Sentiment

Stocks have bounced back from early losses and are trading mixed late Thursday. The table was set for weakness after Citi (C) and Goldman Sachs (GS) slipped on earnings news. While both reported profits and revenues that beat Street expectations, shares slipped as some of the good news might have been already discounted during the latest market rally. It was buy the rumor, sell the news.

Meanwhile, the day's economic news was mixed. Before the start of trading in New York, the Labor Department reported that the Consumer Price Index [CPI], a gauge of inflation at the consumer level, rose .2 percent, which is in-line with expectations..

(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.)

1) Stocks with Hillbent’s proprietary "A" (strongest) or "B" (next strongest) ranking in terms of positive fundamentals for revenue and earnings stability comprise what is better known as the "Weekly Babies With Bathwater" watchlist. (See results below)

• UBS tax talks stall. Talks to settle a tax dispute with UBS (UBS) have stalled once again as the U.S. and Swiss governments try to find a legal middle ground allowing the transfer of some client data to U.S. authorities. The two countries, which have until August 12 to reach a deal, have agreed in principle on the major issues but the technical details, and in particular the data transfer timeline, are still not finalized. The Swiss government is holding a special session today in light of the stalled negotiations.
• Publicis catches a fish. Publicis (PUBGY.PK) will buy Microsoft's (MSFT) ad agency Razorfish in a cash-stock deal worth $530M, roughly 1.5 times Razorfish's 2008 sale of $380M. Publicis is already the leader in digital advertising, which is one of the few ad sectors that has continued to grow during the recession, and Razorfish is number two in the sector. The purchase is part of a broader deal in which Publicis will buy display and search ads from Microsoft at attractive terms in exchange for minimum guaranteed purchases.
• Resolution raises bid for Friends. Buyout group Resolution improved its offer for life insurer Friends Provident (FRDPY.PK) for the second time, prompting Friends to enter into discussions with Resolution "with a view to recommending its proposal." The revised offer values Friends at £1.86B ($3.1B), a 12% premium to Friends' Friday close.
• China alleges Rio deceit. Rio Tinto (RTP) shares were down 3.2% premarket (7:00 ET) after allegations from China that Rio spied on its steel industry for six years, costing China $102B in excess iron ore costs. However, the author of the document linking Rio to the excess steel charges said the article is his own opinion, not the government's, and that it's based on previously published data. Confusion over the source and severity of the Rio allegations further weakens China’s shaky credibility on issues like this.
• Geithner wants debt leeway. On Friday, Geithner formally requested that Congress raise the $12.1T statutory debt limit, warning it must be increased so that "citizens and investors here and around the world can remain confident that the United States will always meet its obligations." Geithner said the existing limit could be breached as soon as mid-October if no action is taken, as the Treasury is expected to issue up to $2T of debt in FY '09 and up to $1.6T of debt in FY' 10.
• No synergy for Dynegy. Along with quarterly earnings (see details below), Dynegy (DYN) announced it will sell nine power plants to one-time partner LS Power Associates, a closely-held power generation company. LS Power will pay over $1B for the assets and return nearly $500M in shares to Dynegy, effectively unwinding a 2006 joint venture meant to create the largest U.S. developer of coal-fired power plants. LS Power will also give up its three seats on Dynegy's board and agree not to increase its Dynegy holdings beyond the 15% stake it will be left with after the transaction.
• Friday's failures. Three more banks were closed on Friday, bringing this year's failures to 72. The failures, including two in Florida and one in Oregon, are estimated to cost the FDIC $185M. (Read the FDIC's press releases I, II, III)

Earnings: Monday Before Open

• DISH Network Corp. (DISH): Q2 EPS of $0.14 vs. consensus of $0.67 (may not be comparable). Revenue of $2.9B (-0.4%) in-line. Added ~26K net subscribers in Q2 for a total of 13.61M. (PR)
• Dynegy (DYN): Q2 EPS of -$0.41 vs. consensus of -$0.04 (may not be comparable). Revenue of $493M (+53%) vs. $612M. (PR)
• Holly (HOC): Q2 EPS of $0.29 beats by $0.02. Revenue of $1B (-40.5%) vs. $1.1B. (PR)
• Northgate Minerals (NXG): Q2 EPS of $0.02 misses by $0.03. Revenue of $130M vs. $139M in the same quarter last year because of a large drop in realized copper prices. (PR)
• Perfect World (PWRD): Q2 EPS of $0.72 beats by $0.08. Revenue of $76M (+56.5%) vs. $73M. (PR)
• Quicksilver Resources (KWK): Q2 EPS of $0.24 beats by $0.06. Revenue of $206M (+4%) vs. $194M. (PR)

Earnings: Friday After Close

• Berkshire Hathaway (BRK.A): Q2 EPS of $1,147 misses by $91.38. Operating earnings of $1.78B (-22%). (PR)
• Freddie Mac (FRE): Q2 EPS of -$0.11. Loss due to dividend payment on $1.1B of senior preferred stock to Treasury. Positive net worth of $8.2B; no additional funding required from Treasury purchase agreement. Net income of $768M vs. one analyst's estimate of $771M. (PR)
• NATCO Group (NTG): Q2 EPS of $0.32 misses by $0.10. Revenue of $156M (-3%) vs. $159M. (PR)

Today's Markets

• In Asia, Nikkei +1.1% to 10,524. Hang Seng +2.7% to 20,930. Shanghai -0.3% to 3,250. BSE -1% to 15,010.
• In Europe at midday, London -0.6%. Paris -0.6%. Frankfurt -0.8%.
• Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.4%. Crude -0.4% to $70.67. Gold -0.3% to $956.50.

