Wall Street and its scoreboard stock exchanges are jubilant with the 0.5% cut in the prime rate. But all is not well. As expected, gold and oil hit record highs on the news yesterday and the sky's the limit. The dollar will be losing value and foreign investors will be buying increasing amounts of our equities, including land, buildings, public and private companies. Expect American ownership to decrease.

The fact that the Federal Reserve sought to pacify investment bankers and individuals who made bad deals in an effort to shore up what was starting to look like big trouble in the "heartland" is not, I think, worthy of celebration. Yes, we should be grateful that Ben Bernanke and crew are keeping a watchful eye on the pulse of the economy and did not wait until we drowned to throw in a lifeline. But for this conservative group to make the cut they had to think things were bad, and that is not exactly heartening news.

Transportation stocks are not doing well this morning, and neither are delivery companies. FedEx Corp (NYSE: FDX) and United Parcel Service (NYSE: UPS) are showing losses or treading water, even though the overall market is notably up. Why? Fuel costs.

Continue reading FedEx & UPS are not celebrating Bernanke's worried rate cuts - should you?

FedEx & UPS are not celebrating Bernanke's worried rate cuts - should you? originally appeared on BloggingStocks on Wed, 19 Sep 2007 16:20:00 EST. Please see our terms for use of feeds.

Forgive me for rekindling a two week old story by Michael Santoli in Barron's (subscription required) July 9, 2007 issue but sometimes I need to ponder things a while. In the story Santoli suggests that FedEx Corp (NYSE: FDX) could "lure a private buyer at a 20% premium or more above it's current $110 share price".

This brings several points to mind about private buyouts and LBO's. Before I get to that let me state, short and sweet, I hate this idea - this would be a bad deal! As a shareholder I do not think 20% is enough. These deals don't happen over night. It often often takes six months to a year to close a deal like this, often longer. The stock closed today around $117, already 6.4% higher.

FedEx has been one of the truly great companies on the planet since Fred Smith started it. Not to slight Mr. Smith, who to the best of my knowledge has only done right by shareholders, but sometimes insiders have taken advantage of shareholders in LBO situations. In particular when they trade old public shares for new private shares and are rewarded twice, the second time, at the public shareholders' expense. It is a conflict if insiders receive favorable treatment as part of the buy-out group to go along with the deal.

I understand why a big company might want to take FedEx private. I do not understand why major shareholders would support such a sale without a much larger premium, and this Santoli does not discuss.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

July 9, 2007: Brent Archer - Taking advantage of FedEx buyout rumors

FedEx buyout at a 20% premium would be a bad deal originally appeared on BloggingStocks on Tue, 17 Jul 2007 17:30:00 EST. Please see our terms for use of feeds.

It wasn't the bagels burning up, it was the owner.

Before work I often stop by New York Bagel & Deli (NYBD) in Santa Monica for coffee, a bagel and the word on the street. Well this morning I got an earful from my friend Brian Gruntz, the owner, about the pay and severance package Bob Nardelli received for running The Home Depot (NYSE: HD)...before bailing out after failing to increase shareholder value in terms of share price. Hundreds of millions of dollars...for what?

Even though it is almost six months later, Brian still finds it outrageous that Nardelli and other CEOs are rewarded for contributing nothing to their company's bottom line, or shareholders', and often negative results due at least in part to their failure of leadership. Brian went on to rant about a story he read somewhere linking CEO performance and the construction of personal mansions, which start to pop up, like oracles, six months before their demise.

Continue reading Burning up at the bagel shop - Home Depot & Nardelli won't go away

Burning up at the bagel shop - Home Depot & Nardelli won't go away originally appeared on BloggingStocks on Wed, 20 Jun 2007 16:45:00 EST. Please see our terms for use of feeds.

Under the category of more nonsense from analysts, you can file this morning's downgrade of FedEx Corp. (NYSE: FDX) as reported by Kevin Shult.

• FedEx was downgraded to Hold from Buy at Citigroup which lowered its target to $120 from $132 to reflect expectations for slower earnings growth in the next few quarters combined with ongoing uncertainty on the timing of an economic recovery.

So here is what I think is the nonsense part: Notice that while Citi does not recommend you buy FedEx, it has still given it a 12 month price target of $120 per share. While I am typing away, FDX is trading at just over $105 per share so if Citi is correct about the $120 figure, buying right now would result in a 14.28% gain plus a small dividend yield of 0.335% for a total annual return of 14.62%. I guess Citigroup thinks beating the 70-year market average by over 4% is meaningless.

I hope this drives the stock price down a few bucks because I own FedEx and would like to own some more! Then, before you know it, Citi will upgrade it based on valuation.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

FedEx: When is a downgrade an upgrade? originally appeared on BloggingStocks on Mon, 02 Apr 2007 14:50:00 EST. Please see our terms for use of feeds.