The various digital video recording and playback devices around the house have gathered together quite a nice collection of interesting fare for the next rainy weekend — which I absolutely insist will not be this weekend. (Enough of this London on the Hudson crapola!)

• Musical Minds:  Oliver Sachs, Nova (on line)

• Guns, Germs & Steel: Jared Diamond, PBS 3 parts

• The Music Instinct: Science & Song: Bobby McFerrin and Daniel Levitin 3 part series

• The Ascent of Money: Niall Ferguson, 4 parts PBS/DVD (see this clip)

And finally, as a little counter-programming to all this intellectual fare:

• Jim Jeffries HBO If you have never seen this Australian comedian before, brace, yourself. Very funny (but crudely blunt).

Comment or Read More at The Big Picture

• Gallery: Domestic robots with a taste for flesh - tech - 25 June 2009 - New Scientist -
  technology ai robots futures
• The AI Report - Forbes.com -
  toread ai technology futures
• Technology Review: Blogs: arXiv blog: Bird Navigation Breaks Entanglement Record -
  quantum
• The Man Who Shook Up Vegas - WSJ.com -
  statistics math sports gambling probability
• YouTube - [Trailer] Robogeisha - I'll see it if it gets more than 70% on rottentomatoes
  video kungfu japan
• History of Home Values -
  realestate housing economics charts system:filetype:png system:media:image

Comment or Read More at uglychart.com: a blog about stocks

Click charts to ENLARGE.

Keyword: Technical analysis, stock market, short selling, Securities and Exchange Commission, GlobalEconomicAnalysis.com, stock charts

The SEC prepares to reinstate short-selling rules. What a surprise. Hated by the banks, the short-selling restrictions ADD NO VALUE but plenty of appeasement. A popular move that will improve the SEC's image, restricting short selling doesn't affect the problems that brought near system meltdown. And the SEC looked the other way while Bernie Madoff ripped off charities and investors. MISH makes the call.

But all isn't lost.
Domino's Pizza (DPZ) weekly, fighting off a double top and negative 8,3,3 stochastics. The Memphis Barbeque chicken was the best Domino's 'za' I've ever had. We'll have to see if we can equal it down the road with a home-grown version.

Good trading and great risk management to all.

Educational use only. Never intended as investment advice.
Comment or Read More at Technically Speaking, Market Analysis and Theory

Fascinating story in USA Today on the banking system our neighbors to the North enjoy:

Our northern neighbor sometimes seems so similar to the United States that it’s hard to tell where the USA ends and Canada begins. Here’s one way: Canada is the place with healthy banks, taxpayers unscathed by megabillion-dollar bailouts and no need to overhaul financial regulation because it was done right the first time.

As U.S. officials scramble to prevent a crisis sequel, the ability of Canadian banks to navigate the current financial storm is earning global plaudits. The World Economic Forum in October ranked the country’s financial institutions No. 1 in the world for solvency. U.S. banks came in 40th, two rungs behind Botswana.

A few noteworthy differences:

• Superintendent of Financial Institutions: A single, powerful regulator;

• Industry Concentration: 5 banks have 85% of assets in Canada;

• More conservative executive-suite culture: Bankers are more like Accountants than Wall Streeters;

• Canada’s version of Glass Steagall repealed in the 19080s.

It is more than regulation alone: Canada has a very different corporate culture; is less driven by pursuit of option riches, and seems to be more concerned with sustainable, rather than short term, corporate profitability. Bullet points 2 and 4 would likely be abused in the US.

The entire piece is well worth reading . . .

>

Source:
U.S. regulators could learn from Canada’s banks (USA Today)
David J. Lynch
USA TODAY, July 2, 2009
http://www.usatoday.com/money/world/2009-07-01-canada-bank-regulation_N.htm

Comment or Read More at The Big Picture

~~~
Source:
Goldman Primed to Benefit from AIG’s Woes — Again, William Cohan Says
Yahoo Tech Ticker, Jul 02, 2009 10:28am EDT
Aaron Task
http://finance.yahoo.com/tech-ticker/article/273168/Goldman-Primed-to-Benefit-from-AIG's-Woes—-Again-William-Cohan-Says

Comment or Read More at The Big Picture

Click charts to ENLARGE.

I prefer to trade the 60 minute charts. Here's a 3 by 60 minute sampler from the SPDR sector inspector.From the left: XLB, XLF, XLK.
______________________________________________________________
Here's a 9 by 60 minute chart panel graph.
Top from left: CUBA, EEM, EWA, EWC, TKF
Bottom: the BRIC house, EWZ, RSX, IFN, FXI
_______________________________________________________________
Good trading and great risk management to all.

Educational use only. Never intended as investment advice.
Comment or Read More at Technically Speaking, Market Analysis and Theory

So now we know CNBC's formula for success. Dennis Kneale's comic stylings at night, followed by Amanda Drury's Australian Open blouse in the morning.

And to think, you have all convinced me not to watch any more Bubblevision. Apparently she was on loan from CNBC Asia all week. As she was this time last year.

Anyway, back to Kneale. I suspected that his ratings where somewhere in the John McEnroe-Daniel Simpson Day 0.0 level. But apparently I was wrong. On June 29th he got about 232,000 viewers at 8 PM. It doesn't sound right. Mad Money got 162,000. Squawk Box also got 162,000. I find it hard to believe that they got the same exact numbers, and were bested by like 50% by DK? Doesn't really make sense. All the other news channels get big bumps in that time slot, so perhaps general viewership just takes off then and there? I mean could you throw on "Pauly Shore's Investment Tips" and get 200,000 viewers too?

Or maybe DK is way more popular than I think, and CNBC is pure genius giving him a prime time slot.
Comment or Read More at Daily Options Report

After yesterday saw unemployment tick up t0 9.5% (and U6 hit 16.5%!) I thought it might be a good time to do a little compare and contrast: Let’s compare job losses during this recession against  prior recessions:

This is a different way to look at the ob loss situation: This chart reveals the change in Unemployment across the past 7 recessions :

>

(thanks to RM for the eye candy!)

>

Chart does of the Day takes a look at this recession, the last recession and the average recession from 1954-2006:

>

via Chart of the Day

The current job market has suffered losses that are nearly three times as much as the average. If this were an average recession/job loss cycle, the number of jobs would have begun to increase three months ago.

Comment or Read More at The Big Picture

One of the only things I dislike about my Casio Exilim EX-Z75 7.2MP is the puny 3X optical zoom.

So it was no surprise when this NYT article caught my attention:

“There are currently two types of ultrazoom cameras: the full size and the compact. The full-size models resemble those digital single-lens-reflex cameras carried by professionals; compact ultrazooms look more like pumped-up standard point-and-shoot cameras.

I pitted five models against each other in an ultrazoom showdown. The average ultrazoom I tested weighed about 15 ounces with a battery — the lightest weighed in at 8 ounces. All of the cameras had 3-inch LCD screens and, except for two compact models, smaller viewfinder LCD screens.”

The two standouts are show top and bottom in the graphic. At top right:

Canon PowerShot SX200 IS

Details: $350, 12 megapixels, 12x optical zoom, 3-inch LCD

Fun Features: Blink-detection notifies you if a subject blinks during the shot. A smart auto mode changes settings for close-ups and long shots.

The SX200 is about two inches thick and weighs about 8 ounces. The 12x zoom lens pops out of the front and takes up most of the camera’s face, making it a bit hard to grip when taking action shots. In bright sunlight, the camera performed admirably and the odd features — including color replacement, which allows you to, say, swap pink for blue in every photo — will make some people happy.

The test shots showed excellent color reproduction, although the indoor shot looked a little washed-out.

This camera is similar in size and shape to the average point-and-shoot circa 2001. It fits into a pocket, which can’t be said for the larger ultrazooms.

Grade: A-

At bottom right:

Sony Cyber-shot DSC-HX1

Details: $439, 9 megapixels, 20x optical zoom

Fun features: A 10-image-a-second burst mode ensures you’ll get at least one good shot.

At 16 ounces, the Cyber-shot DSC-HX1 was the most compact of all of the full-size cameras we tested. The camera has a hinged LCD screen that swings up and down, but doesn’t swivel. The shots were quick and sharp even in low light and without flash. The camera had some minor issues with close-up photos — mainly focusing on the wrong part of the scene and creating a messy blur — but in terms of shooting speed, the Sony won hands-down.

In identical test situations, the Sony also had brighter colors in auto mode, offering a more nuanced photo. Interestingly, this model had the best viewfinder LCD: the image looked sharper in the viewfinder than on the large LCD screen.

Grade: A+

Cool stuff!

>

Source:
Little Cameras With Big Eyes
JOHN BIGGS
NYT, June 24, 2009
http://www.nytimes.com/2009/06/25/technology/personaltech/25basics.html

Comment or Read More at The Big Picture

Comment or Read More at The Big Picture

I cannot figure out why you PR people keep sending me PDFs of articles, but then don’t post it online. Do you want the publicity or not?

If yes, than a) post it on your site; b) THEN send out the email.

Its kinda hard to link to meatspace items on a blog . . .

