• Buffett buys Burlington for a cool $44B. Berkshire Hathaway (BRK.A) announced it will acquire the 77.4% of Burlington Northern (BNI) it doesn't already own for $100/share in cash and stock - a 30% premium to Monday's close of $76.07. The transaction is worth $44B, including $10B in outstanding debt. Here's what Warren Buffett had to say: "Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well. Berkshire's $34B investment in BNI is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it's an all-in wager on the economic future of the U.S. I love these bets."
• Stocks slide; futures fall. Global stock markets painted a gloomy picture Tuesday, with bourses in Asia and Europe taking 2%-plus losses as risk appetite took a breather and investors clamored for safe-haven assets, sending the dollar and U.S. Treasurys climbing and futures tumbling (see data below in Today's Markets). "The basis for the correction seems to rest on three legs," Merrill economist Bill O'Neill said. "Worries over prospects for holders of equity in banks; concern that interest-rate hikes are imminent; and paradoxically, that recovery in 2010 will be crippled by a U.S. consumer unwilling or unable to open his or her wallet." Others took the recent downturn as a sign equity prices had gotten ahead of real improvements in the economy.
• Stanley, B&D craft $8.4B merger. Stanley Works (SWK) agreed to buy rival Black & Decker (BDK) for $4.5B in stock, the culmination of a courtship that spanned 27 years and three other attempts. The bid values B&D at about $57.57/share, a 22% premium to Monday's close. "The more we talked, the more we felt like these were two very complementary and unique companies," BDK CEO Nolan Archibald said, adding both CEOs were "totally swayed" by potential synergies of $350M. Stanley shareholders will own about 50.5% of the combined company; B&D shareholders will get 49.5%.
• Lloyds, RBS diverge on aid. Lloyds (LYG) and Royal Bank of Scotland (RBS) unveiled agreements with the U.K. Treasury over their participation in its program to insure toxic assets, and detailed the divestments they will need to make to satisfy EU regulators. Lloyds opted out of the expensive U.K. asset-protection scheme, saying it would raise £21B, including a £13.5B rights issue; the government will maintain its 43% stake in the bank. The move subjects Lloyds to more modest EU demands: Lloyds said it will dispose of "a retail banking business" with a 4.6% market share and about 19% of its mortgage portfolio; sell £180B in noncore assets; and limit acquisitions over the next 3-4 years. RBS will enter the asset-protection scheme to insure £282B of its illiquid loans, with the first £60B in losses borne by RBS. The government will inject another £25.5B into RBS, raising its stake to 84.4%. RBS will sell its RBS retail network in England and Wales and NatWest branches in Scotland; RBS insurance; Global Merchant Services; and its stake in RBS Sempra Commodities. LYG +2.8% premarket. RBS -8%.
• Outflows continue to plague UBS. Shares of UBS (UBS) are -7% premarket after the Swiss bank said it doesn't expect client inflows to recover anytime soon due to its mangled reputation as a result of its tax dispute with the IRS. UBS posted a fourth straight quarterly loss of 564M francs (-$552M), worse than the 207M loss expected by the Street. Total client outflows rose to 36.6B francs ($35.8B), led by a doubling of outflows at its Americas wealth-management division. On a media call, CFO John Cryan cited UBS's "residual reputational issue" along with "some morale issues among advisers" that it needs to face, and said UBS expects "modest outflows from Swiss clients until we return to profit."
• EU sees gradual recovery. The EU lifted its 2010-2011 growth forecast to 0.75% and 1.5% respectively, but cautioned its outlook is "highly uncertain" given that "significant fiscal and monetary policy measures" are supporting the recovery. Predicting government deficits will swell to 7.5% of GDP, the Commission said a "protracted period of fiscal consolidation will have to follow at some stage to put public debt back on a sustainable footing."
• RBA hikes rates again. Australia's central bank, the first G-20 member to break from super-loose monetary policy, raised interest rates for the second time in two months - to 3.5% - amid a rapidly improving economic outlook. The bank hinted it may not boost rates again in December, saying the rises in October and November would work to temper inflation and ensure a sustainable upswing in the economy, which sent the Aussie dollar (ETF: EWA) lower. The central bank has never hiked rates three months in a row.
• CRE breaks death spiral. Prices of investment-grade commercial real estate rose 4.4% in Q3, according to the MIT CRE's transaction-based index, possibly signaling an end to the sector's year-long downward spiral. "One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said. "Nevertheless, this is the strongest sign of a bottom that we've had in two years." The positive news comes in stark contrast to gloomy remarks from the Fed's John Greenlee, who said Monday (.pdf) that regional banks building up "unprecedented concentrations of CRE loans" will suffer the impact of worsening conditions in real estate markets, and warned, "Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions."
• Hat trick of upside surprises. U.S. manufacturing activity hit its highest level in 3.5 years and pending home sales contracts unexpectedly surged, reducing fears the economy's budding recovery would falter. ISM's manufacturing index climbed 3.1 points to 55.7 (vs. 53.3 consensus) as companies began rebuilding inventories. "Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode," ISM said. Pending home sales rose for the eighth straight month, the longest streak on record, with NRA's index gaining 6.1% (vs. +0.7% consensus) to 110.1. The index is now at its highest since Dec. 2006. And construction spending (.pdf) rose 0.8% (vs. -0.3% consensus) to an annual $940B, though the gain was offset by a large downward revision to August's number.
• Pensions bulge while market caps shrink. Pensions rose an average of 19% for top executives in 2008, even as their companies' stock prices fell by 37% amid a global downturn, according to an analysis of SEC filings. The growth was largely due to arcane pension formulas that have received little scrutiny.