Monday's Economic Calendar

• 10:00 Conference Board's Employment Trends
• Notable earnings before Monday's open: ALD, DISH, DYN, HOC, KWK, NXG, PCLN, PWRD, SYY
• Notable earnings after Monday's close: FLR, FRPT, HRP, MDR, MTXX, NUAN, QSFT, TWTC

Seeking Alpha editor Eli Hoffmann contributed to this post.

Standard & Poor's recently updated the list of dividend growers from the S&P 1500 Index. In addition to the list containing decent growers, the companies exhibit a strong dividend coverage ratio. The criteria used in assembling the list include:

• paid increasing annual cash dividend for the past 10-years

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.)

Fortune Small Business is out with its annual FSB 100 list, which measures the fastest growing (by revenues) publicly-traded small business listed on U.S. exchanges. As always, it is both fascinating and frustrating.

Though the FSB 100 has many intriguing prospects, it is horribly laid out and almost impossible to assess in the format provided. For example, there’s no way on the FSB site to get a handle on the market cap of the list except one company at a time. It's another instance of a layout designed to generate unnecessary page views (and advertisement cpm’s) at the cost of reader convenience.

It may be the height of optimism, most project overall earnings growth for the S&P 500 Index stocks to be down by nearly 30% from the second quarter of 2008.

Stocks punched higher in March when a handful of companies said profits for the first three months of the year wouldn't be as dismal as feared. But many businesses achieved better-than-expected results by slashing costs, including payrolls.

• paid increasing annual cash dividends for the past ten years

• 2009 estimated coverage and 2010 ratio of at least 2-to-1 (based on street estimates divided by the current 12 month indicated dividend rate)

Source:

Standard & Poor's (.xls)

