WSW: Louis Rukeyser's Wall Street Summary &amp; Discussion $treet

Top 480. May 9, 2002 4:56 PM

» JeffChristy - Re: Surprise!

In response to message posted by SteveT:

SteveT

This Friday's guest will be Ken Hebner from CGM funds. I think he may mention S L Green (SLG). It is a REIT that provides office space in New York city. It was about the only stock I own that was up on the day the market reopened after 911. I bought this stock after Hebner mention it on CNBC and I did my own research on the company. I got in around $27 and it is now trading in the mid 30's paying a decent dividend. It will be interesting to see if he mentions it.

-- posted by JeffChristy

Top 481. May 9, 2002 6:23 PM

» stocksystm - Sonders and Kim

When is Louis going to give these two the boot? They obviously are in desparate need of a clue. Riding the bandwagon is their only talent. Too bad they don't know when to get off. Sonders looks good on T.V. and gives a great impression of knowing what she is talking about. Unfortunately, it's all an act. I repeat, Sonders and Kim are hazardous to your wealth.

-- posted by stocksystm

Top 482. May 9, 2002 6:41 PM

» SteveT - Re: Re: Surprise!

In response to message posted by JeffChristy:

Jeff, thanks for the heads up.

-- posted by SteveT

Top 483. May 11, 2002 6:08 AM

» SteveT - 5-10-02

Lou opened stating recent events have investors confused, depressed, and even angry. The goals of this show are to do more than consol us when in pain. Lou said we try to offer useful insight to improve your condition. He offered advise from Will Rogers. I am sure you all have heard the line about only buying stocks that go up. To that he added another line from Rogers, Buy land, they aint makin' any more of it! Lou then reviewed key news of the week centering on the housing bubble question. Alan Greenspan even chimed in on that, as well as capital spending. Despite all this good news the market could only rally one day in a row.

Barbara Marcin said the market is suffering from shaken confidence the past six months due to enronitis, accounting concerns, and worries analysts intentionally mislead investors. Over the next year she expects Hewlett-Packard (HPQ) Cendant (CD) AOL Time Warner (AOL) and Disney (DIS) to do well.

Harvey Eisen said the NASDAQ crash has been worse than the DOW crash of 1929. But there still are over 4,000 legitimate companies without questionable accounting that are well run and cash flow positive. These stocks have and will continue to do well. These types of companies are harder to find. Harvey found a couple in the education arena, GP Strategies (GPX) and Whitman Education (WIX) pasted his test. Eisen warns, be careful! He has never seen investors pay so dearly for being wrong. Harvey recommends selling over valued stocks. He subscribes to the theory "The higher the price goes the more expensive it gets". I would take that to mean don't be afraid to take profits. Lou asked if we are near a bottom. The answer was two fold 1. I hope so. 2. I don't know. Harvey shared him and Lou have talked for years about testing bottoms. Harvey's take is we did bottom last Fall and we are testing that bottom now. Since last September interest rates are lower and the economy is doing better. Capital spending has been a disaster. no where to go but up?

Kim Goodwin says the mood is mixed. There is some question about the strength of the recovery. She thinks the real question is inventories. Are we seeing replenishment or increased demand? Kim thinks demand is starting to pick up. Goodwin would be selling Large Pharmaceuticals. Two she would buy are Viacom (VIA) and Procter & Gamble (PG). She thinks Procter & Gamble will do well as the dollar weakens.

Lou then introduced Kenneth Heebner Manager of the CGM Focus Fund. The first question Lou asked if he was changing his strategy now since Real Estate has done so well recently. Not at all, Ken thinks Home Builders are in for a long run. Homebuilders represent about 40% of his Real Estate Fund and about 25% of the Focus Fund he manages. He has moved away in the Real Estate Fund from the Office and Industrial REITs. Heebner likes Homebuilders due to the following. The leaders are doing a great deal of consolidating, they have strong financials, and low P/Es. He sees multiple expansion along with earnings growth. If long term rates go up a little it should have no effect on homebuilders and as long as Capital spending in the over all economy is weak long term rates should stay reasonable. Two stocks he likes are Lennar (LEN) and NVR Inc. (NVR). Another REIT area he likes is Hotels, they are about 30% of his Real Estate Fund. Heebner thinks when the economy picks up they will see dividends in the 11% to 12% range. A viewer e-mailed about another Fund in the CGM family, Capital Development which has been lagging of late and is closed to new investors. Ken explains it did not benefit from the tech boom of the late 90s and fell behind. He likes the prospects for the companies it currently owns but said if you want to own technology pick another fund.

