More Stuff I Missed Earlier this Week

Too much real news, too little fake staff on hand to read it all. Ah, the life of an undermanned fake mutual fund with a budget of $0.

**Ciena (CIEN) Upgraded at UBS - yes I mentioned it Thursday but some more color on the upgrade with some news I really like:

• Ciena (CIEN) will be the sole-source provider of long-haul optical components for Verizon (VZ) in Europe, UBS analyst Nikos Theodosopoulos asserted in a research note today. On the news, he raised his rating on the stock to Neutral from Sell.
• Theodosopoulos adds that his Sell rating on the stock was based on expectations of a slowdown in sales of the company’s CoreDirector swithces to AT&T (T) in 2008. But he says checks this week find continued strength for CoreDirector slaes in ‘08 “given the success of AT&T business initiatives and ongoing network consolidation post several AT&T mergers.”
• Theodosopoulos boosted his 2008 GAAP EPS estimate to $1.76 from $1.58; for ‘09 he goes to $1.95 from $1.82. His price target jumps to $49, from $41.

**Moody's Upgrades Mosaic's (MOS) Debt Rating

• Credit-ratings agency Moody's Investors Service Inc. on Friday upgraded fertilizer and feed producer Mosaic Co.'s ratings to "Ba1" from "Ba3." "Ba1" is the highest speculative or "junk-bond" rating and "Ba3" is two notches below that.
• Moody's said in a statement the change reflects the strength of Mosaic's cash flow, "extremely robust" conditions in Mosaic's fertilizer markets and the company's focus on reducing debt.
• In September, Mosaic Co. said it planned to prepay $300 million in principal of term loans under its senior secured bank credit facility. Including this payment, Mosaic has prepaid $700 million in the past five months. (this is nice to see considering Mosaic has >$2 Billion in debt; shows the confidence management has in continued strength in their core business)

**Credit Suisse Upgrades Agricultural Sector

• Shares of fertilizer companies rose Thursday, after a Credit Suisse analyst upgraded the sector and said companies such as Agrium Inc. (AGU) and Mosaic Co. (MOS) are able to withstand weakness in the economy.
• Credit Suisse analyst Mark W. Connelly assumed coverage of the sector and upgraded it to "Overweight" from "Underweight." The fundamentals of fertilizer companies are stronger than industrial chemicals, forest products and many metals, he said.
• "Expectations are very high, and rightly so," Connelly wrote in a client note. "The big picture is truly robust, and very likely to remain that way for many years to come."
• Connelly gave Agrium (AGU) an "Outperform" rating and remained upbeat on its fertilizer business and its retail segment, which was strengthened by its purchase of Royster-Clark last year.
• Connelly assumed coverage of CF Industries Holdings Inc. (CF) with a "Neutral" rating. The company will need to make an acquisition to drive growth, Connelly said. Since its focus is mostly on ethanol, it will need to diversify, he said.
• Connelly said Mosaic ranks No. 2 in potash, a strong commodity business, and No. 1 in phosphates. "The potash position is strong, phosphates can improve considerably from here, and we expect the international distribution assets to be a key strategic advantage," Connelly wrote. He rates Mosaic "Outperform."
• And Potash Corp. of Saskatchewan Inc. (POT) gained $1.10 to $103.59. Connelly gave the company a "Neutral" rating and $116 price target, saying expectations are running high. "Having done so many things right, expectations are especially high. That makes the risk of even a modest misstep greater for this stock than the rest," Connelly wrote. (As I've stated I am overweight Mosaic due to valuation gap versus Potash, but like both - also have some holding in CF Industries and have been exploring Agrium but decided to just buy more Mosaic, and mix it up with some CNH Global (CNH) as an equipment play in the agriculture sector)