• Final countdown to stress test results. With just hours to go before the Federal Reserve releases its official stress test report, results continue to leak out. At least seven of the nation's biggest banks reportedly need to boost capital by $65B; Bank of America (BAC) likely has the largest hole to plug with a capital shortfall of around $34B, followed by Wells Fargo (WFC) with $13-15B, GMAC (GJM) with $11.5B, Citigroup (C) with $5B and Morgan Stanley (MS) with $1.5B. At least six institutions won't need any capital at all, including JPMorgan Chase (JPM), Goldman Sachs (GS), MetLife (MET), American Express (AXP), Bank of New York Mellon (BK) and Capital One Financial (COF). Geithner said the results will give a 'reassuring' picture of the banking system's ability to withstand crisis. Financial shares continue to do well in the run-up to the official release: AXP +2.2%, BAC +5.2%, C +7.8%, GS +0.9%, JPM +1.4%, MS +0.5%, WFC +2.5% (7:00 ET).
• Addressing too-big-to-fail. FDIC's Sheila Bair and Minneapolis Federal Reserve's Gary Stern offered up various solutions for the too-big-to-fail problem in Senate testimony yesterday. Bair wants to see the creation of a systemic-risk council to monitor potentially problematic companies because, as one lawmaker put it, "we cannot afford to replace Citi-sized financial institutions with Citi-sized regulators." Bair also wants the FDIC to be able to wind down bank and thrift holding companies as it now does with failed lenders. Stern suggested stress tests with pre-specified policy requirements, automatic capital protection regimes and insurance premiums on risky activity. (Read Bair's full testimony and Stern's full testimony)
• Senate fights foreclosures. The Senate approved a bill to reduce home foreclosures, including a provision that would shield mortgage service companies from lawsuits if they participate in federal loan modification programs. The bill did not include a controversial mortgage cramdown proposal some Democrats had been advocating. Lawmakers also raised the FDIC's borrowing authority to $100B from $30B, and extended the $250,000 deposit insurance limit through 2013.
• Chrysler update. In the words of Fiat CEO Sergio Marchionne, "Chrysler is on track to re-emerge from bankruptcy in 60 days. I will become Chrysler CEO after that." He said the idea has already been discussed with the Treasury.
• GM seeks stake in Fiat. General Motors (GM) is reportedly asking for a 30% stake in Fiat in return for giving the Italian automaker its Latin American and European operations, while Fiat is offering less than 10%. The talks are the latest development in Fiat's sudden bid to grow into a global auto powerhouse, by acquiring GM's Opel, and a 20% stake in Chrysler.
• Murdoch: brighter outlook for News Corp. News Corp. (NWS) reported in-line quarterly earnings yesterday (see details below) and a 47% drop in operating income as advertising revenues declined. The company reaffirmed earlier guidance that FY '09 operating income would fall 30%. However, CEO Rupert Murdoch stressed "it is increasingly clear that the worst is over. There are emerging signs in some of our businesses that the days of precipitous decline are done." Murdoch has no plans to buy additional newspapers, and will initiate cost-cutting at MySpace and Fox Interactive Media.
• SocGen posts loss on writedowns. Societe Generale (SCGLY.PK) reported an unexpected Q1 loss on writedowns connected to U.S. bond insurers and on higher provisions for risky loans. The bank had a net loss of €278M ($370M) vs. analysts' forecasts for a €332M profit, and noted that "acute tensions remain in the financial markets." CEO Frederic Oudea was named chairman, after Daniel Bouton stepped down from the position at the end of April. Shares -3.8% in Paris (7:00 ET).
• New Kindle for students, newsies. As expected, Amazon (AMZN) released a new and larger e-reader designed for textbooks and newspapers. The Kindle DX will cost $489, a mark-up of $130 over earlier versions of the e-reader, and will go on sale this summer.
• GE's health-care push. General Electric (GE) plans to announce a health-care initiative today, unveiling its efforts to improve the 'sustainability of global healthcare systems' in the areas of health technology, independent living, rural health and cost containment. The initiative will likely involve at least $1B of R&D spending. Shares +3.1% premarket (7:00 ET).
• MSFT still open to Yahoo deal. Microsoft (MSFT) CEO Steve Ballmer sees room to work with Yahoo (YHOO) to create a 'better search product' and says a tie-up would have been 'valuable.' He declined to comment on whether the two companies are holding formal talks. Premarket: MSFT +1.1%, YHOO +1.0% (7:00 ET).
• House hearing on BoA-Merrill. Bank of America (BAC) CEO Ken Lewis and top federal officials will reportedly be asked to testify in the House of Representatives next month regarding claims that the government pressured Bank of America into completing its Merrill Lynch acquisition.
• Dell may use Android. Dell (DELL) may use Google's (GOOG) Android operating system for future products, according to a press release put out by a small software company. The company's spokeswoman and a Dell representative later said the release was 'issued in error,' but the Dell spokesman confirmed the firm is assessing technology options.
• Weak April for Costco. Costco (COST) said its April same-store sales were 8% lower than a year ago, even worse than the 6.8% drop analysts expected. The decline was led by a 12% drop internationally, and 7% in the U.S. Total sales fell 6% to $5.18B.
• Job cuts decline. Firing announcements fell 12% in April M/M to 132,590, marking the third month in a row of job cuts declines, but are up 47% Y/Y. The report by Challenger, Gray & Christmas Inc noted that "job cuts are still at recession levels, but the fact that they are falling is certainly promising." According to ADP, private sector employment fell by 491,000 in April vs. 708,000 in March (revised from 742K) - much less than the 645,000 decline economists expected. Improvement was widespread across industries and across business sizes, but "this is still a major decline in employment."
• BoE stays put, boosts bond buys. Bank of England kept its key lending rate unchanged at 0.5%, but raised its bond purchase target by £50B to £125B. "The global banking and financial system remains fragile despite further significant intervention by the authorities," the Bank said, noting it expects U.K. inflation to drop below its 2% target later this year. "But surveys at home and abroad show promising signs that the pace of decline has begun to moderate."