Barbara asked if he thought consumer spending would hold up. Yes it should continue to lead. Harvey said he admired his buying out of favor style and asked if he thought Auto Dealerships would be an interesting area. Yes, many are buying small family dealerships and making them more efficient and improving earnings. One is Sonic (SAH) it is selling at a P/E of 12 and could grow earnings by 25%- 30%. Kim asked for other areas where consolidation is occurring. The Recreational Vehicle Industry.

Heebner made money shorting technology stocks in 2000 and 2001, Lou wanted to know if he is shorting much now. Not much expect in a few special situations. Lou always looking to diversify asked for other areas that look promising. Stage Stores (STGS) could do well. It is an Apparel store with new management that should grow earnings 20% and is trading at a P/E of 10. Ken is avoiding Energy since he believes at some point we are going to control Iraq. This will mean plenty of cheap oil. Lou finished asking for a 10 year homebuilder stock forecast. Heebner pointed out a huge short position in those stocks and 6 months ago they were weak. Now orders are increasing and earnings are rising. He thinks they are candidates for strong earnings growth and Multiple expansion.

Next week, Richard Bernstein from Merrill Lynch who has been correctly Bearish the past two year. Let's see if he is ready to turn?

-- posted by SteveT

Top 484. May 11, 2002 6:43 AM

» stocksystm - Heebner's Folly

Great summary of the show. Ken Heebner appears to still feel the pain from missing out on the greatest bubble in history. Therefore, he is going to invest heavily in the greatest bubble going on now.

The homebuilding stocks are not going to double and triple from here. I was just rolling my eyes listening to that crapola. This industry has never had meaningful multiple expansion, given its cyclicality. The stocks are at peak earnings and will fall substantially when interest rates rise.

-- posted by stocksystm

Top 485. May 11, 2002 8:38 AM

» Kirk - Re: 5-10-02

.
In response to message posted by SteveT:

Great Summary Steve!

You wrote:

Heebner made money shorting technology stocks in 2000 and 2001

And

A viewer e-mailed about another Fund in the CGM family, Capital Development which has been lagging of late and is closed to new investors. Ken explains it did not benefit from the tech boom of the late 90s and fell behind. He likes the prospects for the companies it currently owns but said if you want to own technology pick another fund.

which makes me think the guy was on because he has a hot fund in a hot sector but their stable of fund managers is nothing special overall. Sort of like CNBC having Kevin Landis on to pump his stocks with price/sales of over 20 and little or no profits at the peak of the tech bull.

CGMFX CGM Focus Fund
<img src=http://pvcharts.quicken.com/bin/icenter.... width=470 height=250>

Looks like a bubble to me. Great performance the last two years but I'd warn about performance chasing
http://www.quicken.com/investments/perfo...
Shame on Lou and the panelists for not mentioning the hazards of performance chasing. At least you say "The first question Lou asked if he was changing his strategy now since Real Estate has done so well recently?"

I'd be taking some massive profits if I owned this fund… I learned my lesson riding a telecom fund up and back down between 1998 and 2002… You need to take profits out of mutual funds just as you do stocks when they go on parabolic returns.

LOMCX CGM CAPITAL DEVELOPMENT
Wow, that was a terrible fund!
http://www.quicken.com/investments/perfo...

So it seems that he has a hot fund in the hot sector, but other CGM funds are not too hot.

All CGM Funds:
http://www.quicken.com/investments/perfo...

-- posted by Kirk

Top 486. May 11, 2002 10:01 AM

» JeffChristy - Re: Re: 5-10-02

In response to message posted by Kirk:

Kirk

You are describing what George Soros calls the boom/bust-sequence concept. We have seen the entire cycle with the telecom stocks. Reit's and home builders appear to be approaching the latter stages of the boom phase. I wouldn't be surprised if the home builders fall, at some time in the future, as fast and as hard as the telecoms did. Reits won't be hurt as bad until interest rates start to move up. Maybe to best time to sell Reits is when we see the first sign of rates going up. It is always hard to time a top.

-- posted by JeffChristy

Top 487. May 11, 2002 12:58 PM

» Steven_Russell -

-- posted by Steven_Russell

Top 488. May 11, 2002 12:59 PM

» Steven_Russell - Karen Gibbs on WSW with Fortune

Karen Gibbs, a familiar financial face with Neil Cavuto on Fox News channel, will be the new co-host on the debut of Maryland Public Television's Wall Street Week with Fortune, when it begins the new format June 28.

-- posted by Steven_Russell