Wednesday, October 10, 2012

Apple and HP/SNMX, AA, JNJ/BOUGHT 100 of the ADR NRBAY at $9.36

A 14 year old Pakistani girl, who wrote a blog championing peace, was shot and critically injured by the Taliban as she was leaving school. NBCWorld News In her blog she described the Taliban's oppression in the Swat Valley region of Pakistan.   

SENOMYX (own) announced the approval by the European Union of SNMX's four Savory Flavors and its S2383 Flavor ingredient.  

Barclays initiated coverage of FirstMerit (own) with an overweight and an $18 price target.

Iron Ore rose $3.9 or 3.38% yesterday to close at $119.32 per metric ton.

The Baltic Dry Index closed at 875 yesterday. While this index has recovered some from its 663 low on 9/17/12, it is still considerably below the 3/9/09 level of 2263, let alone the 5000 to 10,000 range prevailing between 10/2007 to 9/2008. This index is published daily and attempts to compute the transport price of major raw materials (e.g. coal, iron ore) by sea, using dry bulk carriers.

After the bell yesterday, Cummins lowered its full year revenue estimate to $17B from $18B and cut its revenue and EBIT for the third quarter, citing weak demand. I have no position. 

The recent warning from the hapless Hewlett-Packard and the correction in Apple's stock have caused a widespread downdraft in technology stocks. The slide in Apple's price is easily the more important event. AAPL closed at $702.1 on 9/19/2011, AAPL Historical Prices. Sometimes, a stock can just go too far too fast. Apple closed at $363.57 on 11/25/11, less than one year ago: AAPL Interactive Chart After hitting an intra-day low of $623.55 yesterday, Apple rebounded to close at $635.85, down -2.32 or -0.36%. There are a number of large mutual funds who are heavy into Apple and whose managers would not like to see a continued price drop. 

The current consensus estimate is for an E.P.S. of $53.45 for the F/Y ending in September 2013 on $194.18B in revenues. AAPL Analyst Estimates Total cash per share was $29.5 as of 6/30/12. 

Goldman Sachs downgraded Johnson & Johnson to sell yesterday. While I do not currently have a position in JNJ, it is hard to understand the rationale for a brokerage sell recommendation, other than for the usual short term trading reasons. The dividend yield is around 3.5%, with a long history of dividend growth, and the forward P/E is $12.51 at a $68.3 price. JNJ Key Statistics A response to the negativity of the GS analyst can be found in today's

Yesterday's Close: JNJ: 68.41 -1.03 (-1.48%) 

Home prices in over 100 metropolitan areas hit peak home prices during July, with another 50 cities within 2% of their peak prices, according to a report from Lender Processing Services.

In today's WSJ page, published last night online, I noted a number of owned securities will be going ex dividend on Thursday. This would include the Nuveen closed end funds that pay monthly dividends (NBB and NBD). The CEF ERC, which also pays monthly, goes ex dividend for its ten cent per share dividend (own 550). The bond CEF from Blackrock, PSY, goes ex dividend for its monthly 6.1 cent per share dividend. The CEF AVK goes ex dividend for its monthly 9.39 cent per share dividend. The exchange traded senior bond, HTGZ, issued by the BDC Hercules Technology Growth Capital, goes ex interest for its quarterly distribution (own 200)  

1. ALCOA (own): Alcoa reported adjusted earnings of 3 cents per share for the third quarter on $5.8B in revenues.

After Tax Operating Income (ATOI) for Global Rolled Products =$98M, up 63% year-over-year

ATOI for Engineered Products and Solutions=$160M, up 16% year-over-year

The consensus estimate was for break-even on $5.57B in revenue.

The drags were the "Alumina" segment and the "Primary Metals" segment. Alumina ATOI was down $163M from a year ago to a negative $9 million, while primary metals was a negative $14M with a 17% decline in third party realized price per metric ton. 

In a report published by Davenport & Company and summarized in a Bloomberg article, the Davenport analyst, Lloyd O'Carroll, values Alcoa at $21.72 per share based on a sum of the parts analysis and in part on his long term estimate for aluminum prices. Over the short term, based on the current low price for aluminum, a higher value could be achieved by separating the flat-rolled sheets and engineered products division into a separate company. That strategy previously worked for Alcan that spun off its aluminum sheet business in 2005 (called "Novelis") which was later bought by India's Hindalco Industries, part of the Aditya Birla Group, for $6 billion. Alcan was acquired by Rio Tinto for $38 billion in 2007.   

Yesterday's Close: AA: 9.13 +0.01 (+0.11%)

2. Bought 100 of Nordea Bank (NRBAY) at $9.355 Yesterday (The $500 to $1,000 Flyers Basket Strategy)(see disclaimer): Nordea Bank is a large European bank operating primarily in Denmark, Finland, Norway, and Sweden. Some branches are in Russia, the three Baltic countries and Poland. Nordea operations | 

Third quarter earnings were scheduled to be released on 10/24. 

As of 10/9/12, the  consensus E.P.S. estimate for 2012 was €.75 and €.81 for 2013. Nordea Bank AB (NRBAY.PK) Analysts At yesterday's exchange rates the 2013 estimate would equate to about USD $1.04. 

Nordea's ordinary shares are priced in Swedish Krone. The ADR's are available on the pink sheet exchange in the U.S. where shares are purchased in USDs. NRBAY Nordea Bank AB To know whether the ADR shares are being priced correctly, I need to know the closing price on the Stockholm exchange and then convert that price from Swedish Krone into U.S. Dollars: 

1 ADR=1 Ordinary Share
Yesterday's Close Home Market-Ordinary Shares: NDA-SEK.ST: 62.95 -0.40 (-0.63%) 
Priced in Swedish Krone
62.95 Swedish Krone (SEK) = USD $9.394 (As of 10/9/12)

Chart 2000 to date for Ordinary Shares: NORDEA BANK (NDA-SEK.ST) Interactive Chart

Long Term Chart of SEK/USD Currency Conversion

Link to Facts and Figures for Nordea as of 6/30/12: Facts and figures | (1400 branches; Core Tier 1 Capital of 11.8%; total assets €708.8B; return on equity 12.5%.

Link to Second Quarter Report: ‎ (E.P.S. €.21 up from €.18 in the 2011 2nd quarter)

Dividend Yield: About 2.9% at a total cost of $9.36, based on last annual payment made in April. Stock will generally go ex dividend in late March.

Yesterday's Close: NRBAY: 9.47 -0.08 (-0.84%)
NRBAY Historical Prices

The shares also trade in Euros at the OMX-Helsinki, closing at €7.29 yesterday. NDA1V:Helsinki Stock Quote - Nordea Bank AB 

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