Earnings: Tue. Before Open

• Alpha Natural Resources (ANR): Q3 EPS of $0.47 beats by $0.09. Revenue of $729M (+5.9%) in-line. Shares -0.9% premarket. (PR)
• American Tower (AMT): Q3 EPS of $0.17 in-line. Revenue of $444M (+8.5%) vs. $430M. (PR)
• AmerisourceBergen (ABC): FQ4 EPS of $0.44 beats by $0.04. Revenue of $18.27B (+9.7%) vs. $18.06B. Shares +5.5% premarket. (PR)
• Archer Daniels Midland (ADM): FQ1 EPS of $0.77 beats by $0.20. Revenue of $14.9B (-29.5%) vs. $17.9B. Shares +0.1% premarket. (PR)
• Cameron International (CAM): Q3 EPS of $0.58 beats by $0.05. Revenue of $1.23B (-18.1%) in-line. Shares -0.3% premarket. (PR)
• Cognizant Technology Solutions (CTSH): Q3 EPS of $0.45 beats by $0.04. Revenue of $853M (+16.2%) vs. $806M. Sees Q4 EPS of $0.45 vs. $0.42 and revenue of at least $880M vs. $830M. Shares +6.9% premarket. (PR)
• Emerson Electric Company (EMR): FQ4 EPS of $0.67 beats by $0.07. Revenue of $5.32B (-20.5%) in-line. Sees 2010 revenue of $19.45-19.87B vs. $20.21B. "We are well positioned for economic recovery, but the shape and speed of the recovery remains unknown and we expect weakness to continue in the near-term." Shares -1% premarket. (PR)
• Expeditors International of Washington (EXPD): Q3 EPS of $0.27 misses by $0.02. Revenue of $1.04B (-33.7%) in-line. "There certainly were significant challenges during the latter part of this quarter as both air and ocean carriers imposed capacity reductions in order to implement very aggressive price increases. While we wouldn't call it 'The Perfect Freight Storm,' the rapidity of these carrier moves created a pricing environment that resulted in our experiencing single digit airfreight yields out of Asia during the first several weeks of September. Ocean yields were also significantly impacted." (PR)
• Frontier Communications (FTR): Q3 EPS of $0.17 beats by $0.02. Revenue of $527B (-5.6%) in-line. Shares -0.3% premarket. (PR)
• Gaylord Entertainment (GET): Q3 EPS of -$0.32 misses by $0.21. Revenue of $199M (-12.2%) vs. $202M. (PR)
• IntercontinentalExchange (ICE): Q3 EPS of $1.18 beats by $0.03. Revenue of $256M (+27.3%) in-line. Shares +0.2% premarket. (PR)
• Marathon Oil (MRO): Q3 EPS of $0.61 beats by $0.04. Revenue of $14.48B (-37.9%) vs. $13.7B. Shares +1.3% premarket. (PR)
• Marvel Entertainment (MVL): Q3 EPS of $0.26 beats by $0.02. Revenue of $106M (-42.1%) vs. $92.5M. Disney (DIS) is due to acquire Marvel by year-end. (PR)
• MasterCard (MA): Q3 EPS of $3.48 beats by $0.54. Revenue of $1.36B (+1.9%) in-line. Gross dollar volume +0.3%. Purchase volume +0.4%. Shares +3.3% premarket. (PR)
• Medco Health Solutions (MHS): Q3 EPS of $0.75 beats by $0.03. Revenue of $14.79B (+17.8%) in-line. Shares +2.5% premarket. (PR)
• Northgate Minerals (NXG): Q3 EPS of $0.03 misses by $0.01. Revenue of $120M. (PR)
• Oshkosh Truck (OSK): FQ4 EPS of $0.27 beats by $0.11. Revenue of $1.49B (-19.8%) vs. $1.4B. "We expect to be solidly profitable in fiscal 2010, led by significant revenue growth in our defense business, which should more than offset anticipated low demand at our construction-related businesses." Shares +3.8% premarket. (PR)
• Petroquest Energy (PQ): Q3 EPS of $0.07 misses by $0.06. Revenue of $50.3M (-35.8%) vs. $52.2M. Shares -6.5% premarket. (PR)
• Polo Ralph Lauren (RL): FQ2 EPS of $1.75 beats by $0.44. Revenue of $1.37B (-3.8%) vs. $1.31B. "We are raising our sales expectations for the remainder of the year, but we continue to be cautious with our outlook and are planning accordingly." Shares +2.7% premarket. (PR)
• Rockwell Collins (COL): FQ4 EPS of $0.84 misses by $0.03. Revenue of $1.19B (-7%) in-line. Shares -2.7% premarket. (PR)
• Royal Caribbean Cruises (RCL): Q3 EPS of $1.07 beats by $0.07. Revenue of $1.8B (-14.5%) in-line. Sees "a slight loss" in Q4 vs. consensus of +$0.04. "Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings." Shares -3.2% premarket. (PR)
• St. Joe Company (JOE): Q3 EPS of -$0.08 misses by $0.02. Revenue of $43.2M (+30.1%) vs. $28.9M. (PR)
• Teva Pharmaceutical Industries (TEVA): Q3 EPS of $0.89 beats by $0.01. Revenue of $3.55B (-7.6%) vs. $3.63B. Shares -2% premarket. (PR)
• Viacom (VIA): Q3 EPS of $0.69 beats by $0.12. Revenue of $3.32B (-2.7%) in-line. Shares +0.7% premarket. (PR)
• Vornado (VNO): Q3 FFO of $1.25 beats by $0.08. Revenue of $671M (-0.7%) vs. $637M. Shares -0.5% premarket. (PR)

Earnings: Mon. After Close

• Anadarko (APC): Q3 EPS ex-items of $0.40 may not compare to estimate of -$0.33. Gains that may affect comparability, including reversed accrual and unrealized derivatives loss, of $0.51/share. Revenue of $2.7B (-55%) vs. $2B. Shares +0.7% AH. (PR)
• Avis Budget Group (CAR): Q3 EPS of $0.54 misses by $0.01. Revenue of $1.5B (-14%) vs. $1.6B. Shares +6.5% AH. (PR)
• Axis Capital (AXS): Q3 EPS of $1.05 beats by $0.33. Revenue of $452M (-29%) vs. $581M. (PR)
• Chesapeake Energy (CHK): Q3 EPS of $0.70 beats by $0.05. Revenue of $1.8B (-76%) vs. $2B. Shares -1.1% AH. (PR)
• Forest Oil (FST): Q3 EPS of $0.48 misses by $0.04. Revenue of $177M (-50%) vs. $252M. Shares -1.8% AH. (PR)
• Hecla Mining (HL): Q3 EPS of $0.09 beats by $0.09. Revenue of $95.2M (+39%) vs. $68.7M. Shares +2.4% premarket. (PR)
• Kinross Gold (KGC): Q3 EPS of $0.00 misses by $0.12. Revenue of $582M (+16%) vs. $578M. Shares +0.4% AH. (PR)
• MannKind (MNKD): Q3 EPS of -$0.42 beats by $0.06, on no revenues. "While we continue to be fully engaged in the task of navigating our NDA through the FDA review process, we are continuing to run additional studies of AFRESA." Shares +4.5% AH. (PR)
• Republic Services (RSG): Q3 EPS of $0.32 misses by $0.04. Revenue of $2.07B (+149%) in-line. Sees full-year EPS of $1.46-1.48 vs. $1.46. Shares -0.2% AH. (PR)
• Principal Financial Group (PFG): Q3 EPS of $0.74 beats by $0.09. Revenue of $2.3B (-9%) vs. $2.5B. Shares +2.4% AH. (PR)
• St. Mary Land (SM): Q3 EPS of $0.23 beats by $0.03. Revenue of $186M (-43%) vs. $187M. (PR)