**CIBC Analyst: $100 Oil by End of 08

• Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said Tuesday.
• Jeffrey Rubin said rising demand within oil-rich nations such as Mexico, Venezuela and Saudi Arabia will put pressure on global oil prices in the coming years.
• That, combined with the increased cost of pulling petroleum from reserves deep under the sea or wringing it out of oil sands in Canada, will keep oil prices high even if demand in the Western world remains constant.
• "We're in a world of triple digit oil prices for the foreseeable future," Rubin said during a speech to investors here.
• Rubin said oil exports from OPEC countries, Russia and Mexico will likely decline by about 3 million barrels per day over the next five years. The biggest drop, he expects, will come from Mexico, a key U.S. supplier. "Of the 3 million barrels, we're probably talking about 2 million barrels are going to come directly out of U.S. supplies," he said.
• Rubin expects Mexican oil imports to the U.S. will dry up by about 2012. Some of that decline will be made up by imports from other parts of the world, but the lions' share -- nearly a third of all U.S. oil imports -- will come from Canadian oil sands, he predicted.
• But replacing relatively easy-to-refine liquid crude with petroleum from oil sands is certain to increase costs, he said. By the end of the decade, Canadian oil sands are likely to represent the world's largest source of new oil supplies, he said. "We're basically replacing low-cost oil with high-cost oil," he said.
• Looking ahead, Rubin expects crude oil prices to average as much as $90 a barrel next year, rising to around $100 by the end of 2008. That would represent an increase of nearly 25 percent over Tuesday's settlement price of $80.05 a barrel for light, sweet crude on the New York Mercantile Exchange.
• "Triple digit prices is not a spike," he said. "Triple digit oil prices is what is going to be required to maintain, let alone grow, world oil supplies." (Couldn't have said all this better myself - although I think it will be earlier than end of 2008. Only wrench to this, near term, is serious slowdown in US economy, which could give crude a breather but the inevitable trend due to global modernization is "up")
  

**Nabors (NBR) Sees Results Below View

• Nabors Industries Ltd (NBR), the world's largest land-based oil and gas driller, said on Friday it expects third-quarter and 2008 earnings to miss Wall Street expectations as weak natural gas prices depress rig activity across most of its North American operations.
• Nabors said there was increased potential for persistent weak market conditions through 2008 in its North American natural gas drilling and U.S. land well servicing businesses.
• So far this year, the company's stock is up only about 2 percent, dramatically underperforming a 49 percent gain in the Philadelphia Stock Exchange oil service company Index
• Weakness in Nabors' North American markets has plagued the company for some time and depressed its share price.
• In fact, since January the Hamilton, Bermuda-based company has warned three times that its earnings would fall short of investor expectations.
• The warning from Nabors is a signal that investor should stay away from other oil service companies that have exposure to North American gas markets, Tudor Pickering Energy said in a note to clients. "It is just plain bad out there for North American drill-related assets," the note said.
• "There's no question the land rig business has problems. Demand's flattening off, supply's coming on and day rates are going down," said Sanford Bernstein analyst Ben Dell, who believes 2008 will probably be a trough for Nabors earnings. (again, as I stated earlier "energy" is not a monolith investment. Half the battle in making money is not losing it, or having 'dead' money. So picking "a driller, any driller" just hasn't worked. Here is a land driller, and a Cramer favorite at that, that has produced a whopping 2% this year. Compare that to the substantial gains in the deep sea oil drillers who are tied to global crude rather than domestic natural gas. I only saw this article because they tried to tie Pride International (PDE) as a victim in this mess - a company which just sold off its South American land assets)

Long Ciena, Mosaic, CF Industries, Potash, Pride International and much higher oil prices in the decade to come; no personal positions

Mmmm Beer! (Inflation)

