satyr

GE Is David Hartzell's Highest Conviction Holding - Here's Why

So much has been said here that I will not bother giving an opinion on GE. The truth usually lies somewhere in the middle. But, nobody cares what I think, anyway.

I do have to say, though, that Jack Welch was not as great as many people believe. For years, he was the darling of B-schools and considered the most brilliant CEO of his time. If you do a little foresnic research, what you find is that he hid a lot of problems that were later inherited by others. His ego was huge, and that often got in the way of making good decisions to undo previous bad decisions. It may be here not there in terms of making a current investment in GE, but if the topic interest you, do a little research and you find that I am right.

Shrewd Investors are Buying A&P's Unique Bonds

I had not considered GAJ before, so I appreciate the idea. The case for GAP to be acquired does not seem compelling, particularly at current valuations. So, I guess the question on my mind is what happens to the debt if the grocer just keeps bumping along as an inferior competitor.

In the short run, the return of around 10% is attractive in of itself. You don't get that kind of clip off a typical investment these days without accepting a reasonable amount of risk (not to say it does not exist here).

Eventually, I see a couple of longer term outcomes that raise some worries. First, if GAP flounders and ultimately goes belly up, I have not crunched and extrapolated the numbers to get a sense of what the holders of this debt might expect to get. Has anyone done the math on this? Second, I am in the camp that says that we will run into inflationary problems before too long, and bond values will drop as rates ratchet up. So, if I were to jump into GAJ, I don't see the case to be holding it for more than about 6 months or a year.

RIP: Retail Stores Closed in 2009

As mentioned by others, the figures are suspect. Are these gross closings, or net of openings? What about relocations? Closings can be a sign of trouble, or effective management that knows when it is time to move the store to a better part of town, abandon a dying region, or prune for growth. You have to be very careful how you interpret this data.

Bank Dilution Looms for 2010

A few things could use some qualificaiton or clarification here. First off, the current problems in commercial real estate are not so much the result of poor underwriting as the falling value of the assets. I would not blame underwriters for not anticipating that collateral would lose 30% of its value. Second, it should not be assumed that capital levels will be bolstered by stock sales. There are other means for accomplishing this, so until a financial institution announces a stock sale, I would not suppose it. And, third, when a company sells shares, it does not necessarily result in dilution, other than in the very short run. Remember, they get cash in return for the shares, and this is a new asset owned by all shareholders. In turn the cash will be exchanged for other assets that generate income. This should not be characterized as a negative, because if capital is properly deployed, it is actually a benefit to existing shareholders.

Stocks Bounce, But Big-Name Investors Aren't Convinced

There are so many moving parts that it becomes nearly impossible to predict outcomes in the short or mid-term. Psychology plays a more important role than fundamentals, and very little money (as a percentage of the total) is controlled by those who are governed by fundamentals. No doubt, there are exceptions like Zell, Buffett, et cetera. But, anyone who thinks that what they say and what they do are one in the same are likely to get their head handed back to them on a platter. They will load up on what they want, then tell you about it after it has already moved in their favor.... hoping that everyone else then jumps on the bandwagon and boosts their bet even further into the black. Bottom line: think hard and for yourself.

Report from Europe: More Soggy Economic Data but Stocks Don't Care

As always, an informed perspective on what is. Of course, the Ford/Onion vid the end was most appreciated.

How to Play Buffett's Big Bet on America

Value Added, you make a salient point. Not to say that Warren has no heart. But he is a capitialist and is looking for ROI wherever he can find it. He is also as inside government as Goldman Sachs at this juncture (and also inside Goldman Sachs). I would not make the mistake of viewing anything he says or does as altruistic.

CVS Is in Good Health - Barron's

Looks like something rose to the surface for CVS, and it wasn't cream.

CVS Caremark Tumbles on Lost Business

You fail to mention that CVS is also being investigated. The details are not known, but there have been various allegations made with respect to anti-trust, information sharing between the two sides of the business, and other related issues that are perceived to be harmful to the consumer.

