Monday, May 12, 2008

LDK Solar (LDK) - Good Earnings but Worrying Margins

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I can best sum up the LDK Solar (LDK) earnings review with the comment that the dark cloud of shortages of polysilicon continue to act as a dark cloud overhead. While the company beat solidly on both revenue and earnings this quarter, gross margins continue to degrade - down to 27.7% from last quarter's 30.1% [Feb 25: LDK Solar Reports Solid Numbers] - and much worse than the year ago period which was in the high 30%s. This continues to be an issue for the space. Even worse is guidance for 2008 which now is guidance for 23-28% gross margins (this is down from a 26-31% gross margin guidance for the full year given less than 90 days ago). As polysilicon prices stay stubbornly high, the drag on profit margins for these companies continues.

Essentially with lower gross margins you need a much higher revenue number, just to stay "flat" to where you would of been with higher margins. So incremental revenue gains over previous projections simply get washed out by lower margins. At *some point* polysilicon prices will drop and we should see margins stabilize/expand but we've been saying that for a few quarters now, and the target continues to get pushed out into the future. Frankly if I could trade after hours I would of been out on the initial spike to $38 but since I cannot do that in the Marketocracy.com account, I have to see how the stock reacts tomorrow and then re-assess, after thinking it through tonight. This is not of a situation of a lack of growth, but the associated profits with said growth continue to be curtailed - much farther out than originally anticipated. This is not a LDK specific issue and all the players on the polysilicon side of solar are facing the same issues - some can offset it with other efficiencies or scale but it's a drag on profits for all of them. So I suppose the story now is margins will improve..... in 2009.
  • Net sales for the first quarter of fiscal 2008 were $233.4 million, up 21.1% from $192.8 million for the fourth quarter of fiscal 2007, and up 218.0% year-over-year from $73.4 million for the first quarter of fiscal 2007.
  • Gross profit for the first quarter of fiscal 2008 was $64.6 million, up 11.2% from $58.0 million for the fourth quarter of fiscal 2007, and up 127.5% year-over-year from $28.4 million for the first quarter of fiscal 2007. Gross profit margin for the first quarter of fiscal 2008 was 27.7% compared with 30.1% in the fourth quarter of fiscal 2007 and 38.7% in the first quarter of fiscal 2007.
  • Net income for the first quarter of fiscal 2008 was $49.8 million, or $0.45 per diluted ADS, compared to net income of $49.2 million, or $0.44 per diluted ADS for the fourth quarter of fiscal 2007.
Guidance
  • "Regarding our polysilicon plant project, the construction remains on track for completion based on our previously announced schedule. With the recent funding we secured, in addition to our other financial resources, such as advances from customers, LDK is well positioned to pursue its aggressive growth strategy," concluded Mr. Peng.
  • For the second quarter of fiscal 2008, LDK Solar estimates its revenue to be in the range of $278 million to $288 million with wafer shipments between 136 MW to 146 MW.
  • LDK Solar also revised its outlook for the full year of fiscal 2008: Revenue to be in the range of $1.08 billion to $1.18 billion; Gross margin in the range of 23% to 28%
Long LDK Solar in fund; no personal position

Monday Readings - Energy, the Dollar, Central Europe Farms, and Public Storage Auctions

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Today, we'll focus on energy/oil, the dollar, sad affects from the home bust, and what I contend will be the best long term investment - undervalued farm land (and it's not in the USA)

As our President trots with hat in hand to Saudia Arabia to ask them to pleeeeeaaseee open the spigots.... the NYTimes asks What Can we Do about Rising Oil Prices? Not Much
  • With gasoline closing in on $4 a gallon, Washington is awash in proposals to bring down prices — once more turning the energy debate into political football.
  • There have been calls for a gasoline tax “holiday” this summer, cries to force OPEC to pump more oil (or else!), appeals by President Bush to allow “environmentally friendly” drilling in Alaska’s Arctic National Wildlife Refuge, and demands to tax Big Oil’s billion-dollar-plus profits.
  • But what can the White House, Congress or competing presidential candidates do to reduce gas prices in the near term? The short answer, alas, is not much.
  • No industrialized economy is as reliant on oil, or as obsessed with gasoline prices, as the United States, the world’s biggest consumer of oil. But the oil market is largely immune to Washington’s machinations, and prices have more than quadrupled over the last six years for reasons that are increasingly disconnected from what happens in the United States.
  • In the long term, there are only two ways to reduce prices: boost supplies or reduce demand. The country’s energy policy does exactly the opposite: it encourages consumption by keeping energy taxes low and discourages exploiting new supplies because of environmental concerns and not-in-my-backyard political objections.
  • Lawrence J. Goldstein, an economist at the Energy Policy Research Foundation, estimated that the nation’s oil import bill would probably reach $450 billion this year, up from $120 billion in 2002. “Our energy policy is bankrupt,” he said. “It is not prudent any more to ignore the supply side of the equation.”
So my "World of Shortages" thesis is beginning to pick up into the mainstream - more and more people are finally realizing the US is not the end all and be all; that there is a global competition for resources. Sadly, if we dropped everything today and put together a coherent energy policy (what I call a Manhattan Project II) it would still take 4-7 years to really make serious inroads - and the time between "now" and "then" will be filled with serious strains for many. But don't you worry folks, our leadership won't be working on a coherent strategy - they will be fighting, pointing fingers, and continuing their typical incompetence. So we'll keep pushing out solutions down the road a few more years. Even if we wanted to do nuclear for example... the Wall Street Journal reports the New Wave of Nuclear Plants Faces High Costs
  • A new generation of nuclear power plants is on the drawing boards in the U.S., but the projected cost is causing some sticker shock: $5 billion to $12 billion a plant, double to quadruple earlier rough estimates.
  • Nuclear plants haven't been built in meaningful numbers in the U.S. since the 1980s. Part of the cost escalation is bad luck. Plants are being proposed in a period of skyrocketing costs for commodities such as cement, steel and copper; amid a growing shortage of skilled labor; and against the backdrop of a shrunken supplier network for the industry. (as opposed to say if we built them maybe a decade ago? No, that would take proactive action - we are a reactive country; only after the emergency is here will we act)
  • The price escalation is sobering because the industry and regulators have worked hard to make development more efficient, in hopes of eliminating problems that in the past produced harrowing cost overruns.
Last, we finish off the energy section with an interesting story in the NYTimes: As Gazprom Goes, So Goes Russia
  • Gazprom certainly had reason to party: its chairman, Dmitri A. Medvedev, was riding high on the Russian campaign trail as the hand-picked successor of President Vladimir V. Putin. Although Gazprom forked over a handsome sum to book Ms. Turner and Deep Purple, Mr. Medvedev’s favorite band, the opportunity for the company, the world’s biggest producer of natural gas, to have its own man installed as Russia’s next leader was priceless.
  • .... his ascent confirms that in today’s Russia, the line separating big business and the state is becoming so fine that it’s almost nonexistent.
  • It’s hard to overemphasize Gazprom’s role in the Russian economy. It’s a sprawling company that raked in $91 billion last year; it employs 432,000 people, pays taxes equal to 20 percent of the Russian budget and has subsidiaries in industries as disparate as farming and aviation.
  • If crude oil and natural gas are considered together, Gazprom’s combined daily production of energy is greater than that of Saudi Arabia.
  • Now that Russia is seeking to reclaim the geopolitical clout it had in Soviet days, it is wielding its vast energy resources, rather than missiles, to reassert itself. More often than not, its most potent artillery is Gazprom itself.
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Two stories on the dollar....