~~~

Oh, yeah, here are the flash and PDF versions

Comment or Read More at The Big Picture

In the 31 weeks since the launch of the chart of the week feature, I have created all the charts with the exception of (I believe) two of them. Going forward, I think it is time to relax this constraint a little and expand the scope of the chart of the week feature to cover a broader range of subjects, bring in a little more visual variety, etc.

What better way to usher in an expanded chart of the week feature, but with a heat map of the second quarter performance of the S&P 500, particularly when the 15% gain in the quarter was the best for the index in eleven years. The FINVIZ.com heat map breaks down the quarterly performance at the component level, grouped by sectors and industries, with the size of the squares being proportional to market capitalization and the color codes (and numbers) representing quarterly performance.

FINVIZ.com has a large number of heat maps available and is a site that is well worth exploring.

[source: FINVIZ.com]

Comment or Read More at VIX and More

Click charts to ENLARGE.

We've reviewed over and again the tendency of financial journalism to provide explanations for price action. Did unemployment surprise the market or only the reporters?

Aw, hell, let's look at some charts.
Market Vectors Agribusiness (MOO)...Gann 3-day swing chart is negative.
___________________________________________________
Dow Industrials ETF (DIA). Diamonds are forever? Thin ice ahead.
_______________________________________________________________Honeywell (HON)...or honey wagon?
_________________________________________________________________ProShares UltraShort Financials (SKF)...seductive or a trap? The answer next week...
____________________________________________________________
Good trading and great risk management to all.

Educational use only. Never intended as investment advice.
Comment or Read More at Technically Speaking, Market Analysis and Theory

I first wrote about SuperValu (SVU) at the end of 2008, here, after picking up some shares at $12.46. Fifteen days later I sold those shares at a profit of 43.5%. By the end of the day this Thursday, SVU shares were once again trading within pennies of the price I paid for them in December. Attractive? Perhaps. Certainly cheap. Much less expensive (valuation wise) than any of the competitors - Kroger, Safeway, Costco and Walmart.

But, and this is a big but, SVU's management team just hasn't been able to get it right. They screwed up on their acquisition of Albertson's and they have had trouble positioning themselves to compete effectively in today's troubled economic environment. Yes, they can cut costs, lower margins and feature generics, but keeping loyal and satisfied customers coming back week after week takes much more than that. For that you need to create an attractive, lasting and consistent presence and I am not so sure that SVU, as a corporation, can do that any time soon. Without such a corporate-wide sustainable competitive advantage, Supervalu may simply be forced to compete with Walmart on price and location.

Does that mean that SVU stock is no longer a bargain in the mid $12 range? It is still temptingly cheap at these levels and it may still be a bargain. But there is a significant risk that Supervalu will go the way of A&P in the 70s (from preeminence to irrelevance) in a matter of a decade. Should that happen, Supervalu's value will catch up on the way down with its stagnating stock price. Even if that happens, however, it is extremely unlikely that this company will declare bankruptcy or go out of business.

This suggests a different and safer way to invest in Supervalu - buy their bonds. New 8% coupon bonds maturing on 05/01/2016 (CUSIP: 868536AT0) were just issued a couple of months ago. They are rated BA3 by Moody's and B+ by S&P. I believe that these bonds' low ratings, while justified from the point of view of debt ratios, are nevertheless overly pessimistic, considering the company's ability to operate profitably, while supporting the large debt load.

Supervalu bonds' maturity date is a bit further than I would like to keep these days just for "fear" of future inflation. But then again, I see some folks advocating paying off mortgages as a form of investment. For many of us this would be the equivalent of locking the money up for under 6% for up to 30 years, which I find to be much less palatable. Given the slightly higher risk bond alternative, I chose it, picking them up just below par value at 98. As this is my first venture into individual corporate bonds, I started with a small stake.

P.S. I would like to thank Vitaliy Katsenelson for pointing out a decent yield and good availability of these.

Jake Berzon
www.stockvalues.org
Article syndicated from GuruFocus.com, go to GuruFocus for Warren Buffett's recent stock picks
Become GuruFocus Premium Member to See What Gurus Are Buying

Comment or Read More at GuruFocus Updates

Last week's top five stocks that reached their 52-week lows were WalMart Stores Inc. (WMT), People's United Financial Inc. (PBCT), Cephalon Inc. (CEPH), Harris Corp. (HRS), and Sunoco Inc. (SUN). According to GuruFocus updates, these Guru stocks have reached their 52-week lows.

Last week's top two out of favor industries were the Banking and Retail industry. 15 banks have reached their 52-week lows, while 2 have reached their 52-week highs, giving the industry a low/high ratio of 7.5 In the Retail industry, 3 stocks have reached their 52-week lows, while 2 have reached their 52-week high, giving the industry a low/high ratio of 1.5

For full details about guru stocks at 52-week low and more information, click here: [www.gurufocus.com].

