After four years, a federal judge has finally ruled in the counterfeit goods case in which Tiffany & Co. (NYSE: TIF) sued eBay Inc. (NASDAQ: EBAY), demanding it create better polices on its auction site and assume responsibility for the goods traded there.
But the judge ruled in favor of eBay, saying that "the law is clear: it is the trademark owner's burden to police its mark. [...] Tiffany must ultimately bear the burden of protecting its trademark."
No doubt, this is a significant victory for eBay and all online retailers that, while agreeing to take fake merchandise off their sites, want to be alerted to it by the owners of the trademarks. This means e-tailers don't need to police their sites for counterfeit goods, something that would have been quite costly.
If this sounds a little odd to you, maybe that's because of a recent suit regarding copyrighted material on Google Inc. (NASDAQ: GOOG)'s YouTube. Viacom Inc. (NYSE: VIA) has sued the owner of the video sharing site for $1 billion in damages, accusing YouTube of enabling copyright infringement since users upload copyrighted material to the site.
The stock market was down today and the financial sector was hit as hard as anything else. These are the days you want to have your watch-list ready or perhaps your stock alerts triggered. I have been watching Wells Fargo (NYSE: WFC) for quite some time. Today at $27.00 I received an alert and decided to buy some.
As a value investor I am seeking not to just make a profit but to have as large a margin of safety as possible. That means I do not want to just buy a discounted stock but I want to "steal it". Patience is always in order, and usually is rewarded. That was the case when we watched Tiffany & Co. (NYSE: TIF) go from the low $40's to $57 per share and think we had missed the train, only to keep our eyes open as it fell back down to $36 where we pulled the trigger.
Last week TIF did us proud (see: Chasing Value: Tiffany's -- all that glitters) and although I am wrong way too often, I would be greatly surprised to see TIF anywhere near $36 ever again. It has reached $50 since we purchased it in April. The following chart illustrates the recent path of Wells Fargo.
"All that glitters is not gold" is a common refrain we hear from time to time and it is meant as a word of caution, but in this case, it's gold and diamonds and platinum served up in pretty little blue boxes. Today it was reported that Tiffany Profit Beats View, Hikes Outlook. Chief Executive Michael Kowalski said Tiffany would continue with its expansion in 2008, with plans to open 24 new stores across the United States, Asia-Pacific region and Europe.
However, no matter what the Wall Street stock pushers will tell you, I would not jump in here. Patience is in order and buying when there is a frenzy is a bad idea. You will see this in my previous posts on the company and I am offering the same here. You should add it to your watch list.
I do not expect TIF to see $36 dollars again, but we are speaking of likelihoods not certainties and there is no must own stock! Everything fluctuates and it is only worth buying an individual stock if there is a great chance of getting a bargain. I might look favorably at another purchase somewhere closer to $40 -- and if I do not get it, that's alright. Then I will buy something else.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: We own shares in TIF.
Tiffany & Co (NYSE: TIF) shares are trading higher after the company posted a first-quarter profit of $64.4 million or 50 cents per share, beating analysts' estimates of 40 cents per share, citing international strength. TIF also raised its outlook for the full year. If you think that the stock 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 TIF.
After hitting a one-year high of $57.34 in October, the stock hit a one-year low of $32.84 in January. TIF opened this morning at $49.25. So far today the stock has hit a low of $48.62 and a high of $49.98. As of 12:25, TIF is trading at $48.92, up 1.18 (2.5%). The chart for TIF looks bullish and steady, while S&P gives the stock its highest 5 Stars (out of 5) Strong Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $40 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 three months as long as TIF is above $40 at August expiration. Tiffany would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.
TIF hasn't been below $40 since March and has shown support around $46 recently. This trade could be risky if the international economy slows down as well over the next few months, but even if that happens, that position could be protected by support the stock might find above $40, where it formed a base over the past two months. Brent Archer is an options analyst and writer at Investors Observer.
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 TIF.
Stock futures were higher early Friday morning as oil futures continued to drop and Dell reported surprising strong earnings. (Read the full transcript of the conference call that followed the earnings announcement.)
Some upcoming economic readings about personal income might affect the Street's mood yet, but as long as oil prices remain at around $125 a barrel or go even lower, investors may feel more positive on the day.
If last week stocks witnessed one sharp-drop session after another, this week stocks have been more consistent on their way up and on Thursday U.S. stocks rose for the third session in a row due to a big drop in crude-oil futures. The Dow industrials rose 52 points, or 0.41%, the S&P 500 added 7 points, or 0.53%, and the Nasdaq Composite rose 21 points, or 0.87%.
On the economic calendar today several releases:
At 8:30 a.m. EDT April Personal Income and spending is due. While not perfect, personal income is a decent indicator of future consumer demand. Once personal income starts to stagnate, meaning inflation has caught up with income growth, this is another indication of a recession. A price index is included in the income report. The personal-consumption expenditures is often considered to be the Federal Reserve's preferred inflation gauge.
A little after the open, May Chicago PMI, a regional manufacturing survey, is due out.
Finally, at 10:00 a.m., a revised reading on consumer sentiment from the University of Michigan for May will also be released.
While the earnings season is beginning to wind down for the current quarter, there are still plenty of results to come. Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report results in the final week of May 2008.