NYTimes: The Dollar - Shrinkable but (so far) Unsinkable
  • If the United States were any other country, these would surely be days of panic and austerity in Washington. With debts spiraling higher, a trade deficit exceeding $700 billion a year, and its currency plunging for years, the government would be forced to cut spending and jack up interest rates in a frantic bid to attract investment.
  • For more than half a century, Americans have enjoyed a unique privilege in the global economy: The dollar has been the world’s dominant currency, the money used in most transactions and the repository for the national savings of many countries, including China, Japan and Saudi Arabia.
  • Virtually limitless demand for American government bonds has supported the dollar’s value, and kept domestic interest rates down. Americans have been emboldened to spend in blissful disregard of their debts, secure that foreigners would always supply finance.
  • But what are the chances that a day of reckoning is coming, when the dollar would be so weak that America would have to play by the rules that apply to every other country? Recent signs do suggest some fraying in the American relationship with its many foreign creditors. The balance of trade has gotten so lopsided and the question marks hovering over the American economy so thick that some foreign governments are beginning to hedge their bets on the dollar.
  • For Americans, losing that status could be painful, sending interest rates higher and raising the costs of buying homes and cars. A country that has been operating with essentially unlimited credit might have learn to live within a budget. (the horror)
My own take, and it's a major outlier view is one day America will default on it's debt. Our debt will rise to the point that (at current pace) it will one day surpass a level we could ever service it - think of a day when the interest ALONE is larger than GDP. Meaning our entire economic output could be spent on interest payments; and that would leave nothing for anything else. So we default - we say, oops - that's never going to happen again, and away we go with a clean state. We look awful in the eyes of the world but really what else is new :) This is the path we are heading in 2-3 decades. Much like a bankrupt company we'd have a new slate and could then begin running up new debt with promises it would never happen again. Plus if you are upset, hey who has the world's strongest military.

But enough about that - the Wall Street Journal says the "Steady" Dollar Tempers Many of the "Weak" Dollar plays that have been so profitable
  • For years, the dollar has been the sick man of the currency world, particularly when compared with the euro. Now, it looks like the illness isn't terminal, which could affect a variety of investment strategies that have thrived on the dollar's decline.
  • At $1.5483 to the euro, the dollar is up about 3% from its all-time low against the European currency reached in late April. (woo hoo, break out the champagne! 3% off all time low - the strong dollar is BACK)
  • No one expects the dollar to make a dramatic recovery. But if it stabilizes, that could eventually remove a tailwind for some companies and investments. A weaker dollar has juiced returns for U.S. investors in overseas stocks and bonds. Moreover, foreign profits among U.S. multinationals have translated into bigger gains at home. If the dollar steadies, such benefits would recede. (be careful what you ask for, this is all that is saving Wall Street's pumpkin)
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Now for a very interesting WSJ story on attempts to buy up farmland in the other great global food basket - Russia/Ukraine/former satellite states of USSR - I think this asset class will be a tremendous investment over a 30-40 year time frame as arable land disappears across the globe due to climate/urbanization - but you'll have to check the blog in 3 decades to see if I'm correct.
  • The vast collectives that fed the Soviet Union are now a patchwork of tiny gardens, fields and vacant lots. But combined, they could help feed the world: Russia, Kazakhstan and Ukraine have fertile yet untilled land the size of Idaho.
  • If someone could just stitch the land back together and create modern farms, agronomists say, the vast spaces north and east of the Black Sea could generate an extra 115 million metric tons of wheat per year -- 20% of the world's current production.
  • Richard Spinks is trying to do just that. The 41-year-old Briton has literally been going door-to-door, leasing small plots of land from hundreds of thousands of poor farmers in western Ukraine. His company, Landkom International PLC, has planted wheat, barley and rapeseed on a combined 25,000 acres. Landkom expects to reap its first big harvest this fall.
  • .... as technology gains have slowed, the search for additional arable land has intensified. That's created an opening for entrepreneurs with visions of re-collectivizing the land in former communist countries and rebooting production.
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Last, just a downer story from the NYTimes - we don't think about all the implications of the housing bust but just like we have foreclosures on homes, we now have "auctions" on people's stuff in public storage. A very sad state we have gotten ourselves in. Oh well, the key thing is the past 5 years we have enriched 100s of the top NYC bankers, and create multi millionaires out of them to create these toxic waste dumps of faulty mortgage loans. And that's really the important thing to come out of our capitalist system (you know, capitalist on the way up, socialist on the way down). And when said multi millionaires fall on hard times, our tax dollars and Federal Reserve are waiting in the wings to keep them propped up - unlike those silly peons who have public storage. Always a silver lining; the great American transfer of wealth continues i.e. the "anti-Robin Hood" country.
  • The foreclosure crisis is hitting yet another American locale: the self-storage center.
  • As they lose their homes, people are turning to these humble cinderblock and sheet-metal boxes to store their stuff. But some people cannot keep up with their storage bills any better than they could handle their mortgage payments, and storage companies are auctioning off their property for a pittance.
  • The auctioneer, Blair Auction & Appraisal, has been conducting sales at self-storage facilities in the Midwest for more than a decade. “If a site used to have 10 auctions, these days it has 15 or 20,” said Wayne Blair, the owner. At one site in Detroit, he auctioned off the contents of 45 units.
  • Bill Martin, a 50-year-old former manager in the technology industry, lost his house in the Southern California community of Lake Forest last August. “Storage has my hopes in it,” said Mr. Martin, who sleeps on a foldout bed in his mother’s guest room. “I don’t tell anyone this, but at least once a week I go over and look at my couch, my refrigerator, my TV stand, my mattress and realize I did have a life, and maybe there’s a way to go back to it.” (just sad)
Well folks, it is just a sad state - grown men in the Midwest needing to move back home to make ends meet [Jan 16: Interesting Human Economic Toll Piece in NYTimes], now grown men in the West Coast... the pooring of America continues... living standards continue to erode for many who don't have much of a voice - slowly but surely [Do the Bottom 80% of Americans Stand a Chance]