WalMart Stores Inc. (WMT) Reached the 52-Week Low of $47.85

The prices of WalMart Stores Inc. (WMT) shares have declined to close to the 52-week low of $47.85, which is 26.5% off the 52-week high of $63.17. WalMart Stores Inc. is owned by 19 Gurus we are tracking. Among them, 6 have added to their positions during the past quarter. 11 reduced their positions.

Wal-Mart Stores Inc. is the world's largest retailer. The company has a market cap of $187.23 billion; its shares were traded at around $47.85 with a P/E ratio of 13.9 and P/S ratio of 0.5. The dividend yield of WalMart Stores Inc. stocks is 2.2%. WalMart Stores Inc. had an annual average earning growth of 13.3% over the past 10 years. GuruFocus rated WalMart Stores Inc. the business predictability rank of 5-star.

Walmart recently reported its results for the first quarter of 2009. On May 14, 2009, the company announced that its first-quarter net sales were more than $93 billion, down slightly from results a year ago. However, this includes a negative impact from the valuation of many currencies against the U.S. dollar. Without that impact, net sales were over $98 billion.

Andreas Halvorsen bought 1,016,100 shares in the quarter that ended on 03/31/2009, which is 1.48% of the $3.58 billion portfolio of Viking Global Investors LP. George Soros owns 1,817,589 shares as of 03/31/2009, an increase of 286.72% from the previous quarter. John Hussman owns 2,250,000 shares as of 03/31/2009, an increase of 12.5% from the previous quarter. Arnold Van Den Berg owns 1,640,793 shares as of 03/31/2009, a decrease of 21.92% of from the previous quarter. This position accounts for 6.83% of the $1.25 billion portfolio of Century Management. Donald Yacktman sold out his holdings in the quarter that ended on 03/31/2009.

Buy: Executive Vice President Mary Susan Chambers bought 1,500 shares of WMT stock on 05/22/2009 at the average price of $49.41; the price of the stock has decreased by 3.16% since.

People's United Financial Inc. (PBCT) Reached the 52-Week Low of $15.12

The prices of People's United Financial Inc. (PBCT) shares have declined to close to the 52-week low of $15.12, which is 33.0% off the 52-week high of $21.75. People's United Financial Inc. is owned by 3 Gurus we are tracking. Among them, 2 have added to their positions during the past quarter. 1 reduced their positions.

People's Bank is a diversified financial services company providing consumer and commercial banking services in addition to insurance trust and financial advisory services. Through its subsidiaries People's provides brokerage and financial advisory services asset management equipment financing and insurance services. People's United Financial Inc. has a market cap of $5.27 billion; its shares were traded at around $15.12 with a P/E ratio of 32.9 and P/S ratio of 4.4. The dividend yield of People's United Financial Inc. stocks is 4.1%. People's United Financial Inc. had an annual average earning growth of 1% over the past 5 years.

People's Bank is a diversified financial services company providing consumer and commercial banking services in addition to insurance trust and financial advisory services. Through its subsidiaries People's provides brokerage and financial advisory services asset management equipment financing and insurance services. People's United Financial Inc. has a market cap of $5.24 billion; its shares were traded at around $15.05 with a P/E ratio of 32.7 and P/S ratio of 4.3. The dividend yield of People's United Financial Inc. stocks is 4.1%. People's United Financial Inc. had an annual average earning growth of 1% over the past 5 years.

Ron Baron owns 1,718,050 shares as of 03/31/2009, an increase of 17.03% from the previous quarter. This position accounts for 0.32% of the $9.64 billion portfolio of Baron Funds. John Paulson owns 2,750,000 shares as of 03/31/2009, an increase of 12.24% from the previous quarter. This position accounts for 0.53% of the $9.36 billion portfolio of Paulson & Co..

Many gurus are decreasing their positions in the company.

Cephalon Inc. (CEPH) Reached the 52-Week Low of $55.04

The prices of Cephalon Inc. (CEPH) shares have declined to close to the 52-week low of $55.04, which is 31.4% off the 52-week high of $80.26. Cephalon Inc. is owned by 4 Gurus we are tracking. Among them, 1 have added to their positions during the past quarter. 3 reduced their positions. Cephalon is an international biopharmaceutical company focused on the discovery development and marketing of products to treat sleep disorders neurological disorders, cancer, and pain. The company has a market cap of $4.06 billion; its shares were traded at around $55.04 with a P/E ratio of 10.9 and P/S ratio of 2.1. Cephalon Inc. had an annual average earning growth of 10.1% over the past 5 years.

Cephalon recently reported its first quarter 2009 results. The company announced that its sales were $514 million for the quarter, up from $434 million in the first quarter of 2008. For the second quarter of 2009, the company is introducing and sales guidance of $515 to $535 million.

Jean-Marie Eveillard bought 710 shares in the quarter that ended on 03/31/2009, which is less than 0.01% of the $7.39 billion portfolio of Arnhold & S. Bleichroeder Advisers, LLC. Edward Owens owns 1,402,000 shares as of 03/31/2009, which accounts for 0.61% of the $15.69 billion portfolio of Vanguard Health Care Fund.

Ken Heebner owns 230,000 shares as of 03/31/2009, a decrease of 30.3% of from the previous quarter. This position accounts for 0.29% of the $5.4 billion portfolio of CAPITAL GROWTH MANAGEMENT LP. Richard Aster Jr owns 217,200 shares as of 03/31/2009, a decrease of 40.8% of from the previous quarter. This position accounts for 0.87% of the $1.69 billion portfolio of Meridian Fund.

Harris Corp. (HRS) Reached the 52-Week Low of $28.66

The prices of Harris Corp. (HRS) shares have declined to close to the 52-week low of $28.66, which is 48.4% off the 52-week high of $53.91. Harris Corp. is owned by 5 Gurus we are tracking. Among them, 2 have added to their positions during the past quarter. 2 reduced their positions.

Harris Corporation is an international company focused on communications equipment for voice data and video applications. The company has a market cap of $3.79 billion; its shares were traded at around $28.66 with a P/E ratio of 7.3 and P/S ratio of 0.7. The dividend yield of Harris Corp. stocks is 2.8%. Harris Corp. had an annual average earning growth of 21.3% over the past 10 years.

Harris Corp. recently reported its third quarter 2008 results. The company announced that its net income was 86 cents per diluted share, and revenue was up slightly. "Our company performed very well in the third quarter with higher revenue and strong earnings," said Howard L. Lance, chairman, president and CEO. "However, order rates declined in the quarter and are expected to remain weak in the near-term, which will have a significant impact on expected results in fiscal 2010. Beyond fiscal 2010, our company is well-positioned to return to growth. We will continue to invest in acquisitions and new products to expand into adjacent markets where our advanced technologies and capabilities are discriminators. For example, feedback from our customers that have begun fielding our new Falcon lll ® manpack radios has been overwhelmingly positive. The Falcon III 117G is JTRS-approved and offers the most advanced capabilities available in the market, including wideband networking. We are confident that the radios will be widely fielded in both the U.S and international markets."