Today's Markets

China was the lone gainer on an otherwise dismal Tuesday in Asia. Europe shares are getting pummeled. Stock futures are under severe pressure. Treasurys and the dollar are up strongly.

Bullish Calls:

UPS (UPS): "Boy you've got horse sense! I would make that a much bigger position!... Buy, buy, buy!"

In a conference call Wednesday afternoon, Bruce Berkowitz answered a number of shareholder questions regarding The Fairholme Fund, the state of the overall stock market, and prospects for health care reform. Mr. Berkowitz’s record at The Fairholme Fund since its inception on December 29, 1999 has been nothing short of extraordinary. Based on the fund’s semi-annual report (pdf) dated June 30, 2009, annualized performance since inception has been a gain of over 12% annualized compared to a loss of over 3% annualized for the S&P 500.

This article documents some of the notes that I took during the call and are not necessarily direct quotations. This is not a comprehensive transcript of the event, but focused on areas that I found particularly interesting. A replay of the conference call should be available on The Fairholme Fund’s website in the near future.

The Fairholme Fund have bounced back nicely in 2009, showing a 30% gain for the year. Quick summary follows but you can view Berkowitz's portfolio moves in this spreadsheet.

• Their new positions seem to indicate that Berkowitz has changed his mind regarding some lukewarm comments about Berkshire Hathaway's (BRK.A) low growth potential a while back. He added about $150M to BRK.A and BRK.B positions. Fairholme's other notable new position is yet another ode to the equipment rental industry, RSC Holdings (RRR). They already have positions on industry peers, United Rentals (URI) and Hertz Global Holdings (HTZ). Berkowitz has mentioned his attraction to the industry's counter-cyclical free cash flows on numerous occasions.
• The only noteworthy divestiture was Canadian Natural Resources (CNQ). Berkowitz made a great sell call on the energy space near last year's peak (which I should have heeded!) and continues to avoid the space.
• Sizable accumulations during the quarter included the aforementioned HTZ, Humana (HUM), Spirit Aerosystems (SPR) and St Joe (JOE). HUM and SPR seem to be company-specific plays since the fund sold sizable chunks of related players like Boeing (BA), Northrop Grumman (NOC), Wellpoint (WLP) and UnitedHealth Group (UNG). As for JOE, Berkowitz has been a long-time (and long-term) bull on its play in Florida land development and continues to stand by that view with conviction.
• Fairholme decided to book the quick gain on American Express (AXP), reducing that position by over 70% as the stock rose.

Mohnish Pabrai's fund is no longer tracked in the pages of Barron's but I would guess his funds are also rebounding better than the broader market. He held his hand for the most part during the quarter as shown in this spreadsheet of Pabrai's holdings.

The recently released semi-annual report of The Fairholme Fund (FAIRX), a mutual fund managed by respected value investor Bruce Berkowitz, reveals some noteworthy portfolio changes during the fund's second fiscal quarter ended May 31st.

Berkowitz significantly boosted the fund's ownership of Hertz Global Holdings (HTZ) during the period, from 30.0 million shares at the end of February to 46.4 million shares at the end of May. Hertz shares rose sharply during the period, suggesting that Berkowitz was likely adding to his position at higher prices. The shares have continued their upward climb since the end of Fairholme's fiscal Q2, rising from $6.85 per share on May 29th to $10.93 as of August 7th. The rapid ascent of Hertz shares likely reflects investors' changed perception of the company's ability to service its considerable debt load, which amounted to roughly $9 billion, net of cash, at the end of June (most of the debt is used to finance Hertz's large inventory of rental vehicles). Hertz's earnings remain depressed, but analysts estimate that profitability will recover somewhat, to $0.33 per share, in 2010.