I eagerly await the "trickle down" economics theory to begin working for the vast majority in this country (I believe that theory is, cut taxes for the ultra wealthy so they can create new businesses full of $9-$11 service jobs for the rest of society). So far, not so good... "trickle on" yes... "trickle down" - not so much. We'll just have to wait patiently for the point where social acrimony reached a tipping point.

Zhongpin (HOGS) Reports Earnings

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Missed the fact that Zhongpin (HOGS) was reporting today; looks like a small beat and more importantly their major business metrics continue to improve. Share count unfortunately is up 50% year over year, diluting some of the gains away. Since this is the smallest company in the portfolio by a mile, I really like to delve into the earnings report even more so than larger companies whose quarter to quarter performance is not nearly that important to me, as it is to the lemmings than dominate Wall Street.
  • Revenues for the first quarter of 2008 increased for the tenth consecutive quarter to a record $108.7 million, up 94.9% from $55.8 million in the first quarter of 2007. Approximately 20% of the increase was from increased sales volume and the other approximately 80% was from higher average selling prices.
  • Operating income for the quarter was $7.8 million, up 67.8% from $4.6 million for the comparable prior year period.
  • Net income increased to a record $7.3 million, up 81.8% from net income of $4.0 million in the first quarter of 2007.
  • Fully-diluted earnings per share for the quarter were $0.24, compared with fully-diluted earnings per share of $0.19 for the first quarter 2007.
  • Weighted average fully-diluted outstanding shares for the first quarter of 2008 were 30,748,961, compared to weighted average fully-diluted outstanding shares of 20,982,304 in the first quarter of 2007.
  • Zhongpin's strong revenue growth in the first quarter of 2008 was the result of increased prices for pork and pork products combined with increased sales to food service distributors and to restaurants and non-commercial customers.
  • According to the Ministry of Agriculture of the PRC, the average pork price in the first quarter of 2008 increased 74.2% from the same period one year ago. (agflation!)
  • For the quarter, chilled pork and frozen pork represented 50.7% and 36.9% of total revenue, compared to 51.0% and 36.4% in the same period of 2007, respectively.
By retail channel
  • Revenue from Zhongpin's retail channels, including showcase stores, network stores and supermarket counters, represented 41.2% of total revenues. Revenue from retail channels rose 71.6% to $44.8 million, from $26.1 million in the first quarter of 2007. During the quarter, Zhongpin added seven new retail outlets, including one new showcase store, two new Zhongpin ''branded'' stores and four new supermarket counters, for a total of 2,946 retail outlets. Revenue from restaurants and non-commercial businesses represented 31.3% of total revenues in the quarter, up 138.0% to $34.0 million from $14.3 million in the same period a year ago. Food services distributors generated 25.4% of total revenues and showed the largest increase in revenue growth year-over- year, up 161.8% to $27.6 million from $10.6 million in the first quarter of 2007.
Gross margin
  • Gross profit in the first quarter of 2008 was a record $14.2 million, up 83.3% from $7.7 million in the first quarter of 2007. Gross margin was 13.1% in the first quarter of 2008 compared to 13.9% in the first quarter of 2007. The year-over-year decline in gross margin was attributed to hog prices rising faster than the prices of pork products.
  • Sequentially, gross margin increased 1.3 percentage points from 11.8% in the fourth quarter of 2007, due to stronger demand for pork consumption which was favorably influenced by the Chinese New Year holidays.
Expenses
  • In the first quarter of 2008, general and administrative (''G&A'') expenses were $4.4 million, or 4.1% of total revenues, compared to $2.0 million, or 3.5 % of total revenues, for the same quarter last year. The significant increase of G&A expenses was primarily the result of increased expenses for compensation, advertising, training, amortization and depreciation.
Guidance
  • Zhongpin plans to continue to expand its production capacity through both new facility construction and acquisitions. The Company is ahead of schedule in the construction of its western Henan Province facility in Luoyang City which is now expected to begin operations by the end of the second quarter of 2008. Zhongpin's eastern Henan Province facility in Shangqiu City is expected to begin operations in the fourth quarter of 2008. This is slightly behind schedule due to the delay of a waste water treatment facility to be built by local government outside of our facility. The new western and eastern facilities will add 70,000 metric tons and 80,000 metric tons annual capacity, respectively, of chilled and frozen pork. Once these facilities are completed, Zhongpin will have total capacity of 471,560 metric tons of chilled and frozen pork, excluding outsourcing from OEMs.
  • In March 2008, Zhongpin began construction of a new prepared meat facility at Zhongpin's Industrial Park located in Changge City, Henan Province. The new facility will add 28,800 metric tons in annual capacity of prepared meat for a 114% increase over Zhongpin's current capacity of 25,200 metric tons, bringing total capacity of prepared meat to 54,000 metric tons. The facility is expected to begin production in September 2008.
  • Based on its current expansion plans and its financial results in the first quarter, Zhongpin is confident it will meet its guidance for full year 2008 revenues in the range of $490 million and $520 million, gross margin between 12.6% and 13.0% and net income of between $30 million and $33 million, or between $0.98 and $ $1.07 per share, assuming a fully diluted share count of 30.7 million shares outstanding.
Long Zhongpin in fund; no personal position

Hedge Funds: It's a Mulligan Industry

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I've written on this subject a few times including [Mar 28: Founder of Long Term Capital Failing Again] and [Feb 28: London Hedge Fund Goes from +87% Return to Out of Business in a Span of Months] but frankly, for a person in my position with my goals, I have to say I get supremely irked each time I read another version of the same story. The Wall Street Journal has 2 stories on this subject - it seems like such a strange game. Take other people's money, devise a method to "beat the system" by a large amount, creating the ability to earn large sums of money in very short periods of time ('generational wealth' I like to call it), but opening yourself up to completely blowing up from the risks involved.