Earnings: Thursday Before Open

• AECOM Technology (ACM): FQ2 EPS of $0.40 in-line. Revenue of $1.5B (+28.7%) vs. $1.6B. (PR)
• Ansys (ANSS): Q1 EPS of $0.37 beats by $0.01. Revenue of $121M (+10.9%) vs. $125M. (PR)
• ATP Oil & Gas (ATPG): Q1 EPS of $0.05 beats by $0.40. Revenue of $82M (-63.9%) vs. $92M. (PR)
• BCE (BCE): Q1 EPS of $0.57 beats by $0.04. Revenue of $3.6B (-0.5%) vs. $4.3B. (PR)
• Cameron International (CAM): Q1 EPS of $0.59 beats by $0.02. Revenue of $1.3B (-6.1%) vs. $1.4B. (PR)
• CapitalSource (CSE): Q1 EPS of -$0.36 misses by $0.11. (PR)
• Continental Resources (CLR): Q1 EPS of -$0.03 misses by $0.03. Revenue of $97M (-57.6%) vs. $112M. (PR)
• Corrections Corp. of America (CXW): Q1 EPS of $0.29 beats by $0.03. Revenue of $404M (+6.5%) vs. $403M. (PR)
• Dynegy (DYN): Q1 EPS of -$0.40 misses by $0.36. Revenue of $904M (+66.5%) vs. $683M. (PR)
• Frontier Communications (FTR): Q1 EPS of $0.12 misses by $0.02. Revenue of $538M (-5.5%) vs. $547M. (PR)
• General Motors (GM): Q1 EPS of -$9.66 beats by $1.39. Revenue of $22.43B (-47.1%) vs. consensus of $20.19B. Excluding special items, adjusted net loss was $5.9B. Cash fell to $11.6B from $14.2B. Shares +4.8% premarket (7:20 ET). (PR)
• Holly (HOC): Q1 EPS of $0.44 beats by $0.14. Revenue of $651M (-56%) vs. $590M. (PR)
• HRPT Properties Trust (HRP): Q1 EPS of $0.28 beats by $0.02. Revenue of $217M (+7.8%) vs. $216M. (PR)
• Lamar Advertising Company (LAMR): Q1 EPS of -$0.23 beats by $0.06. Revenue of $247M (-12.6%) vs. $244M. (PR)
• Lexington Realty Trust (LXP): Q1 EPS of $0.38 beats by $0.02. Revenue of $101M (-4.5%) vs. $99M. (PR)
• Linn Energy LLC (LINE): Q1 EPS of $0.48 beats by $0.09. Revenue of $204M (+19.2%) vs. $171M. (PR)
• MetroPCS Communications (PCS): Q1 EPS of $0.12 beats by $0.03. Revenue of $795M (+20.1%) vs. $818M. (PR)
• Nasdaq (NDAQ): Q1 EPS of $0.48 beats by $0.01. Revenue of $369M (-11.9%) vs. $379M. (PR)
• Omega Healthcare Investors (OHI): Q1 FFO of $0.37 in-line. Revenue of $49M (+20.3%) vs. $42M. Reaffirms FY '09 FFO of $1.47-$1.50. (PR)
• Perrigo Company (PRGO): FQ3 EPS of $0.50 beats by $0.05. Revenue of $506M (+5.3%) vs. $527M. Issues upside EPS guidance for FY '09 of $1.80-1.90, vs. previous guidance of $1.75-1.90. Shares +4.3% premarket (8:00 ET). (PR)
• Plains Exploration & Production Company (PXP): Q1 EPS of $1.23 beats by $0.96. Revenue of $228.5M (-63.3%) vs. $302.7M. (PR)
• Teradata Corporation (TDC): Q1 EPS of $0.26 beats by $0.12. Revenue of $367M (-2.1%) vs. $345M. (PR)