Why Price Increases are Brewing for Craft Beers

• That six pack of high-brow beer is about to come at a higher price, thanks to the sharpest surge in decades in the cost of the hops and barley that give each brew its distinctive taste.
• Consumers could pay 50 cents to $1 per six pack more in the coming months for many small-batch "craft beers," as brewers pass on rising hops and barley costs from an unpalatable brew of poor harvests, the weak dollar and farmers' shift to more profitable crops.
• Other makers of craft beers, the fastest-growing segment of the U.S. brewing industry, say they may eat the higher ingredient costs, which will pare their profits.
• The company (Boston Beer) has raised its prices just over 3% this year to help offset the hops and barley costs. Mr. Koch says that for next year, the company is "probably looking at the same or maybe more."
• "The cost increases have been the largest we've ever faced, both in barley and in hops," says Mr. Koch, who founded the company in 1984.
• The cost pressures could slow the expansion of American craft brewers, which account for about 5% of U.S. beer revenue, and even put some smaller ones out of business. Craft-beer makers also are battling other cost increases, including higher prices for glass, cardboard, gasoline and the stainless steel used to make beer kegs.
• Big American brewers like Anheuser-Busch Cos. and SABMiller PLC's Miller Brewing Co. also face cost increases, but the impact isn't nearly as great for them. They use much less hops and barley in most of their beers, which is why they are lighter in taste and calories. (thank god for that eh?)
• Large beer makers are also better able to secure long-term contracts to mitigate the impact of rising ingredient costs. Most spirits makers, such as Diageo PLC and Fortune Brands Inc., also face a relatively limited impact from global increases in the cost of grains such as corn.
• Craft beer makers have faced escalating costs over the past year. Prices for malting barley, which accounts for a beer's color and sweetness, have jumped as farmers increasingly shifted to planting corn, which has been bringing higher prices because of high demand from makers of biofuels, like ethanol. The weak dollar also has made it more expensive for U.S. brewers to buy commodities from Europe.
• The news worsened for craft brewers significantly in recent weeks. Firms that turn barley into brewing malt informed craft brewers of price increases ranging from 40% to 80%, and hops suppliers announced increases ranging from 20% to 100%, depending on the variety of hops.
• The price of hops -- which give beers their bitterness and aroma -- has risen because of shortages across the globe, due in part to poor crops in Europe.
• Mr. Bell says employees who test beers at his company haven't been able to detect a change with the new hops and that he won't make any changes that will compromise quality. Starting next year, he anticipates he will raise the price he charges beer wholesalers by 50 cents to 60 cents per case. Customers may see an even higher price increase because retailers typically mark up beer even further.
• Rob Tod, president of Allagash, says the company expects to absorb some of the recent cost increases. But it will likely impose some price increases, resulting in a four-pack of its Allagash White costing about $9 at retailers in the Northeast, up about 50 cents. "We're getting hit on all sides," Mr. Tod says.
• Ken Grossman, the founder of Sierra Nevada Brewing Co. in Chico, Calif., says the brewer plans some price increases, but it's better positioned than others because a price spike for hops in the early 1980s prompted him to sign long-term contracts. "I've gotten calls of panic from other brewers," he says.

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Mmmm... no inflation here. Move along. Nothing to see.

Nouriel Roubini on the Jobs Number

Uber Economist Roubini weighs in on the jobs number:

• 110K jobs were created in September and the July and August figures were revised upward. So is it all rosy for the job market? Not really for several reasons
• First, the August revision (+93k) was almost only goverment job which went from -28K to +57K (a +85K revision).
• Second, employment in the private sector was only 73k and this has been its average for the last quarter; this is a weak figure for private sector job creation. 80% of job created in September were either in government or in health/education services.
• Third, since the increase in the labor force is closer to 120k per month this 73k average private jobs for the last 3 months represents a relatively weak job creation
• Fourth, losses are continuing in housing (-20k in September), manufacturing (-18k) and retail trade (-5k), but the housing losses are still mismeasured as many undocumented workers do not show up in the employment statistics.
  

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As I mentioned, strange number. I am not big on conspiracies but really how convenient is it that when the Fed needed a weak number to justify serious cuts, we got it, and then once that was taken care of the reality came to light. And more interesting is government jobs went from -28K to +57K on the revision or plus 85K. Without that revision last month's number would of been +81K and no need for massive cuts. Sorry it just stinks too much.