Michael Price owns 65,000 shares as of 03/31/2009, an increase of 428.46% from the previous quarter. This position accounts for 1.05% of the $178 million portfolio of MFP Investors LLC. Kenneth Fisher owns 53,995 shares as of 03/31/2009, which accounts for 0.01% of the $20.33 billion portfolio of Fisher Asset Management, LLC. Jean-Marie Eveillard owns 1,600 shares as of 03/31/2009, which accounts for less than 0.01% of the $7.39 billion portfolio of Arnhold & S. Bleichroeder Advisers, LLC. David Williams owns 5,400,000 shares as of 03/31/2009, which accounts for 3.41% of the $5505.54 billion portfolio of Columbia Value and Restructuring Fund. Ronald Muhlenkamp owns 540,413 shares as of 03/31/2009, which accounts for 2.94% of the $532 million portfolio of Muhlenkamp Fund.

Sell: Director Karen L Katen sold 4,408 shares of HRS stock on 05/12/2009 at the average price of $29.37; the price of the stock has decreased by 2.42% since.

Sell: President - BCD Timothy E Thorsteinson sold 8,000 shares of HRS stock on 02/19/2009 at the average price of $39.98; the price of the stock has decreased by 28.31% since.

Sunoco Inc. (SUN) Reached the 52-Week Low of $22.73

The prices of Sunoco Inc. (SUN) shares have declined to close to the 52-week low of $22.73, which is 52.5% off the 52-week high of $47.85. Sunoco Inc. is owned by 2 Gurus we are tracking.

Sunoco Inc. is principally a petroleum refiner and marketer with interests in coke making. Sunoco Inc. has a market cap of $2.66 billion; its shares were traded at around $22.73 with a P/E ratio of 2.6. The dividend yield of Sunoco Inc. stocks is 5.3%. Sunoco Inc. had an annual average earning growth of 16.9% over the past 10 years.

Sunoco recently reported its first quarter 2009 results. The company reported net income of $12 million, or 10 cents per share, compared to a net loss of 50 cents per share in the first quarter of 2008. "In a period of significant demand weakness, we were able to earn $23 million in Refining and Supply by effectively optimizing operations in a very difficult market," said Lynn Elsenhans, Sunoco's Chairman and Chief Executive Officer. "In addition, our non-refining businesses earned $57 million in the first quarter. While lower demand and rising feedstock costs limited the contribution from Retail Marketing and Chemicals, Logistics earnings of $30 million reflected another record quarterly result from Sunoco Logistics Partners L.P. and our Coke segment earned $25 million."

Richard Aster Jr owns 9,800 shares as of 03/31/2009, which accounts for 0.02% of the $1.69 billion portfolio of Meridian Fund. Brian Rogers owns 2,912,200 shares as of 03/31/2009, which accounts for 0.68% of the $11.33 billion portfolio of T Rowe Price Equity Income Fund.

Buy: Director John K Wulff bought 5,500 shares of SUN stock on 05/14/2009 at the average price of $29.77; the price of the stock has decreased by 23.65% since.

Article syndicated from GuruFocus.com, go to GuruFocus for Warren Buffett's recent stock picks
Become GuruFocus Premium Member to See What Gurus Are Buying