Then when it happens, you blame it on a "Black Swan" event - that once in a lifetime risk that you could never of foreseen.... wash your hands, close down your fund. (wait a while) And then go back to the market to raise funds for a new fund, now that your smarter and learned from your mistakes... and here is the kicker folks - there are tons of people willing to give it to you. But only if you have the right pedigree and have shown the ability to destroy wealth in a fabulous manner. Is that perverted or what? I guess I just don't understand since I am not part of that "sophisticated" system. Again, perhaps I am just bitter and that feeling does not allow me to see the brilliance in the investors who continue to shovel money in the direction of these "stars".

For those new(er) to the market, and wonder why stocks go in crazy directions that don't resound with logic these are illustrative stories of what goes on behind the scenes; think computer dominated trading, think huge leverage, think massive risks and the ability (in some cases) to group together to push a stock where "said group" would prefer it to go... this is not your momma and poppa market from the 60s or 70s. We are just minnows in shark infested waters. And leverage is everything - even our "conservative" investment banks are apparently leveraged 30+:1 (see Bear Stearns). And money is so pervasive in the invesment banking industry, that $30M is chump change - I don't know the conversion ratio but apparently $1 million investment banking dollars (easily earned through such great ideas as tech stock IPOs that value companies on "eyeballs" or say mortgage back securities - NEARLY risk free) is equivalent to a $10 bill for normal Americans.

WSJ: Rebounds by Hedge Fund Stars (Stars?) Prove it's a Mulligan Industry
  • Jeffrey Larson lost $1.5 billion for his hedge-fund investors in a few painful weeks last summer. He shuttered Sowood Capital Management LP in July, one of the more embarrassing meltdowns in recent memory.
  • So what are the 50-year-old Mr. Larson's summer plans this year? He is trying to raise money for a new fund, arguing that he has learned valuable lessons. And he is attracting some interest.
  • Just over a week ago, Drake Asset Management announced that it was closing its $2.5 billion hedge fund after heavy losses. Executives say they already have more than $800 million committed to a new fund.
  • Some investors in Daniel Zwirn's D.B. Zwirn & Co. fund recently received subpoenas from the Securities and Exchange Commission regarding an investigation into the fund, which is closing. But some already have told Mr. Zwirn that they would be interested in giving him money for a new firm he is considering.
  • Traders sometimes even get third chances. Take Brian Hunter. After leaving Deutsche Bank amid a dispute, his trades led to $6.6 billion of losses for hedge fund Amaranth Advisors. He now is advising a new fund.
  • Investors have a range of explanations for opening their wallets for failed managers. Sometimes, managers demonstrate that big losses made them smarter investors, or they offer to waive some of their hefty fees for those who got burned in previous funds. Some managers who had stumbled in the past, such as David Shaw of D.E. Shaw and William Ackman of Pershing Square, restarted their careers and generated big returns.
  • It can be helpful to have lost loads of money, rather than a smidgen of cash. (aha! that's the secret - go big or go home)
  • "It's crazy, but the guy who's down substantially often will have a lot more options versus someone smaller who hasn't lost much money," says Neal Berger, who runs Eagle's View Asset Management, LLC and invests with funds. "Some investors will say 'lightning doesn't strike twice in the same spot,' or, 'there must be something smart about him that someone gave him the opportunity to lose so much money in the first place."'
Back to Peloton which I wrote about in February - WSJ: Peloton Flew High, Fell Fast
  • When hedge-fund chief Ron Beller's investments in U.S. mortgages turned against him, he got a rude awakening to Wall Street's unsentimental ways. Bankers who had vied for his business reeled in credit lines and seized the fund's assets. In a matter of days, Peloton Partners LLP, once one of the world's best-performing hedge-fund operators, lost some $17 billion.
  • There is a widespread weakness in the hedge-fund business: Highflying managers sometimes fail to fully factor in broader risks, such as what happens when troubled banks pull back the borrowed money many funds need to make their investments. Peloton was particularly susceptible because it borrowed heavily to boost returns. For every dollar of client money, Peloton had borrowed at least another nine dollars to buy some bonds.
  • A Long Island, N.Y., native, Mr. Beller made his career at Goldman Sachs Group Inc., netting a post as a top executive in London. (aha that explains it, right pedigree - please take all my money; what could go wrong - every Goldman guy is teflon)
  • At a Goldman-hosted hedge-fund conference in a Spanish coastal resort, Peloton's team held court with potential investors, laying out the fund's strategy: Make money on global economic trends through bets on a variety of assets, including bonds and currencies. The partners kicked in $30 million to help start the fund. Goldman's asset-management arm invested $50 million, said people familiar with the situation. By that fall, Peloton's assets totaled $1 billion.
  • He berated some investors who decamped, questioning why they would forgo Peloton's gains, which by November 2007 had reached a stunning 87.6%, largely on the bearish housing bet. In late January, Peloton won two awards at a black-tie ceremony hosted by trade publication EuroHedge. But by Monday, Feb. 25, further sharp drops had left Peloton scraping for cash to meet margin calls from lenders, including UBS and Lehman Brothers Holdings Inc. On Wednesday morning, Feb. 27, yet another sharp drop in Peloton's mortgage investments killed a rescue. Mr. Beller at one point collapsed on a couch in distress. The next day, lenders seized Peloton's assets, bringing a chaotic end to the fund.
So follow along at home; huge leveraged gain in 2007, accepting hedge fund awards in late January 2008, out of business by end of February 2008.

Since it is now May 2008, I can only assume he has a new fund or is fund raising and getting a ton of capital because "that could never happen again" and "he learned from his mistakes". :) There just must be more money than sense in this world. I look forward to the day I can blow up institutions money in my hedge fund and be lauded for my learning curve....

