TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime.
There are tons of ridiculous stories that can be written in the Naked City. Notice that every day we are blessed with a story about how there are three private-equity firms examining Lehman Brothers (NYSE: LEH) (Cramer's Take) and Neuberger Berman (NYSE: NEU) (Cramer's Take). I think I have read that story a dozen times now.
You can list them, too: Blackstone (NYSE: BX) (Cramer's Take), KKR (NYSE: KFN) (Cramer's Take), Apollo (NASDAQ: AINV) (Cramer's Take), maybe Cerberus. What are they going to do, deny it? "No, we are not looking at it?" Their investors would love that: "Well what the heck are they doing with our money?" would be the reaction of investors if they issued denials. I predict weeks more of phantom tire-kicking of Lehman by nonexistent private-equity firms.
How about private equity about to swarm over collateralized debt obligations? Usual cast of characters there. Right? Come on, those stories are a penny a dozen. Every day I read about them. But nobody, other than Lone Star, is doing anything, anything at all on this front. If there were buyers, you can bet that Lehman and AIG (NYSE: AIG) (Cramer's Take) wouldn't be in the woods, lost, hopeless, with tons of bad European paper.
MOST NOTEWORTHY: American Capital, Realty Income and KKR Financial were today's noteworthy downgrades:
Jefferies downgraded American Capital (NASDAQ: ACAS) to Underperform from Hold as they see a disproportionate risk profile in the company's current portfolio when compared to most peers.
Banc of America cut Realty Income (NYSE: O) to Sell from Neutral as they believe the current valuation is not sustainable.
Bear lowered KKR Financial (NYSE: KFN) to Peer Perform from Outperform following the company's announcement that it intends to sell 20M shares in a public offering.
OTHER DOWNGRADES:
Goldman cut PepsiCo (NYSE: PEP) to Neutral from Buy.
RBC Capital downgraded Avocent (NASDAQ: AVCT) to Sector Perform from Outperform.
JP Morgan removed NICE Systems (NASDAQ: NICE) from its Focus List.
The Wall Street Journal reported that KKR Financial Holdings LLC (NYSE: KFN), a unit of Kohlberg Kravis Roberts, revived concerns of a credit crunch after it asked for a restructuring of billions of dollars in short-term debt.
The Associated Press reported that the pilots' unions of Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) are unable to agree on how seniority for the companies' pilots would work under a combined carrier. The impasse puts the deal in "serious jeopardy," inside sources reported.
U.S. stock futures were significantly lower this morning, indicating U.S. stocks could have a rough start as investors await data on inflation and housing. Despite solid results from Hewlett-Packard after the closing bell Tuesday, renewed concerns about the credit market, oil climbing above $100 a barrel and the uncertainty about the upcoming data pulled futures lower.
Like seemed what was going to be a healthy gains day Tuesday, ended on a down note after oil futures reached the $100 a barrel. The Dow industrials fell nearly 11 points, or 0.09%, the S&P 500 lost over 1 point, or 0.09%, and the Nasdaq Composite dropped 15 points, or 0.67%.
Several economic readings are due for release today:
At 8:30 a.m., consumer price index for January will be reported. Economists predict inflation may have grown 0.3% during January, or 0.2% excluding fuel and energy prices.
At the same time, January housing starts and building permits also will be released. Economists expect the data to remain near the lowest level since 1991 in January, as the deepest real-estate recession in a quarter-century will weigh on the economy for a third year.
At 2 p.m., the Fed will release minutes from the last interest-rate policy committee in which it slashed rates by a half-point.
Meanwhile, around 10:30 a.m., weekly crude inventories will be reported. Oil closed for the first time above $100 a barrel Tuesday, but prices retreated somewhat Wednesday to around $99 a barrel. Concerns over a refinery explosion and the possibility that OPEC may cut its output caused oil prices to spike with several other factors remaining in the background.
MOST NOTEWORTHY: Commercial Metals (CMC), KKR Financial (KFN), Career Education (CECO), Ann Taylor (ANN) and Intel (INTC) were today's noteworthy upgrades:
CIBC upgraded Commercial Metals (NYSE: CMC) to Sector Outperformer from Sector Performer based on valuation.
KKR Financial (NYSE: KFN) was raised to Outperform from Market Perform at Friedman Billings, following managements detailed conference call and managements prudent and rapid actions to address the sale of its Rambus (RMBS) portfolio.
Bear Stearns upgraded Career Education (NASDAQ: CECO) to Outperform from Peer Perform based on valuation.
Ann Taylor (NYSE: ANN) was upgraded to Outperform from Market Perform at Piper Jaffray due to the upside at the company's LOFT division and the firm's belief that there is upside to their 2008/2009 estimates for Ann Taylor.
Credit Suisse upgraded shares of Intel (NASDAQ: INTC) to Outperform from Underperform based on expected margin expansion, a more benign competitive environment in the MPU sector, better positioning vs. AMD (AMD) at the high-end, and strong demand trends...
MOST NOTEWORTHY: PepsiCo (PEP), Countrywide Financial (CFC), KKR Financial (KFN), Home Depot (HD) and Visteon (VC) were today's notable downgrades:
PepsiCo (NYSE: PEP) was cut to Neutral from Buy at Goldman based on valuation.
Merrill downgraded Countrywide Financial (NYSE: CFC) to Sell from Buy, citing liquidity concerns in the mortgage sector as accelerated margin calls and forced asset sales could lead to further problems and selling pressure.
KKR Financial Holdings (NYSE: KFN) was downgraded to Market Perform from Outperform at Friedman Billings based on the liquidity crisis and impact on equity. Lehman cut shares to Equal Weight from Overweight based on capital market funding concerns.
Home Depot (NYSE: HD) was downgraded to Hold from Buy at Gabelli due to near-term uncertainty.
Goldman downgraded Visteon (NYSE: VC) to Sell from Neutral...
OTHER DOWNGRADES:
Credit Suisse downgraded UBS (NYSE: UBS) to Neutral from Outperform.
Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.
From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."
While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent
the Blackstone Group itself, or they could represent a fund that's managed by Blackstone Group, much like Kohlberg Kravis Roberts & Co. KKR Financial Corp. (NYSE:KFN) real-estate investment trust and Apollo Management's Apollo Investment Corp. (NASDAQ:AINV).
Regardless, and especially if the Fortress Investment Group (NYSE:FIG) is any indication, there would be strong interest in the IPO. Considering all the noise and after the year private equity had had, I, for one, think that this IPO is going to be the real thing.
TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime. .gif){kind=logo}
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U.S. stock futures were significantly lower this morning, indicating U.S. stocks could have a rough start as investors await data on inflation and housing. Despite solid results from Hewlett-Packard after the closing bell Tuesday, renewed concerns about the credit market, oil climbing above $100 a barrel and the uncertainty about the upcoming data pulled futures lower.
Analyst sees oil dropping to $50 on global economic slowdown
Lehman screws workers out of severance payments
No Cramer, now is not the time to panic!