Anyhow bigger picture is we continue to move to an economy based on the very bloated healthcare system which is killing in the pocketbooks but its another conundrum - to lower health care costs we need to go electronic and probably eliminate 15-20% jobs in the oversized system, but each year more and more of our economy is devoted to health care jobs - so how do you kill the golden goose? It creates jobs but wacks us all with ridiculous costs.

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What say you Barry Ritholtz?

• Private sector employment growth was stagnant.
• Health care, and bars & restaurants were responsible for more than half the rise.
• Temp jobs, usually a good leading indicator of future job creation, fell 20,000.
• Government was responsible for nearly all of the upward revisions to the July and August
• Manufacturing continues to lose lots of jobs quickly. (Negative 60,000 over the past two months)
• Retail hiring is trending downwards
• To review: Any report under approximately ~150k month (subject to revisions) is weak. It means that job creation is failing to keep up with population growth.
• In 2006 was 226,000 new jobs created per month
• In 2007, that number fell to 122,000
• In Q3 2007, that number fell to 74,000

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But Barry - the market likes it, they really like it! All news is good news. Rah rah!

To me, what I see is an economy in the long long long run (talking years/decades) that is going to subsist on healthcare and government jobs and apparently bars. Even small government Republicans are creating government jobs like nobody's business, right W? Sounds like a nirvana. If we are just passing along the same dollars from me... to you... back to me... (i.e. I cut your hair, you do her nails, she washes his car, he cuts her lawn), how do we ever create new money/wealth in this country? Oh wait... we have the printing press. I forgot about that. More cuts on the way, more currency floated into the system, making each of our dollars worth less....



Problem solved. Back to the elevator... err... market. Whose going up?

My favorite comment in all this is:

The vast majority of yesterday’s revision came in government jobs, with 71,000 jobs in local education being added to the preliminary estimate. It was the first time that nonfarm payrolls were revised from a loss to a gain in the following report since October 2002.

“I can’t explain why it happened; to some extent, it’s just chance,” said Thomas L. Nardone, an economist at the Bureau of Labor Statistics who oversees the jobs report. Mr. Nardone said that early surveys of schools simply did not reflect the actual job growth.

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Yes, chance. Imagine that. It's so random. So perfect. So.... something.

Another Way to Play the Energy Mega Trend: Seismic Data

I have been (and will continue to be) extremely long term bullish on the "energy" sector, but much like the "technology" sector it is not a monolith although talking heads like to portray it as such. For example, natural gas has been a pretty pathetic investment (and highly cyclical) due to its difficulty of transport - therefore it is tied to the US economy, whereas crude oil is a global commodity. You can see this in the lagging performance of natural gas drilling stocks (focusing on land assets in the US or natural gas assets) versus the deep sea oil drilling stocks (focusing on international waters or a global theme). This is one of many examples...

I've been trying to find less cyclical companies and hence my earlier comments about sticking to specific service companies to shield the portfolio from the ups and downs that could ensue if crude oil gyrates from $71 or $81 or $91 to $61. One area of the energy complex I have not touched on are the seismic data companies. What is that? Sounds a bit intimidating but in it's most simplistic terms it is essentially 'mapping' to help energy companies find more oil/gas. For all you ever wanted to know about the process go here and click on start tour. There are very few of these companies publicly traded in the world, but the two I have isolated on are having tremendous runs this year. Both are smaller cap type of companies so if global trends continue should show continue outsized growth for many years, and interestingly one is very focused on the domestic market and the other on the global market. At this point that difference has not hurt the domestic companies prospects (share price) one iota. So let's take a closer look.

