Two Ways To Play: Buffet Sees Goldman Opportunity
Strengthen your portfolio in good times and bad.
Buffet Takes a Stake in Goldman
Nice job by Professor Cooper yesterday noting on the Buzz a bid in Goldman Sachs (GS). Today the Wall Street Journal reports the company will get a $5 billion investment from Warren Buffet's Berkshire Hathaway (BRK.A).
Buffet will be buying perpetual preferred stock that pays a 10% coupon with warrants to purchase up to $5 billion of common stock at any time in the next 5 years for $115, about 8% below yesterday's closing price. Goldman also plans to sell $5 billion of common stock to the public, netting a minimum of $10 billion of fresh capital.
From the Bull Pen: The news certainly injects confidence in the banking sector. Bulls can eye the financial ETF (XLF) for an upside trade. Notice how the stock filled the gap from last Friday. Sell stops can be set below $20.
From the Bear Cave: When the time comes, bears can short the financials as challenges remain. But another option is MasterCard (MA) if the stock can rally to near $220.
IBM: No Slowdown in India
Bloomberg reports IBM's (IBM) regional general manager Shankar Annaswamy said the company is still bullish on India and hasn't seen a slowdown in Indian demand.
Annaswamy said IBM had about 73,000 people in India at the end of 2007 servicing clients around the world. And in the quarter ending June of this year, the company increased sales in India by 37%. Globally, it will take 2 to 3 more quarters for a clearer picture to develop of the computer services industry, he said.
From the Bull Pen: Is Microsoft (MSFT) the better international tech play? Bulls can play the upside with sell stops below $25.
From the Bear Cave: The daily chart of the India Fund (IFN) tells a different story. The trendline for the year is down. Bears can consider entering on the short side if the stock can rally to $40 resistance. Buy stops can be set above that level.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed with the Hang Seng +0.47%, Nikkei +0.20%, Sensex +1.17%, Taiwan -0.80% and Shanghai +0.70%.
A quick check across the pond finds the CAC -0.45%, DAX -0.10%, FTSE -0.34%
As of 8:30 AM EST, S&P futures are higher +10 points to 1197, and Nasdaq futures are +16 to 1666.
A Look At Commodities
Commodities are mostly higher. Crude oil is +2.48 to 109.11. Gold is +5.10 to 891.00. Silver is -0.280 to 13.120, and copper is +0.50 to 317.20.
The dollar index is +0.170 to 76.638.
On the Radar
7:00 MBA Mortgage Applications
10:00 Existing Home Sales: 4.94 mln cons.
10:00 Existing Home Sales (m/m): -1.2% cons.
Click here for the full radar.
Hump day today! Good luck!
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