Sunday, September 10, 2006

Barron's Summary

In Barrons' annual survey, they asked institutional money managers to indicate the degree of respect they had for the world's largest co's. Most highly valued is J&J (JNJ), followed by GE, PG, TMC, BRKA etc.

92 year old fund manager likes QMAR, IR and EPD.

Barron's discusses favorably Symantec (SYMC), saying that after hitting an all-time low in June, the shares have started moving up. They could climb more than 30% over the next 12 months as a diversification strategy bears fruit.

Barron's highlights Ford (F), discussing its newly named CEO Alan Mulally. According to the article, the financial mkts are betting there's a 40% chance Ford will be bankrupt within 5 years. And therefore suggesting that if he succeeds, so will Ford. If he doesn't…

According to the Barron's, Pixar shareholders got a sweet deal when Disney (DIS) greed to buy the co earlier this year, and the takeover looks even better now. Disney stock has appreciated, Pixar's latest movie, Cars, has proven disappointing at the box office and Pixar may have backdated stock options, potentially enmeshing former Pixar CEO and controlling shareholder Steve Jobs. "The deal was a stroke of genius by Jobs," says Michael Savner, of BofA. "He convinced the mkt that Pixar's business model was unbreakable and scalable." Disney paid a lot for a co that produces just one movie a year. Jobs netted over $3.5bn from the sale, swapping his illiquid Pixar shares for liquid Disney stock, another brilliant move.

"The Trader" section speculates on General Electric (GE) breakup. The most obvious spin-off candidate is NBC Universal, which has little fit with GE's industrial businesses. In a recent note, CSFB analysts Nicole Parent and Bill Drewry took a look at NBC Universal and valued the co at about $35.5bn, or $3.50 per GE share. That's 10x projected '07 operating profits, a modest valuation by media standards. Another analyst, Tony Boase of AG Edwards, recently valued the division at $40bn.

"The Trader" column also discusses LaBranche (LAB), questioning that might LaBranche operate better as a private co? Buyout firms, under mounting pressure to deploy their vast cash stash, are broadening their hunt, and LaBranche could merit a lingering look. The co, with a mkt value of $513m, could see a cash influx of about $400m over the next few years, ests Robbert Van Batenburg, of Louis Capital. He thinks LaBranche is ripe for a mgmt-led LBO. So, article suggests that while option premiums are by no means cheap for this volatile stock, they are reasonable by historical standards. And given the uncertainty facing LaBranche, the neglected call options may offer a limited-risk way to position for a hoped-for buyout, or at least a bounce if speculation escalates.

"Technology Trader" column discusses Neurochem (NRMX), a stock that traders call a tight stock. More than 4.3m shares of this thinly-traded stock had been sold short, as of mid-July, which exceeded 45 days' worth of trading volume. Unfortunately for the Neurochem shorts, about 1/3 of the co's stock is held by investment entities controlled by CEO Francesco Bellini and a large Canadian insurance co, while another 50% is in the hands of other friendly institutions. Since August 17, securities filings by Bellini's investment vehicles reported adding C$4.7m worth of Neurochem stock to their holdings. Shorts tell to the Barron's the maneuver has forced massive buy-ins of Neurochem short positions. Most interesting, Bellini's securities filings disclose that the source of his funds is a loan from the National Bank of Canada that's secured by...his holdings of 50m shares of Neurochem stock.

1 comment:

MikeT said...

Took a stab at NRMX today with a nice profit.

Looks like short covering to me. Having said that the trading pattern and the chart is IDENTICAL to that of CEGE just before their Phase II results were made public.

Bellini's a guy worth watching and so is the stock. In Canada they call him the "the Midas touch". IF (and that's a BIG IF) Alzhamed provides positive Phase III results NRMX will absolutely explode. Too many shots and a huge market (3.6mil americans + 1.5 europeans with alzeimers). The only drug in the market is PFE's Aricept which is 2.5+bln and it doesn't attack the disease. My grandma was on it 3-4years ago.