• BoA's Lewis closer to exit. Bank of America (BAC) reshuffled its senior management yesterday, replacing the head of consumer banking with Brian Moynihan, who had previously run wealth management, and hiring Sallie Krawcheck as the new wealth management chief. The bank is also setting up a five-way competition for a new CEO to replace Ken Lewis "at the appropriate time," with candidates including Moynihan, who is the front runner for the position, Krawcheck, CFO Joe Price, home-lending chief Barbara Desoer and Goldman Sachs veteran Tom Montag. Shares -1.4% premarket (7:00 ET). (Read BoA's press release)
• BoA settles Merrill suit. Bank of America (BAC) agreed to a $33M settlement with the SEC over charges that it made false and misleading statements to investors about bonuses at Merrill Lynch. The settlement was announced almost immediately after the allegations, which the bank neither confirmed nor denied, but the SEC emphasized it will continue its investigation. Though the $33M payment is high for disclosure-related cases not connected to fraud, the fine seems small compared to the $3.6B in bonuses paid at Merrill in 2008 and damages CEO Ken Lewis' once-golden reputation far more than BoA's bottom line. (Read the SEC's complaint (.pdf) and statement on the settlement)
• No surprises from UBS loss. UBS (UBS) posted a Q2 net loss of 1.4B Swiss francs ($1.32B), its third consecutive quarterly loss, on costs related to job cuts and charges related to the company's debt. Its wealth and asset management divisions saw outflows of 39.4B francs. CEO Oswald Gruebel said markets improved in the second quarter but a sustainable economic recovery 'is not yet visible.' Shares -8.3% premarket (7:00 ET). (Read UBS' letter to shareholders (.pdf))
• Bank regulators oppose financial reforms. Several top banking regulators, including the FDIC's Sheila Bair, will testify in Congress today against some key elements of Obama's proposed financial reforms. The regulators feel parts of Obama's plan are unnecessary, and Bair doesn't "see merit or wisdom in consolidating federal supervision" under a single regulator since combining agencies is 'no panacea' for effective oversight. The testimony comes in spite of strongly-worded exhortations from Geithner, who wants regulators to end their turf battles and public criticism and to get in line behind the reforms. (See the Senate's full list of witnesses for today's hearing)
• Monday's market climb. The S&P 500 broke through the 1,000 mark for the first time since November, climbing 1.5% to close at 1,002.63, and the Nasdaq broke the 2,000 mark, closing up 1.5% at 2,008.61. All three major U.S. indexes, including the Dow Jones Industrial Average, are now at their highest levels since last autumn. Speculation that the recession may be ending helped commodities surge and sent Treasurys and the dollar down.
• Google's Schmidt leaves Apple board. Google (GOOG) CEO Eric Schmidt resigned from Apple's (AAPL) board of directors, with Apple releasing a statement that "as Google enters more of Apple's core businesses... Eric's effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest." The resignation, which Apple described as mutual, highlights not just the growing overlap between Apple and Google, but also increased antitrust scrutiny from the Federal Trade Commission. The move failed to mollify the FTC, which said it "will continue to investigate remaining interlocking directorates between the companies."
• ANZ picks up Asian assets. Australia and New Zealand Banking Group (ANZBY.PK) agreed to buy some Asian units from Royal Bank of Scotland (RBS) for around $550M. ANZ will pick up retail, wealth management and commercial businesses in Taiwan, Singapore, Indonesia and Hong Kong, as well as RBS' institutional banking businesses in Taiwan, the Philippines and Vietnam, as a 'further stepping stone' in the bank's Asian growth strategy.
• Clunker program lifts car sales. July U.S. motor vehicle sales reached their highest pace in eleven months, thanks in large part to the 'Cash for Clunkers' program which sent consumers rushing to dealerships. Car firms sold 997,824 cars and light trucks in July, pushing the annualized selling pace to 11.24M vehicles vs. June's rate of 9.69M, and a slump in luxury auto demand showed signs of lessening. Here's the breakdown:
  -Ford (F): +2.3% to 158,838 vs. consensus of -5%, making it the first U.S. manufacturer to report a monthly sales increase this year.
  -Chrysler: -9% to 88,900. Car sales -14% to 22,109. Sales up 30% M/M. "We are seeing encouraging signs that consumer confidence is building, and more consumers are considering purchasing a new vehicle."
  -General Motors: -19.4% to 189,443. Chevrolet was the best-performing brand at -9.3% to 124,948. Saturn, the worst performer, was -66.1% to 5,968.
  -Honda (HMC): -17.3% to 114,690. Truck sales -20.6% to 37,996.
  -Toyota (TM): -11.4% to 174,872, up 27.7% M/M. Lexus division -16.5% to 18,517. Hybrids +19.3% to 24,295.
  -Nissan (NSANY): -24.6% to 71,847. Trucks -48.4% to 20,448.
  -Daimler (DAI): -24% to 17,646 for the Mercedes-Benz car division.
  -Volkswagen (VLKAY.PK): +0.7% to 20,590. Diesels accounted for more then 30% of total sales.
• CIT sweetens buyback offer. CIT Group (CIT) raised its tender offer on $1B in notes to a purchase price of $875 per $1,000, up from $825. CIT also lowered its minimum tender condition to 58% of notes, and has already received tenders for 64.97% of notes. The improved terms all but guarantee the buyback's success, pulling CIT one step farther away from bankruptcy court. (Read CIT's press release)
• AIG gets new chief. Robert Benmosche will become CEO and President of AIG (AIG), replacing Edward Liddy as of August 10. Benmosche is the former CEO of MetLife (MET), and will be AIG's fifth chief since 2005.
• Manufacturing still contracting. The ISM Manufacturing Index came in at 48.9 in July vs. 46.5 consensus, its 18th consecutive month of contraction. Nonmetallic Mineral Products and Paper Products reported growth. Machinery, Plastics & Rubber Products, and Wood Products led the laggards.
• Construction spending inches up (.pdf). June Construction Spending rose 0.3% to $966B/year, beating consensus estimates of -0.5%. Compared to a year ago, construction was down 10.2%. For the first half of the year, spending of $456B was 11.4% below last year.

