Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.
If S&P 1340 doesn't hold, you're going to hear a lot of chatter regarding the March lows (S&P 1275) in a hurry. Be prepared. Be very prepared.
One very savvy soothsayer, who I just got off the phone with, doesn't think we get there. He's looking for S&P 1320-ish as a long side opportunity. Just so you're hearing what I'm hearing as heck, we don't call him "As Good As It Gets" for nothing.
Moi? Are you talking to me? You know my drill: I've got a pretty sizable ratio bet on (short crude, long oil), which I'm trading around as a function of price, along with some tertiary trading exposure, including Goldman (GS) calls.
Speaking of taxi drivers, how long do you think it'll be before cabs are allowed to pick up multiple passengers in the Big Apple? That should help with societal acrimony!
If you looked up "Where there's smoke, there's fire," you'd probably find a picture of Lehman Brothers (LEH)., this thing trades funky.
I'm seeing a lot of stocks trade "wide," which is to say they're jumping around. That's a recipe for smaller size. Adapt, don't conform.
Given the amount of typing I do on any given day, do you think I should get finger insurance?
Jarrett Lilien, E-Trade Financial Corporation's (NASDAQ: ETFC) president and COO, who lost out on the CEO job last month to Donald Layton, is going to resign from the online brokerage firm, the Wall Street Journal reported; Layton doesn't plan to fill the position.
Chinese Internet search firm Baidu.com Inc (NASDAQ: BIDU) is poised for aggressive growth but must also confront a number of obstacles, according to the Wall Street Journal's "Heard in Asia," including a number of lawsuits regarding its music services and a vacancy in the CFO position.
Alibaba Group, a Chinese Internet company , is in advanced talks with investors to finance its acquisition of Yahoo! Inc's (NASDAQ: YHOO) stake to expand its management independence, the Wall Street Journal reported.
OTHER PAPERS:
According to inside sources, the New York Post reported that billionaire Joseph Lewis and former Bear Stearns Companies Inc (NYSE: BSC) CEO Jimmy Cayne are looking for a white knight that could surpass JPMorgan Chase & Co's (NYSE: JPM) takeover offer for Bear Lewis and Cayne have reportedly reached out to several private equity firms and overseas banks, including Barclays Plc (NYSE: BCS) and Credit Suisse Group (NYSE: CS).
WEB SITES:
Medical supplies boss Michael Mastromarino, accused of stealing the body parts of around 1,000 corpses, has pleaded guilty to several charges in a deal with prosecutors. The BBC News reported that the Biomedical Tissue Services company shipped bones, skin and tendons to tissue-processing companies such as LifeCell Corporation (NASDAQ: LIFC) and Tutogen Medical Inc (AMEX: TTG), which are in turn facing hundreds of civil lawsuits.
Baidu.com, Inc. (NASDAQ: BIDU) shares are rising after an article in Barron's(subscription required) published Thursday evening predicted the Chinese internet sector would be quite profitable in 2008. A positive outlook from the respected publication often gives any stock a boost. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BIDU.
After hitting a one-year low of $92.80 in April, the stock hit a one-year high of $429.19 in November. BIDU opened this morning at $241.70. So far today the stock has hit a low of $240.83 and a high of $249.84. As of 12:45, BIDU is trading at $244.40, up $1.98 (0.8%). The chart for BIDU looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $210 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just two weeks as long as BIDU is above $210 at March expiration. Baidu would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.
BIDU hasn't been below $210 since August and has shown support around $235 recently. This trade could be risky if the this momentum stock has lost its mojo, but even if that happens, this position could be protected by the support the stock might find around $230, where it has bottomed over the past month.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BIDU.
Battling Baidu.com Inc (NASDAQ: BIDU) in China with little success, Google Inc (NASDAQ: GOOG) is working with a Chinese company to offer free licensed music downloads, the Wall Street Journal reported. The new service is expected to be launched in several weeks.
OTHER PAPERS:
BHP Billiton Limited (NYSE: BHP) raised its bid for mining company Rio Tinto Plc (NYSE: RTP) to more than GBP70B. Meanwhile, the UK Times reported that Rio's new Chinese shareholder was preparing a counter bid for Rio.
The Washington Post reported that Time Warner Inc (NYSE: TWX) CEO Jeffrey Bewkes is expected to announce a plan today to sell or spin off Time Warner Cable Inc (NYSE: TWC). Bewkes also is likely to signal plans to break up AOL in the coming year.
"Our latest buy is Matthews Asian Technology Fund (MATFX), which has been added to our Global Core and Asia-Pacific Portfolios. While there's plenty of uncertainty in global markets at the outset of 2008, the tech sector and Asia's economies both look well-positioned to weather the storm.