Comment or Read More at GuruFocus Updates

A conversation with Paul Krugman of The New York Times and 2008 Nobel Prize Winner, Economics

~~~

Comment or Read More at The Big Picture

Fascinating discussion via Nomura strategist Sean Darby on a new investment theme:

Investors are overlooking the domestic growth opportunities of Muslim-dominated
countries situated along the ancient Spice Route. We estimate that between 2020F
and 2025F, approximately one in every five births will be in countries whose ports
were visited by merchants trading along the route way back in the 13th century.

We believe investors are ignoring Muslim-dominated countries in favour of the
China consumer theme, despite the fact that China’s demographics and income
per capita are inferior to those of the Spice Route economies. These countries are
also benefiting from significant infrastructure investment spending.

The Spice Route report complements our Silk Road theme, launched in June 2008.
The Spice Route theme highlights secular consumption overlooked by investors;
the Silk Road theme is about the future economic benefits of a series of road and
rail projects traversing central Asia. Both have low information ratios.

The return of the Spice Route

Follow the Spice Route, follow the consumer: Booming demographics are the distinguishing factor between the Muslim countries and most of the world. The Muslim population dominates the coastal countries passing the Spice Route, all the way from Borneo to West Africa. India by itself is home to around 150mn Muslims. Indonesia has the largest single number of Muslims, with Malaysia and the Gulf countries failing to break into the top fifteen. Using independent forecasts, we calculate that births in Muslim countries as a percentage of global births will continue to increase until approximately 2015.

Companies likely to benefit from the theme We highlight companies listed within the respective markets that derive a high proportion of earnings from growth in domestic operations. These are typically banks, telecom and consumer staples. Further, we have
added some prestige Asian companies that export high value-added
consumer goods such as autos, as well as other well known brands in
sectors such as tobacco.

We are launching our Spice Route basket with the goal of riding secular consumption trends running from Indonesia to the Gulf. We believe the theme has a low information ratio, low correlation to global equity markets, and is a lateral way of playing demographic changes within the Islamic world. We highlight 17 companies from Japan through Indonesia to the Gulf as potential beneficiaries of the consumer boom.

Source:
Nomura urges investors to turn to Asia, Japan
Reuters, Jun 30, 2008
http://www.reuters.com/article/etfNews/idUSN3026544320080630

Comment or Read More at The Big Picture

This year's Independence Day theme (at least as I see it): getting our country back on track by rediscovering the principles which made us great.

Liberty, a spirit of independence (among individuals and the nation as a whole), commerce and trade, striving for peaceful relations with all nations & no entangling foreign alliances or policing the world. Can it be done?

There is a fantastic, recent essay from Ron Paul in The Washington Times that addresses some of these themes. While I am not a regular reader of said paper, I found this piece entitled, "'Fight them over there vs. over here' a false choice", to be highly worthwhile and extremely informative.

I hope you'll take a moment to read this piece during the July 4th weekend. Please share it with your family and friends, be they American or interested readers living abroad.

We also posted some very worthwhile articles and audio clips about the Founding Fathers and America's fight for liberty and independence at this time last year, so please have a look and enjoy. Thanks, and have a great Independence Day!

Comment or Read More at Finance Trends Matter

There is a kind of weird OpEd in today’s WSJ by Stan Liebowitz. The professor makes the incredible discovery that zero down payments, 100% LTV financings tend to slide in great numbers into foreclosure:

“What is really behind the mushrooming rate of mortgage foreclosures since 2007? The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house — that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.”

This is analysis by gross over-simplification. Not quite reductio ad absurdum, but close. Unfortunately, it leads to conclusions that are at best only partially correct.

And that conclusion? The problem has been Prime, not sub-prime loans:

But the focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not subprime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures. (These percentages are based on the period since the steep ascent in foreclosures began — the third quarter of 2006 — during which more than 4.3 million homes went into foreclosure.)

Here is where things get weird: I can’t verify many of these data points. They don’t square with the data I review via RealtyTrac or Mortgage Bankers Association or Bloomberg. (I assume the professor meant we had 4.3m foreclosures since Q3 2006, not during).

As to prime versus sub-prime, it appears the Mortgage Bankers Association, data dispute the professor’s. Jay Brinkmann, chief economist for the MBA, noted in May 2009 that in 2008, prime, fixed-rate loans were only 19% of foreclosure starts nationwide, while Subprime adjustable-rate mortgages were 39%. More recently, the two levels have come together: prime loans are up to 29% of foreclosure starts while subprime adjustables came down to 27%.

But reporting only in percentages can be misleading. As Floyd Norris noted in August of 2008, “There are far more prime mortgages than subprime, of course, and subprime loans are much more likely to get into trouble. But this does show how the foreclosure problem is spreading.”

Agreed.

But the claim that during this crisis it has been Prime and not Subprime is simply unsubstantiated by the timeline or data. Subprime went bad first, then Alt-A, and then prime followed it later. Sub-prime and Alt-A went bad due to poor lending standards; Prime went bad in part due to job losses and as the economy got worse.

If anything, there is a stronger argument to make that the problem is worse from 30 year fixed versus ARMs. Here is the MBA data from September 2008:

For prime loans, foreclosure starts on fixed rate loans were 0.34 percent, an increase of five basis points, while prime ARM foreclosure starts were 1.82 percent, a 26 basis point increase. For subprime loans, fixed rate foreclosure starts increased 27 basis points to 2.07 percent and subprime ARM foreclosure starts increased 31 basis points to 6.63 percent

Sub-prime worse than Prime, ARMs much worse than fixed.

Of course, it is true that 100% LTV mortgages are a problem. But you need some context to understand how they came about. And while the professor does correctly identify underwater mortgages as a major factor — he seems to place the blame squarely on 100% LTV. Perhaps another question worth exploring is the boom/bust issue: How did those home prices run up so much, only to reverse back towards normal, historical pricing metrics? For that, you need to look at many factors.

A more comprehensive 40,000 foot view would note that 100% LTV is a symptom of the larger problem of a) abdication of lending standards, caused by b) enormous demand for securitized loans, enabled by c) rating junk as AAA, in order to satisfy the demand for higher-yielding, non-junk paper, all of which traces its roots to d) Greenspan’s ultra low interest rates.

Yes, bad lending standards, no money down, lack of income verification or debt servicing ability were key culprits. But to claim that it was more Prime than sub-prime is belied by the history of foreclosures. And, it ignores all the other moving parts to the equation.

>

>

Source:
New Evidence on the Foreclosure Crisis
Zero money down, not subprime loans, led to the mortgage meltdown.
STAN LIEBOWITZ
WSJ, JULY 3, 2009
http://online.wsj.com/article/SB124657539489189043.html

Comment or Read More at The Big Picture

Click chart to ENLARGE

A little tied up this "holiday" morning with alligators nipping at my heels, the gators a.k.a. respiratory failure. But I'm taking a little break from the toxidromes, sepsis, neuromuscular disease, and more.

Here's the SP500 daily chart with 150 day EMA, Bollinger Bands, and some volume-based indicators (MFI and accumulation distribution). What do we see in the world of PRICE, PATTERN, TREND, and TIME.

• Price is below the 150 period EMA
• Last week's lows possibly come into play early next week
• The rally off the lower band stalled out at the 20 period moving average