Earnings: Wednesday After Close

• Anadarko Petroleum (APC): Q1 EPS of -$0.53 beats by $0.09. Revenue of $1.6B (-46.4%) vs. $1.7B. Shares +0.85% AH. (PR)
• Atwood Oceanics (ATW): FQ2 EPS of $0.88 beats by $0.09. Revenue of $141M (+24%) vs. $139M. Shares +4.4% AH. (PR)
• Avis Budget Group (CAR): Q1 EPS of -$0.44 beats by $0.19. Revenue of $1.19B (-17.4%) vs. $1.25B. Shares -5.75% AH. (PR)
• Brookdale Senior Living (BKD): Q1 EPS of -$0.13 beats by $0.20. Revenue of $498M (+3.6%) vs. $495M. (PR)
• Churchill Downs (CHDN): Q1 EPS of -$0.37 beats by $0.21. Revenue of $73.7M (+12.2%) vs. $67.6M. (PR)
• Cisco Systems (CSCO): FQ3 EPS of $0.30 beats by $0.05. Revenue of $8.2B vs. $8.07B. CEO John Chambers' comments on the earnings call will be critical, as always. Shares +2.5% AH. (PR)
• Eagle Bulk Shipping (EGLE): Q1 EPS of $0.37 in-line. Revenue of $56M (+52.6%) vs. $54.4M. Utilization rate 99.6%. Shares -4.5% AH. (PR)
• Embarq (EQ): Q1 EPS of $1.39 beats by $0.10. Revenue of $1.35B (-7.6%) in-line. (PR)
• Federal Realty Investment Trust (FRT): Q1 FFO of $0.99 in-line. Revenue of $131M (+3.8%) vs. $130M. Shares flat AH. (PR)
• Global Industries (GLBL): Q1 EPS of $0.17 beats by $0.10. Revenue of $269.5M (-10.6%) vs. $264M. Shares +2.6% AH. (PR)
• Goodrich Petroleum (GDP): Q1 EPS of -$0.05 misses by $0.02. Revenue of $28.5M (-38.6%) vs. $21M. Shares -1.8% AH. (PR)
• Home Properties (HME): Q1 FFO of $0.79 beats by $0.01. Revenue of $129M vs. $122M. Shares flat AH. (PR)
• ION Geophysical (IO): Q1 EPS of -$0.10 misses by $0.02. Revenue of $107M (-23.8%) vs. $133M. Shares -9.5% AH. (PR)
• Limelight Networks (LLNW): Q1 EPS of -$0.02 beats by $0.02. Revenue of $33.2M (+9.9%) vs. $32.7M. Shares -0.4% AH. (PR)
• Macrovision (MVSN): Q1 EPS of $0.31 beats by $0.10. Revenue of $111.2M (+7.2%) vs. $106.7M. Narrows full-year guidance essentially in-line with previous range. Shares +4.7% AH. (PR)
• Murphy Oil (MUR): Q1 EPS of $0.37 beats by $0.12. Revenue of $3.45B (-47.1%) vs. $4.09B. Sees Q2 EPS in-line. Shares flat AH. (PR)
• News Corp. (NWS): FQ3 EPS of $0.16 in-line. Revenue of $7.4B vs. $7.71B. Says results "directly reflect the continuing weakness of the global economic climate." Shares +3.3% AH. (PR)
• ON Semiconductor (ONNN): Q1 EPS of $0.03 beats by $0.10. Revenue of $379M vs. $362M. "Due to the slowdown in the macro economy, along with the reduction of inventory levels throughout the supply chain, we believe the semiconductor industry and ON Semiconductor shipped fewer products than the end-market consumed." Shares +8.9% AH. (PR)
• Penn Virginia (PVA): Q1 EPS of $0.06 in-line. Revenue of $199M (-20.1%) vs. $221M. Shares +0.3% AH. (PR)
• Prudential Financial (PRU): Q1 EPS of $1.05 beats by $0.22. Revenue of $1M vs. $1M. Shares +4% AH. (PR)
• Regency Centers (REG): Q1 FFO of $0.78 beats by $0.01. Cuts quarterly dividend by 36% to $0.46. Shares flat AH. (PR)
• Symantec (SYMC): FQ4 EPS of $0.38 beats by $0.03. Revenue of $1.49B (+1.49%) in-line. Sees FQ1 EPS and revenue in-line. Shares -0.8% AH. (PR)
• Sunoco (SUN): Q1 EPS of $0.50 beats by $0.16. Revenue of $6.44B. "We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply." Expects 2009 capex to be $200M lower than planned. Shares +0.5% AH. (PR)
• Tenaris (TS): Q1 EPS of $0.62 misses by $0.06. Revenue of $2.45B (-6.7%) vs. $2.5B. Shares -1% AH. (PR)
• Tesoro (TSO): Q1 EPS of $0.37 in-line. Revenue of $3.28B (-50.3%) in-line. Shares -2.5% AH. (PR)
• The Andersons (ANDE): Q1 EPS of $0.27 beats by $0.33. Revenue of $697M (-2.2%) vs. $579M. Shares +14.2% AH. (PR)
• THQ (THQI): FQ4 EPS of -$0.54 misses by $0.20. Revenue of $170M vs. $149M. Expects year-end cash balance at least $50M higher next year. Secures $35M credit line with BofA (BAC). Shares -0.3% AH. (PR)
• USEC (USU): Q1 EPS of $0.02 misses by $0.07. Shares -5.1% AH. (PR)

Today's Markets

Another day of solid gains for overseas markets. Tokyo, open for the first time this week, led the way.

May 28th marks the next OPEC meeting. Will there be more production cuts? John Licata, chief investment strategist at Blue Phoenix Inc. doesn't think so, noting that even those cuts are being offset by "much production coming from non-OPEC members." In this exclusive interview with The Energy Report, John discusses the underlying forces that continue to drive crude's price volatility and explains why he foresees a "super spike" in natural gas—the likes of which we haven't seen since 2003.

The Energy Report: The market is going a little bit crazy today, especially the NASDAQ and oil. To what do you attribute that?

by Guest Author: Robert Williams, PhD, P.E.

There is a dominant stock investing theme that directs you to invest in companies that provide a product that everybody uses every day. May I draw your attention to a specific product in this category, namely asphalt? Unless your house has a tile roof, you probably woke up under an asphalt-tiled roof; walked to your car on an asphalt footpath; drove your car to work on an asphalt-surface highway or freeway; and parked your car in the asphalt-surface office car park.

Q4 2008 Earnings Call

February 17, 2009; 10:00 am ET

• Automakers report on progress. General Motors (GM) and Chrysler must submit preliminary reports today about their progress in cutting costs and their recovery plans, with final plans due March 31. Along with its report, sources say GM, due to receive another $4B from the government today, may seek aid beyond the initial $18B requested because of worsening economic conditions. GM may also shut or sell up to four European plants as it looks to save around $1.5B, while angling for €3B ($3.8B) in loan guarantees from European governments. The reports will be reviewed by a government task force led by Treasury's Geithner and White House economic adviser Lawrence Summers, rather than by an individual 'car czar.'
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Join us at the 4th Annual Value Investing Congress West (May 5&6 in Pasadena, CA) to find out how some of the world's best investors are recouping losses and finding great values in this tumultuous market. To see a full list of speakers, click here.