Earnings: Tuesday Before Open

• Allegheny Energy (AYE): Q2 EPS of $0.43 in-line. Revenue of $815M (-15%) vs. $868M. (PR)
• Archer Daniels Midland (ADM): FQ4 EPS of $0.10 vs. consensus of $0.45 (may not be comparable). Revenue of $16.5B (-24%) vs. $15.2B. (PR)
• ArvinMeritor (ARM): FQ3 EPS of -$0.25 beats by $0.06. Revenue of $993M (-47%) vs. $1.2B. (PR)
• Cameron International (CAM): Q2 EPS of $0.60 beats by $0.13. Revenue of $1.3B (-14%) vs. $1.2B. Issues upside Q3 EPS guidance of $0.50-0.55 vs. $0.42 consensus. Issues upside FY '09 EPS guidance of $2.15-2.25 vs. $1.89 consensus. (PR)
• Cincinnati Bell (CBB): Q2 EPS of $0.11 beats by $0.01. Revenue of $328M (-7%) vs. $336M. (PR)
• Cognizant Technology Solutions (CTSH): Q2 EPS of $0.50 beats by $0.13. Revenue of $777M (+13%) vs. $762M. Issues upside Q3 guidance: sees EPS of $0.44 vs. $0.39 consensus, revenue of at least $800M vs. $781M consensus. (PR)
• CVS Caremark (CVS): Q2 EPS of $0.65 beats by $0.01. Revenue of $25B (+18%) vs. $24B. (PR)
• Discovery Communications (DISCA): Q2 EPS of $0.43 beats by $0.11. Revenue of $881M (-0.5%) in-line. (PR)
• D.R. Horton (DHI): FQ3 EPS of -$0.45 misses by $0.22. Revenue of $922.5M (-43%) vs. $792M. (PR)
• Duke Energy (DUK): Q2 EPS of $0.26 beats by $0.01. Revenue of $2.9B (-10%) vs. $3.2B. (PR)
• Emerson Electric Company (EMR): FQ3 EPS of $0.56 misses by $0.01. Revenue of $5.1B (-22.5%) vs. $5.3B. (PR)
• Entergy (ETR): Q2 EPS of $1.23 misses by $0.03. Issues in-line guidance for FY '09, sees EPS of $6.20-6.80 vs. $6.56 consensus. (PR)
• Expeditors International of Washington (EXPD): Q2 EPS of $0.25 in-line. Revenue of $895M (-38%) vs. $999M. (PR)
• Frontier Communications Corporation (FTR): Q2 EPS of $0.11 misses by $0.02. Revenue of $532M (-5%) vs. $534M. (PR)
• HCP (HCP): Q2 EPS of $0.55 beats by $0.04. Revenue of $267M (+7.5%) vs. $249M. (PR)
• Henry Schein (HSIC): Q2 EPS of $0.81 beats by $0.05. Revenue of $1.6B (-2%) in-line. (PR)
• Iconix Brand Group (ICON): Q2 EPS of $0.30 in-line. Revenue of $56M (+9%) vs. $51M. (PR)
• IntercontinentalExchange (ICE): Q2 EPS of $1.12 misses by $0.01. Revenue of $250M (+27%) vs. $243M. Shares +0.6% premarket (7:40 ET). (PR)
• Louisiana-Pacific (LPX): Q2 EPS of -$0.26 beats by $0.07. Revenue of $266M (-31%) vs. $241M. (PR)
• Marvel Entertainmnet (MVL): Q2 EPS of $0.37 beats by $0.06. Revenue of $116M (-26%) vs. $106M. (PR)
• NiSource (NI): Q2 EPS of $0.02 beats by $0.01. Revenue of $1B (-35%) vs. $1.6B. (PR)
• Pinnacle West Capital (PNW): Q2 EPS of $0.77 misses by $0.10. Revenue of $840M (-5%) vs. $834M. (PR)
• PPL (PPL): Q2 EPS of $0.32 misses by $0.08. Revenue of $1.7B (+65%) in-line. (PR)
• Progress Energy (PGN): Q2 EPS of $0.64 misses by $0.05. Revenue of $2.3B (+3%) in-line. (PR)
• Rowan Companies (RDC): Q2 EPS of $0.78 beats by $0.03. Revenue of $482M (-18%) vs. $435M. (PR)
• Spectra Energy Corp. (SE): Q2 EPS of $0.22 beats by $0.02. Revenue of $937M (-17%) vs. $1.1B. (PR)
• St. Joe Company (JOE): Q2 EPS of -$0.49 misses by $0.33. Revenue of $41M (-40%) vs. $24M. (PR)
• Tenet Healthcare (THC): Q2 EPS of -$0.03 misses by $0.02. Revenue of $2.2B (+5.5%) in-line. (PR)
• TRW Automotive (TRW): Q2 EPS of -$0.11 vs. consensus of -$0.83 (may not be comparable). Excluding charges, reports $0.08 per share. Revenue of $2.7B (-39%) vs. $2.6B. (PR)
• Valeant Pharmaceuticals International (VRX): Q2 EPS of $0.51 beats by $0.07. Revenue of $192M (+25%) vs. $181M. Shares +5.6% premarket (8:20 ET). (PR)
• W&T Offshore (WTI): Q2 EPS of -$0.07 beats by $0.41. Revenue of $150M (-67%) vs. $138M. (PR)

Earnings: Monday After Close

• Anadarko (APC): Q2 EPS of -$0.48 beats by $0.20. Revenue of $1.8B (-37%) in-line. (PR)
• Arena Pharmaceuticals (ARNA): Q2 EPS of -$0.48 beats by $0.01. Revenue of $2.4M (-8%) vs. $3.1M. (PR)
• Atmel (ATML): Q2 EPS of $0.00 beats by $0.05. Revenue of $285M (-32%) vs. $279M. Sees Q3 sales up 4-8% sequentially. (PR)
• Axis Capital (AXS): Q2 EPS of $1.22 beats by $0.05. Revenue of $781M (-4%) vs. $747M. (PR)
• Centex (CTX): Q2 EPS of -$2.63 misses by $1.46. Including tax benefit, reported EPS of $0.68. Revenue of $574M (-49%) vs. $563M. (PR)
• Chesapeake Energy (CHK): Q2 EPS of $0.62 beats by $0.11. Revenue of $1.7B vs. $1.9B. (PR)
• Comstock Resources (CRK): Q2 EPS of -$0.26 in-line. Revenue of $65M (-62%) vs. $63M. (PR)
• Extra Space Storage (EXR): Q2 FFO of $0.24 beats by $0.10. Revenue of $69M (+3%) vs. $67M. (PR)
• Forest Oil (FST): Q2 EPS of $0.52 beats by $0.06. Revenue of $182M (-65%) vs. $240M. (PR)
• Herbalife (HLF): Q2 EPS of $0.78 beats by $0.06. Revenue of $572M (-11%) vs. $550M. Sees Q3 EPS of $0.66-0.69 vs. $0.81. Sees Q3 revenue down 4-6%. (PR)
• Hologic (HOLX): FQ3 EPS of $0.29 beats by $0.03. Revenue of $403M (-6%) vs. $395M. Sees full-year EPS of $1.14-1.16 vs. $1.12. (PR)
• Principal Financial Group (PFG): Q2 EPS of $0.69 beats by $0.06. Revenue of $2.2B (-19%) vs. $2.5B. (PR)
• Pulte Homes (PHM): Q2 EPS of -$0.74 misses by $0.17. Revenue of $679M (-58%) vs. $647M. (PR)
• STEC (STEC): Q2 EPS of $0.42 beats by $0.08. Revenue of $86M (+54%) vs. $83M. Sees Q3 EPS of $0.45-0.47 vs. $0.39. Files to sell 7.5M shares of common stock. (PR)
• WMS Industries (WMS): FQ4 EPS of $0.49 beats by $0.02. Revenue of $196M (+5%) vs. $197M. Sees full-year revenue of $760M-780M vs. $707M. (PR)

Today's Markets

Little movement in Asian markets, which closed mixed. European markets are heading down and U.S. markets are unlikely to sustain yesterday's gains.