Blackberry Bold Joins Blackberry Kickstart

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Looks like there is some excitement today on the announcement of the new Blackberry "Bold" which is Research in Motion's (RIMM) foray into 3G; Apple's (AAPL) turn comes soon for their 3G entry. It feels like I am doing more product discussion [May 1: A New Phone for your CrackBerry Addicts] than stock discussion of late with RIMM. Jim Goldman from CNBC details how this smartphone war is shaping up, and if you'd like a video look at how the phone looks/works you can click here.
  • It's been a year since RIM released an update, and during that time, just about every spotlight has turned to the iPhone from Apple with so many experts ceding the market to the upstart touch-screen wonder.
  • And the Bold is something to behold. I haven't talked to a single person who has seen it, touched it, played with it, whose first reaction wasn't "I want that."
  • The particulars shape up this way: First, no touch-screen on the Bold as has been widely rumored. Instead, a beautifully rich, half-VGA, 408x380, 65,000 color screen where, I'm told, images jump off the screen.
  • Other notable items: 1Gb of on-board memory with capacity for 16 gigs; wi-fi, Bluetooth, GPS, a 2 megapixel camera, full HTML browsing (like the iPhone), 3.5G and good battery life.
  • RIM isn't offering any specifics on release dates, but it should be some time this summer. A source tells me it will be priced competitively with iPhone, probably in the $399 or below range.
  • Trouble for Apple is that, unlike Vista, RIM is indeed offering a compelling alternative to iPhone. The media player and spectacular screen will appeal to consumers and business users alike. The RIM keyboard will give the device the edge over Apple's iPhone for enterprise users as well. Business users who may have been on the fence between the two may lean their way back into the RIM camp with Bold.
  • Still, several analysts are out this morning with bullish reports on Apple, including Piper Jaffray, which says current iPhone versions are in incredibly short supply lending credence to the June 3G release. And American Technology Research raised its Apple target to $220 from $210, and raised its iPhone shipments to 11 million and 17 million in calendar years 2008 and 2009 respectively, from 7 million and 10 million.
Again, these are 2 of the names I can find that actually have secular growth in the "overrated as a growth story" technology sector. I continue to remain long both; let the fighting begin this summer in a cell phone store near you....

Long Research in Motion, Apple in fund; no personal positions

Sunday, May 11, 2008

Reviewing August 2007's Roadmap & Views

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Every so often I try to put a collection of thoughts together as a big picture view of where things will be headed in the next 6, 12, 18 months. While most of these thoughts are constantly swimming in my head, it is fruitful to put them down on paper plus fun to look back and see how wrong or correct I was. When I had a fraction of today's amount of readers I outlined some thoughts at the tail end of August 2007 which can be found here [Aug 31: Et tu, September?] Since we have 3/4 of a year past now we can begin looking into these comments and see how they played out. I'll do a similar look at my early December outline [Dec 4: Et tu 1st half 2008? Predictions for the coming 6 months] (which was far more detailed) in mid summer. One day I'll get around to writing a new one for the coming 6-18 months ahead...

Now let's set the stage for late August since in hindsight everything looks predictable. A few key things to remember
  1. Fed Funds rates were still in 5%+ range; the market had begun its dislocations in late July through mid August and the Federal Reserve had come to its first "rescue" with a discount rate cut, in a surprise move that caught shorts with their pants down (free markets and all) on a Friday 8:30 AM when the market had plunged. (I was among those caught the wrong way as the first hints of socialized markets and "interference" was upon us)
  2. We were still being told, everything is fine in housing, this is only a subprime issue - and anyhow housing is only 4.5% of GDP, so even if it did fall off a cliff (which it would not) it is nothing to worry about. Housing will rebound "later in the fall"...
  3. We were told the financial issues were only subprime and the confessions at that point were "the kitchen sink" - it wouldn't get worse than that
  4. We were told there has never been a time when housing prices fell nationally so stop worrying
  5. We were told not to fight the Fed
  6. No one was talking about recession except Peter Schiff, Nouriel Roubini, TraderMark, and a handful of others. Every major brokerage house said no chance.... until December 2007 when many began changing their tune. Some still say no such thing ;) Ignorant bliss was everywhere back then; now it is less so but still in pockets
  7. Inflation was not on the table as even a discussion point; other than some throwaway lines in each Federal Reserve statement over the past few years.
  8. Clinton v Guiliani was the consensus for Election 2008... the first primary was many months away
Let's move on to my comments at the time

We were just embarking on the first of many homeowners bailout plants - Bush proposed some minor one that encompassed a whopping 100K people. Here were my comments on the housing bust

* We are in inning 2? 3? of a housing correction
* Home prices are sticky; as homes are illiquid. We are just now seeing the first serious falls, and these drops so far, seem minor versus what should be coming down the pike in the most overheated of markets, as prices are so out of whack with income it's silly.
* The supply of buyers is constrained by much tighter mortgage standards - leading to pure economic theory, less supply of buyers, increasing supply of inventory = not good for prices. I mean really, who can afford a $500K mortgage in CA with a fixed rate of 6.25% fixed? That's a $3100 payment, before property taxes. There are only so many people in this country who can afford that. I'd argue a very small amount. Oh and did I mention jumbo rates are north of 7%? I am being generous with the 6.25% rate. The same example applies to the $400K mortgage in Seattle and northern Virginia, New Jersey, Hawaii, Boston, the $350K mortgage in Arizona, Nevada, Maryland, Chicago, Portland, Denver. Where will these people come from? When they cannot resort to interest only 2/28s?
* And after we bail these people out (not with Bush's plan, but with the next generation of Bush's plan that will need to be created), who is going to be able to afford to buy those homes when these bailed out owners want to sell? Or after the bailout will they be content to sell for $150K less?
* When people even in good financial shape see weakness in housing they also naturally get cautious and retrench on their plans to buy, and this feeds on itself (you go first... no you go first... no you... someone buy this house!)
* Even those people who have no plans to sell their home, feel poorer on paper, and hence have natural tendency to tighten spending when feeling less flush in cash, even on paper.
* Bush's aid plan is going to help less than 100K out of millions who will be suffering in the home market
* The fact that free market Bush is even alarmed enough to come up with any sort of plan. Free markets are great... until something goes bad, I guess. Even for Republicans.

So all in all, relatively good calls. This was the first step in a long step towards socialization of losses onto the backs of the normal people and away from Wall Street - coming from Republicans no less. But what the government and Federal Reserve was doing then was a pebble in the ocean compared to what they did later in the year and into 2008, which I aptly said with the comments about "the next iteration of Bush's plan" (and Congress was even more hasty to create plans). I do believe the housing correction has moved to inning 3/4 now that new home builders are finally slashing prices... so 9 months later we've moved an inning up. Further, the early blips of home prices depreciation which I said would seem minor (and they were), pale in comparison to the 20%+ year over year drops we are now seeing.

Tighter mortgage standards *is* causing an issue - as it dries up potential buyers. We also seeing a retrenchment by buyers who can buy as they wait to see the housing market bottom before jumping in, as stated. People *are* feeling poorer across the nation as their home prices depreciate.

Onto the consumer...