In yesterday’s post, I discussed the importance of having some long oil exposure in your portfolio as most businesses are generally hurt by increasing oil prices. But, if you’re like me, and not an expert oil trader. It can be daunting to go out and buy an oil ETF like the Goldman Sachs Crude Oil Total Return (OIL) or maybe even a Powershares DB Crude Oil Double Long (DXO). So, where else can we look?

Oil Majors

I admit that this is a rather experimental post. Recenlty, I have done some work that looks at valuations on U.S. independent refiners and have reached several conclusions. One of these is that current share prices, despite their substantial declines in 2008, still price-in a historically strong industry environment going forward. Thus, they are not priced for hard times, as some might believe. The four companies I looked at, Valero (VLO), Tesoro (TSO), Frontier (FTO), and Holly (HOC), are actually still more expensive in terms of capacity valuation than they were at their own share price highs of 1998-2003, at least by my analysis.

I also believe that the strongest ideas are formed via sharing and confrontation. Therefore, I have attached a rather detailed PDF to this post, which looks at the calculated historical EV/Capacity valuations for four U.S. refiners. Perhaps something similar has already been said elsewhere, but I have a feeling that it is unlikely that the same perspective had already been applied, and therefore, I hope this piece adds some value to the discussion.

There’s too much risk and uncertainty to allocate capital to refining assets.

The independent refiners have had a tough go of it since mid-2007, with many declining by 70% to 90%. Most balance sheets are clean (Frontier Oil (FTO), Holly Corp (HOC)) while some have large debt loads due to acquisitions (Western Refining (WNR)).

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

The other funds we've already covered include:

Q3 2008 Earnings Call

November 4, 2008 10:00 a.m. ET

• Even more firms may gain access to TARP. Sources say the Treasury may use some of its $700B rescue fund to buy stakes in financing companies such as GE's (GE) GE Capital and CIT Group (CIT). Presently the program only includes publicly-traded banks and insurers, although the Treasury is already mulling opening the door to some privately-held firms. The U.S. government could eventually own even more of the American financial system than first envisioned.
• Yahoo, Google tone down ad tie-up. Yahoo (YHOO) and Google (GOOG) submitted a revised version of their search-ad pact to the Justice Department in the hope gaining approval. New provisions limit the scope of the deal, including shortening the agreement to two years from ten, and capping Yahoo's revenue from the deal to 25% of its search revenue total; previously there was no cap. The revised plan also gives Google advertisers the ability to opt out of having their ads displayed on Yahoo sites. It's unclear whether the changes will suffice to appease regulators who worry the deal will allow Google (GOOG) to monopolize online advertising. Separately, Yahoo said Monday Microsoft (MSFT) executive Jeff Dossett will take the lead position in its online media properties after veteran Scott Moore left "for other opportunities."
• UBS posts earnings, warnings. UBS (UBS) confirmed a Q3 profit of 296M Swiss francs ($256.3M) helped by credit and tax gains, with outflows of 49.3B francs from its wealth management unit and 34.4B francs from its asset management unit. The world's largest wealth manager, UBS had already reported much of its Q3 results last month when it announced a capital injection of 6B franc from the Swiss government and said it would unload $60B of risky assets into a central bank fund. UBS noted some positive client money flows in October, but warned 'difficult' market conditions would hurt fee-earning businesses and Q4 results would be weighed down by the accounting effects of transferring risky assets. Shares -2.6% premarket.
• Outlook sours for RBS. Royal Bank of Scotland (RBS) abandoned its full-year profit forecast after it wrote-down £1B in October against assets connected to Lehman Brothers and Icelandic banks and as bad loans rose. It also posted £1.4B of markdowns in Q3 before new accounting rules allowed it to claim back £1.2B. CEO Stephen Hester said the latest writedowns, coming in addition to £5.9B in H1, show the bank has too much risk and could face a full-year loss. RBS is in line for a U.K. bailout, and the government could own up to 60% of the bank unless investors buy some of the £20B of stock to be issued later this year. Shares -14.9% premarket.
• Goldman hedge fund down $1B. A flagship Goldman Sachs (GS) hedge fund - Goldman Sachs Investment Partners - has lost almost $1B of its $6B since its launch in January, further evidence of the crisis facing the industry. "We anticipate that these results will lead to net outflows from the hedge fund industry," managers said, although GSIC itself imposed a two-year lock-in at inception. More than half of its 13% Q3 loss was on positions in commodities, basic materials, metals, mining, energy and agriculture.
• Tough 2009 for JPMorgan. JPMorgan (JPM) CEO Jamie Dimon told employees the firm faces "highly challenging conditions" in 2009, but sees a possible "strong recovery" in 2010. JPM's recent acquisitions of Bear Stearns and WaMu will improve performance in the "longer term," he said. Dimon warned Asia is "going to get worse than you think" as the tidal wave that began with a collapse of the U.S. mortgage market washes over it. Still, longer-term, he sees "very substantial natural growth" in the region.
• iPod master leaves Apple. Tony Fadell, one of the fathers of the iPod, is leaving Apple (AAPL) for personal reasons, sources say. Former IBM (IBM) executive Mark Papermaster will take his place. During Fadell's tenure, the iPod grew from a curiosity into a major cash cow; Apple sold 54.7M iPods during its most recent fiscal year. But growth has cooled off as saturation becomes a factor in many countries. Still, Apple shows no signs of giving up any of its 70% U.S. market share.
• Dismal October for automakers. General Motors (GM) said October was likely the auto industry's worst month since WWII after its sales plunged 45%, Ford's (F) fell 30%, Nissan's (NSANY) declined 33%, Honda's (HMC) dropped 25%, while Toyota's (TM) declined by 23%. GM marketing chief Mark LaNeve said he believes there's plenty of pent-up demand, "but until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer." U.S. auto sales are now down 14.6% YTD. "It's weaker than we were anticipating," J.D. Power's Bob Schnorbus said, warning leaders should take heed: "The auto industry is important to the economy and it should not be taken too lightly."
• Manufacturing paints bleak picture. The ISM's Manufacturing index fell to 38.9 in October, its lowest level since 1982, and worse than the expected 41.5. The only industries reporting growth were apparel and leather & allied products. Petroleum & coal and nonmetallic mineral products led the laggards. The weaker than expected data increases the risk the current slump will outdo the recessions of 2001 and 1991. Companies are cutting back on investments and hiring as Q3 consumer spending plunged by 3.1% - the biggest decline in 28 years. The survey "indicates a significantly faster rate of decline in manufacturing when comparing October to September," ISM director Norbert Ore said. "It appears that manufacturing is experiencing significant demand destruction as a result of recent events." Prices also rose at a much slower rate: the price index plunged to 37 from 53.5 in September - the lowest level since December 2001. Export orders dropped for the first time in 70 months.
• September Construction Spending fell 0.3% from August's revised numbers, better than the expected 0.8% drop. Residential private construction -1.3%; non-residential +1.2%.