• The bands really are neither expanding (e.g. walking the bands down) nor contracting (volatility)
• We are 15 days into the time cycle off the SPX highs (Jeff Saut references 17-25 day cycles)
• We could be forming a head-and-shoulders top (at least we need to consider that possibility)
• Clearly we have been range-bound recently
• Volume shows three distribution days (higher volume, lower price) in the last five sessions
• Accumulation/distribution shows LOWER highs (tops often take longer, I like to call them 'process' tops)
• Money flow index is similarly making lower highs
  

The market will tell us what we need to know. Relying on the false prophets of Wall Street will bring us nothing.

Good trading and great risk management to all.



Educational use only. Never intended as investment advice.
Comment or Read More at Technically Speaking, Market Analysis and Theory

Last week's top five stocks that were bought by their CEOs were Helix Energy Solutions Group Inc. (HLX), GHL ACQUISITION CORP (GHQ), SOLUTIA, INC. (SOA), HECKMANN CORPORATION (HEK), and Trico Marine Services Inc. (TRMA)? According to GuruFocus Insider Data, these are the largest CEO buys during the past week.

Helix Energy Solutions Group Inc. (HLX): PRESIDENT & CEO Owen E Kratz Bought 101,250 Shares

PRESIDENT & CEO of Helix Energy Solutions Group Inc. (HLX) Owen E Kratz bought 101,250 shares on 06/24/2009 at an average price of $10.2. Helix Energy Solutions Group Inc. is a leading marine contractor and operator of offshore oil and gas properties and production facilities. The company has a market cap of $1 billion; its shares were traded at around $10.2 with a P/E ratio of 5.8 and P/S ratio of 0.5. Helix Energy Solutions Group Inc. had an annual average earning growth of 28.6% over the past 10 years.

Helix recently reported its first quarter 2009 results. The company announced that its net income was about $53 million, or 50 cents per diluted share, compared to $73 million, or 77 cents per diluted share in the first quarter of 2008.

David Einhorn owns 6,527,645 shares as of 03/31/2009, an increase of 13.86% from the previous quarter. This position accounts for 1.41% of the $2.38 billion portfolio of Greenlight Capital Inc. David Einhorn owns 6,527,645 shares as of 03/31/2009, which accounts for 1.41% of the $2.38 billion portfolio of Greenlight Capital Inc. Kenneth Fisher owns 829,750 shares as of 03/31/2009, which accounts for 0.02% of the $20.33 billion portfolio of Fisher Asset Management, LLC.

Many directors are recently increasing their positions in the company. Director Nancy K Quinn bought 2,000 shares of HLX stock on 03/18/2009 at the average price of $5.12; the price of the stock has increased by 99.22% since.

GHL ACQUISITION CORP (GHQ): CEO Scott L Bok Bought 100,000 Shares

CEO of GHL ACQUISITION CORP (GHQ) Scott L Bok bought 100,000 shares during the past week at an average price of $9.79. GHL ACQUISITION CORP. is a newly formed blank check company organized for the purpose of effecting a merger capital stock exchange asset acquisition stock purchase reorganization or other similar business combination with one or more businesses or assets which they refer to as their initial business combination. The Company has a market cap of $474.8 million; its shares were traded at around $9.79 .

Seth Klarman owns 199,462 shares as of 03/31/2009, a decrease of 91.14% of from the previous quarter. This position accounts for 0.19% of the $1.01 billion portfolio of The Baupost Group.

Buy: Senior Vice President Robert H Niehaus bought 25,100 shares of GHQ stock on 06/30/2009 at the average price of $9.79; the price of the stock has decreased by 0% since.

SOLUTIA, INC. (SOA): President, CEO & Chairman Jeffry N Quinn Bought 20,000 Shares

President, CEO & Chairman of SOLUTIA, INC. (SOA) Jeffry N Quinn bought 20,000 shares on 06/24/2009 at an average price of $6.02. SOLUTIA is a market-leading performance materials and specialty chemicals company. The company has a market cap of $566.9 million; its shares were traded at around $6.02 with a P/E ratio of 16.3 and P/S ratio of 0.3.

Solutia recently reported its first quarter 2009 results. The company announced that its net sales decreased to $339 million, from $517 million in the first quarter of 2008. Adjusted EBITDA also decreased to $56 million, from $95 million.

John Keeley owns 49,000 shares as of 03/31/2009, an increase of 16.67% from the previous quarter. This position accounts for less than 0.01% of the $4.75 billion portfolio of Keeley Fund Management. John Keeley owns 49,000 shares as of 03/31/2009, which accounts for less than 0.01% of the $4.75 billion portfolio of Keeley Fund Management. Charles Brandes owns 340,535 shares as of 03/31/2009, which accounts for less than 0.01% of the $16.16 billion portfolio of Brandes Investment.

Buy: Executive VP, CFO & Treasurer James M Sullivan bought 3,000 shares of SOA stock on 06/24/2009 at the average price of $5; the price of the stock has increased by 20.4% since.

HECKMANN CORPORATION (HEK): CHAIRMAN & CEO, 10% Owner Richard J Heckmann Bought 20,000 Shares

CHAIRMAN & CEO, 10% Owner of HECKMANN CORPORATION (HEK) Richard J Heckmann bought 20,000 shares on 06/24/2009 at an average price of $3.72. HECKMANN CORPORATION operates as a blank check development stage company. It intends to acquire or acquire control of one or more operating businesses through a merger stock exchange asset acquisition reorganization or similar business combination. HECKMANN CORPORATION has a market cap of $409.5 million; its shares were traded at around $3.72 with and P/S ratio of 39.

Heckman Corp. recently reported its first quarter 2009 results. The company reported a net loss of $1.69 per share. Net sales were $7.8 million. Mr. Richard J. Heckmann, Chairman and CEO of Heckmann Corporation, stated, "We made great progress in accelerating our strategic investment into diversified water business interests. Globally, the increasing need for delivery and purification of fresh water is driving growth in the water industry. Water infrastructure and resources are attractive long-term business opportunities and we are putting our strong balance sheet to work in the water business. So far, our efforts have culminated in a letter of intent to purchase substantially all of the assets of three companies that operate a saltwater disposal, treatment and water pipeline transportation business in Texas and Louisiana. This business has very strong growth characteristics and with the experienced and strong management team we are acquiring, we expect to open new avenues for expansion using our balance sheet strength. We have also signed an agreement to purchase a minority stake in Underground Solutions, Inc., a fast growing water infrastructure and pipeline company located in Poway, California. Investments such as these that enable us to diversify into productive and profitable water-related businesses will be critical to the long-term success of our Company."

Ron Baron owns 3,500,000 shares as of 03/31/2009, which accounts for 0.18% of the $9.64 billion portfolio of Baron Funds.

Buy: Vice President/General Counsel Donald Ezzell bought 30,000 shares of HEK stock on 05/29/2009 at the average price of $4.14; the price of the stock has decreased by 10.14% since.

Trico Marine Services Inc. (TRMA): Chairman and CEO Joseph S Compofelice Bought 20,000 Shares

Chairman and CEO of Trico Marine Services Inc. (TRMA) Joseph S Compofelice bought 20,000 shares during the past week at an average price of $3.26. Trico Marine Services Inc. provides a broad range of marine support services to the oil and gas industry primarily in the North Sea Gulf of Mexico West Africa Mexico and Brazil. It has a market cap of $54.7 million; its shares were traded at around $3.26 with and P/S ratio of 0.1. Trico Marine Services Inc. had an annual average earning growth of 8.8% over the past 10 years.

Trico recently reported its first quarter 2009 results. The company announced that its revenue was $122 million, and that it had a net loss of 4 cents per diluted share in the quarter. Chairman and Chief Executive Officer, Joseph S. Compofelice, commented, "Our first quarter results were adversely affected by the sharp decline in day rates and utilization in our Towing and Supply segment in the North Sea and U.S. Gulf of Mexico, lower utilization of our Subsea Services vessels and lower activity in our Subsea Trenching and Protection segment both due to seasonality and vessels in transit. Since the beginning of 2009, we have reduced our exposure to the North Sea by mobilizing two of our Subsea Trenching and Protection vessels to commence new contracts in China and Australia, expanded the scope of work related to contracts in the Mediterranean and completed the sale of a North Sea PSV for $26 million. Importantly, each of the 16 vessels at DeepOcean and CTC Marine are now earning revenue under contracts of various lengths at margins consistent with those realized in 2008, and we expect this to translate into improved operating results in the second and third quarters. We continue to see the fundamentals of subsea sector growth remaining strong in the second and third quarters of 2009."

