Buzz Bits: Dow, Nasdaq Slip
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Bell Buzz - Todd Harrison - 3:51 PM
- There are some sessions that are massively important, sea-shifting and mind boggling. Today, wasn't one of them.
- Even so, there are often valuable clues nestled in the muck and today may be a precursor of the quarter-end script (beta over banks).
- I'm not playing the former but I'm there on the latter. The problem is, my biggest banks short (GS) is the only piggy thus far poking higher. Don't you love it when that happens?
- I suppose it's apropos that following Monday's five year Minyan anniversary, we'll embark on the biggest quarter in franchise history. How so? MV Kids, The Exchange, MV Festivus (12/7) and a massive surprise for all ye faithful.
- Someone once said that if you told an entrepreneur how much hard work executing a vision would entail, (s)he would never have started the journey. I completely get that (oofa!) but I've gotta say, I'm glad we've fought the good fight. The definition of professional nirvana is doing what you love with people you respect while serving the greater good.
- Hopping for a slew of post-market "to do's." I sincerely hope y'all had a good day and that your night puts it to shame!
Position in GS.
GM, Rental Cars and Gamers - Jeff Macke - 12:28 PM
- General Motors (GM): Moving higher even as UAW workers walk. Pick your poison, in terms of the bullish arguments for the stock: "the strike ending, eventually, will be bullish!", "relatively cheap", "rate cuts", etc. I'm not here to fight you on any of them; I'm simply here to say there are a lot of stocks out there and almost all of them look like better short, or long, ideas than GM.
- Good NY Times (NYT) article on rental car giant Hertz (HTZ) yesterday. Far be it from me to take the other side of The Paper of Record but I'm going to have to say that both NYT and HTZ are facing industry pressures that exceed the grasp of even the best managers' ability to control them. For Hertz, rising fleet cost sales are a crusher. For the Times, well, as it turns out it's a newspaper. And you can now read even the Big Articles for free (after a short-lived effort by the NYT to charge). I've been bearish on both stocks in public for months and see no reason to change that view now.
- What do I like? How about GameStop (GME), making all time highs on the cusp of Microsoft's (MSFT) Halo3? How about almost anyone in the video game foodchain, going into Christmas? How about Guy Adami's article on Mr. Softie this morning (which, for the record, I liked even before I got to the part where he gave me a shout out for a line I cribbed from Todd-O and others).
- Running with the Mr. Happy theme, I also liked (actually, loved) Ken Burns' new documentary The War, which premiered on PBS last night. We're big PBS watchers in general around the Jeffmacke household. Put it on your DVR list!
Hoku Scientific in the Spotlight - Quint Tatro - 11:35 AM
We have had a very interesting morning thus far with an opening fade that was bought rather aggressively. Despite the green on the screen breadth is negative in the NASDAQ which has me a little on edge. I continue to believe that performance anxiety and the end of the quarter will keep us going and will be especially helpful to those stocks that have been winners or late.
I am trying hard to strike a balance this morning, moving out of stocks that have gotten a bit extended and rotating into names that I believe are poised to continue.
I came into today with some Broadcom (BRCM) but have been adding in anticipation of a coming break. I will look to trade around my shares here rather aggressively, simply because the stock is so liquid and I can feel comfortable moving in and out without affecting the normal trading pattern. I will probably scale back if we don't see a break out today and let shares run if we do.
In the high momentum area, I am watching Hoku Scientific (HOKU). I started a smidge and am waiting for an add on, a move over today's high. This company has moved into the solar arena but hasn't found much attention despite others, such as Ja Solar (JASO) and Ascent Solar (ASTI), rocketing to the moon. If traders really are seeking out beta, they will find HOKU soon. If they do not, I will place a stop on a break below Friday's low of $9.50.
As an aside, I did take a little JASO off into this move and anyone who has followed may want to consider the same. There's nothing like making a little paper gain real.
Positions in BRCM, JASO and HOKU.
Arris Group Buys C-COR Inc., The bandwidth arms race is heating up... - Sean Udall - 9:15 AM
As stated, I believe this is a sign of things to come in the bandwidth supplier space as well as Tech in general. (Earlier this month Applix (APLX) got acquired by Cognos (COGN).) Arris (ARRS) is buying C-COR (CCBL) for $730 in cash and stock. I view this buy quite favorably as ARRS is paying a little more than 2 times forward sales for CCBL (2.17 times). Further, CCBL has a strong balance sheet with over a $100 mln in cash, which helps fund the deal.
ARRS itself is not an expensive stock either. Forward P/E is a hair under 14 and its PSR is 1.65 -- not to mention the roughly $3 per share in net cash.
Strategically, this deal looks quite solid. The merger will take two solid small-mid tier players in the cable equipment space and creates a more robust and substantial company -- thus helping them compete with the likes of Cisco (CSCO) and Motorola (MOT). Additionally, at this point there are very few pure plays left in the cable equipment space. Tandberg which ARRS made a run at, ended up getting acquired by Ericsson (ERIC). SFA was acquired by CSCO and I remember MOT adding a couple smaller names to their portfolio in the last couple years.
I believe this leaves ARRS, Harmonic (HLIT) and BigBand Networks (BBND) as the last remaining independent pure plays in this space (at least with sales of $200 mln or higher). I also expect this could lead to additional strength in these names (esp. HLIT & BBND). If not, I'm a buyer on any meaningful weakness.
I need to listen to the call today but I doubt I hear anything that would shake my bullish thesis in this group. In fact, I'm expecting to hear confirmation of my bandwidth constrained thesis.
Positions in ARRS, HLIT, BBND.
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