Tuesday, January 27, 2009

Ponzi Schemes Galore/BMY, AVY, VZ, SYK, SLG/ GE review by Moody's/ Stop Making Acquisitions NADX/ADD 50 MSFT/Sold Delek



Tonight's picture is of a youngster who is either a dominant left or right brain, and I think that his look is a dead giveaway. 

A woman gave birth to octuplets in California.  It was just the second time that woman gave birth to 8 babies in the U.S.  Reuters

1. Ponzi schemes gone wild:
 Arthur Nadel surrendered to authorities in Tampa. Yahoo! FinanceNadel allegedly had less than a million left from what he claimed to be over 300 million invested with him.FOXBusiness.comYahoo! Finance  


A money manager from Gatlinburg, Tennessee is still missing.  www.tennessean.com | The Tennessean

A financial advisor located in Brentwood, Tennessee was recently charged with operating a Ponzi scheme allegedly bilking clients out of 9 million. Nashville Business Journal:

Another famous Tennessee Ponzi case has a connection to Bill Monroe's madolin. Shelbyville Times-

A Buffalo investment manager was arrested earlier this month in connection with an alleged Ponzi scheme.The Buffalo News

According to TIME MAGAZINE, other recent SEC actions include shutting down CRE Capital in Atlanta for allegedly bilking investors out of 25 million and a manager in Broomall, PA. for allegedly scamming investors out of 80 million.   That manager reported consistent annual returns of 18 to 37% to his 80 investors  and claimed to have 150 million when the actual value of the funds left was about $147,000.   The attorney for CRE Capital said his clients acted in good faith.  TIME
See also,  NYTimes.com

As incredible as it may sound, the SEC is maintaining that it did a good job investigating Madoff in the past. Yahoo! Finance

A doofus rarely admits to being a doofus. 

 Does anyone expect an admission of making a mistake from one of the Masters of the Universe, let alone an apology?

It is difficult for me to keep track of all of the earnings just on the positions that I already own, let alone on stocks that I am considering to add.

One of the more difficult asset allocation decisions that will have to be made in 2009 is what to do with the proceeds of maturing short term bonds.  I have several coming due this year starting in May.  My current inclination is to put all of it into stocks irrespective of my VIX indicator. 

2. Bristol Myers (BMY): Bristol-Myers, which is owned, had a solid report.Reuters   MarketWatch Excluding items which were a net positive, earnings came in at 46 cents versus estimates at 40 cents.  The company had a 582 million after tax gain from the sale of its Imclone shares, which are excluded from that 46 cents. My main concern is that Plavix will face generic challenges in November 2011.  A new heptitis B drug, Baraclude, did have sales rise 55% to 153 million; a 31% increase in Abilify to 606 million; Sustiva franchise up 15% to 300 million; a 72% increase in Orencia ( for rheumatoid arthritis) to 129 million; and a 54% increase in Sprycel to 86 million (all 3 month figures versus 4th quarter 2007). Yahoo! Finance  Plavix sales for the quarter increased 7% to 1.469 billion with Enfamil, Reyataz, Erbitux and Avapro down in sales slightly by a few per cent.  Ablify's recently added depression indication may be spurring growth in sales of that drug.  Add-on Depression Treatment| Bipolar and Schizophrenia Treatment | ABILIFY® (aripiprazole)Cash and marketable securities are now over 8 billion with the proceeds from the Imclone stock sale.  Goldman Sachs added BMY to its conviction buy list. Reuters

I saw where Fuld, the former Lehman Brothers CEO, sold his 13 million dollar Florida estate to his wife for $100.   Reuters
 
3.  Avery Denison: Avery Denison, a previously owned position, is one of the cyclical companies that I will try to avoid during an economic downturn.  It forecasted today that earnings for 2009 might be just a buck if the 4th quarter 2008 revenue trends continue throughout 2009.  This would increase to only 2 bucks if  fiscal year 2008 continues for 2009. The company is laying off 10% of its workforce and 120 million in restructuring charges.   Revenue for the 4th quarter fell 12%.  As some have said, down 10% in revenue is the new flat.  The earnings before items did come in ahead of estimates at 65 cents versus expectations of 43 cents.Avery Dennison Reports Fourth Quarter and Year-End 2008 Results: Financial News - Yahoo! Finance  But those expectations had been reduced several times as the economy accelerated its downturn late last year. The company did previously declare it regular first quarter dividend of 41 cents payable in March.  A dividend cut later in 2009 is certainly a possibility.  The stock has returned to mid 1990 levels.  The price has been cut in half since 9/08/08.  Notwithstanding AVY's sensitivity to the economic cycle, I may start nibbling on further price erosion. 

