Monday, November 16, 2009

BAGAKOAA November 16, 2009 Beats, HiMan, and Whisper Numbers


November 16, 2009 Beats, HiMan, and Whisper Numbers

I hope you watched Friday’s edition of Mad Money.  Lennin’s great nephew (They actually do look a lot a like), did a terrific job of addressing why some stocks react well to good news, don’t react well to good news or react well to bad news.  He laid out the various scenarios explaining what it means to beat the street, beat analysts expectations, and how insider “Whisper numbers” set the stage for how a particular stock responds to various sound bites.  He also explained the importance of know who the key analyst is on any stock, how to find out who they are, and what to expect when a key analyst is the HiMan (The analyst with the highest expectations), and when results do not hit the HiMan’s expectations.  This was explained very well by Jim “Skee Daddy” Cramer.  Remember this is downloadable for free on iTunes.  (aapl at $206 today, almost back to its 52 week high.  I am liking the $240 Q1 price, but watch your stops.)

Friday you were warned to be ready for a correction if the retail report today was weak.  It was not.  Even after they got rid of “cash for clunkers” fallout, there was a .2% increase in sales, a small but important two month trend.  Food services and drinking establishments were up impressively.  (Yes that was probably due to me alone.) Housing and housing related retail sales figures are still the anchor.

The market did shrug off the poor Empire State Manufacture index report.  This is one of the few mfg sector reports not headed in the right direction.  It appears as though readers of the report must have been focused on the teeny tiny but positive hint of an improvement in hiring.

You probably know this but the fairly positive comments by Bernanke today helped get the Dow up another 136 points.  No one heard the IFS and SHOULDS and COULDS in his speech.  Of note in his talking points to the Economic Club (I wonder what dues are at the Economic Club.), was the threat of commercial real estate.  You all need to watch this bubble.

Let’s hope to keep this train moving down the tracks with a healthy Producer Price Index report tomorrow.  We should see a little increase tomorrow as 80 dollar a barrel oil is entering the market.  Also watch the industrial production report tomorrow which should improve, but not as much as in the last couple months because the cash for clunker program is over and plats slowed down.

In the various accounts, here is the pin action over the last few days.  I increased my position on VOD after reading and confirming a positive report in Barron’s over the weekend.  I hold the ADRs here and help manage an account on the London Stock Exchange.  Here is a highlight from the Barron’s article:” Still, Vodafone raised its interim dividend and now yields a generous 5.8%. The shares, which Friday closed at 135.80 pence ($2.74), trade at a forward price/earnings multiple of nine times.

All that leads Charles Luke, senior investment manager at Aberdeen Asset Management and a member of the team that runs the Aberdeen U.K. Growth Fund, to consider Vodafone undervalued. "Cash flow is strong, the dividend yield is attractive and the shares are cheap on an earnings basis," he says.

With the huge release of Modern War Fare II, (9 Million copies sold), I increased several portfolios holdings of GME, Game Stop.  Again I owe this pick to my son Jack.  I also took a very nice profit on 4 Jan 2010 $25.00 call Options on Hasbro.  I still have 10 calls left on this but wanted to take some money off the table.  On Friday I caught my limit price on 3 Jan 2010 $55.00 calls on UPS.  I missed my limit price on a similar call for FedEx.

Other than that I am just watching the green and resetting stops and trailing stops.

One more thing.  Back in August one of our readers asked about GMAC SmartNotes.  They were rightly concerned about the reliability of the Bonds, now rated Junk.  After doing some homework on them, I mentioned here and Bought some for myself at 520 a note.  They are now selling for 630 and will have a 14% yield if I hold them till maturity.  They are a bit hard to find, but you might take a look at these 6% 2019 Bonds.  Call Investor relations at the company now overseeing them.  You’ll be impressed with what they tell you.

Salve Lucrum


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