At the end of each trading week, Hillbent scans 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.)

Continuing the theme I discussed yesterday with Seth Klarman and Meryl Witmer's filings, Bruce Berkowitz's Fairholme Capital was strangely subdued (here's the spreadsheet) despite the early March market plunge:

• As with Klarman and Witmer, no new positions added (according to the 13F -- remember, incomplete information) despite new bear market lows. Instead, it seemed Berkowitz was focusing on building existing positions, especially American Express (AXP). A good move on his part thus far as the stock has more than doubled since Berkowitz increased his stake by 76%. Other sizable buying included Florida real estate play St Joe (JOE), hedge fund retailer Sears Holdings (SHLD), aerospace manufacturer Spirit Aerosystems (SPR) and rental company Hertz Global (HTZ).
• Fairholme liquidated a few small positions and reduced a wide range of holdings, perhaps to raise cash for their best ideas and meet redemptions. The only notable sell-off was Canadian Natural Resources (CNQ), reduced 88% even though they were adding to it in Q4.

Mohnish Pabrai's rocky performance has been well-documented but a quick glance at his 13F spreadsheet suggests recent portfolio moves have been kind to him as financials and base metal miners have moved up fast in the last few weeks:

• More banks need capital. Speculation continues to grow ahead of Thursday's stress test results, with sources now saying as many as 10 out of 19 tested banks may need more capital. Regulators will likely cite commercial real-estate loans as a major reason why the banks need more capital, with projected losses of up to 12% on those loans over two years. Despite the rumors, financial shares rose by the most in more than a month yesterday, sending Wells Fargo (WFC) up 23.7%, Bank of America (BAC) up 19.3% and Citigroup (C) up 7.7%.
• S&P marches upwards. The S&P 500 turned positive for 2009, as a late burst of buying in the financial sector, basic-materials, energy and consumer stocks pushed the index to 907.24. The S&P is up 34% since hitting bear-market lows in early March, and is now up 0.4% for the year to date.
• UBS misses profit mark again. UBS (UBS) posted a Q1 net loss of 1.98B Swiss francs ($1.75B) amid more writedowns and continued client withdrawals, and said its bad loans may increase as the global economy worsens. Since taking office in February, CEO Oswald Gruebel has cut 7,500 jobs, replaced two executive board members and sold a Brazilian business unit, calling a return to profitability his 'most urgent' task. Shares -1.2% premarket (7:00 ET).
• Obama tax plan faces resistance. Obama unveiled plans to end tax breaks for U.S.-based multinational corporations but met with resistance from some Democrats in Congress worried about 'unintended consequences.' The proposal would ban three offshore tax-saving strategies commonly used by companies like Citigroup (C), General Electric (GE) and Procter & Gamble (PG), and re-opened a debate about whether U.S. firms can stay globally competitive if forced to pay hefty taxes on foreign profits.
• Bankruptcy fallout for Chrysler lenders, dealers. Chrysler's dealership network is on the verge of collapse as uncertainty about Chrysler's future drives already-scarce consumers away. Meanwhile, secured lenders who oppose Chrysler's bankruptcy plan have asked for their identities to be kept secret after some received death threats. Chrysler itself received court permission to use $4.5B in government loans for bankruptcy financing, and expects to be profitable again by 2012.
• Antitrust probe on Apple, Google. The Federal Trade Commission is investigating whether Apple (AAPL) and Google (GOOG) violated antitrust laws with the overlap of directors on their boards. Arthur Levinson and Google CEO Eric Schmidt sit on the boards of both companies, leaving room for antitrust regulators to intervene if their presence reduces competition.
• Alcatel-Lucent widens loss. Alcatel-Lucent (ALU) saw its Q1 loss more than double to €402M ($537.5M) from €181M the year before, as demand for telecommunications equipment slumped. This marked the company's tenth consecutive quarterly deficit. CEO Ben Verwaayen said the company has no plans to leave the business of making wireless-communications equipment but acknowledged this "will be a year of transition" and "taking appropriate actions." Shares -2.7% premarket (7:00 ET).
• Raising the bar on failed bank reviews. With so many U.S. banks failing (32 to date in 2009), government watchdogs want to change the law so that a review is required only if a bank's failure costs the FDIC $300M or more. Currently, a review must be done if a bank failure costs the FDIC $25M or more, which has created a heavy workload of 'material loss reviews' of failed banks.
• Kindle tackles textbooks. Amazon (AMZN) is reportedly planning to unveil a new version of Kindle tomorrow aimed at publishers of periodicals and academic textbooks. The new e-reader will, among other features, likely have a larger screen and a more fully functional web browser. Amazon has already worked out a deal with several publishers to make their textbooks available in e-format.
• ArcelorMittal shelves steel bid. ArcelorMittal (MT) has suspended a potential $8B investment in Indonesian steelmaking facilities, after over a year of stalled negotiations. The deal was meant to capture key supplies of iron ore and reduce ArcelorMittal's reliance on big suppliers like Rio Tinto (RTP) and BHP Billiton (BHP).
• TALF gets a boost. The Federal Reserve's TALF program is making some progress, with a $5B JPMorgan Chase (JPM) bond offering backed by credit-card loans that is eligible for the program. The JPMorgan deal is the largest to date of the TALF-eligible offerings, and is one of six deals due to be sold today.
• Loss but no aid expected for AIG. AIG (AIG) is expected to post a Q1 loss when it reports on Thursday, but reportedly won't need a new capital injection from the government. If this is true, it will be the first quarterly results announcement since AIG's September bailout that is not coupled with government aid.
• Aussies hold rate steady. Australia's central bank left its benchmark interest rate unchanged at 3%, as largely expected. The bank is waiting to see whether the lowest borrowing rates in nearly 50 years, coupled with government spending, will be enough to pull the economy out of its recession.
• Construction spending improves (.pdf). Construction spending rose 0.3% in March vs. an expected 1.6% fall and last month's 1% fall (revised). For the quarter, spending fell 10.9%.
• Home sales beat expectations. Pending Home Sales rose 3.2% in March, vs. consensus of 0% and previous sales of +2% (revised). NAR chief economist Lawrence Yun said the increase could be the "leading edge" of first-time buyers taking advantage of cheap prices and the $8,000 tax credit.