4.  EMC:  EMC, where I have a small starter position, reported a  5% rise in 4th quarter revenues to 4.02 billion from 3.83 billion a year ago.  The company earned 14 cents after charges and 32 cents before charges. MarketWatch   TheStreet.comEMC is not giving guidance for 2009.  EMC Reports Fourth-Quarter and Full-Year 2008 Financial Results: Financial News - Yahoo! Finance

5.  Bought 50 Microsoft at $17.79:  In a continuation of adding positions gradually in the Tech titans, I bought 50 Microsoft at 17.79.   Again, I am using the proceeds from the Kraft sale to fund the transaction which leaves about $700.  However, by the time I complete the re-deployment of that cash, I will probably have wished that I had just kept the Kraft shares. Time to Start Building Positions in TECH Titans? BAC: Hey WE Took a Look at the Books in Mid December & Said Wow We Need to talk to Uncle Ben
(this buy brings me to 100 shares total, with a goal of 200)

6.  Sold Delek: I sold the remaining 50 shares of Delek after reading Valero's report today.  The order was filled at 7.28 and these shares were the ones purchased at 4.61 last November. Yes, I am Chicken Now, and Proud of IT
Those proceeds will be used to buy another small cap. 

7.  Verizon Pension Hit: Verizon did say that it would take a hit of 9 to 11 cents in 2009 due to pension and other retirement expenses. Reuters  I believe that this would be widely expected for companies with pension plans that suffered a substantial loss in value due to the stock market crash last year, and it was a crash. 

8: National Dentex:  I would hope that the management of National Dentex (NADX) has finally seen the light.  Growth by acquisitions is counter-productive now.  It makes no sense to add 7 million in revenues at a cost of 10 million.  The focus has to be on improving profitability from existing operations.  I would assume that anyone, including the CEO of this small company, is capable of seeing the light when the cost of the last small acquisition in Lansing Michigan equalled about 1/2 of  NADX's market capitalization a few days ago.   

9. GE: Moody's has placed GE under review for a possible downgrade.- Yahoo! Finance MarketWatch

10  Stryker: Stryker reported earnings after the close.  Revenues rose 3.6% with earnings at $.69 vs. $.66 in the year earlier period.  Adjusted earnings from continuing operations came in at $.74.Stryker Operating Results for Quarter Ended December 31, 2008: Financial News - Yahoo! Finance
SYK projected diluted net earnings for 2009 to be in the range of $3.12 to $3.22 which would constitute a 10 to 14% increase over adjusted diluted net earnings per share  of $2.83 for 2008.
This is the same as previous guidance by the company.MarketWatch
SYK  rose over 4% in after hours trading.  This stock was a short recommendation by one of the bears in a recent Barron's issue. Cure for a Lush: A limitless supply of alcohol?/SYK a short?/WaMu: Just another example Socializing risk and Privatizing rewards

SL Green stood by its previous forecast of 2009 FFO of $5.25 to $5.5 Reuters

11. Yahoo: Yahoo reported a decline in revenues and a net loss of 303 million.  MarketWatch
If you want to use the NON-GAAP number, then Yahoo had net income of  $.17 which beat estimates.  That number excludes a number of items including depreciation, amortization, stock based compensation, a 108 million restructuring charge for severance, facilities and other restructuring costs, a 488 million impairment to its international operations  and miscellaneous costs associated with keeping Microsoft from buying it at over 30 a share.  Yahoo's first quarter operating income forecast was well below forecasts. UPDATE 3-Yahoo posts higher profit but outlook weak | Markets | Markets News | Reuters
I have no interest in Yahoo at all above $10 and de minimis interest in the 8 to 10 range.


12 Phoenix Insurance Bond: I have noted a great deal of volatility in the senior bond issue of Phoenix Insurance (PFX).  The only recent news noted is that A.M. Best revised its outlook to negative.  A.M. Best Revises Outlook to Negative for The Phoenix Companies, Inc. and Its Core Subsidiaries: Financial News - Yahoo! Finance


DISCLAIMER:

  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. 

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