Earnings: Before Open

• Ameren (AEE): Q3 EPS of $1.17 misses by $0.08. Revenue of $2.06B (+3.2%) vs. $2.29B. Sees full-year EPS of $2.80-3.00 vs. $3.01. Shares -5.3%. (PR)
• Archer Daniels Midland (ADM): FQ1 EPS of $1.63 vs. consensus of $0.69. Revenue of $21.16B (+65%) vs. $15.98B. (PR)
• Autodesk (ADSK): Sees Q3 EPS of $0.53-0.55 vs. $0.55 consensus and revenue of $604-607M vs $624M. "The sharp downturn of the global economy is substantially impacting our business... Demand for our products fell dramatically in October in all geographies as the financial crisis worsened. (PR)
• Cimarex Energy (XEC): Q3 EPS of $2.19 misses by $0.07. Revenue of $576.5M (+67.7%) vs. $568M. (PR)
• Dean Foods (DF): Q3 EPS of $0.28 misses by $0.03. Revenue of $3.19B (+2.5%) in-line. (PR)
• Emerson Electric (EMR): FQ4 EPS of $0.88 beats by $0.02. Revenue of $6.7B (+11.1%) in-line. (PR)
• GrafTech (GTI): Q3 EPS of $0.55 beats by $0.10. Revenue of $316M (+25.7%) vs. $303M. Shares +6.7%. (PR)
• HCP Inc. (HCP): Q3 FFO of $0.71/share beats by $0.05. Revenue of $270M vs. $242M. Sees full-year FFO of $2.38-2.42 vs. $2.29. (PR)
• Holly (HOC): Q3 EPS of $1.00 beats by $0.13. Revenue of $1.72B (+42.3%) in-line. (PR)
• Louisiana-Pacific (LPX): Q3 EPS of -$0.38 misses by $0.08. Revenue of $390M (-17.5%) in-line. (PR)
• Magna International (MGA): Q3 EPS of $0.17 vs. consensus of $0.90. Revenue of $5.53B (-9%) in-line. (PR)
• Marvel Entertainment (MVL): Q3 EPS of $0.64 beats by $0.19. Revenue of $182.5M (+47.7%) vs. $146M. Sees full-year EPS of $2.45-2.65 vs. $1.93 and 2009 EPS of $1.00-1.35 vs. $1.94. (PR)
• Myriad Genetics (MYGN): FQ1 EPS of $0.30 beats by $0.16. Revenue of $74M (+52.4%) vs. $70M. (PR)
• NiSource (NI): Q3 EPS of $0.03 in-line. Revenue of $1.42B (+11.8%) vs. $1.36B. (PR)
• PPL Corp. (PPL): Q3 EPS of $0.45 misses by $0.15. Sees full-year EPS of $2.00-2.05 vs. $2.29, and 2009 EPS of $1.60-1.90 vs. $2.17. "Many of the pressures that affected our results in 2008 also are expected to continue into 2009..." (PR)
• Rowan (RDC): Q3 EPS of $1.00 beats by $0.13. Revenue of $527M (+5%) vs. $540M. "Continuing weakness in capital markets and commodity prices will, eventually, affect customer demand for our products and services, though we have experienced little impact thus far." (PR)
• St. Joe (JOE): Q3 EPS of -$0.12 misses by $0.12. Revenue of $32.8M (-57.6%) vs. $47.3M. (PR)
• Talisman Energy (TLM): Q3 EPS of $0.72 beats by $0.08. Revenue of $2.82B (+50.9%) vs. $2.89B. (PR)
• Tenneco (TEN): Q3 EPS of $0.01 misses by $0.22. Revenue of $1.5B (-3.8%) in-line. (PR)
• Tenet Healthcare (THC): Q3 EPS of -$0.06 misses by $0.03. Revenue of $2.14B (+5.2%) vs. $2.21B. Shares +14.1%. (PR)
• W&T Offshore (WTI): Q3 EPS of $0.79 misses by $0.03. Revenue of $290M (+13.6%) vs. $276M. (PR)

