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

Top 713. Nov 15, 2003 6:41 AM

» SteveT - 11-14-03

Once again Tyler Mathisen filled in for Lou who is reportedly chomping at the bit to return. Tyler reviewed the news of the week, which in large part dealt with Mutual Funds, scandal, and the SEC. Oh yes don’t forget Eliot Spitzer. Despite the recent problems with some fund families, investors have not been shy about investing new money into funds in general. The past four weeks have averaged $5 Billion inflows into equity funds.

Roger McNamee says the overall market is in pretty good shape but fears some Tech maybe ahead of itself. He predicts earnings in 2004 will be good but not evenly distributed. In the 90’s one could make money owning most any stock in the right sector, but Roger says not today. Now McNamee says to look at product cycles and for companies poised to exploit the cycles. His current recommendations are Seagate Technology (STX), Flextronics (FLEX), Citrix Systems (CTXS), and Intuit (INTU). Roger would sell none leaders in almost every sector and avoid Telecom equipment.

Gretchen Lash thinks the overall earnings estimates for next year are still to low. She is bullish on the economy and market. However she too thinks certain Technology stocks are ahead of themselves. Lash thinks next year the market will broaden out and quality growth companies that have lagged will perform better. Stocks she likes now are Viacom (VIAb), Fox entertainment (FOX), Wells Fargo (WFC), and United Parcel Service (UPS).

Ed Brown said the market has very strong fundamental underpinnings. The economy is in good shape, corporate profits are good, and the FED has no reason to raise rates soon. The mutual fund scandals are acting as a dampener but that too will pass. Stocks Ed likes now are Amgen (AMGN), Dicks Sporting Goods (DKS), and First data (FDC). Brown can’t find anything fundamentally to support telecom stocks that have had large run ups such as Lucent (LU) and Scientific-Atlanta (SFA) and would sell them. He also is not excited about any of the large Pharmaceuticals.

Tyler them introduced Special Guest Foster Friess, Chairman & Founder, Friess Associates. Foster says the mutual fund scandals are unfortunate and it is not wide spread. This is especially true in the small fund families that go to great lengths to assure everything is proper. He is amazed at how the Government reports economic statistics. One example is GDP. It was reported to be 3.3% in the second quarter this year. Friess says he doesn’t know anyone that believes the last two GDP reports are real. One example is computer sales in the second quarter were reported to be $38 Billion, while the actual number was $6 Billion. That alone would have lower second quarter GDP to 1.2%. Employment too can be manipulated by arbitrarily declaring the economy is improving and adding in jobs that are not there. Foster also thinks profits predictions are over rated so many stocks are getting ahead of themselves.

Roger asked how long he holds a stock and how do you know when to sell. He has a very high turn over and thinks it is essential to a successful investment business. He constantly evaluates stocks on a rolling six quarters and will sell if he sees a large gain in a short period of time. Gretchen asked if he looked at sectors or individual stocks for places to invest. Not at sectors or “the market” but on a stock-by-stock basis. He does not look to buy industry leaders but the third or fourth company in an industry that is gaining market share. Foster mentioned Nissan (but was not able to disclose if it was a current holding) as a company that made him a lot of money even though autos has been a terrible sector to invest in. Ed asked for some stock picks that will do well over the next six quarters. Gevity HR Inc. (GVHR), Advance Auto Parts (AAP), McDonalds (MCD), and Staples (SPLS).

Next week we all hope Lou is back and will welcome Special Guest Don Phillips, Managing Director of Morningstar. The panel will be Alison Deans, Harvey Eisen, and Mary Farrell.

-- posted by SteveT

Top 714. Nov 15, 2003 7:40 AM

» iammugsy - Telecom's

Makes me wonder why all these elite analysts are all down on Telecom stocks. As a whole they are probably right but seems at least one of them would have picked up on the great run up of CACS. With all the tools they have at their disposal, I would think this would have shown up on their spectrums. Any thoughts ?

-- posted by iammugsy

Top 715. Nov 22, 2003 8:16 AM

» SteveT - 11-21-03

Bill Griffeth served a guest host and reported Lou sends his thanks for the many well wishes for his speedy return. Bill pondered the question. What’s the market to believe? The market did pull back slightly this week while most of the economic news was good. The jobs picture improved, as did manufacturing and housing remains strong. Some currency traders were caught in a stink operation. It looks like we could be in the early stages of a trade dispute with China. The heart of the matter is persuading the Chinese to float the value of their currency and President Bush could impose quotas on Chinese textiles as leverage. The Dollar hit a new low vs. the Euro. E.C. One step forward one step back? Or is it the preverbal wall of worry?