The domestic company in this sector is Dawson Geophysical (DWSN); this is a $600 million market cap company based in (where else) Texas. From their web site investor relations page:

"Dawson Geophysical Company is the leading provider of onshore seismic data acquisition services in the United States. Founded in 1952, we acquire and process 2-D, 3-D and multi-component seismic data for our clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries. Our clients rely on seismic data to identify areas where subsurface conditions are favorable for the accumulation of hydrocarbons, as well as to optimize the development and production of hydrocarbon reservoirs. We operate 3-D seismic data acquisition crews in the lower 48 states of the United States, and a seismic data processing center. We market and supplement our services from our headquarters in Midland, Texas and from additional offices in Houston, Denver, and Oklahoma City."

Dawson just added it's 15th crew as business expands, and the stock is a star, rising from $27 at the beginning of this year to a recent high of $85, for a 215% gain. The stock has settled a bit falling to $80 in recent trading. The most recent earnings report is here.

It's larger international peer is CGSVeritas (CGV), a company born out of the merger of a US and French company in January of this year. CGSVeritas does what Dawson does but with larger scope and international focus. To see the latest press release on earnings click here and for a nice pdf full of fancy charts and graphs click here. My one concern is the lack of year over year growth in the land oriented business but I am going to dig deeper into that, in the future.

CGSVeritas stock has been no slouch this year either, rising from a low of $29 in January to a peak of $65 (+124%), before a small pullback to $62. In fact these 2 companies charts basically look like mirror images. So obviously the word is out. This is what happens when business is booming and there is confidence a cyclical play is turning into more of a secular play - PE expansion, and heavy buying. Is it too late to get in? Judging from growth prospects I doubt it, but I am going to hold off until the next market 'pullback' to try to get these at lower prices.

Let's see what the analysts are thinking for estimates.
Dawson 2007 est: $3.54 (up from $3.02 90 days ago)
Dawson 2008 est: $4.77 (up from $3.60 90 days ago)
This implies a 35% earnings growth rate next year
Revenue growth rate is projected @ 30% (5 analysts weighing in)

CGSVeritas 2007 est: $2.83 (up from $2.49 90 days ago)
CGSVeritas 2008 est: $3.46 (up from 3.34 90 days ago)
The implies a 22% growth rate next year
Revenue growth rate is projected @ 14% (3-4 analysts weighing in)

So we see while analysts realize they have been very wrong on 2007 estimates, they have not increased 2008 estimates very much. So a bit of a conundrum as a famous economist once said... the domestic company is actually projected to grow quicker, whereas the international company is projected to grow slower. Somehow I think they are going to be wrong again, so the 22% earnings growth rate is going to be more in line with Dawson's. CGSVeritas reports on November 15th so let's see if we see some guidance update for 2008. All I know is both companies customers have pockets bulging with cash and need to find more resources.

Both companies are valued roughly at 22x 2007 estimates and 17-18x 2008 estimates. Personally when given a choice I want to the company who is going to be the direct benefit of Middle East petrodollars, and some exposure to the Far East and thats CGSVeritas, but with its smaller size Dawson will have the easier time showing year over year growth. Either would be a nice fit into the portfolio based on long term sector trends. I will be putting these on the radar and see if I can enter one on a pullback - both trade about 10% above their 50 day moving average.

SA/SS

No positions

Breakdown: Fund Positions by Market Capitalization

One thing I am interested in viewing is what sort of fund my mock mutual fund would be categorized as, in the Morningstar world of market capitalizations. For those unfamiliar with market capitalization it's essentially a fancy word with many syllables to scare you off; it basically means 'size'. Essentially a company has X number of shares and $X stock price. By multiplying the two you get 'size'/market capitalization (or "cap" for short).

Why does it matter? Well all conventional wisdom says you should diversify your assets among different sizes of stocks as certain sizes fall in and out of favor with the investment community over time. For example in the late 90s, large cap stocks were all the rage, but the past half decade it's been small cap stocks time to dominate. While I agree with the conventional wisdom that your investments should be spread out among many different sizes, especially if one is a passive investor (i.e. buy a mutual fund and look at it twice a year), this stringent labeling of mutual funds has pushed the mutual fund industry to really limit the ability of their mutual fund managers by forcing many to only allow investments in certain size of companies. So a manager in a large cap mutual fund might see some great companies smaller than the 'bottom limit' he is allowed to invest in, but is not allowed to buy those stocks. Sort of silly.