Earnings: Tuesday Before Open

• Archer-Daniels-Midland (ADM): FQ3 EPS of $0.37 misses by $0.12. Revenue of $14.8B (-20.7%) vs. $16.9B. (PR)
• Automatic Data Processing (ADP): FQ3 EPS of $0.80 in-line. Revenue of $2.4B (-2.2%) in-line. (PR)
• Avon Products (AVP): Q1 EPS of $0.27 misses by $0.06. Revenue of $2.2B (-12.9%) vs. $2.1B. (PR)
• Brookfield Asset Management (BAM): Q1 EPS of $0.15 misses by $0.01. Revenue of $2.65B (-17.4%) vs. $1.61B. (PR)
• Cincinnati Bell (CBB): Q1 EPS of $0.12 beats by $0.01. Revenue of $625.5M (-3.5%) vs. $345M. (PR)
• Cimarex Energy (XEC): Q1 EPS of $0.09 misses by $0.08. Revenue of $209M (-56.2%) vs. $232M. (PR)
• Cognizant Technology Solutions (CTSH): Q1 EPS of $0.38 beats by $0.01. Revenue of $746M (+16%) vs. $734M. (PR)
• Constellation Energy Group (CEG): Q1 EPS of $0.74 beats by $0.04. Revenue of $3.1B (-16.2%) vs. $4.4B. (PR)
• CVS (CVS): Q1 EPS of $0.55 beats by $0.01. Revenue of $23.4B (+9.7%) vs. $23.6B. (PR)
• Denbury Resources (DNR): Q1 EPS of $0.19 in-line. Revenue of $173.7M (-45.2%) vs. $241.4M. (PR)
• Diamondrock Hospitality Company (DRH): Q1 EPS of $0.16 beats by $0.03. Revenue of $118.5M (-10.8%) vs. $114M. (PR)
• Duke Energy (DUK): Q1 EPS of $0.28 misses by $0.04. Revenue of $3.3B (-0.7%) vs. $3.4B. (PR)
• Emerson Electric (EMR): FQ2 EPS of $0.49 misses by $0.04. Revenue of $5.1B (-15.5%) in-line. (PR)
• FirstEnergy (FE): Q1 EPS of $1.02 beats by $0.13. (PR)
• Foundation Coal (FCL): Q1 EPS of -$0.10 misses by $0.06. Revenue of $395M (-2.9%) vs. $401M. (PR)
• Health Net (HNT): Q1 EPS of $0.41 beats by $0.06. Revenue of $3.9B (+2.5%) in-line. Shares +2.6% premarket (8:40 ET). (PR)
• Hewitt Associates (HEW): FQ2 EPS of $0.60 beats by $0.05. Revenue of $762M (-3.5%) vs. $754.5M. (PR)
• IntercontinentalExchange (ICE): Q1 EPS of $1.09 beats by $0.14. Revenue of $232M (+12.1%) vs. $230M. (PR)
• Kraft Foods (KFT): Q1 EPS of $0.45 beats by $0.05. Revenue of $9.4B (-6.5%) vs. $9.7B. Shares +3.0% premarket (7:30 ET). (PR)
• Legg Mason (LM): FQ4 EPS of -$2.29 beats by $0.04. Revenue of $617M (-42.3%) vs. $611M. (PR)
• Louisiana-Pacific (LPX): Q1 EPS of -$0.29 beats by $0.13. Revenue of $205M (-41.4%) vs. $245M. (PR)
• Macerich Company (MAC): Q1 EPS of $1.16 beats by $0.10. Revenue of $211M (-3.1%) vs. $201M. (PR)
• Marvel Entertainment (MVL): Q1 EPS of $0.57 beats by $0.21. Revenue of $197M (+75%) vs. $136M. (PR)
• Molson (TAP): Q1 EPS of $0.53 beats by $0.20. Revenue of $559M (-58.8%) vs. $568M. Shares +6.5% premarket (8:45 ET).(PR)
• Penske Automotive Group (PAG): Q1 EPS of $0.11 beats by $0.08. Revenue of $2.2B (-32%) in-line. (PR)
• PetroQuest Energy (PQ): Q1 EPS of -$1.36 misses by $1.40. Revenue of $59M (-22.4%) in-line. (PR)
• Pinnacle West Capital (PNW): Q1 EPS of -$0.29 misses by $0.17. Revenue of $629M (-8.6%) vs. $699M. (PR)
• Precision Castparts (PCP): FQ4 EPS of $1.87 misses by $0.01. Revenue of $1.6B (-9.2%) vs. $1.8B. (PR)
• Progress Energy (PGN): Q1 EPS of $0.64 beats by $0.03. Revenue of $2.4B (+18.2%) vs. $2.2B. (PR)
• Radian Group (RDN): Q1 EPS of -$2.69 misses by $1.03. Net loss is "primarily attributable to unrealized mark to market losses on derivatives and the continued increase in mortgage insurance defaults." (PR)
• Spectra Energy (SE): Q1 EPS of $0.33 in-line. Revenue of $1.4B (-13.5%) in-line. (PR)
• St. Joe (JOE): Q1 EPS of -$0.12 misses by $0.10. Revenue of $21.6M (-81.5%) vs. $33.3M. (PR)
• Teva Pharmaceutical Industries (TEVA): Q1 EPS of $0.71 beats by $0.03. Revenue of $3.1B (+22.4%) vs. $3.4B. (PR)
• Valeant Pharmaceuticals (VRX): Q1 EPS of $0.46 beats by $0.23. Revenue of $178M (+17%) vs. $175M. Shares +5.6% premarket (8:15 ET). (PR)
• Wisconsin Energy (WEC): Q1 EPS of $1.20 beats by $0.18. Revenue of $1.40B (-2.2%) vs. $1.45B. (PR)
• W&T Offshore (WTI): Q1 EPS of -$0.54 misses by $0.01. Revenue of $117M (-67.1%) vs. $122M. (PR)

