economic environment, which we believe will continue to negatively impact our business." Shares +5.6% AH. (PR)
• Smith & Nephew (SNN): Q1 EPS of $0.13 misses by $0.49. Revenue of $865M (-5%) vs. $902M. Shares +0.45% premarket. (PR)
• Starbucks (SBUX): FQ2 EPS of $0.16 beats by $0.01. Revenue of $2.3B in-line. Shares +1.5% AH. (PR)
• STMicroelectronics (STM): Q1 EPS of -$0.31 beats by $0.02. Revenue of $1.66B (+33%) in-line. (PR)
• Taubman Centers (TCO): Q1 EPS of $0.70 beats by $0.12. Revenue of $158M (+0.2%) vs. $146M. Shares -0.3% AH. (PR)
• Teradyne (TER): Q1 EPS of -$0.38 beats by $0.02. Revenue of $121M (+59.4%) in-line. Shares +3.7% AH. (PR)
• Unum Group (UNM): Q1 EPS of $0.62 beats by $0.02. Revenue of $2.45B vs. $2.57B. Shares -0.1% AH. (PR)
• Visa (V): FQ2 EPS of $0.73 beats by $0.09. Revenue of $1.65B (+13.4%) in-line. Affirms full-year outlook - high-single digits in 21009 and the lower range of 11-15% in 2010. Volume growth of $675B down 1% Y/Y. Shares -0.1% AH. (PR)
• Walter Industries (WLT): Q1 EPS of $1.36 beats by $0.51. Revenue of $290M (+20.7%) vs. $316M. Shares +6.6% AH. (PR)
• Whiting Petroleum (WLL): Q1 EPS of -$0.92 misses by $0.20. Revenue of $164M in-line. (PR)

Today's Markets

Overseas markets posted strong gains Thursday, and futures are sharply higher.

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is Jim Simons' Renaissance Technologies, ranked 4th in Alpha's 2008 hedge fund rankings. Rentec, as they are commonly known, was started by Simons in 1982 and has around $25 billion in assets total. They employ mathematical and statistical methods to execute their investments and trades. Their flagship $7 billion Medallion fund has averaged annual returns around 35%.

With all of the furor over the past quarter, I did not update my actions on my portfolio. Today I do so.

New Buys

I own a number of insurers in my portfolio. Each of them has hard-to-replicate business models, with strong cultures, and good management teams (excluding HIG, which is merely a speculation at present). The tickers are listed below.

But Assurant is the best in my opinion. Unlike many companies in the life space, their liabilities are stable. Unlike many P&C insurers, their distribution model is inexpensive, and the downside is limited. Unlike many health companies, by focusing on individuals and small groups, and not using “teaser rates,” they have had decades of constant profitability. Unlike many life companies, if the S&P 500 goes up or down, they have no direct risk.

For those interested, below we highlight every stock in the S&P 500 Financial sector along with their percentage of analyst buy and sell ratings. The list is broken out by industry group (banks, diversified financials, insurance, and real estate) and then sorted by buy ratings from most to least. As shown, People's United Financial (formerly People's Bank of Connecticut) has the highest percentage of buy ratings in the bank group at 50%. M&T Bank (MTB), Regions Financial (RF), and Huntington Bancshares (HBAN) all have less than 10% buy ratings in the bank group.

Investors are biting their fingernails to see whether or not US equity markets will hold their lows from November 20th. As we mentioned in a post earlier today, the current declines have been focused primarily in one sector -- the Financials.

Even though the market is essentially flat since November 20th, the average stock in the S&P 500 is actually up 13.93%! And even though the Financial sector as a whole is down about 12% since November 20th, the average stock in the sector is actually up 1.41%! This means that the biggest stocks in the sector are down significantly, and as we all know, these include Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC).

Of course, Warren Buffett is the most admired living investor but for my money, I appreciate Seth Klarman’s insights and approach as much if not more than the Oracle. Readers can see all of the Baupost Group’s portfolio moves in easy-to-read spreadsheet format here but below is a summary of items that caught my eye:

• Klarman didn’t open any new big-money positions but he did add substantially to CapitalSource (CSE) and Theravance (THRX). Interesting to note that he moved up the capital structure with convertible debt on both those stocks in addition to adding more equity. Also of interest is Baupost’s selective move into financials with CSE and iStar Financial (SFI). Of course, Klarman thrives on complexity and Baupost has great expertise in commercial financing due to their activities; it may be perilous for less-informed investors to follow.
• Baupost seems to have completely abandoned its medical insurers position by selling off Wellpoint (WLP) and UnitedHealth Group (UNH). I’m not sure what caused the about-face but it definitely was not profit-taking.
• Klarman seems undaunted by the troubles currently roiling the media industry as he continues adding to his News Corp (NWS) stake.
• I noticed some bifurcation on his natural gas positions, with Klarman adding a third to his Breitburn Energy (BBEP) holdings, even as the share price halved, while at the same time, cutting its Linn Energy (LINE) stake by 20%. In a previous investor letter, he indirectly referred to both companies as being well-hedged for at least a few years.

Meryl Witmer, of Barron’s Roundtable renown, runs an extremely focused portfolio. View the spreadsheet breakdown here. My thoughts on her moves: