Sell of Carnival

We recently sold Carnival for a gain of 30%. The company did come out out with good numbers when they reported but this was mainly due to a decrease in oil prices. Management reported that they see a weak economy going forward for their industry especially due to low amounts of booking going forward. This is one of the reasons I wanted to get out of this company now but the main reason is oil prices. The reason they were able to come out with great numbers was due to the fact of oil being so low and I don't think this will be the case going forward. Granted, oil is at extremely low levels but I don't think it will stay around this level for very long. Management reporting a weaker outlook has scared me and the possible combination of increased oil prices can be catastrophic for this company and industry.

ORCL Q2 EARNINGS

ORCL released earnings on friday for Q2 which missed revenue estimates. Earnings as a whole were considered positive because of beating the streets estimates with 34 cents per share in earnings and increasing operating margin from 41% to 46%. Q3 guidance was in line with street estimates which was another positive. New software licensing a forward looking measure of future sales was down 3%.

All that can really be said of these earnings is that revenues weren't stellar by any means, but minimizing costs allowed them to beat estimates. It really says something in a time when corporations are minimizing IT spending, ORCL is able to control costs to maximize earnings. Until the economy is able to recover, increasing margins are really the only way to beat estimates.

ESV Down 14%-Dec 18 (James F)

Thursday-December 18, 2008, Ensco was down roughly 14% on the day. The same day OPEC decided to cut production 2.2M barrels per/day in an effort to increase prices, but said they had no specific price target in mind. Although OPEC cut production, oil futures still continued to fall in price. Oil was down roughly 7% on the day. Traders felt that the cut in production was not enough and most energy names to trade down. I still maintain a hold recommendation on ESV, as I still believe oil is not staying at these price levels for long.

NIKE FY2009 Q2 Earnings Report

Nike recently reported FY 2009 Q2 Earnings. Net Income was up 8.8% Revenue was up 6% and EPS was up 13% to 80 cents a share. Reported future orders were down one percent from last year however, excluding foreign currency exchange rates these orders were actually up 6%. Overall US sales decreased 1% lead by a 17% decrease in the equipment segment while the footwear segment was able to maintain slight positive growth. International revenues were very strong for the quarter lead by Asia Pacific and the Americas which grew 22% and 21% respectively. The company was able to beat analyst earnings estimates by two cents primarily driven by oversees growth. Nike also increased it GM by 40bp and raised its dividend by 9%.

I still see Nike's brand image and loyalty along with its superior ability to penetrate and grow within emerging markets driving growth for them over the next year or as long as we remain in a US and Global recession. While I do see further softening for demand in the footwear industry both in the US and abroad, which I feel I compensated for in my earnings estimates and valuation. I believe Nike is still well positioned to weather the storm with its strong market share and significant amount of cash, and use this as means of gaining market share as many small companies continue to struggle.

NVDA Up 10% Mid-day

Electronic Arts and Take-Two Interactive Software are adopting Nvidia's PhysX technology, bringing more realistic gaming to the PC. The largest graphics chip supplier announced this week that Electronic Arts and Take-Two have licensed its PhysX technology as a development platform.

After falling below $7 a share in the past weeks, NVDA has rebounded from Monday's $7.03 open to $8.59 mid-day today. That is a 10% gain for today and puts NVDA up nearly 9% since its purchase.

CHK up 30% mid-day after Investor Update and Uprgade to Overweight at JP Morgan

CHK scrapped its plans to issue new shares in the beginning of 09' and also announced further reduced cap-ex for 09 and 2010. Further, the company projects that they will maintain a cash neutral budget (0 FCF) and will reduce rig count even further to 110-115 range for Q1 09. The company continues to do the right things during these hectic times in the market and I continue to believe that despite short term weakness in energy demand, the original thesis still holds.