Earnings: Monday After Close

• Automatic Data Processing (ADP): FQ1 EPS of $0.54 beats by $0.04. Revenue of $2.18B (+9.5%) in-line. Shares -2.5%. (PR)
• Coldwater Creek (CWTR): Sees Q3 sales of $225M vs. $265M consensus, and EPS of -$0.07 to -$0.09 vs. $0.03 consensus. "The overall macro-economic environment has proven to be substantially more challenging than anticipated." Shares -5.9%. (PR)
• Comstock Resources (CRK): Q3 EPS of $1.20 beats by $0.20. Revenue of $169M (+103.7%) vs. $158M. (PR)
• Embraer (ERJ): Q3 EPS of $0.32 misses by $0.07. Revenue of $1.55B (+8.1%) vs. $1.63B. (PR)
• EOG Resources (EOG): Q3 EPS of $2.34 beats by $0.10. Revenue of $3.22B (+226.5%). Shares +1.9%. (PR)
• Forest Oil (FST): Q3 EPS of $1.26 misses by $0.12. Revenue of $474M (+51.5%) vs. $465M. (PR)
• Herbalife (HLF): Q3 EPS of $0.89 beats by $0.03. Revenue of $M in-line. Sees Q4 EPS of $0.65-0.70 vs. $0.91, and 2009 EPS of $3.50-3.55 vs. $3.71. Shares -13.5%. (PR)
• MasterCard (MA): Q3 EPS of $2.47 beats by $0.22. Revenue of $1.34B (+23.7%) vs. $1.27B. Gross dollar volume rose 12.3%. "As we are not immune from the long-term effects of the current economic environment, we have significantly accelerated the focus on our cost structure..." Shares +8%. (PR)
• Mohawk Industries (MHK): Q3 EPS of $1.10 misses by $0.02. Revenue of $1.76B (-9%) in-line. (PR)
• Open Text (OTEX): Q3 EPS of $0.53 beats by $0.03. Revenue of $183M (+11.4%) vs. $179M. Shares -1.1%. (PR)
• Pepco Holdings (POM): Q3 EPS of $0.59 misses by $0.11. Revenue of $3.06B (+10.4%) vs. $2.73B. (PR)
• Pitney Bowes (PBI): Q3 EPS of $0.67 misses by $0.03. Revenue of $1.55B (+2.6%) vs. $1.6B. Sees full-year EPS of $2.75-2.82 vs. $2.85. (PR)
• St. Mary Land (SM): Q3 EPS of $1.20 beats by $0.08. Revenue of $324M (+31.4%) vs. $329M. Shares +1.2%. (PR)
• Viacom (VIA): Q3 EPS of $0.62 beats by $0.07. Revenue of $3.41B (+4.2%) vs. $3.32B. Shares +1.5%. (PR)

Today's Markets

• Asia closed mixed Tuesday. Tokyo was the standout, +6.27% to 9,115. Shanghai -0.76% to 1,707. Hang Seng +0.28% to 14,384. BSE Sensex +2.84% to 10,631.
• European markets posted strong morning gains. London +1.75%. Paris +2.1%. Frankfurt +2%.
• U.S. futures are markedly higher at 7:00 AM. Dow +1.88% to 9506. S&P +1.96% to 988.50. Nasdaq +2.18%. Crude +1.16% to $64.65. Gold +1.49% to $737.60.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook
  10:00 Factory Orders
  5:00 PM ABC Consumer Confidence Index
• Notable earnings before Tuesday's open: ADM, AEE, AMSC, DF, DNR, EMR, ENTG, EXPD, FE, GTI, HCP, HL, HNT, HOC, JEC, JOE, LPX, MAC, MGA, MYGN, NI, NNN, NXG, PPL, PQ, RDC, TDC, TEN, THC, TLM, VNO, WTI, XEC
• Notable earnings after Tuesday's close: AMMD, BRE, CBL, DCT, FCH, HRP, JKHY, ME, NHP, PXD, UPL, USU, VTR

Seeking Alpha editor Rachael Granby contributed to this post.