* The retail "my house is my ATM" play, seems to be over. Retailers already foretelling this; remember stocks are discount mechanisms for the near future (6+ months out). Yes people have been calling this for years, but our consumption culture has always made them look like fools. But with the spigot of the ATM as a house now truly gone, people won't be able to refinance their credit card debt into a new mortgage. (and keep repeating every 2-3 years)
* Same point above but in regards to stock market gains - how will they feel with a potential 15% correction in stocks? More retrenchment?

The retail "my house is my ATM" play *IS* over. Retailers were foretelling this and their stocks went on to be crushed further into the fall and early winter. By mid January these stocks were obliterated [Jan 15: Will there be Anywhere Left to Shop?] As for the stock market, after the correction in the summer, we went onto new highs in the market under the illusion of everything was ok and the Federal Reserve is all powerful - into Sept/Oct 2007 - before a serious selloff in November and a beheading in January 08. But 401ks balances are not making people feeling any better nowadays.

Onto inflation - the one call I really rest my laurels on, especially food and the boondoggle that is corn ethanol... this came before anyone else was talking about it (except perhaps Coxe which I found out about many months later) [Jan 18: One Lonely Voice Agrees with me on Food Inflation] *Now* it is consensus...

* Grocery inflation as this ill begotten push for ethanol (using inefficient corn) is rifling through feedstock, corn syrup and any of the thousands of items which use corn as a basis, and now seeping to the end consumer.

Job market? Well I was "wrong" here because the fantasy that is the government jobs reports has been showing GAINS in financial, construction and every other type of jobs due to the magic of the birth/death model (lovely) So while I believe I am correct in reality, if you use government reports I am wrong left and right ;)

* Construction jobs - they are going to be accelerating into an abyss. Granted, some portion is illegal workers who were never on payrolls (official ones, that is) in the first place. But this is a trailing indicator. Who needs more homes when inventory is >9 months, on the way to ? 12?
* Mortgage jobs - huge cutbacks already announced and will be filtering through the future unemployment reports
* Financial jobs - we should start seeing lay off notices soon enough (next week?) I already read that across the pond there are cuts in credit departments already hitting. If we go back to pre 2004 levels of 'credit' (revert to the mean?) what does that mean?
* For those that remain, their year end bonuses will suffer. This year will be down, but NEXT year looks to be really down, as entire departments will no longer be needed/existing. What does this mean for the NYC and affiliated areas high end real estate market? I know, I know, those poor millionaires...

Credit market? Financial earnings? We were told everything is fine - the Fed was now on our side and once again - the kitchen sink confessions were now behind us, and financials were "safe" to buy and hey... "cheap" after their correction in summer 07 - I, on the other hand, was loaded up on Ultrashort Financial (SKF) - which in fact hurt me in September and October when the fantasy of belief was strong in the market - before reality hit later in the fall. As I stated, we saw MULTIPLE earnings revisions reductions. The credit markets? A complete disaster which only got worse as the year progressed and well into 08.

* Commercial paper market still extremely dysfunctional
* Earnings cuts in the financials - just started getting downgraded this week by the analysts - how are they even going to be able to provide guidance in October when the location of all this credit risk is in many ways unknowable (how do you tell what % of loans in a CDO you own is going to default in the next 2 years?) We are probably looking at earnings revisions down #1 of a multi step downgrade program in these names.

Google? I was correct on the stock (which got trashed starting in Jan 08) but not so much on the reasoning (yet)

* Internet ad spending down as financial companies provide a large bulk of it. Could Google disappoint? Psychological blow of all blows - the teflon stock of our era missing?

China? Nailed this one - although it took about 6 weeks. China was cut in half starting in November 07. Keep in mind this was in the environment where "it is safe to buy Chinese stocks into the Olympics" - yada yada.

* China looking like an exact mirror to NASDAQ 1999-2001? New bubble? The Shanghia Index over 5000, was only 4000 just over a month ago, and almost 100% up in 6 months? 50 PE on an index? Oh and a large portion of those earnings are investment gains, not operational earnings. With a country full of newbie investors who have never been through any bear market? Remember what happened when China fell just 7% in Feb 2007.

Earnings of Interest this Week

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We are winding down yet another earnings season; only a few more land mines to dance through - we have the first of the Chinese solar names reporting and later in the week we have the first confessions in major retailers. Watch for a lot of confessions in the next 3-4 months about how the "2nd half of 2008" is not shaping up as rosy as everyone believes it will be now. They might get a short term spike from these handouts... err rebate checks, but I think far less than people expect - more important will be the strain consumers will feel under $4 gas, and next winter's heating bills.... along with agflation (food inflation)

I'll be interested to watch the market reaction next Thursday - will the major retailers cause a "relief rally" on "hey the results are not as bad as we thought" or will they cause a selloff on "what, you mean the consumer is under duress?" - any major slashing of guidance by KSS or JCP could cause the thinking to change to "hey maybe we better re-assess if 2nd half rebound is fantasy or not" - we'll see.

On the economic front we'll have export and more important IMPORT prices (which show me the true story in inflation - it's been running around 14-15% of late) Tuesday, and then to offset that truth is the lie that is Consumer Price Index (CPI) which is the government's report on what inflation "is". So truth on Tuesday, lie on Wednesday.

Companies I'm watching

Monday
Solar names JA Solar (JASO) which we don't own but the stock is behaving very well, and LDK Solar (LDK) which we do own; the latter, after being comatose, has shown some life of late.

Tuesday
Another Chinese solar Canadian Solar (CSIQ) which has just about the best chart in the entire sector

Speaking of solar we have Applied Materials (AMAT) which is trying to remake itself into a solar brand it appears

Cameco (CCJ) a uranium name which has NOT participated in the commodity boom (strangely) but if you want to play nuclear this is the way to do it - some signs of life here the past week

TJX (TJX) which is a retailer who caters to the off rack "poorer" America (TJ Maxx and the like), but the big kahuna of the pooring of America trend is going to be Walmart (WMT) - I truly think the next 12 months is going to be a time of revival for this brand (which is an unfortunate thing in terms of what it means for the direction of our country) As I said a long time ago a nation of Target shoppers will be forced involuntarily to become a nation of Walmart shoppers [Dec 26: Target Shoppers Turning into Walmart Shoppers]

Speaking of which one of my favorite short ideas (although its scary to short these into earnings because of the "hey its a terrible number but we expected abysmal so take this stock up 30%!) of this Walmart nation is Whole Food Markets (WFMI) - I expect economic reality to push people out of healthy organic foods back into junk or lower cost food (read: cheap) so a lot of formerly upper middle income people will be forced out. That's pooring of America 101 - and a threat to WFMI the next 2 years.