The mock fund I have here, and a small % of funds out there in the real world are "go anywhere" funds, meaning they can buy any size. This lets the manager to buy what he/she prefers, rather than be limited by size. I generally prefer (all things being equal) smaller over larger as it is easier to sustain higher growth rates when companies are smaller. This makes the remarkable growth rates of companies the size of Apple (AAPL) and Google (GOOG) the exception, and not the rule.

The other bugaboo is definitions of where exactly the cut off is for what is a large cap versus a mid cap versus a small cap. You ask 20 investment companies and you get 20 answers. For purposes of this analysis I split things into 5 categories:

1. Mega cap: >$100 Billion market cap
2. Large cap: $12-$100 Billion
3. Medium cap: $3-$12 Billion
4. Small cap: $500 million - $3 Billion
5. Micro cap: under $500 million

Again, this is a matter of debate on where the exact cut-offs are but good enough. If I exclude the index ETFs, the country ETFs (i.e. iShares Malaysia), etc - this leaves 53 out of 60 positions with 'measurable' market cap. The MEDIAN market cap of the fund at this time is $9.9 Billion (larger than I assumed).

I measure the fund versus 2 indexes, (1) S&P 500 - whose median market cap is $13.1 Billion and (2) Russell 2000 - whose median market cap is $647 million. So after analyzing this I think the Russell 2000 is not an accurate measure of the fund's performance, so going forward I am going to measure against the larger Russell 1000 - whose median market cap is $5.8 Billion. The median market cap of the Russell 1000 is still smaller (by nearly half) of Rising Tide Growth Fund but represents 1000 of the largest 3000 securities in the Russell 3000, so should be a closer measure to what type of stocks this fund owns.

But what this shows you is how few "truly large" companies there are in the US - once you get past the first 1000, the size drops off rapidly. So the fund is somewhere in between the Russell 1000 and S&P 500.

Let's break my holdings out by segment (largest to smallest)

Mega Cap
GOOG $185 B
AAPL $140 B

Large Cap
FCX $42.2 B
ACH $35.8 B
CME $34.5 B
POT $33.2 B
NOV $27.4 B
IBN $24.2 B
MOS $23.1 B
GRMN $22.5 B
MA $22.0 B
BLK $20.8 B
BRCM $20.1 B
JNPR $19.0 B
GSF $17.3 B
DO $15.6 B
CMI $14.4 B
CNH $13.8 B
MDR $13.1 B
BTU $13.0 B
NIHD $12.5 B

Mid Cap
SNDK $11.9 B
HDB $11.9 B
ATI $11.3 B
ICE $10.9 B
FWLT $10.0 B
JEC $9.9 B
CNX $8.4 B
FTI $7.4 B
KBR $6.9 B
STP $6.3 B
PDE $6.0 B
CROX $5.5 B
TIE $5.3 B
LDK $5.3 B
SGR $4.8 B
FTO $4.6 B
CIEN $4.0 B
CF $4.0 B
BGC $3.8 B
CTRP $3.4 B
RVBD $3.1 B
HXM $3.1 B
CLB $3.0 B

Small Cap
WNR $2.8 B
UA $2.8 B
EDU $2.5 B
PCR $1.7 B
TSL $1.3 B
GMKT $1.3 B
BCSI $1.3 B

Micro Cap
DHIL $0.2 B
BTJ $0.2 B

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Again, this is not dollar cost weighted (i.e. larger positions have more weight) but I was a bit surprised to see how high the median market cap in the fund was; I always assumed it would be lower. But that does also align with my belief that larger international focused companies are the place to be as we enter an era of global modernization, along with the fact this type of fund is more focused not on hitting home runs (finding never heard of micro caps, buying 10 and hoping 1 turns into the next Microsoft, but striking out a lot), but instead is focused on hitting a lot of singles and doubles with a few triples, and trying to limit strike outs.

