By:
On:
In: Commentary
Tagged:
With: 0 Comments

In the past, I have rated XTO Energy (NYSE:XTO) as a Good company. It is no surprise that Exxon Mobile (NYSE:XOM) has agreed to buy the company. XTO management has traditionally done a great job of running the company. Actually, I think XTO could have done better since my analysis back on October 20 showed that the company was worth at least $57 a share and could have broken $100 if their revenue and profitability would have continued to grow at their traditional rate.

Since this appears to be a friendly merger, it is not likely that XTO Energy will continue as an independent concern. While I will leave the posting from the past in place, I will no longer list XTO on the Watch List.

By:
On:
In: Commentary
Tagged:
With: 0 Comments

The last time that I looked at Hewlett-Packard [stckqut]HPQ[/stckqut], I rated the company a Fair company and encouraged you not to buy it. I haven’t rechecked the numbers since then but the recent news of Hewlett-Packard buying 3-Com begs the question, does this acquisition invoke the rule of not buying a company that just recently changed its size due to acquisition or divestiture?

The quick answer is no.  According to Reuters, 3-Com had quarterly revenue of 290.5M and HP had revenue of 27,451.0M.  Since 3-Com is less than 10%, HP should have little trouble absorbing the smaller company without affecting its major operations.

Remember, the magic number is 10%. If it goes over that number, stay away for awhile.

By:
On:
In: Commentary
With: 0 Comments

The Wall Street Journal just wrote an article saying that more mutual fund managers are using market timing and stock timing tools to “time” the market. They are doing this to act more nimbly and get into and out of stocks that are moving up and down.

Mutual funds have a problem with this technique that doesn’t affect small investors. Mutual funds have to move much larger sums of money around and therefore can affect the market with their purchases or can incur higher management costs.

From WSJ.com:

Some of these funds have beaten the market in recent years. Ivy Asset
Strategy, for example, gained an annual 14.9% in the five years ending
Nov. 10, compared with less than 1% for the Standard & Poor’s
500-stock index.

Fund companies say investors spooked by the recent market turmoil
are demanding more-flexible products. Many investors have been
frustrated “with investment products that were not able to react to the
environment that we just went through,” says Joel Sauber, head of U.S.
products at Legg Mason. The firm’s new Legg Mason Permal Tactical
Allocation Fund can stash up to 40% in cash.

A study from New York University’s Stern School of Business suggests
market-timing can work for some mutual-fund managers. The best
stock-pickers during economic expansions also show some market-timing
ability in recessions, the study found.

So if the “big guys” are using market timing to improve their performance, why aren’t you?

By:
On:
In: Commentary
Tagged: ,
With: 0 Comments

I haven’t done the analysis on i2 Technologies or JDA Software Group to find out if they are a Good, Fair or Poor company.  I don’t have to since they just merged and since the merger is great than 10% of both companies, they violate the Confident Investor first rule regarding mergers or divestitures – never invest in a company that changes its size more than 10% with a merger or divestiture.

While the merger may be logical and offer great value to the company and its customers, a merger of this size simply is too difficult to do well. A Confident Investor cannot confidently invest in the resulting company until things settle down a bit.

By:
On:
In: Old Stock Analysis, Poor company, Stock analysis
Tagged:
With: 0 Comments
Company name General Electric Company
Stock ticker GE
Live stock price [stckqut]GE[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Good
Sales growth Fair
EPS growth Poor
P/E growth Poor
EBIT growth Poor
ANALYSIS
Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $11.25
Target stock price (averages with growth) $12.41
Target stock price (averages with no growth) $12.66
Target stock price (manual assumptions) $11.75

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.