Wednesday, November 29, 2006


The WSJ reports that Novartis (NVS) may be prepared to sell Gerber Products and could have a willing buyer in Nestlé. Gerber and Novartis's medical-nutrition business together would fetch between $4-5bn. Gerber alone would be valued at more than $3bn.

“Inside Track” section reports that 2 hedge funds that demanded an overhaul at Pep Boys-Manny Moe & Jack (PBY) have kept buying shares even after grabbing the steering wheel at the auto-parts retailer. The funds, Pirate Capital and Barington Equity Partners, successfully pushed for the ouster of the co's CEO and used their leverage as major shareholders to win a total of 5 seats on the co's 11-member board. Since then, they have continued to add to their holdings, spending more than $16m in Nov to buy nearly 1.3m Pep Boys shares. Pep Boys Chmn William Leonard, who is serving as interim CEO, bought an additional 40K shares this month.

Barron’s discusses Nintendo (NTDOY), saying that investors better buy the co’s new gaming device Wii than co shares. The shares have more than doubled to $28 in the last 12 months, primarily on the strength of another Nintendo machine, the hand-held Dual Screen, better known as the DS. The DS is expected to propel Nintendo's sales by more than 50% in the year ending March, to $7bn, while driving up profits by 70% or better. But the DS is last year's story, and Nintendo is entering into a year of expected slower growth, with sales up perhaps 9% and operating profit up 18%. For the stock to outperform, the Wii will have to be a winner over many months and years of game sales. Momentum investors will be tempted to bid up the shares to perhaps $35 or more as ests for Wii sales rise, but the real proof will come in how the Wii plays out over the course of ‘07, and that could mean some downside to the ADRs in the near term. "The stock has had a good run and a correction would be welcome," says Christian Takushi, of Swisscanto Asset Mgmt. Nintendo shares could have a 15% or so downside from here, says Takushi.

“Inside Scoop” section reports that hedge fund MMI Investments disclosed holding a 6% stake, or 20.6m shares, of Unisys (UIS).

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