Alison Deans is concerned and doesn’t like the “feel” of the market now. She thinks stocks have fully priced in all the good news but none of the potential bad news. Deans is worried about rates increasing as the economy expands. She also thinks bond yields will rise and the FED may lag in raising short-term rates. (Remember it is an election year) The declining Dollar is bothersome in that it may set off a trade war resulting in decreased foreign ownership of U.S. securities which could lead to even higher interest rates down the road. Despite all this Alison does like some stocks, she thinks the Travelers (TAPa) St. Paul Companies (SPC) merger makes sense. She also Likes Viacom (VIAb) and Georgia Pacific (GP).

Harvey Eisen is positive on the markets. The bear market is over, interest rates are low, the economy & earnings are recovering, inflation is low, taxes have been reduced, and housing is strong. What’s not to like? The Dollar is “very bad news” the one fly in Harvey’s ointment. Eisen too likes the Travelers St. Paul deal. He also likes Ivax (IVX) and WebMD (HLTH).

Mary Farrell is bullish and suggested looking at the fundamentals. She expects earnings to be up about 15% this year and next. We have solid economic growth and low rates for now with low inflation. The Mutual fund scandal may have taken a toll on investor psychology but this will play out. It is encouraging that is going to be dealt with. Mary likes Gillette (G) Staples (SPLS), and Exxon Mobil (XOM).

Bill then introduced Special Guest Don Phillips, Managing Director of Morningstar. Don thinks the Mutual Fund mess is a result of many people believing the myth of the “perfect industry” They thought people working in the mutual fund Industry weren’t subject to the same temptations as people in any other line of work. People should never stop asking tough questions. Bill asked how does the small investor research if the funds they own could be implicated in this scandal. Phillips recommended a little common sense. Ask yourself are you doing business with people you trust? Do they treat you like a partner? Check the costs and read the reports. Now it might be difficult to know who to trust. The good thing is in a year or so the smoke will clear and the landscape will be better. The Industry is going to have no choice but to accept more regulation and disclosure. Don hopes it is sensible and not something rushed through in an election year. He would like to see something solid for years to come. Mergers are to be expected and some funds will end up selling under duress, there may not be many buyers not knowing if they are getting tainted funds. Ultimately we will see bigger fund families but there is always going to be entrepreneurs with the next great idea to start new funds.

Alison Asked what changes in legislation can we look for. Certainly more disclosure on costs. Governance changes too, things like an independent Chairperson and more visible boards. Alison also asked Don about the Morningstar rating system. They no longer rely on the fund name or manager’s description to determine the style of the fund. They enter each security they own into a database and that determines where they are classified. Harvey asked if people should take money out of funds involved in a scandal. Don said not necessarily, check the alternatives. It is however imperative the industry do what it has to in order to regain the public trust. Harvey went on to ask for the name of some top mangers in the small cap and distressed funds category. Phillips likes to look for visionaries that have a stake in the game. For small growth he likes Robert L. Rodriguez who managers FPA Capital (FPPTX). One of his favorite value mangers is Marty Whitman of the Third Avenue Value Fund (TAVFX). Mary asked if Don foresaw a time when small shareholders were going to be represented on boards and involved in the governance of mutual funds. It has to happen by getting independent board members and they need to stay in touch with shareholders and act as their voice. Now most business is behind closed doors and directors have far more contact with mutual fund management companies than shareholders. Mary then asked what shareholders should do if their funds are named in a scandal. It should be a red flag and they should definitely consider another investment. Before making the decision look for tax considerations, costs, and if there are better alternatives. If you see no problems go ahead and make the move, if nothing else it will send a message to the mutual fund companies that you do care about corporate governance.

Phillips did mention funds he likes Clipper Fund (CFIMX) and he does own it. He likes the quarterly letter to shareholders and they openly talk about both their successes and failures. They use the report to communicate not market. Phillips also likes Oakmark OAKMX), Marsico Focus Fund (MFOCX), Legg Mason Opportunity (LMOPX), and Vanguard Primecap Fund (VPMCX). He said Vanguard is one of the cleanest and best run shops in the Nation. Don likes funds that concentrate in specific areas. Saying if you are going to pay for active management then make sure you are getting active management, not an index fund in disguise.