So going forward, I will be changing my measurement on the second index from Russell 2000 to Russell 1000; this makes me feel a bit better than I could not keep up with the Russell 2000 this week but the reality is the composition of my fund (median market cap $9.9 Billion) is nothing like the Russell 2000 (median market cap $647 million). It also would put this fund firmly in the 'large/medium cap growth' positioning in the Morningstar mutual fund style box.

I'll take another look in a quarter to see if there is any meaningful change to the median market cap of the fund.

Analyst Notes on Various Stocks in the Portfolio

With my minuscule budget for running this fake fund (read $0) I obviously don't have big money access to research reports so I find drips and drabs across the internet. As I like to say, usually the stock price itself is the best research report.

With that said here are some notable items from the past few days:

1. Stifel Nicolaus Believes Juniper Networks (JNPR) Poised to Deliver Great September Quarter. "It believes that Juniper Networks should easily beat its September quarter revenue of $709 million and EPS $0.21. Stifel Nicolaus has a Buy Rating on Juniper." Stifel Nicolaus checks show that Juniper's business on the service provider front did great with strong momentum at AT&T, Google and Yahoo! Also, Stifel's checks show that Juniper has a large number of orders in the pipeline and can continue to grow revenue at a healthy rate over the next few quarters." (thank you sir, may I have another)
2. Garmin (GRMN) Unlikely to Buy Another Company In Response to The Navteq Deal, Says Soliel Securities. " There has been some recent speculation that Garmin (GRMN) would go out and buy another company, but Soliel Securities believes that is highly improbable because an all-cash offer would be highly dilutive to Garmin. Soliel Securities says, "...given GRMN's focus as a GPS system vendor with cost-discipline and a homegrown corporate culture, we would be surprised to see it forced into making an excessively large and expensive acquisition purely for defensive reasons."
   
3. Gmarket (GMKT): RCB cutting Q3 ests below consensus! Also, BIDU looks like a short here. "RBC Capital is out with a surprising call on Gmarket (NASDAQ: GMKT) cutting their 3Q07 estimates below consensus to account for accentuated seasonality as their channel checks indicate that the holidays in Korea had a greater-than-anticipated impact on site activity. Korean Chuseok holiday (Sep. 25) fell midweek this year and lengthened the period of decreased online activity. RBC believes GMKT will report flattish GMV vs. 2Q07. They have lowered their estimates to GMV 775b KRW vs. prior 791b KRW, revenue $60mm vs. prior $62mm, and EPS $0.15 vs. prior $0.18. (Consensus stands at $0.18/ $62.7 mm). "That being said, firm's preliminary read into the level of activity heading into 4Q07 is indicating a sharp rebound and as a result FY07 estimates remain essentially unchanged. They believe investors should look past this period of seasonality and focus on what are actually indications for robust trends for 4Q07 and 2008. Maintains Outperform rating and $27 target." (oops, I was wondering why the stock was down - well just to be careful I will probably need to reduce the position going into earnings since the lemmings in the stock will probably overreact)
4. Goldman Sachs removes Gmarket (GMKT) from its Conviction Buy List. (hey now, no need to pile on! That said, on the positive side I didn't realize Gmarket was a cool enough company to get on Goldman's Conviction Buy list. I thought this was my secret undiscovered stock but it seems everyone is on the secret. On the flipside, Goldman is the smartest kid in the class so when they say "no soup for you" - I better at least have one ear listening. Tough call here, investors unquenched thirst for all things Asian versus reality check - hmm, who wins?)
5. Piper Jaffray Believes LDK's (LDK) Risk Is Priced In " Piper Jaffray understands there is some uncertainty with LDK Solar (