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Buzz Bits: Markets Edge Up

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Your daily Buzz highlights...

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Flashback! - Bill Meehan -

This day in market history...

  • Closing levels 7 years ago
    • DJIA: 10,395.01
    • Naz: 2,583.50
    • S&P 500: 1349.82
    • Crude: 16.73
    • Gold: 283.45


This day in Minyanville history...


In other news...

  • In 1954, Hank Aaron made his major league debut. He would hit the first of 755 home runs 10 days later.



Sloppy sloppy sloppy - Fil Zucchi - 2:16 PM

Gastar Exploration (GST) is a tiny gas E&P company closely followed by energy boutique Pritchard Capital. As an early stage company, the appeal lies in the potential value of its assets. Late last year Chesapeake Energy (CHK) bought a stake in the company in the high $2's. There has been a sloppy GST seller around for a few days now, who has knocked the price down quite a bit. A few minutes ago GST filed an 8-K saying that on March 31 it issued 541,000 shares as a deferred payment on a prior acquisition; this might explain the recent heavy trading.

GST is a tiny, speculative company which will likely go nowhere until the potential of its assets becomes clearer. That being said I have added to my position this morning.

Position in GST, CHK



Dully Noted - Kevin Depew - 1:11 PM

Are we there yet? Are we there yet? As I prepare to scoot out the door for a dose of Kentucky blue grass, here are a few of the technical items of note popping up on my screen:

  • Advanced Micro Devices (AMD), spread triple bottom break at 32.
  • Beazer Homes (BZH) triple bottom break at 64.
  • Centex (CTX) triple bottom break at 61.
  • iShares Goldman Sachs Natural Resources (IGE) double bottom break at 97.5.
  • KB Home (KBH) double bottom break at 64.
  • Ryland (RYL) double bottom break at 68.

Hmm, sure are a lot of homebuilders on that list. Meanwhile, no real DeMark buy signals among those stocks, suggesting this isn't what they call the "final flush" just yet.

I hope this finds you well and ready to enjoy a much needed long Holiday weekend.



Follow the yellow brick road... - William Fleckenstein - 11:32 AM

Newmont Mining (NEM) will report earnings on April 20, which by my reckoning is quite a bit earlier than usual. If so, I would imagine that the company has good news to share -- even as Wall Street seems to be expecting the opposite. (Similarly, Wall Street seems to act as though the guys running the show are the industry's dumbest -- rather than the smartest.)

I bought a few NEM calls late Tuesday, and I intend to increase my stock and call positions leading into April 20, for a trade based on the idea that Newmont's business is better (and its valuation lower) than is generally thought to be the case.

Position in NEM



Careful MInyans on MDT... - John Succo - 10:56 AM

Medtronic (MDT) is not buying back stock straight.

As part of the convertible bond issue, they are buying back stock in conjunction. So on one hand they are issuing stock (increasing future float) through the convertible bond (imbedded call options on the bond) and buying it back as part of the deal.

Net this has no effect on the float or dilution of the company.

By doing this in effect the company is "issuing volatility (selling)" on their stock, nothing more.

Position in MDT



What the near-term could bring us....Snapper to soon make an appearance? - Bennet Sedacca - 10:34 AM

Way back on February 10th, we wrote a piece about what we thought the rest of the year would bring. So far so good - notice we do not break our arms patting ourselves on the back as we live in the world of bricks and glass houses and 2x 4's that come from nowhere, just when you think you have it right.

But since we have been lucky so far, we naturally have been asked what we think of the short-term. Well, again, I find the market highly technical and coming up on a cycle low and the end to negative seasonality. Please see a chart here of what we think the near- term will bring (now I am really asking for a 2x4). I expect the 5.20-5.25 area to hold in 10's but the bounce to be only 2-3 points as resistance is multi-year and monstrous. Yes, I expect to play for it, but nimbly. How? In Treasuries. Munis aren't liquid enough and we expect corporates to start to widen. Not advice, just an educated guess.

Positions in various Treasury securities



Curb Your Enthusiasm - Adam Warner - 10:26 AM

AMEX seats have slipped a tad off a $320,000 print recently to the current market of $230K bid/$280K offer. The buzz is that part of the runup was due to excitement about the USO product, which has started as a dud so far.

That is still no bargain though, it is triple where it would likely trade were the IPO market to dry up, and double the estimated "breakup" value based on their assets. And those "assets" are primarily prime downtown real estate.



McDonald's March Comps: Better Than First Blush - Brian Gilmartin - 10:03 AM

While McDonald's (MCD) looks to have beat by a smidge on q1 '06 eps, the real story with this morning's release was the strong March comp's in the US of 6.6%, which came against the strongest US comp in the US in March '05 of 6.8%. (See attached spreadsheet.)

We are long MCD's as one of our defensive restaurant plays, since at $35 per share, the stock is still trading at just 8.5(x) cash from operations, generating better than $4 per share in 4q trailing cash from ops.

Since MCD's is more of a mature growth story, this cash is getting returned to shareholders in the form of buybacks and dividends, which isn't really news, it just makes the stock an excellent fundamental story in uncertain or rocky markets.

Last thought: US comp's get easier through the rest of '06, as the attached spreadsheet demonstrates.

Position in MCD


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