"The Matthews Asian Technology Fund gives you the best of both worlds. With $245 million in assets, the fund has delivered annualized returns in excess of 25% over the past five years. It invests in a mixture of both large-cap and small-cap companies, with varying degrees of exposure to 'technology.'
"Some holdings, like Chinese search engine Baidu.com and the Japanese social networking site Mixi, are pure technology plays, whereas Korea's Samsung Electronics and Japan's Sony fall into the more mature camp of consumer electronics.
"Telecom is also among the fund's biggest holdings, with China Mobile and India's Bharti Airtel among the top 10 holdings. That means the fund won't always deliver eye-popping returns, but it offers a bit more protection on the downside."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
With stock markets continuing to free fall, investors should explore the option of tax-loss selling now. While harvesting losses on stocks to offset capital gains is customarily done in October and November, smart investors will realize that there is no reason not to do the same now. Over the last week, I have been working with my clients to sell their losers and realize the loss. Either they will be able to use the losses to offset gains which hopefully will come later on this year, or the losses can be rolled over for next year as well.
Those of you in former high fliers such as Baidu.com (NASDAQ: BIDU), First Solar (NASDAQ: FSLR) and Apple (NASDAQ: AAPL) who are lamenting your steep losses of the last month have no fear. By taking losses on those stocks now, you may actually profit from your losers.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 1/23/08
China is beginning to admit that slow growth in the U.S. would be a significant enough drag to badly damage its exports and hurt its economy. "If U.S. consumption really comes down, that's bad news for us. That will have a pretty severe impact on our exports," Zhang Tao, deputy head of the international department of the People's Bank of China, told a group including Reuters.
Any slowdown is likely to hit the Chinese stock markets hard. Despite a recent pullback, the Hang Seng Index is up over 60% in the last two years while the S&P has barely risen. The Shanghai Composite is up over 300% during that period.
Downward pressure on China shares could affect many stocks listed in the U.S. Among the most vulnerable are probably those that have risen the fastest. That would include Baidu (NASDAQ: BIDU), which is up about 130% in the last year, and China Mobile (NYSE: CHL), which is up over 70%.
If a U.S. recession hits China, the markets there may have seen their best days.
Although Google (NASDAQ: GOOG)'s Android mobile phone software platform was officially announced months ago, the global wireless industry has been mum -- or doesn't know -- when Google's platform will be available for consumers. Which global wireless markets will be the first to even see a device powered by Google's Android platform?
Would it make sense for Google to release this platform in a market where consumers do most web surfing on a mobile device instead of a PC? Possibly -- although releasing Android in a market that has gadget-obsessed consumers may also be a decent choice. How about releasing the platform to a wireless carrier in a country where you're trying to take internet search engine market share away from a competitor?
Not only do hundreds of millions of Chinese wireless customers exist (more than the entire U.S. population), but many of them interact with the web on their mobile phones. Also, Google has made it known that it wants to become the largest search engine provider in the world's most populous country. That spot is now held by Baidu.com, which has managed to beat Google in China to this point. But Google -- ever the secretive tech giant of the world -- definitely has its sights set on leading the Chinese search engine market. How better than to release Android into that market and -- overnight -- up the ante in a huge way against Baidu.com's search engine dominance?
The news that Baidu.com (NASDAQ: BIDU) was being included in the NASADQ 100 index is not just a big deal for the high flying Chinese stock, but rather continued validation for investors who look abroad to make big gains. The fact that another foreign company has been added to the prestigious index, shows that more and more large companies are headquartered outside the US, and that the real strong economic growth is continually coming from emerging markets. Investors tend to think of Latin America and China/South East Asia as the traditional emerging markets, but there is another market, that has also performed exceptionally well over the last five years, and in times of global market turmoil, has been a refuge for emerging market investors
That market is Israel. With more stocks trading on the NASDAQ than any other country in the world, Israel has learned that economic success depends on exporting ingenuity. With a very small domestic market, even though GDP growth is continuing in the 5.5-6% range, what intrigues foreign investors is the innovative technology that comes out of Israel. If you look around at the products you use on a daily basis, you will find embedded in them key Israeli intellectual property. Companies from Checkpoint Software (NASDAQ: CHKP), which makes the firewall that sits on your computer, to Teva Pharmaceuticals (NASDAQ: TEVA), the world's largest generic drug maker, are just a small sample of this.
Today's news isn't just great for Baidu, it's more validation for emerging economies as a whole.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer is long BIDU,CHKP and TEVA as of 12/04/07.
