According to the WSJ, Whole Foods (WFMI) CEO John Mackey posted messages under a pseudonym on Yahoo forums that praised his co and blasted Wild Oats, which Whole Foods is seeking to buy. In Jan’05, someone using the name Rahodeb went online to a Yahoo stock-mkt forum and posted this opinion: No co would want to buy Wild Oats Markets at its price then of about $8 a share. "Would Whole Foods buy OATS?" Rahodeb asked. "Almost surely not at current prices. What would they gain? OATS locations are too small." Rahodeb speculated that Wild Oats eventually would be sold after sliding into bankruptcy or when its stock fell below $5. A month later, Rahodeb wrote that Wild Oats mgmt "clearly doesn't know what it is doing .... OATS has no value and no future." The comments were typical of banter on Internet message boards for stocks, but the writer's identity was anything but. Rahodeb was an online pseudonym of John Mackey, co-founder and CEO of Whole Foods. For about eight years until last August, the company confirms, Mr. Mackey posted numerous messages on Yahoo Finance stock forums as Rahodeb. It's an anagram of Deborah, Mr. Mackey's wife's name. Rahodeb cheered Whole Foods' financial results, trumpeted his gains on the stock and bashed Wild Oats. Rahodeb even defended Mr. Mackey's haircut when another user poked fun at a photo in the annual report. "I like Mackey's haircut," Rahodeb said. "I think he looks cute!"
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The WSJ reports that General Electric (GE) and Abbott (ABT) abandoned their $8.1bn deal for 2 units that make medical-diagnostic equipment. The co’s said they had called off the deal, announced in Jan, b/c they were "unable to reach agreement on final terms and conditions." There is no breakup fee.
“Heard on the Street” out saying that Warren Buffett, Carl Icahn and big-name hedge funds have bet more than $8bn on railroad stocks in recent mo’s. But going along for the ride could be bumpy. Railroad share prices have run up on headline-fueled enthusiasm about the high-profile purchases. Since April, Berkshire Hathaway has disclosed an 11% stake in Burlington (BNI). Berkshire also has taken smaller but substantial chunks of Union Pacific (UNP) and Nortfolk (NSC). Icahn Mgmt and activist hedge funds including Atticus Capital and Jana Partners have barreled into the railroads, too. The result: As a group, railroad shares have surged more than 20% so far this year, despite a 4% decline in traffic b/c of the slowdown in automobile and home sales. So, the question is: Can they hold on to their gains? "The stocks have traded up partly on expectations that something big will happen," says Rick Paterson, of UBS, referring to speculation that a buyout firm might take one of the co’s private. "We think that is less likely than likely."
Barron’s Online out saying that the fiber-optic resurgence that has paved the way for new public stocks in the last 9 mo’s is very real. It is also rather fragile, and as a result, some of those stocks are running far ahead of the rosiest outlook for their businesses. Case in point, shares of recently public Infinera (INFN). 7-year-old Infinera makes equipment used by phone co’s to expand the bandwidth of their networks. It has a promising future, with sales soaring from $2.6m to $50m in the most recent quarter. And it's finally generating positive cash flow despite continued net losses. But even with a dramatic rise in sales this year and next, it would be hard to justify the current 20x multiple of price-to-trailing 12-mo sales, a valuation that seems to assume unreasonable growth in the fiber-optic mkt. Infinera is one of 4 recent fiber-optic IPOs. Judging by the track records of those stocks, one might pick up Infinera at a cheaper price soon. Opnext (OPXT), Optium (OPTM) and IPG Photonics (IPGP) have traded down as much as 25% from the closing price on their first day of trading.
“Inside Scoop” section reports that Morgan Stanley Investment Mgmt and Buckingham Capital Mgmt resorted to bare-knuckle tactics and sold about 3.2m shares of Build-A-Bear (BBW). Buckingham let go of all of its 1.5m shares, or 5.7% stake in Build-A-Bear. Morgan Stanley sold almost all of its 8.7% stake, or 1.7m shares, leaving the investment giant with a mere 559 shares. According to StreetSight.net, Buckingham "focuses on companies that are substantially undervalued relative to strong fundamentals" and sells its holdings when the stocks become overvalued.
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