These companies are expected to post earnings growth, compared to the same period in the previous year:
Dell Inc. (NASDAQ: DELL) down 2.9% to 33 cents per share, on $15.66 billion in revenue
TiVo Inc. (NASDAQ: TIVO) is expected to swing to a loss of a penny per share, compared to a penny profit a year ago, and report $55.62 million in revenue. And analysts expect Borders Group Inc. (NYSE: BGP) to narrow its loss 7.8% to 47 cents per share, on $801.11 million in revenue.
After hitting a one-year high of $57.34 in October, the stock hit a one-year low of $32.84 in January. TIF opened this morning at $45.91. So far today the stock has hit a low of $45.29 and a high of $48.95. As of 12:00, TIF is trading at $48.00, up 2.15 (4.7%). The chart for TIF looks bullish and steady, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $35 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 a 4.2% return in just three months as long as TIF is above $35 at August expiration. Tiffany would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.
TIF hasn't been below $35 except for a couple days in the past year and has shown support around $41 recently. This trade could be risky if the US economy tanks some more in the coming months, but even if that happens, that position could be protected by support the stock might find just around $36, where it bottomed out in March.
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 TIF.
MOST NOTEWORTHY: Spirit Aerosystems, Genpact and SEI Investments were today's noteworthy initiations:
Friedman Billings believes Spirit Aerosystems (NYSE: SPR) is well-positioned on key aircraft platforms and has significant revenue visibility. The firm started shares with an Outperform rating and $33 target.
Baird is positive on Genpact's (NYSE: G) recurring, non-discretionary revenue, strong growth in Global Client revenue, market leading position; shares were assumed with an Outperform rating and $16 target.
SEI Investments (NASDAQ: SEIC) was initiated with a Market Perform rating and $27 target at Keefe Bruyette, as they are cautious in the near-term due to industry headwinds.
After three months it is time to face the facts: two of the three indices beat my picks handily. I have not made a good showing so far and unlike most investment idea sources, I feel obliged to air my dirty laundry for all to see.
My riskiest stock pick Newcastle Investment Corp (NYSE:NCT) is down almost 37% this year, and the energy stocks did almost as poorly even though fuel prices are near all-time highs. The downers were not offset by this months' repeat winners.
March was a seesaw battle, but in the end there was not much to show for it. However, unlike the last day of January (down 370 points in the Dow) and February's last trading day (down 315 points), March had a final day of plus 46.49, which is not very meaningful.
Most of my picks sagged a little more, while two remain in positive territory. Raytheon Co. (NYSE: RTN), the high tech defense contractor is up and Reliance Steel & Aluminum (NYSE: RS) is way up.
MOST NOTEWORTHY: Bed Bath & Beyond, DSW Inc and Oplink Comm were today's noteworthy downgrades:
JP Morgan downgraded Bed Bath & Beyond (NASDAQ: BBBY) to Underweight from Neutral citing recent sales commentary from competitors and the difficult macro environment.
Oppenheimer cut DSW Inc (NYSE: DSW) to Perform from Outperform following the company's Q1 miss and lower than expected guidance, as they see little visibility in the coming quarters.
Piper downgraded shares of Oplink Communications (NASDAQ: OPLK) to Sell from Neutral following the company's negative earnings preannouncement and lowered their target to $9.00 from $14.
OTHER DOWNGRADES:
Tiffany (NYSE: TIF) was downgraded to Sell from Neutral at Merrill.
Tiffany & Co. (NYSE: TIF) is engaged in the design, manufacture, and retailing of fine jewelry, timepieces, sterling silverware, china, crystal, stationery, fragrances and personal accessories. The firm sells its goods exclusively through some 150 stores worldwide, a Web site and catalogs.
The company pleased investors earlier in the week, when it reported Q4 EPS of $1.27 and revenues of $1.05 billion. Analysts had been expecting $1.21 and $1.05 billion. Management also guided FY09 EPS to $2.75-$2.85 ($2.49 consensus) and FY09 revenues to about $3.23 billion ($3.18B consensus). Cowan and JMP Securities subsequently issued favorable comments about the company and Trian Fund Management revealed it had boosted its stake in the stock from 7.9% (1/16) to 8.44%.
eBay believes that it is Tiffany's responsibility to police the site for infringement of its trademarks, and the company's policy is that it will respond to claims by companies flagging possibly counterfeit merchandise. But eBay itself does not devote substantial resources to policing for counterfeiters. Rolex and Louis Vuitton have sued eBay on similar grounds.
According to the Wall Street Journal, "Tiffany argues that eBay knew it had a problem with counterfeit items being listed on its Web site and did little to clean it up."
In the "risk factors" section of its latest 10-K, eBay touches on the Tiffany lawsuit, saying that "Litigation and negative publicity has increased as our websites gain prominence in markets outside of the U.S., where the laws may be unsettled or less favorable to us. Such litigation is costly for us, could result in damage awards, injunctive relief, or increased costs of doing business through adverse judgment or settlement, could require us to change our business practices in expensive ways, or could otherwise harm our business."
It stands to reason that if eBay could take responsibility for counterfeit listings in a cost effective way, it would have avoided this litigation. eBay's business model could be in some pretty serious trouble if a judge rules that the company is responsible for copyright infringement by third party sellers -- it might have to just stop selling luxury goods altogether.
This will be an important case for any eBay investors to follow.
Stock futures were higher early Friday morning as oil futures continued to drop and Dell reported surprising strong earnings. (
.gif){kind=logo}
After three months it is time to face the facts: two of the three indices beat my picks handily. I have not made a good showing so far and unlike most investment idea sources, I feel obliged to air my dirty laundry for all to see..gif){kind=logo}
Earnings preview for Ford
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