Next weeks Special Guest will be Dana Telsey, Chief retail analyst Bear Sterns. The panel will be Frank Cappiello, Mike Holland, and Barbara Marcin. Bill Griffeth is scheduled to return as guest host.

-- posted by SteveT

Top 716. Nov 22, 2003 12:12 PM

» smile_1 - Re: Telecom's

In response to message posted by iammugsy:

put a market multiple on Cacs earnings and comp the current price to rational price and you should get your answer.

momentum players aside

-- posted by smile_1

Top 717. Nov 30, 2003 6:39 AM

» SteveT - 11-28-03

Bill Griffeth again served a guest host and recapped the week pretty much the way he did last week. The government reported very strong economic data, The Dollar hit a new all time low vs. The Euro, Gold flirted with $400 an ounce, and the stock market rose modestly. Is this a trend?

Frank Cappiello is bullish but thinks the good news is already priced into the market so it is going to pause and see what will happen in 2004. Some things to watch out for next year are deficits and a rapidly weakening Dollar. This could lead to inflation and FED tightening. We have seem rising commodity prices and are likely to see pricing power return. These are not bad things and are expected in any economic recovery. Frank likes Pfizer (PFE) and Suncor Energy (SU). He would reduce his position in Intel (INTC).

Barbara Marcin is bullish and thinks if rates go up sooner rather than later it is not necessarily a bad thing. This would indicate the recovery is stronger than expected and than is priced in now. She believes the FED won’t raise rates until June at the earliest. Marcin likes dividend payers like Honeywell (HON), Dow Chemical (DOW), Washington Mutual,(WM), and Merck (MRK).

Mike Holland is bullish and sanguine about next year due to a 30% increased corporate profits in the 3rd Quarter. They for the first time in history topped $1 Trillion. Holland thinks now is a good time to buy larger companies that have lagged, saying they have little downside and should perform well next year. Some he likes are Exxon Mobil (XOM), International Business Machines (IBM), and Microsoft (MSFT). He is negative on the U.S. auto industry.

Bill then introduced Dana Telsey, Chief retail analyst Bear Sterns. Dana says the shopping tone is optimistic due to an improved stock market, the jobs picture is promising, and we don’t have the fear of impending war like we did last year. All retail sectors are up at least 20% versus last year.

Frank asked if there is a difference between luxury and discounter outlooks. Definitely, the lower and middle income consumers tend to wait for bigger discounts while in the luxury category self gifting is becoming commonplace. Frank then asked if the Department stores are coming back. They are beginning to revitalize by remodeling and improving service. They also are bringing in new exclusive lines of merchandise. Barbara asked what we can expect from Wal Mart the next couple years. They will get more into apparel, this will cause other retailers to offer new products and whole new lines. It will even be seen in specialty retailers. Barbara then asked how the Internet has affected the retail industry. It has made it much easier for consumers to learn about products and price compare. Telsey believes people shop in part for entertainment and will continue to shop in person when making many final decisions on what to buy. Mike asked if with K-mart emerging from bankruptcy and being aggressive will hurt other retailers. It sure could hurt some of the regional discounters. Mike then asked how investors could take advantage of Internet sales. Dana suggested Williams-Sonoma (WSM), Gap Inc. (GPS), and Best Buy (BBY).

Bill then asked Telsey to recommend other stocks. She favors some that have been out of favor. She repeated Best Buy and Gap Inc. along with Ann Taylor (ANN), Coach Inc. (COH), Tiffany (TIF), Burberry (BBRYF), and Staples (SPLS). Griffeth then asked for some sell recommendations. Any second tier player would be worrisome. Bill then asked about the toy sector. It is very competitive and seasonal. Stores like Toys R Us Inc. (TOY) are going to have to offer something unique. Bill then wanted to know what affect the FED raising rates sooner rather than later would have on consumers in 2004. It won’t be good for retailers but it won’t hurt soft line retailers as much as hard line. A lower Dollar will lead to more competition between retailers giving consumers more choices in quality goods.

Next weeks Special Guest will be Larry Auriana, Portfolio Manager, Federated Kaufmann Fund.. The panel will be Mary Farrell, Frank Gannon and Brian Rogers. Maria Bartiromo is scheduled as guest host.

