Thursday, October 19, 2006


According to the WSJ, a long-suppressed study finding elevated rates of many cancers among workers at IBM (IBM) was published in Environmental Health, a peer-reviewed online scientific journal. IBM has fought for several years to prevent release of the study done by Richard Clapp, a Boston University professor of environmental health. The study analyzes data collected by IBM itself on the ages and causes of death of nearly 32K ppl who had worked at IBM and died between 1969 and 2001. Mr. Clapp got hold of the data, known as IBM's "Corporate Mortality File," as an expert witness who analyzed it for lawyers in California. They had sued IBM on behalf of a number of workers at a disk-drive plant in San Jose who got cancer. Although the plaintiffs settled after several lost their lawsuits, Mr. Clapp sought to publish his analysis.

The WSJ’s “Heard on the Street” column discusses Wal-Mart (WMT), saying that if the co announces next week that it will slow its expansion in the US, investors are likely to applaud. The co has grown at a ravenous pace, building hundreds of stores each year to increase its dominance of the nation's retailing. This year, it will erect as many as 370 US stores to keep up with its typical annual sq-ft growth rate of 8%. But in recent years, Wall St. has become increasingly concerned that Wal-Mart's new stores are stealing sales from its older outlets. Another worry: the higher costs of opening stores in mkts where it isn't already dominant. Some investors and analysts prefer that Wal-Mart throttle back on its growth by next year or ‘08, diverting money that would otherwise be spent on expansion to shareholder-friendly uses such as share buybacks and dividend increases or more extensive remodeling of older stores. Should Wal-Mart signal at its annual session with analysts next week that this will happen, the stock likely will get a pop.

Barron’s Online is out saying that with a trio of blockbuster drugs in its stable, Genentech (DNA) has emerged as one of the most successful biotech co’s in America. And despite a richly deserved premium to the broader mkt, the stock still paints a pretty picture, trading near record-low multiples for this co. "Just look at how fast Genentech's earnings are growing," says Luis Cortez, of Essex Investment Mgmt. "They are expected to grow dramatically faster than the S&P 500 as Avastin goes through a period of reacceleration. So even with the premium, the stock still looks attractive to me."

“Inside Scoop” section reports that Second Curve Capital started snapping up shares of Encore Capital (ECPG) in anticipation of more consumer-loan defaults late last year. Now the hedge fund is banking on a private-equity buyout of the debt collector. Second Curve spent nearly $5.7m to purchase 470K shares during the Q3, increasing its stake to 17.2%. Second Curve CEO Thomas Brown says "we like the debt-collection space" as consumer indebtedness has risen over the past 10-15 years. Brown also notes that "credit-card co’s are increasingly looking to co’s like Encore to sell off debt." "As Americans," Brown says, "we maintain a very healthy appetite for not paying." He says that Encore is a leader among peers in pricing the acquisition of default-loan portfolios and in managing those accounts.

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