Brown-Forman Q2 Earnings Report

The Company reported Q2 earnings today of 94 cents a share up from 83 cents last year beating analyst estimates. Net income was up 11% and revenue was up 5% for the quarter, the company also raised its expected EPS for the year from $3.00 a share to $3.20 a share. The increase in expected earnings is largely due to the sale of two of its wine brands as the company has decided to focus on other products in its portfolio. The main drivers for the quarter were improved Jack Daniels sales in the US a strong performance from the Finlandia brand in Eastern Europe and better than expected volumes for ready-to-drink in Australia. The company also disclosed it plans on purchasing $250 million in stock this year.

Overall the company performed largely as expected an excluding the sale of its two wine brands has remained on target to meet its forecasted earnings numbers for the year. I suggest a hold rating for the stock as I see no significant fundamental changes within the company that would change our original investment thesis.

DD slashes 08 earnings forecast, 09 outlook- Ed Warner

I'm still listening to the live call, but bottom line DD is cutting about 2500 jobs and now expects to report an adjusted loss of 20 cents to 30 cents a share, compared to its prior prediction of a gain in the range of 30 cents to 35 cents a share. Analysts have been looking for a profit of 27 cents/share. Management talked about the challenging environment on almost all fronts, and the "wave of actions" they are taking to deal with it going forward. A detailed plan can be found in the investor presentation from the call located at:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=73320&eventID=2038744

under "supplementary data"

shares are about flat appx a half hour after the announcement

Our position in DD is down almost 55%...the future of it in our portfolio will be discussed in tonight's meeting. I ask that everyone take a look at that presentation and a summary article located at:

http://www.marketwatch.com/news/story/dupont-cuts-outlook-workforce-economic/story.aspx?guid=%7BDFA3BAA8%2D3CEF%2D48AD%2D90C4%2DE2AA7E3B649E%7D&siteid=yhoof

-Ed Warner

IP Down 11%-Ed Warner

Our position in IP was down 11% today, after ending last week about flat. I am confident that much of IP's drop was due to the broader market shedding almost 8% in value. I still like the company and feel very comfortable holding it in our portfolio. Aside from today's severe drop, it's been doing fine since we bought it. I still believe we got into this stock at the right price and the right time. With the continued volatility and slew of economic indicators coming out this week, this week should be interesting for almost all of our holdings. I will continue monitoring the position and alert the group/advisory board of any major developments going forward.

Ensco 14% loss- James Fowler

ESV was down $4.53 today, roguhly 14%. As mentioned in the previous post regarding CHK, the whole energy sector was down on news of OPEC not cutting production along with oil being down 9.5% today. These two events seem to be the reason that ESV was down 14% today.

Dec. 1, 2008 CHK down over 12%

CHK was down $2.18 today, roughly 12.69%. The entire energy sector was slammed on news that OPEC decided against cutting oil production over the weekend. Considering 90% of CHK's proved reserves are natural gas, I believe that this huge loss is largely systemmatic and severely overblown, especially considering the volatility seen in the broader market.

CHK 15.1% loss on SEC shelf filing

On Friday, November 28, CHK announced the potential issuance of up to 50 million shares of common stock in order to fund future capital expenditures. The company does not anticipate issuing any shares until 2009. The recent filing is viewed by analysts as a move to enhance flexibility and is not a sign that the company is having liquidity issues.

CHK (27.5% one day loss on Nov. 20)

The Energy Information Administration released weekly Natural Gas storage information for the previous week and inventories were up 16 bcfe. Most analysts were expecting little to no change in inventories and this event had a significant impact on energy companies across the board. The sector severely outpaced the losses inucrred by the broader tape as double digit percentage losses were commonplace for the day. Natural gas prices were also down to the 6.20 level. Highlighting the effect that changes in the price of the commodity have on CHK.

Ensco 19.9% loss-James Fowler

Yesterday ESV fell roughly 20%. The main reason is that oil traded down to a 3 year low, below $50 a barrel. In the current market environment, energy names seem to move with the price of oil and natural gas. I still believe that oil is not going to stay this low for long and as oil begins to trade back up, so will energy names. ESV still has a tremendous amount of backlog and continues to win new contracts. Just recently, ESV won two three-year contracts in the GOM for $367M, at around $167K a day per contract.

I went into the model and did a scenario analysis, and assumed revenues would be flat from 3Q08 through 4Q09, while keeping expenses the same and I still come up with a price target of $69. Nothing has fundamentally changed with ESV and feel it is still a definite hold.

Carnival Cruise Lines 10.49% loss

Carnival today fell 10.49% and is currently Trading at 16.47. This was accompanied by the S&P 500 being down over 6% and its main competitor Royal Carribean down over 17%. Today Royal Carribean discontinued its stock dividend which has followed in the footsteps of Carnival which recently also suspended their dividend. The market being down and the news of Royal Carribean cutting their dividend sent the cruse line companies down but Carnival had the smallest percentage drop among them.

DuPont suffers 9.88% loss

Today DuPont (DD) suffered a 9.88% loss and is currently trading at $24.26. While the broader market was down 5% today, the reasoning behind the near 10% decline in DD was the sudden news that BASF SE, which makes such items as fertilizers, glues and cosmetic ingredients, said it would temporarily close 80 plants worldwide due to slumping demand and cut production at 100 more, including its major U.S. facilities in Louisiana and Texas. This led to a major sell off in chemical companies as a whole, but DuPonts percentage drop was one of the largest among them. Deutsche Bank analyst David Begleiter said the magnitude of the announcement was "unprecedented" and said the fourth quarter will likely be the chemical industry's toughest since the fourth quarter of 2001.

We are going to keep DD as a HOLD for today, and the materials group will be discussing future plans for DD at tomorrows meeting.

SOURCE: http://biz.yahoo.com/ap/081119/chemicals_sector_snap.html?.v=1

GLW-Q4 revised earnings-RM

I just wanted to briefly touch upon GLW's revised earnings this morning. As I stated when making my stock pitch, GLW's main driver is panel makers utilization rates. During Q3 earnings management warned that even though panel makers are at 70% utilization, it is possible it will continue to fall to as much as 50%. This was already priced into the valuation because of the conservative approach I took. The .20 to .28 cent EPS estimate is now expected to at the lower end at the conclusion of the quarter. The 17% fall in share price was completely overblown. As I expected in gained back more than half of the losses by day end. GLW finished off 6.88% on the day.

Illinois Tool Works Inc. (3 months ended Oct. 31)

Operating revenue rose 8.8 percent for the three months ended October 31. This growth was primarily driven by acquisitions and currency translation. Proven strong acquisition performance in the past was part of my thesis for this acquiring this position. I believe there is tremendous value within the industry and ITW will be able to benefit from this. Base revenues did fall into negative territory because of the continued softening within the North American and European end markets. ITW did trim the top end of their guidance to $3.32. Management believes full year diluted EPS could range from $3.24 to $3.32 assuming a total revenue growth of 10 to 11 percent. Below is the segment operating revenue breakdown Y/Y.

*Industrial Packaging: +10.6 %
*Power Systems and Electronics: + 3.4 %
*Transportation: +11.0 %
*Construction Products: - 4.5 %
*Food Equipment: + 6.9 %
*Polymers and Fluids: +52.2 %
*All Other: + 6.0 %

Humana Q3

First some information on the past Q and some company guidance…

• Humana has completed major acquisitions in the past quarter. Metcare Health Plans, Inc in August, PHP Companies in October and Cariten Healthcare in November. These acquisition included in co's estimate of FY09 EPS of $5.90-6.10. This estimate is above street consensus.
• It missed EPS estimates by .40 a share and guides Q4 EPS below consensus. However as mentioned earlier FY09 EPS is above consensus.

