Wednesday, July 25, 2007

Paperstand (DADE, DCX, CFC, HD, MAR)

According to the WSJ, Dade Behring (DADE) has been sounding out potential buyers of the co and could be close to striking a deal. A number of strategic buyers are possible for the co. One co that is a likely candidate is Siemens (SI). The situation remains fluid and could well fall apart. Dade is scheduled to report 2Q results today.

According to the WSJ, Chrysler's (DCX) attempt to tap debt mkts for $20bn hit a critical juncture as bankers began discussing the likelihood that they will have to step up with a large part of the money because investor demand hasn't been strong enough. The financing is being watched closely in Detroit because the Big Three and a horde of auto-parts suppliers have depended on tapping debt mkts for low-interest loans and bonds in a wave of restructuring and asset sales. "Low interest rates and plentiful capital are the key enablers to Detroit's restructuring," said John Casesa, of Casesa Shapiro Group.

According to the WSJ’s “Heard on the Street” column, the dips, twists and turns taken by Countrywide Financial's (CFC) share price over the past year and a half would make even the biggest roller-coaster fanatic a bit squeamish. And that was before yesterday's plunge, which sent stock of the nation's No. 1 mortgage lender down to its lowest point since late ‘05. Behind the ride has been a faith among many investors that Countrywide's lending smarts would protect it from the worst of the mortgage mkt's woes. Every time the stock fell, investors jumped in and drove the price back up. Yesterday, when Countrywide reported a 33% drop in 2Q earnings and said the losses were due to defaults of prime, rather than subprime, loans, investors' belief was shattered. Now, Countrywide is being lumped in with the rest of the battered mortgage industry, and many investors are betting it has further to fall. The co's CEO, Angelo Mozilo, said the mortgage business won't recover until ‘09. "It's clear the worst is likely still ahead of us and not behind us in terms of the mortgage credit environment," says David Honold, of Turner Investment Partners.

Barron’s Online out saying that while US housing mkt remains troubled, efforts to fix up Home Depot (HD) could get the retailer back on track. Certainly, critics have reason to hammer the stock, which has fallen over 13% in the last 2ys amid crumbling co sales and profits, rising competition and shoddy customer service. Yet, at its current valuation, Home Depot offers a compelling opportunity for patient investors. The co's shares could even double in value in the next 3ys, thanks to a mammoth corporate stock-repurchase campaign, store upgrades, and cash flow and profits starting to grow again. "If you look beyond the current housing environment, Home Depot remains a solid co," says Allison Fisch, of Pzena Investment Mgmt. "The share repurchase will support the stock short term, while efforts to improve the retail experience pick up steam."

“Inside Scoop” section reports that 2 Marriott (MAR) insiders sold nearly $5m in stock last week. Stephen Weisz, president of Marriott Vacation Club Intl, on Fri sold 55K shares for $2.5m. Also last week, Richard Marriott, a former director and officer of the hotel co and the brother of Chmn and CEO J.W. Marriott, Jr., sold 54K shares for $2.4m. Recent sales by Weisz and Richard Marriott have kept insider sentiment at Marriott below that of peers. Marriott scores a 2 on Thomson Financial's 10-point insider-rating scale vs 4.9 for the lodging sector.
And Thomas Weisel Partners analyst Jake Fuller sounded a note of caution recently. In a note Fuller wrote, "We maintain an Underweight rating on the stock, reflecting concern that slowing RevPAR could lead to further multiple compression and est revisions."

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