Buy: 10% Owner Harbour Management Lc Bay bought 50,000 shares of TRMA stock on 06/29/2009 at the average price of $3.25; the price of the stock has increased by 0.31% since.

Article syndicated from GuruFocus.com, go to GuruFocus for Warren Buffett's recent stock picks
Become GuruFocus Premium Member to See What Gurus Are Buying

Comment or Read More at GuruFocus Updates

By now you know the non-farm payrolls report came out and the job loss for June was worse than expected, fortunately the weekly jobless claims number stunk too (small humor attempt). And of course the stock market puked down yesterday.

The tenor of the comments on CNBC seemed to be that oh well, forget it about it now, this after the occasional berating of people who were not so bullish before the June data printed. This sort of manic tone that investors are exposed to from various parts of the media has the potential to be dangerous.

I write often about panic selling and panic buying, letting manic commentary in the media influence your thinking can precipitate panic trading. Think about the last few years from a very big picture. How bad is this really? And how much has changed in the last three months? This has been pretty bad, though not Armageddon, and not much has changed in three months. The stock market rallied a lot and that made some people feel better.

In late December I said I thought there would be a huge rally for no reason at all--it would just happen. I was obviously a couple of months early but it happened. This was not a prediction where I went out on a limb. After markets scare the hell out of people they have violent snapback rallies, this is just how it works.

For the last few weeks, maybe longer, I have been saying I thought there would be one more run down that would scare the hell out of people. I don't think a scare the hell out them decline would take out the old low but I don't know. This is not really a prediction where I am going out on the limb either because...say it with me...this is just how it works. The violent snap back rally, which I have also referred to as feel good rallies reassures people that things are ok and then the market tanks one more time bring it to what John Hussman has called the revulsion stage. Maybe it won't happen this time but the chances are good that it will.

There was no Armageddon or Great Depression 2.0 in the first week of March, we were not completely out of the woods in May, there will be no Armageddon or Great Depression 2.0 if we go down to SPX 700 this summer. I think this is shaping up to what I said months ago which was that the way out will be a stumble along the bottom.

Hopefully long time readers, and more importantly our firm's clients, will realize that my view has been steady as opposed to flip-flopping with each data point that comes along. Aside from probably being unhealthy, constant flip-flopping is more likely to be wrong.
Comment or Read More at Random Roger

Last week's top five guru bargain stocks were Apollo Group Inc. (APOL), TIME WARNER CABLE INC (TWC), Hess Corp. (HES), Pepco Holdings Inc. (POM), and Aetna Inc. (AET). According to GuruFocus updates, these stocks have declined the most since Gurus have bought.

Apollo Group Inc. (APOL): Down 13% Since Kenneth Fisher Bought In the Quarter Ended on 2009-03-31

Kenneth Fisher initiated holdings in Specialized Consumer Services company Apollo Group Inc. during the quarter ended 03/31/2009. He owned 2,650 shares of as of 03/31/2009. Apollo Group Inc. has been providing higher education to working adults for over 25 years. The company has a market cap of $10.89 billion; its shares were traded at around $67.9 with a P/E ratio of 19.5 and P/S ratio of 3.5. Apollo Group Inc. had an annual average earning growth of 29.1% over the past 10 years. GuruFocus rated Apollo Group Inc. the business predictability rank of 4-star.

Apollo Group recently reported its third quarter 2009 results. The company announced that its net revenue for the quarter was over $1 billion, up 26% compared to results as of the third quarter of 2008. Net income was $1.26 per share, compared to 85 cents per share in the third quarter of 2008. "We are pleased to report a record third quarter, driven largely by continuing increases in enrollments and improved student retention at University of Phoenix," said Co-Chief Executive Officer of Apollo Group, Chas Edelstein. "When our students succeed academically, we succeed financially and, for the first time in a quarter, Apollo surpassed the $1 billion revenue mark."

Steve Mandel bought 1,888,980 shares in the quarter that ended on 03/31/2009, which accounts for about 2.25% of his portfolio. Kenneth Fisher bought 2,650 shares in the quarter that ended on 03/31/2009, which is less than 0.01% of the $20.33 billion portfolio of Fisher Asset Management, LLC. Ken Heebner owns 3,920,500 shares as of 03/31/2009, an increase of 22.52% from the previous quarter. Lee Ainslie owns 1,808,920 shares as of 03/31/2009, an increase of 13.75% from the previous quarter. Andreas Halvorsen owns 5,781,300 shares as of 03/31/2009, a decrease of 32.43% of from the previous quarter.

Buy: SVP, CFO & Treasurer Brian L Swartz bought 1,000 shares of APOL stock on 04/03/2009 at the average price of $67.6; the price of the stock has increased by 0.44% since. Many other gurus have recently decreased their positions in the company.

TIME WARNER CABLE INC (TWC): Down 26% Since Dodge & Cox Bought In the Quarter Ended on 2009-03-31

Dodge & Cox initiated holdings in Specialized Consumer Services company TIME WARNER CABLE INC during the quarter ended 03/31/2009. He owned 18,546,987 shares of as of 03/31/2009.

Time Warner Cable Inc. is the second-largest cable operator in the U.S. and an industry leader in developing and launching innovative video data and voice services. They deliver their services to customers over technologically-advanced well-clustered cable systems that pass approximately 26 million homes. TIME WARNER CABLE INC has a market cap of $10.59 billion; its shares were traded at around $30.07 with a P/E ratio of 8 and P/S ratio of 0.7.

Time Warner Cable recently reported its first quarter 2009 results. The company announced that its revenue increased 5% year over year to $4.4 billion. Revenue was $4.2 billion a year ago in the same period. Time Warner Cable Chief Executive Officer Glenn Britt said: "Time Warner Cable performed well in the first quarter, growing revenues, adjusted OIBDA and free cash flow from last year. We added very healthy numbers of new subscribers to our video, high-speed data and phone services, and our commercial services business continued to grow rapidly. We're excited to be an independent company. Cable is a very good business, and our operations are strong and growing despite a challenging economy. We continue to generate very healthy free cash flow which will enable us to reduce debt over the next year."

6 gurus have recently initiated their positions in the company. George Soros sold out his holdings in the quarter that ended on 03/31/2009. John Paulson sold out his holdings in the quarter that ended on 03/31/2009.

Sell: EVP & President, TWC Ventures Carl Uj Rossetti sold 183 shares of TWC stock on 06/02/2009 at the average price of $31.13; the price of the stock has decreased by 3.41% since.

Hess Corp. (HES): Down 13% Since David Einhorn Bought In the Quarter Ended on 2009-03-31

David Einhorn initiated holdings in Integrated Oil & Gas company Heowned 1,300,000 shares of as of 03/31/2009. Hess Corporation is a global integrated energy company engaged in the exploration for and the production purchase transportation and sale of crude oil and natural gas as well as the production and sale of refined petroleum products electricity. The company has a market cap of $16.13 billion; its shares were traded at around $49.33 with a P/E ratio of 10.3 and P/S ratio of 0.4. The dividend yield of Hess Corp. stocks is 0.8%. Hess Corp. had an annual average earning growth of 19.2% over the past 10 years. GuruFocus rated Hess Corp. the business predictability rank of 3.5-star.

Hess Corp recently reported its first quarter 2009 results. The company announced a net loss of $59 million, compared to net income of $759 million in the first quarter of 2008. s

David Einhorn bought 1,300,000 shares in the quarter that ended on 03/31/2009, which is 2.97% of the $2.38 billion portfolio of Greenlight Capital Inc. Jean-Marie Eveillard bought 1,067,711 shares in the quarter that ended on 03/31/2009, which is 0.78% of the $7.39 billion portfolio of Arnhold & S. Bleichroeder Advisers, LLC. Ken Heebner bought 252,300 shares in the quarter that ended on 03/31/2009, which is 0.25% of the $5.4 billion portfolio of CAPITAL GROWTH MANAGEMENT LP. John Rogers owns 472,340 shares as of 03/31/2009, a decrease of 21.92% of from the previous quarter. This position accounts for 0.83% of the $3.1 billion portfolio of ARIEL CAPITAL MANAGEMENT LLC. Dodge & Cox owns 18,927 shares as of 03/31/2009, a decrease of 34.57% of from the previous quarter. This position accounts for less than 0.01% of the $54.08 billion portfolio of Dodge & Cox.

Sell: Executive Vice President J Barclay Collins sold 5,000 shares of HES stock on 06/01/2009 at the average price of $68.5; the price of the stock has decreased by 27.99% since. The company's senior vice president also decreased his positions in the company.

Pepco Holdings Inc. (PHI): Down 13% Since Robert Bruce Bought In the Quarter Ended on 2009-03-31

Robert Bruce added to his holdings in Electricity company Pepco Holdings Inc. by 458.72% during the quarter ended 03/31/2009. He owned 60,900 shares of as of 03/31/2009. Pepco Holdings Inc. is an energy holding company. It has a market cap of $2.9 billion; its shares were traded at around $13.16 with a P/E ratio of 8.1 and P/S ratio of 0.3. The dividend yield of Pepco Holdings Inc. stocks is 8.3%.

David Dreman bought 15,070 shares in the quarter that ended on 03/31/2009, which is less than 0.01% of the $5.74 billion portfolio of Dreman Value Management.

Robert Bruce owns 60,900 shares as of 03/31/2009, an increase of 458.72% from the previous quarter. John Hussman owns 300,000 shares as of 03/31/2009, an increase of 50% from the previous quarter.

Pepco recently reported its first quarter 2009 results. The company announced consolidated earnings of 21 cents per share, compared to 49 cents per share in the first quarter of 2008.

Pepco Holdings was recently bought by its President and CEO. President and CEO Joseph M Rigby bought 10,000 shares of POM stock on 03/09/2009 at the average price of $10.23; the price of the stock has increased by 28.64% since. Many other insiders also increased their positions in the company.

Buy: Director Lester P Silverman bought 6,000 shares of POM stock on 03/17/2009 at the average price of $11.74; the price of the stock has increased by 12.1% since.

Aetna Inc. (AET): Down 12% Since NWQ Managers Bought In the Quarter Ended on 2009-03-31

NWQ Managers added to his holdings in Health Care Providers company Aetna Inc. by 35.48% during the quarter ended 03/31/2009. He owned 7,707,835 shares of as of 03/31/2009. Aetna Inc. is one of the nation's largest health benefits companies and one of the nation's largest insurance and financial services organizations. The company has a market cap of $10.85 billion; its shares were traded at around $24.28 with a P/E ratio of 6.1 and P/S ratio of 0.4. The dividend yield of Aetna Inc. stocks is 0.2%. Aetna Inc. had an annual average earning growth of 6% over the past 10 years.

NWQ Managers owns 7,707,835 shares as of 03/31/2009, an increase of 35.48% from the previous quarter. Edward Owens owns 2,700,000 shares as of 03/31/2009, an increase of 35% from the previous quarter. David Dreman owns 3,186,875 shares as of 03/31/2009, a decrease of 47.75% of from the previous quarter. This position accounts for 1.35% of the $5.74 billion portfolio of Dreman Value Management.

Aetna recently reported its first quarter 2009 results. The company announced that its EPS increased 4% to 96 cents per share. The company said that this was caused primarily by an increase in revenue. Net income was 95 cents per share, up 12% from last year's results.

Buy: SVP, Chief Medical Officer Lonny Reisman bought 585 shares of AET stock on 01/28/2009 at the average price of $31.12; the price of the stock has decreased by 21.98% since.

Article syndicated from GuruFocus.com, go to GuruFocus for Warren Buffett's recent stock picks
Become GuruFocus Premium Member to See What Gurus Are Buying

Comment or Read More at GuruFocus Updates

Kinetic Concepts- [NYSE:KCI] Jul. 2, 2009 $26.54
52-week range: $17.86 (Dec. 24, 2008) - $43.02 (Jul. 23, 2008)

KCI is the leader in advanced wound care via Vacuum Assisted Closure [VAC] utilizing negative pressure wound therapy [NPWT]. They operate about 141 U.S. and 67 foreign, service centers with domestic revenues running about 76%.

Since its February 2004 IPO sales and earnings (from continuing operations) have risen steadily. Here are their per share numbers as reported by Value Line:

Year ...... Sales ..... C/F ...... EPS ...... B/V ..... Avg. P/E
2004 ..... 14.45 .... 2.50 .... 1.63 ..... 0.74 ...... 30.8x
2005 ..... 17.19 .... 3.39 .... 2.32 ..... 2.72 ...... 24.6x
2006 ..... 19.47 .... 3.96 .... 2.69 ..... 5.06 ...... 14.0x
2007 ..... 22.31 .... 4.59 .... 3.31 ..... 9.38 ...... 16.3x
2008 ..... 26.63 .... 5.56 .... 3.57 .....11.50 ......10.4x

Zacks is estimating $3.68 and $4.22 for 2009 and 2010 making the expected multiples just 7.2x this year's and 6.3x next year's expectations. Both those numbers are well under all historical levels as can be seen from the chart above.

A rebound to even 10x 2009's estimate would lead to a 6 - 9 month target price of $36.80 or up
> 38% from today's close of $26.54/share. Is that reasonable? Sure. Kinetic Concepts shares hit peak prices of $78.40, $76.20, $49.10, $66.80 and $54.80 in 2004-2005-2006-2007 and 2008 respectively- all when fundamentals were less favorable than they are today.

Morningstar rates KCI as 4-stars (with 5-stars being best) and estimates 'fair value' as $37/share.
Value Line has a 3 - 5 year target price range of $70 - $100.

The main risks here are increased competition in VAC and the possibility of lower future Medicare reimbursement rates. The current low valuation seems to more than reflect any potential bad news in the near future.

With solid upside and a good balance sheet, Kinetic Concepts appears to offer a good
risk/reward in today's market.

Here's a conservative combination play that will provide a very nice return from here through December 18, 2009 even if these shares do absolutely nothing:

Kinetic Concepts Combination.......Cash Outlay...............Cash Inflow
Buy 1000 KCI @$26.54 ................$26,540
Sell 10 Dec. $25 Calls @$3.90 .......................................$3,900
Sell 10 Dec. $25 Puts @$2.30 .......................................$2,300
Net Cash Out-of-Pocket ...............$20,340

If Kinetic Concepts shares remain at > $25 on the 12/18/09 expiration date:

* The $25 calls will be exercised.
* You will sell your shares for $25,000.
* The $25 puts will expire worthless.
* You will have no further option obligations.
* You will hold no shares and $25,000 cash.

That would result in a best-case scenario profit of $4,660 on your original cash outlay of
$20,340 for a net profit of 22.9%.

That very nice gain would have been achieved in just 5.5 months on shares that:

* Moved up.
* Stayed unchanged.
* Fell back by up to $1.54/share or (-5.8%) from the trade's inception price.

What's the risk?

If Kinetic Concepts shares close < $25 on the 12/18/09 expiration date:

* The $25 calls will expire worthless.
* The $25 puts will be exercised.
* You will be forced to buy another 1000 shares of KCI.
* You will need to lay out an additional $25,000 cash.
* You will have no further option obligations.
* You will hold 2000 shares of KCI.

What's the break-even point on the whole trade?

On the first 1000 shares it's their $26.54 /share purchase price less
the $3.90/share call premium = $22.64 /share.

On the 'put' shares it's the $25 strike price less the $2.30 /share
put premium = $22.70 /share.

Your net break-even price is thus $22.67 /share.

KCI shares could drop by up to $3.87 /share or (-14.5%) without
causing a loss on this trade.


Disclosure: Author is long KCI shares and short KCI puts.

Article syndicated from GuruFocus.com, go to GuruFocus for Warren Buffett's recent stock picks
Become GuruFocus Premium Member to See What Gurus Are Buying

Comment or Read More at GuruFocus Updates

Evidence from many studies indicates that confirmation bias is substantial, with defensiveness outweighing desire for accuracy in driving a preference for confirming over disconfirming information. Individual investors may want to counteract this bias by doubling efforts to consider information in conflict with their beliefs.
Comment or Read More at CXO Advisory Blog - Investing Notes