Wednesday
A seismic measuring company (oil field services) we once owned CGGVeritas (CGV) - I continue to like this space but this company has seemed to disappoint on earnings quite a bit.

Chinese travel player Ctrip.com (CTRP) - this is a name I have followed for many years; they are steady like a rock but the valuation is now getting heady for me so as I stated last week I cut back almost all I had going into this week's earnings. Hoping for some sort of miss or cautionary guidance to drive the stock down so I can buy at lower prices.

Major ag equipment player Deere (DE) - I don't own the equipment stocks anymore; at some point the rising cost of steel, petrol products and the like will be hurting the bottom line unless they can pass all the costs along to farmers - over the next year if inflation does not abate this is the type of company who could see profit margins squeezed simply from the constant increase in input costs.

Thursday
Hewlett Packard (HPQ) - a bit of a technology bellweather

JCPenney (JCP) - we know the numbers will stink; it's just a matter of how bad. As always it is dangerous to bet against these stocks into earnings because of the same reasons mentioned above i.e. "results stunk but hey not as bad as expected, take the stock up!" Wait until the 2nd half, when they constantly are bringing down estimates... it's not going to be a good Christmas for clothing stores.

Kohls (KSS) - see JCPenney although Kohl's is a better company in my view

Urban Outfitters (URBN) - this clothing name has defied the trend and still seems to produce product people will pay up for...

Friday
Abercrombie & Fitch (ANF) - a darling for a long time with its very pricey products; even teenagers seem to be trading down to Aeropostale (ARO)

Bookkeeping: Weekly Changes to Fund Positions Week 40

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Week 40 Major Position Changes

Fund positions of 1.0% or greater can be found each week in the right margin of the blog, under the label cloud and recent comments areas; I highlight weekly the larger position changes.

Being a long only fund, via Marketocracy rules, the only hedges to the downside I have are cash or buying short ETFs. I cannot short individual equities.

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 18.1% (vs 3.3% last week)
54 long bias: 60.2% (vs 77.7% last week)
8 short bias: 21.7% (vs 19.0% last week)

62 positions (vs 66 last week)
Additions: N/A
Removals: Kinross Gold (KGC), Silver Wheaton (SLW), India Fund (IFN), Huron Consulting (HURN)

Top 10 positions = 30.0% of fund (vs 31.3% last week)
41 of the 62 positions are at least 1% of the fund's overall holdings (66%)

Major changes and weekly thoughts
We went through another week where most bad economic news was shrugged off and stock prices continue to hold their own. As always, news does not matter until it matters - the "gas tax" on the entire US economy is being sneered at, as is all the bad news on Main Street - much of it hidden behind faulty government numbers which paint a far rosier picture. As for the "gas tax" (the inflation that hits all pocketbooks across the US as energy prices inflate), anyone with any vision can see it is going to hit profits but until a bunch of companies admit to it, the minions on Wall Street will continue to ignore it and sweet talk the future. The warning after the bell Friday by Fedex (FDX) is just a harbinger of things to come. While the "credit crisis" has been swept under the floor as "it can't get worse than it was" and "no matter what the Federal Reserve will create billions out of thin air to make sure things don't get too bad" the after effects of such a safety net are now being seen. No free lunch. And in the sound and fury of the credit crisis everyone is ignoring the recession - oh I'm sorry "a few bumps in the road on the way to 2nd half recovery". At some point the market will recognize this, and the hit to profits as oil is literally the grease that skids commerce in the 21st century - but until it is plain in people's faces and they cannot ignore it anymore (as they have so far), I guess stocks can continue to levitate on the fairy tale of 2nd half rebound.

For the fund I spent the early part of the week closing out some outlier positions to clean up the portfolio and begin to make it more concentrated; along with selling off parts of some huge winners we've had which have enjoyed multi-week runs. I do expect to be hit with a commodity related sell off at some point... the drumbeat will be "at some point high commodities will be a drag on global growth" and therefore "demand for said commodities will drop" and thus the stocks will sell off. I expect to hear a lot of that as we go into 2nd half 2008 as Western Europe joins the US in protracted slowdown and Japan... well Japan has been in slowdown for 2 decades. At that time many of our holdings will sell off... and people will turn to stocks that... rely on the US consumer "early cycle" which for reasons mentioned in the first paragraph will be a complete disaster. Sorry, there are just not many shelters in the storm in a high inflation, slow growth scenario - and banks, retailers, and restaurants sure are not it.

In a nutshell I am back in a more neutral/defensive stance - I do not know when reality will hit this market, but as we saw in January - when it does it can turn ugly very fast. Corporate profit estimates for 2008 are far far far too high. As they drop, stock prices should drop with them. But $1.3 Trillion of liquidity has now been "created" (no inflation created of course) to help prop up the markets, so it's a war between reality and liquidity. Further, in my view, complacency seems to have set into this market, with the undying believe in the Federal Reserve as the savior... much like September/October 2007. That didn't work out so well.

Below are the fund changes this week - the specific rationale for each of these major moves is explained in the weekly posts which can be accessed in the left margin under archives.