-- posted by SteveT

Top 718. Nov 30, 2003 6:55 AM

» pbradford6 - Question

Steve, do you know how Lou is doing recovering from back surgery? That can be a horrible, painful recovery and I pray that he is making progress and will return shortly.

-- posted by pbradford6

http://biz.yahoo.com/ap/031129/wal_mart_...

Top 719. Nov 30, 2003 7:06 AM

» Kirk - Re: 11-28-03 "Back Surgery"

.
In response to message posted by SteveT:

Thanks Steve

I heard Bill Griffeth mention that Lou was out due to "back surgery."

Dana Telsey is one of the more up beat guests on the show these days. Young and full of energy. She said getting paid to show and travel is a great job!

I read that Friday was a record day for Walmart where they had something like $6 in revenue for each person in America.

Associated Press
Saturday November 29, 3:19 pm ET

Wal-Mart Tops $1.52 Billion in One Day, Hitting Single-Day Company Sales Record

BENTONVILLE, Ark. (AP) -- Wal-Mart Stores Inc. said Saturday it hit a single-day company sales record during the traditional day-after-Thanksgiving shopping sprees, taking in more than $1.52 billion nationally.

Last year, Wal-Mart, the world's largest retailer, reported sales of $1.43 billion for the Friday after Thanksgiving.

-- posted by Kirk

Top 720. Nov 30, 2003 9:35 AM

» SteveT - Re: Question

In response to message posted by pbradford6:

I too heard Lou was out for back surgery and you all know as much as I do watching the program. I too hope he is able to return as soon as possible.

-- posted by SteveT

Top 721. Dec 6, 2003 5:24 AM

» SteveT - 12-5-03

Maria Bartiromo served as guest host. She said the weather was frightful but the economy and stock market were somewhat delightful. For the week we saw nice gains in productivity and a fourth straight month of new job increases. GDP grew at the fastest pace in nineteen years. The other side of the coin is companies may not yet see the need to hire more workers. Are inflation fears on the horizon? To look at the price of oil and the value of the Dollar along with precious metals one would think it is in our future.

Apparently the weather took its toll on the panel, as this week their numbers were two. Kim Goodwin is positive on the economy. She is encouraged by employment gains and thinks four months in a row has established a trend. Goodwin noted strong consumer spending and sentiment support her contention of a continuing strong economy. She is looking for order increases of 20% in the fourth Quarter of this year for Technology and Capital goods. Her forecast for S&P 500 operating profits in Q 4 are up 25% year over year and up 15% in all of 2004. Kim’s stock picks all have good earnings prospects. They are Coach Inc (COH) with a $45 price target in 12 months. She also likes Tom Brown Inc. (TBI) expecting it to trade in the high $30’s in the next 12 months. Her final pick is Agilent Technologies (A) with a 30% expected gain within a year. She believes Amazon (AMZN) to be over priced and would sell that stock.

Elizabeth Dater is certain the FED will raise rates next year and will give advanced warning when they issue their statements after each meeting. She says the next couple years will be a stock pickers market. Dater recommends for purchase now Accredo Health (ACDO), Crown Holdings (CCK), and Westwood One (WON).

Maria then introduced special guest Lawrence Auriana Portfolio manager Federated Kaufman fund. Larry says the market will go higher next year as the economic recovery continues. A few months ago deflation was the worry now it appears more worry about inflation. He is expecting real GDP in 2004 to come in around 4.5% to 5.5% and corporate profits to surprise on the upside. Earnings could be up close to 20% next year and that should make for a good stock market. Auriana uses a qualitative approach to growth stock selection. He looks for companies that grow earnings much faster than the over all economy. He must understand the business and get to know the management since he plans on owning the stock for at least 3 years when he buys. He follows up with constant evaluation. One tip, quality management is what really determines the success of any business. Stocks he owns and recommends are Advance Auto Parts (AAP), Central European Media (CETV), Orthofix International (OFIX), and Dyax (DYAX).

Beth asked for Larry’s view on technology. He said it will recover along with the entire economy but you need to be very selective when picking stocks. Kim asked about his sell discipline. Auriana does plan on each purchase as a 3 to 5 year commitment. He uses no price targets to determine sale. If he feels it is fully priced and the dynamics are good he will hold it. If the fundamentals change he then evaluates it and decides if a sell is in order.

Next weeks Special Guest will be Jim Norris, Partner and Co-manager Cooke & Bieler. The panel will be Mary Farrell, Frank Gannon and Brian Rogers.

-- posted by SteveT