Information regarding political and economical events…

Negatives
• More intense competitive pressure along with a slumping US economy and challenging credit markets will cause significant strain and consolidation in the industry
• Democratic party reform may hit may hurt programs flourishing under Bush administration. Only time will tell.

However we still believe the company belongs in our portfolio because

• Humana has strong capital and liquidity with its $1 billion in revolving credit still available
• Growth in Commercial Specialty products
• The federal government announced regulatory changes to combat skyrocketing premiums for Humana’s Medicare Advantage plans. A significant advantage because Medicare has been seen as one of the companies most challenging prospects.

Finally, We believe that the baby-boomer population will continue to make this a successful pick in the long term and that the fundamental operations of the business have not changed enough to break the thesis and sell the stock.

Brown-Forman Q12009

Brown-Forman posted a decline of 5% in YOY EPS for the first quarter of 2009. However, this decline in earnings was due to 25% of their Agave plants (used for making tequila) dying unexpectedly. While the company stated that it was not uncommon for a portion of the Agave stock to be unusable this high of a loss was very uncommon and should be a onetime event. Excluding this onetime charge the fundamentals of the company remained strong, as they experienced a 12% increase in EPS (excluding the $22M non cash charge) accompanied by a 7% increase in net sales. The majority of the company’s current growth is coming from less developed markets such as Eastern Europe, Latin America and Southeast Asia as growth in many developed markets has declined due to the current economic conditions. The company has maintained its FY2009 guidance expecting 1%-8% growth in EPS for the year including the onetime non cash charge.

Moving forward much of the company’s growth is expected to come from areas outside the US and its main drivers are expected to be its Jack Daniels and Finlandia brands and from its 2007 acquisition of Case Herradura. The company has developed new harvesting strategies to become more efficient and prevent further losses such as the one due to Agave, and should stand to benefit from the current decline in commodity costs especially in fuel and grain. On a valuation basis the company is trading significantly below its historical average in PE, EV/EBITDA, P/S, P/B and P/CF.

Rockwell Collins Q4

Rockwell Collins posted a 17% gain in revenues for its fourth quarter on November 3, 2008. They posted these gains despite the strike of Boeing Co. and Hawker Beechcraft Corp. Boeing is a primary customer which suffered a seven-week strike in its commercial aircraft facility. It is expected that this strike has likely pushed back the 787 Dreamliner until 2010. However, demand has remained high for this aircraft as the backlog order is still in excess of six years due to “customers waiting for these more fuel efficient aircraft”. The strike which lasted 55 days lasted longer than I expected and was approximated that it reduced Rockwell’s top line by $40 million. Rockwell’s EPS was $1.13 per share, while one year ago it posted $0.93 per share. Rockwell beat the streets expectations which were expected at $1.07 per share. However, a tax credit helped boosted their earnings by $0.08 per share.

There are many continuing headwinds I expect to come with Rockwell. A continuing problem I see within the industry is the decline air traffic both domestically and globally. Specifically, global air traffic which had expected growth of 1% - 3%, is now expected to be flat because of the global economic downturn. Rockwell has also seen the cancellation of the Army’s Armed Reconnaissance Helicopter. There has also been a deferral of a $35 billion contract of aerial-refueling tanker and a $15 billion combat, search and-rescue helicopter contract. These contracts were awarded to Northrop Grumman and Boeing and Rockwell is a supplier to both. Along with these issues, the election of Barack Obama and with a Democratic Congress posses an interesting dilemma going forward. Expectations are for a cut in Pentagon spending because of overall tightening of our national budget as well as the expected withdrawal of troops in Iraq. Most recently, Rockwell implement a cost reduction plan which included a slash in employees of 300 or 1.5%.

With the issues mentioned above, as well as beating the street expectations for Q4 and the stock still not rebounding, I feel that a consideration to a sell or reducing or full position would be in the best interest for the group. I will be raising these issues at Thursday’s meeting for a final decision by Friday for the conference call.