Some of the larger changes (chronologically) to the fund below:
  1. Monday, I closed out my 2 precious metals stocks, Kinross Gold (KGC), and Silver Wheaton (SLW) - I'd rather be exposed at this point to commodities that are used less as a hedge against inflation, as opposed to ones who will continue to benefit as inflation continues plus I think the fundamental story is still not appreciated by the Street. So these are a bit of overlap positions with other commodities I already have.
  2. Same logic with the India Fund (IFN) which I closed as well - I own 2 Indian banks which essentially trade in almost identical fashion - right now there seems to be very little discerning between individual Indian stocks and the market as a whole - so it's a bit of overlap.
  3. Tuesday, I had a wonderful trading gain in Brazilian homebuilder Gafisa (GFA) last week, and to top it off I was able to buy back my position (much of it sold in $49.60s) near $42 within days of my sale. While I see downside to $38 (or worse if the market crumbles) I was able to lock in a nice jumble of profits in the last week, in a name I really like, and then reacquire my stake at lower cost basis.
  4. After Alpha Natural Resources (ANR) reported an outstanding quarter Monday, the whole sector jumped and Tuesday, I cut out much of my "trading" positions I was adding last Thursday, booking 15-20%+ type of gains for a 3 day hold. While this group needs a pullback, it is one of my favorites going forward - so I'll continue to trade around a core position.
  5. I added to some fertilizer Tuesday (which I cut later in the week) - this group has been providing a lot of headaches the last week and a half - looking ready to jump technically speaking, but then falling back. So I keep buying a bit, then selling a bit, then buying a bit, and selling a bit as the charts are indecisive. For now I plan to hold off until I see a more solid move - so I will give back some gain but we need to see a pattern emerge. While I expect another huge move later in 2008, I could see this group fall back in the near term - it needs to build a solid base for that next run.
  6. I cut solar exposure as well Tuesday, the Chinese solars all report in May so this group will be extremely volatile in the weeks to come. Unfortunately solar investors seem to group all these stocks together, so when 1 reports a good number, the whole sector pops - and when 1 reports a bad number, the whole sector gets sold off. Until we reach the point where winners and losers are sorted out in the sector - I expect the group to continue to trade in this herky jerky fashion.
  7. I closed Huron Consulting (HURN) as this company yet again cut guidance (which it seems to do every 5th week - and cut its peer FTI Consulting (FCN) which later in the week reported yet another strong number but after a quick spike sold off
  8. Tuesday was busy! I cut back Cummins Engine (CMI) after a heck of a run for a normally staid name.
  9. Wednesday, I cut most of what remained of 3 smaller positions after 35-40% runs in 5 weeks... Baidu.com (BIDU), Mercadolibre (MELI), Ctrip.com (CTRP) - while I respect they can continue to go up, I'll let someone else take the risk - and look to buy back at lower prices.
  10. Thursday, I cut a few names which I had yet to ring the register on, Mechel (MTL), National Oilwell Varco (NOV), and Cleveland Cliffs (CLF) - all are commodity related and again I am getting antsy that we have not had a serious sell off in this space for nearly 2 months. We are overdue.
The above do not include the majority of my trades in my Ultrashorts which I am trading quite often as the market ebbs and flows.

86 Stocks Returning 8%+ Last Week

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Below is this week's list; another week heavily dominated by energy names - natural gas and coal leading the way... as always
  1. Market capitalization of $2B +
  2. Average daily volume 100K+
  3. Stock price $10+
  4. Return past week 8%+
We own names in green; we have owned or discussed names in blue

Symbol Company Name % Price 1 Week
CLR Continental Resources Ord Shs 21.3
WTI W&T Offshore Inc 20.6
ARG Airgas Inc 20.2
EAC Encore Acquisition Co 19.0
GLBL Global Industries Ltd 17.8
AU AngloGold Ashanti ADR 17.5
CRK Comstock Resources Inc 16.9
FTI FMC Technologies Inc 16.5
ATVI Activision Inc 16.5
OCR Omnicare Ord Shs 15.9
PCX Patriot Coal Corp 15.7
ANR Alpha Natural Resources Inc 15.7
DRS DRS Technologies Inc 15.6
OGZPY Gazprom Rep 4 Ord Shs ADR 15.6
ME Mariner Energy Ord Shs 15.3
NOV National Oilwell Varco Inc 15.2
CRZO Carrizo Oil & Gas Inc 15.2
PXD Pioneer Natural Resources Co 15.1
CCJ CAMECO CORPORATION 15.1
BBG Bill Barrett Corp 14.9
OII Oceaneering International Inc 14.5
TE TECO Energy Inc 14.5
UNT Unit Corp 14.3
HK Petrohawk Energy Corp 14.3
CLF Cleveland Cliffs Ord Shs 14.1
APC Anadarko Petroleum Ord Shs 13.8
AUY Yamana Gold Inc 13.8
OC Owens Corning 13.7
WLT Walter Industry Ord Shs 13.0
WCG WellCare Health Plans Inc 12.9
HERO Hercules Offshore Inc 12.8
FDG FORDING INC 12.5
PBEGF Petrobank Energy and Resources Ltd 12.4
SU SUNCOR ENERGY INC 11.9
COSWF Canadian Oil Sands Trust 11.9
IPI Intrepid Potash Inc 11.8
MEE Massey Energy Co 11.7
DLTR Dollar Tree Inc 11.7
DNR Denbury Resources Inc 11.5
EXH Exterran Holdings Inc 11.4
PCZ PETRO-CANADA 11.3
MVL Marvel Entertainment Inc 11.3
NBL Noble Energy Inc 11.2
GIL GILDAN ACTIVEWEAR INC 11.2
MEOH METHANEX CORPORATION 11.2
SPN Superior Energy Services Inc 11.1
BRY Berry Petroleum Co 10.9
LDK LDK Solar Co Ltd 10.9
FFIV F5 Networks Inc 10.7
MR Mindray Medical International Ltd 10.5
VIP VympelKom OAO 10.5
ACI Arch Coal Ord Shs 10.3
TCK Teck Cominco Ord Shs Class B 10.1
WHQ W-H Energy Services Inc 10.0
GG GOLDCORP INC 10.0
BTU Peabody Energy Ord Shs 9.9
TRA Terra Industries Ord Shs 9.9
TDG TransDigm Group Inc 9.8
PCLN Priceline.Com Ord Shs 9.7
CNQ CDN Natural Resource Ord Shs 9.7
XEC Cimarex Energy Co 9.7
NXY Nexen Ord Shs 9.4
PDS Precision Drilling Trust 9.1
X United States Steel Corp 9.0
ECA ENCANA CORP 9.0
PXP Plains Exploration & Production Co 9.0
DISCA Discovery Holding Series A Ord Shs 9.0
EP El Paso Corp Ord Shs 9.0
ATLS Atlas America Inc 8.9
SSL Sasol Level II ADR 8.9
HES Hess Corp 8.8
FWLT Foster Wheeler Ord Shs 8.8
SID Companhia Siderurgica Nacional ADR 8.8
CAM Cameron International Corp 8.6
TLM TALISMAN ENERGY INC 8.6
EQT Equitable Resources Inc 8.5
EL Estee Lauder Ord Shs Class A 8.5
EOG EOG Resources Inc 8.4
BJS BJ Services Co 8.3
CNX CONSOL Energy Inc 8.2
OIS Oil States International Inc 8.2
SWN Southwestern Energy Co 8.2
FMC FMC Corp 8.1
MELI Mercadolibre Inc 8.1
AA ALCOA Ord Shs 8.1
PTEN Patterson-UTI Energy Inc 8.1


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