I was speaking with a client earlier in the day, and I told her that I expected that the market will change course and that we will have a strong rally into year's end. I suggested a few names to her to look into, and she said to me that if I really think that we are going to move up strongly, than we need to buy some high-beta stocks, to try and really bring home some nice profits. I thought she had a very good point and suggested the following two stocks:
Baidu.com (NASDAQ: BIDU): The Chinese web search company has been hit hard over the last month, but interestingly enough, not nearly as bad as the Chinese market has. If my theory that we will have an end-of-year rally holds true, I would expect a strong bounce back for the Chinese market, and as Baidu.com is a large and recognizable Chinese play, I would expect it to move strongly ahead. Keep in mind that China is in the infant stages of e-commerce, and as that market matures, Baidu.com will be at the center of that change.
EMC (NYSE: EMC): The data storage giant has gotten pummeled as spin-off VMware (NYSE: VMW) dropped by more than 35% over the last month. I have recently posted about the fact that EMC is grossly undervalued based on its holding in VMware. What's interesting to note is that when VMware shot up, EMC didn't participate as much as one would have expected based on its ownership. But when VMware took a tumble, investors punished EMC as well. If the market continues its rebound, look for EMC's true value to be unlocked and the stock to really spike higher.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer holds a position in EMC. He has no position in any other stock mentioned as of 11/28/07.
Baidu.com (NASDAQ: BIDU), China's largest search engine, said this week that it beat profit expectations by doubling its most recent quarterly profit, but shares still are trading quite a bit below where they were just a few weeks ago as the company's management warned on profit guidance moving forward, which fell a little flat compared to what analysts were expecting. Maybe analysts are expecting too much, too soon? It wouldn't be the first time for recklessly, short-mindedness palpitations from Street "experts."
Baidu.com's shares have been on a speculative and hyped journey this year (they are priced way out of whack considering fundamentals), but reality did return to the picture a bit as of a few weeks ago when those shares came crashing down in what could be seen as a needed correction. Although Baidu.com operates as the largest search provider in the world's most populous country, it's no Google (NASDAQ: GOOG) when it comes to monetizing all those eyeballs -- yet.
Baidu.com has a very enterprising future in front of it, although a large question remains on whether it can rake up those revenues like Google has managed to do in many global markets. Yahoo! (NASDAQ: YHOO) is in a similar position: It captures billions of views every month, but lacks the advertising prowess to smartly monetize that traffic compared to industry leader Google. But an advertising explosion is still in the infant stages in China, and Baidu.com -- if it plays its cards right -- has a huge potential in front of it. But torrid, rapid growth? That may still be too much to expect in the next quarter or so.
Overnight, the media speculated that a share drop in shares of Chinese search engine Baidu (NASDAQ: BIDU) might be a signal of a top in internet stocks. The shares, which were trading close to $360 in the morning, dropped quickly to just above $302. A number of other Nasdaq tech issues followed Baidu down.
Reutersspeculated that the drop in Baidu "fueled concerns that the recent tech rally may be coming to an abrupt end." After all was said and done, the Nasdaq had been pulled down 1.4%. As one trader told the news service: "You are seeing the classic bubble being burst in the best-performing momentum names such as Baidu.com, Apple and RIM."
But, perhaps Wall Street should pause and reflect. Baidu is not like other tech stocks and to make the parallel that many have would be a significant mistake.
Before yesterday's dip, Baidu shares were up 300% over the last year. The company had revenue of a little over $50 million in the last quarter, the equivalent of a rounding error in earnings at Google (NASDAQ: GOOG). The Chinese company's stock trades at a mind-bending 70x sales. The comparable number for Google is 15x.
Make no mistake. The drop in Baidu's stock is because the shares are insanely expensive. And, it bears no relationship to the balance of the tech market.
Google's strategy with both of these partnerships was to put the heat on Baidu.com, no doubt. Google's head of business and sales for Taiwan and Hong Kong said this week that "We are closing up the gap with them (Baidu)," which is code for we are dead set on catching and surpassing Baidu as China's pre-eminent search and portal destination.
China is the world's second-largest internet market (after the U.S.) with 162 million web users. Don't think for a second that Google won't pull some cash from its war chest to crush Baidu.com with every ounce of strength it can muster.
Right now, Baidu leads China with a 58.1% share of the internet market (as in, a destination), compared with Google's 22.8% share for the second quarter of 2007. What's striking here is that Google's share is up over 4% from the prior quarter. 4% in a single quarter -- nah, that's not aggressive at all, right?
Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com..gif){kind=logo}
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