NVDA F3Q09 Earnings 11/06/2008-(Daren Pon)

Nvidia shares tanked to $7.62 on Thursday, but rose to $8.40 after-hours when they released earnings, showing that they beat the street Q3 earnings estimates. Revenues were $898 million and net income was $61.7 million with Q3 earnings per share of $0.20, well above the $0.12 estimate. Also, gross margins increased from 39.1% to 41.9%. Nvidia closed on Friday at $8.72, a nearly 11% increase from our buy in price of $7.859.

Nvidia has successfully transitioned its manufacturing processes to the 55nm standard, has launched a successful partnership with Apple for its new line of Mac notebooks, and their parallel computing architecture CUDA has been gaining momentum. Additionally, Nvidia has re-priced their products in order to better recapture market share from AMD's increasing price competition. Nvidia was singled out to outperform when Citi upgraded the semiconductor industry earlier this week. While being down overall for Q3, Nvidia beat what was expected of them and I am satisfied with their performance and future profitability.

CSCO F1Q09 Earnings 11/05/2008 - (Daren Pon)

Cisco’s Q1 revenue was up 8% year over year at $10.3 billion from $9.55 billion a year ago and net income was $2.2 billion or 37 cents a share, up 2 cents from last year. Non-GAAP EPS was up 5% to $0.42, 3 cents above the street expectation. Additionally, gross margins increased to 65.6% from last quarter’s 64.9%. Enterprise year over year order growth across all of Cisco was down 11%, while the service provider, commercial and public sector were approximately flat from the year over year orders. Assuming that the global economy recovers to normal growth rates, CEO John Chambers maintains the long-term growth rate of 12-17%. Cisco forecasts Q2 estimates of 5-10% decrease in revenues from a year ago, gross margins of 64%, and capital expenditure of 39-41%. Cisco may seek to make key acquisitions during the economic downturn to increase future profitability.

Cisco still maintains a position of product leadership and has made great progress as an enabler of Web 2.0. Momentum could be realized from their strength in emerging markets and Japan; however, the great deal of Cisco’s profitability is tied into the overall resurrection of the global economy and in turn basic Information Technology spending. I suggest a hold on Cisco to wait for more favorable long-term conditions to arise, but would offer it as the first name to be slashed within the portfolio’s technology allocation to make room for more immediately profitable equity selections and to solidify diversification.

ESV 3Q08 Earnings (James Fowler)

ESV reported a 5.8% increase in net income Y/Y of $282.3M, $1.99 per diluted share, on revenues of $635.8M for 3Q08, compared to income of $266.7M, $1.82 per diluted share on revenues of $536.4M for the same period last year. ESV incurred a loss of $18.9M, $0.13 per diluted share, related to the loss of ENSCO 74, a Gulf of Mexico jackup rig. The rig is believed to have sunk in the aftermath of Hurricane Ike. Average day rates for the jack up fleet for the third quarter increased 10% to $156,900, as compared to $142,100 in the previous quarter last year. Rig utilization was also increased over last year with a rate of 97%, compared to 90%. The first of seven new ultra-deepwater rigs was delivered in September and is currently mobilizing to the Gulf of Mexico. Their balance sheet remained strong with $486M in cash and short term investments and only $300M in debt which half if is not due until 2027.

ESV still seems to be trading at a discount relative to fundamentals. The company will have all of the ultra-deepwater rigs operational by 2012 and anticipates the fleet will contribute approximately one-third of revenue once operational. ESV seems to be highly correlated to the price of oil, and after the price of oil peaking at $144 per barrel; ESV has traded off along with the price of oil. ESV has a strong balance sheet, favorable contract backlog, and is taking a conservative approach to internally funding the rig expansion program. I believe that price of oil is going to stabilize around $80 per barrel in the near future and begin to increase again once we are out of these hard economic times. Sentiment is to hold the position.

