Mar 30

As Originally Posted on MarketWatch.com
by  Brendan Conway
3/25/11

NEW YORK (MarketWatch) — U.S. stocks advanced, boosted by corporate earnings and data showing the U.S. economy picked up some speed at the end of 2010.

The Dow Jones Industrial Average moved into positive territory for the month and was up 59 points, or 0.5%, at 12229 recently, led by Dupont, which gained 1.5%, and AT&T, which rose 1.2%. The Standard & Poor’s 500 gained seven points to 1316, with materials stocks in the lead. The Nasdaq Composite added 20 points to 2756.

Encouraging earnings reports from Oracle and Accenture late Thursday helped set Friday’s tone. Oracle added 3.5% after the business software company’s fiscal third-quarter profit soared 78%, with strong margins and a surge in licensing revenue. Accenture added 6.2% after the company raised its revenue outlook and reported a 26% jump in fiscal second-quarter earnings, highlighted by a surge in new bookings.

A positive reading on the U.S. gross domestic product also gave a boost. GDP, the value of all the goods and services produced in the economy, rose at an inflation-adjusted annual rate of 3.1% in the fourth quarter. The growth was slightly better than previously thought.

The Dow was on track for its sixth gain in seven sessions. Some investors questioned whether the market would be able to sustain the sudden strength it has shown over the last week.

“We don’t think there’s anything imminent or dire occurring, but I do think the market is a little ahead of itself,” Harry Rady, chief executive officer of Rady Asset Management in San Diego said, adding that his company is lightening up its portfolio into the weekend.

He noted the Chicago Board Options Exchange Volatility Index, or VIX, a measure of investors’ outlook for market gyrations, has fallen for seven straight sessions and could easily snap back with negative news. “It’s too much too fast, and it overshot the market,” Rady said, noting that investors’ volatility expectations could snap right back with a setback in Japan or some other global trouble spot.

Investors largely shrugged off a disappointing University of Michigan consumer sentiment reading. The figure came in beneath economists’ expectations at 67.5, a reminder that consumer sentiment remains weak.

The price of crude oil was a fraction lower at $105 a barrel.

Demand for U.S. Treasurys was slightly lower, with yield on the 10-year note at 3.44%.

The dollar rose slightly against both the euro and yen.

Among stocks in focus, mobile-device maker Research In Motion’s stock plunged 11% after the company warned of lower earnings and revenue in the current period. RIMM also said it planned to allow Android applications to run on its PlayBook tablet computer due out next month, viewed as a concession as the company struggles to compete against Apple’s iPad.

Retailer Wet Seal’s core profit for the fiscal fourth quarter rose above guidance, helping shares rise 12%.

Wynn Resorts gained 2.7% after it said Thursday it had formed a strategic relationship with one of the largest poker sites operating in the U.S., even though the federal government considers such activity illegal.

Darden Restaurants’ fiscal third-quarter earnings rose 13% to beat its own optimistic guidance, but a promotional misfire at casual-dining chain Olive Garden helped push shares 3.9% lower.

Lo-Jack slid 8.1% after J.P. Morgan analysts cut their investment rating on the shares to “neutral” from “overweight,” citing higher legal costs and slower licensing revenue associated with a licensee in Brazil.

Body Central surged 20% after the apparel company’s fourth-quarter earnings leapt 86% and the company gave an upbeat outlook.
Original Article - http://www.marketwatch.com/story/us-stocks-rise-djia-moves-toward-sixth-gain-in-seven-sessions-2011-03-25

Mar 4

Originally posted on Business Week
3/3/2011
Rita Nazareth

Warren Buffett has a cash hoard of almost $40 billion and wants to spend it on major acquisitions. The “elephant gun has been reloaded, and my trigger finger is itchy,” the 80-year-old chairman of Berkshire Hathaway (BRK.A) said in his annual letter to shareholders on Feb. 26.

Buffett typically prefers “simple” businesses with pretax profit exceeding $75 million, “consistent” earning power, and “good” returns on equity while employing little or no debt, he says in his report. He has shifted his takeover strategy as Berkshire focuses on “capital intensive businesses” that require investment in infrastructure and equipment, such as power producers and railroads. Investors such as Buffett prefer to buy companies when their valuations are low by historical standards. Last year he made his largest purchase, paying $26.5 billion for Burlington Northern Sante Fe railway. Buffett didn’t respond to a request for comment.

General Dynamics (GD), the maker of Gulfstream business jets and Abrams tanks; Exelon (EXC), the biggest U.S. nuclear power generator; and Archer Daniels Midland (ADM), the world’s biggest grain processor, are among 45 companies that meet the acquisition criteria listed in Buffett’s annual letter, according to data compiled by Bloomberg. “He’s probably looking for something along those lines,” says Barry James, who oversees $2.5 billion as president of James Investment Research in Xenia, Ohio. “Obviously we’re going to need defense, energy, and agriculture.”

Buffett owned a stake in General Dynamics more than a decade ago. Its net income rose 19 percent in the fourth quarter as demand for Gulfstream jets rose, and Chief Executive Officer Jay L. Johnson says the aerospace unit will increase sales at least 10 percent this year. Rob Doolittle, a spokesman for General Dynamics, declined to comment.

ADM could appeal to Buffett because it excels at transporting and storing food and grains, “a very difficult business to replicate,” says Brian M. Barish, president of Cambiar Investors in Denver. One thing that might deter Buffett is that in 1996 ADM agreed to pay a then-record $100 million antitrust fine after the government accused it of price fixing. Buffett’s son, Howard Buffett, joined ADM in 1992, serving as a director and head of investor relations. He resigned in July 1995 because he was unhappy with the company’s actions related to the investigation, The Wall Street Journal reported at the time. Roman Blahoski, a spokesman at ADM, declined to comment.

Exelon may be a target as Buffett looks to add to his stakes in utilities and power producers, according to Harry Rady, who oversees $270 million as CEO of Rady Asset Management in La Jolla, Calif. Exelon trades at 10.1 times earnings, compared with its five-year average of 14.7. “It’s out of favor,” says Rady. “That would be one that would be right up his alley.” Exelon spokesman Paul Elsberg also declined to comment.

Buffett could consider adding another insurer to his stable. Chubb (CB), Travelers (TRV), and Allstate (ALL) are all trading below their historical valuations based on book value, according to Paul Newsome, an analyst at Sandler O’Neill + Partners. Buying an insurer “definitely makes sense,” he says.

The bottom line: Bloomberg data show 45 companies that match up with the takeover goals Buffett outlined in his latest shareholder letter.

Original Article: http://www.businessweek.com/magazine/content/11_11/b4219043478685.htm