I have followed pharmacy rather closely since 2003 and have observed CVS/Tom Ryan and their approach to growth. On the one hand, I give him credit for being very aggressive and able to drive a hard bargain. They stole the Eckerd chain and also Caremark. On the other hand, he is just the kind of figure that you find embroiled in the ugliest of scenarios, whereby hubris causes one to lose sight of integrity and legal doctrine.

By chance, I have had the unwelcome opportunity to watch how CVS/Caremark operates from a customer's perspective over the past year as I have been assisting a family member who has coverage through an employer medical plan. Their inability to communicate internally is mind boggling. You can call them about an issue and if you talk to 5 people you will get 5 distinct answers, all of them in conflict. It is no wonder that they have lost clients.

All of this is not to say that the stock is a bad buy (or a good one). Ryan will pump hard to bring the stock price back. But, he'd better be careful. He made some fairly big promises that he now can't deliver. It would be interesting to know when it became apparent that these contracts would be lost. This company has been a Wall Street darling for a while, which is always a bad sign. Caveat emptor.

The Hartford: Only Paper Profits

Mark-to-market changes gave everyone in the financial industry a boost, so HIG is not alone in seeing profits from balance sheet revaluations. While I agree that the quarter was not exciting in of itself, I think that investors are comfortable seeing some stabilization. Perhaps the more important interpretation is that the company is on solid ground and in a reasonable place from which to repair and grow. The current valuation certainly does not suggest that investors somehow think that HIG is currently going gangbusters and there are no blemishes.

Why Apple Is Worth $80

I actually enjoyed reading this piece and recognize that there is a certain amount of showmanship that shrouds the message. I don't imagine that AAPL is going to $80 any time soon. But, I don't see $300, either. Nobody really knows what will happen, right? What I do notice is that a lot of Apple zealots posted here in vehement protest of everything that was said. And, in a way, that phenomenon was part of the message. Loving the product, Jobs, or the cult is not the same as an investment providing a particular return. And, while it may seem like people will never buy another phone but the iPhone or another computer than a Mac, the same has seemed true about all sorts of brands and products.... until it wasn't.

Three Small Cap Stocks on the Verge of Breakouts

S&P upgraded ARM today to "buy", with a target of $11 on anticipated improved earnings for FY10. However, against a backdrop of today's falling market in last inning, the stock was only able to eke out a 1 cent gain. It did hit a new 52-week intraday high and I think the case can be made for further gains.

Readers Ask: Rite-Aid, Somaxon Pharmaceuticals

davidbdc, I can't agree with you about Rite Aid's management team. John Standley is a very good operator and is the CFO that he brought along from Pathmark. They patched that company up in a relatively short period of time and sold it to A&P, so I would not sell them short.

Mary Sammons is another matter, and if she were running the company I would short it into oblivion. However, she is more of a figurehead at this stage.

I tend to agree with Citizen Chin on this one. Rite Aid has market share on the East Coast and is rationalizing their store base. It will still be some time before they turn a profit. But, they are due to begin debt paydown in the next quarter and have enough cash flow to keep up the fight for a very long time. Eventually, they will turn earnings positive, or sell off a significant piece of the store base (i.e.: West Coast) in order to get enough cash to wipe out a large amount of debt. The question is timing, and that is highly dependent upon the economy.

Cramer's Mad Money - It's All about Apple (10/16/09)

I don't know a thing about ARM Holdings. But, I do know that the symbol "ARM" is not theirs at all. It belongs to Arvinmeritor.

Cash for Clunkers: The Hangover

FYI, Walgreens always makes available the breakdown of sales between front-end and prescriptions. It's provided in all of their press releases for monthly sales, if you are interested in looking it up. In the last month, prescriptions sales were up, while front-end sales were down. This trend was shared by all major drugstore chains in North America.