Earnings: Monday After Close

• American Financial Group (AFG): Q1 EPS of $1.11 beats by $0.15. Sees full-year EPS of $3.75-4.05 vs. $3.72. Shares +9.7% AH. (PR)
• Chesapeake Energy (CHK): Q1 EPS of $0.46 misses by $0.02. Revenue of $2B (+23.8%) vs. $2.2B. Shares -6% AH. (PR)
• D.R. Horton (DHI): FQ2 EPS of -$0.34 misses by $0.04. Revenue of $775M (-52.3%) vs. $817M. Shares -1.2% AH. (PR)
• EOG Resources (EOG): Q1 EPS of $0.53 misses by $0.06. Revenue of $1.16B (+2.1%) vs. $0.98B. Shares +0.9% AH. (PR)
• Extra Space Storage (EXR): Q1 FFO of $0.23 misses by $0.26. Revenue of $69.3M (+5.5%) vs. $67.1M. Sees full-year FFO of $0.99-1.03 vs. $1.21. Shares -3.7% AH. (PR)
• FMC Corp. (FMC): Q1 EPS of $1.22 in-line. Revenue of $690M (-8%) vs. $790M. Shares -6.2% AH. (PR)
• Forest Oil (FST): Q1 EPS of $0.29 beats by $0.13. Revenue of $195M (-48.3%) vs. $257M. Shares flat AH. (PR)
• Health Care REIT (HCN): Q1 FFO of $0.81 beats by $0.02. Revenue of $144M (+14%) in-line. (PR)
• Hill-Rom (HRC): FQ2 EPS of $0.27 beats by $0.12. Revenue of $337M (-10.1%) vs. $334M. Full-year guidance in-line. (PR)
• Hologic (HOLX): FQ2 EPS of $0.29 beats by $0.02. Revenue of $402M (-6.7%) vs. $405M. Sees FQ3 EPS in-line, and revenue of $390-400M vs. $409M consensus. Shares -10.3% AH. (PR)
• McKesson (MCK): FQ4 EPS of $1.23 beats by $0.08. Revenue of $26.22B vs. $27.3B. Shares -3.4% AH. (PR)
• MGM Mirage (MGM): Q1 EPS of -$0.06 beats by $0.01. Revenue of $1.5B (-20.4%) vs. $1.58B. Says cancellations have tapered off and business seems to be stabilizing. Shares +4.8% AH. (PR)
• Principal Financial Group (PFG): Q1 EPS of $0.63 misses by $0.03. Revenue of $2.18B vs. $2.51B. Assets under management down 22% from a year ago to $237B. Shares +0.4% AH. (PR)
• St. Mary Land (SM): Q1 EPS of -$0.01 misses by $0.15. Revenue of $199M (-45%) vs. $196M. Shares flat AH. (PR)
• Vulcan Materials (VMC): Q1 EPS of -$0.29 misses by $0.22. Revenue of $600M (-26.6%) vs. $690M. -2.4% AH. (PR)

Today's Markets

Overseas markets moved higher Tuesday. Futures are up moderately.

Q4 2008 Earnings Call

February 24, 2009, 10:30 am ET

Based on our proprietary Signal Rank™ methodology, The Manual of Ideas estimates that Bruce Berkowitz’s top three ideas are AmeriCredit (NYSE: ACF), United Rentals (NYSE: URI) and Hertz Global Holdings (NYSE: HTZ). While these companies are not in Fairholme’s top ten holdings by dollar value, our proprietary metrics suggest that those are the stocks in which Bruce Berkowitz may have the highest level of conviction at this time. Please see below for an explanation of the MOI Signal Rank™ methodology.

Our analysis is based on Form 13F-HR filed by Fairholme Capital Management on February 13, 2009. We also consider Fairholme’s past 13F-HR filings, recent 13G and 13D filings as well as the latest market prices of the portfolio holdings.

A year ago, I reviewed Fortune Magazine’s 10 picks for the best stocks of 2008. I passed my judgment on Fortune’s recommended stocks based on their closing prices on the first Friday of 2008. Now, a full year later, I was curious to see how Fortune’s picks did versus the S&P 500 over the same time period and to compare my predictions for these stocks with what happened to them over the course of the year up to the close on the first Friday of 2009.

For the purposes of evaluating performance of individual stocks, I assumed that all cash distributions where kept in cash and not reinvested. The one stock of the set, Merrill Lynch (MER), which was acquired in an all-stock swap deal over this time period, I priced on the last day of the measurement period based on the value of the replacement Bank of America (BA) shares received by the MER shareholders.

More news from our friend St. Joe (JOE):

Jacksonville, Florida - (December 18, 2008) - The St. Joe Company (JOE) today said that it has closed the sales of 19,917 acres of non-strategic rural land in Liberty and Gulf Counties for an aggregate sales price of $28.0 million, or over $1,400 per acre.

We continue with Part II of our 2008 Land Review (see part I here). These are the same companies we featured in last year's column, and not surprisingly, most are down significantly.

(Market Cap and EV are in $ millions.)

Let me get this straight: Obama releases a harebrained scheme with the word "infrastructure" in the headline. Close analysis reveals that the plan involves changing light bulbs in government buildings.

As a result, manufacturers of construction equipment that you can buy slightly used at huge discounts rallied strongly. Also, the worst, most heavily shorted stocks rallied the most.

Check out the following chart:

Click to enlarge

The Trend line not only has been broken, it has been demolished to the downside.

Interesting news from St. Joe (JOE):

One of the recent mysteries at St. Joe is: What happened to this $130-million land deal earlier this fall for 67,365 acres of conservation land in Liberty, Jefferson, Gulf and Franklin counties? St. Joe terminated the sale but never identified the buyer or why the contract soured. Now the land is back on the market.

Real estate investment trusts, or REITs, have been among the hardest-hit sectors in the overall market since the credit crunch hit. Is now a time to be considering picking up some REIT holdings on attractive valuations? We spoke with Zacks senior REIT analyst Greg Sukenik to find out.

Around the time of our last interview, you were advocating apartment REITs. Are you still strong on this sector?

I still like apartments, as I think they will continue to outperform other sectors in the 1st half of 2009. Housing will not be coming back anytime soon, and it is still difficult to obtain mortgages with less than 20% down, so there are more renters.

Q3 2008 Earnings Call

November 4, 2008 10:30 am ET