DD Q3 08 Earnings

DuPont Co reported lower third-quarter earnings on Tuesday, hurt by hurricane-related charges and lower volume shipments, and cut its full-year forecast. Revenue rose 9.3 percent Y/Y to $7.3 billion, largely because of higher pricing in all regions. Net income in the quarter fell to $367 million, or 40 cents a share, from $526 million, or 56 cents a share, a year earlier. Excluding a charge for plant damage, lost inventory and other problems from the hurricanes, the company earned 56 cents a share, down from 59 cents a year earlier.
-cnbc.com (full article @ http://www.cnbc.com/id/27291899/for/cnbc/)

Hey I mean when the street's looking for 51 cents/share and you come out at 40 cents/share that's a problem. Obviously they felt an impact from hurricane-related problems; in the form of a significant item of about 16 cents/share for clean up and repair) and about 120M during Q3 and Q4 to replace equipment. On the call and in the investor presentation management cited that although they feel that their balance sheet is strong and they have good access to the commercial paper market, challenges that they will continue to face are the ongoing credit crisis, as well as high raw material, energy, and transportation costs. They also cut their EPS outlook for the year to $3.25 to $3.30 per share. It previously had forecast $3.45 to $3.55. Wall Street had been expecting $3.49. Bottom line, we bought it at 51.82 and its trading at 33.28 at the close 10/21/08. We think it's too late to sell and we don't really see reason for much more downside and management still has a good vision for the business. Ag and Nutrition, which was one of the main reasons we purchased it, had solid results. It was up 22% from Q3 07 with 40% top-line growth in Latin America sales. Couple that with the evenutal recovery of the auto and housing market, we can hopefully make up most of what we have lost on it so far and possibly be realizing gains in the not too distant future. It's a strong company, with good management and the fundamental reasons for us purchasing it have not changed.

ORCL Q1 earnings

Oracle's Q1 earnings beat analyst estimates by 2 cents, with profits coming in at 32 cents per share. New sales were up 14% inline with estimates and profitability was up 28% YoY. Management's Q2 outlook predicts lower sales revenues growing between 2-12% compared with 38% the previous year. Software updates and support are almost 50% of Oracle's earnings, so recurring revenue can easily support profits even with weak sales. This is the main reason ORCL reaffirmed analysts Q2 profit estimates of 35-36 cents a share.

ORCL has responded nicely to earnings. Trading around $18.50 early Thursday it closed at $20.07 today, 8.5% swing in two days. Because ORCL predicts fairly conservative earnings for the next quarter, I recommend continuing to hold the stock in our portfolio. A concern of mine was that SAP was continuing to steal market share from ORCL. Even with the weak economy it seems ORCL has been able to retain a good number of its customers, while preventing SAP from gaining ground.

Earnings Target Rises for Nucor

September 16th Wallstreet Journal:

Nucor Corp. raised its third-quarter earnings target, citing improved performance -- including from recent acquisitions -- and a lower-than-expected accounting charge because of a significant decline in scrap prices.
The maker of steel from recycled metal now expects earnings of $2.15 to $2.20 a share. In July, the company forecast $1.80 to $1.85 a share, below Wall Street's then-estimates. Analysts' latest estimate was $1.93, according to a poll by Thomson Reuters. Year-earlier earnings were $1.29 a share.

Recent acquisitions made by Nucor include this year's $1.44 billion purchase of SHV North America, owner of North America's largest scrap purchaser and Nucor's broker of ferrous scrap.

In March 2007, Nucor acquired Harris Steel Group Inc. Those additions more than doubled Nucor's steel products' annual capacity.

Generally, a run-up in steel prices this year is offsetting record-high iron-ore costs and skyrocketing energy costs.

DD Q2 & Current Update 9/17/2008 (James Leahey)

For Q2 DD posted an EPS $1.18, compared to $1.04 last year’s Q2. A lawsuit and a lower tax rate from a onetime tax settlement accounted for $0.07 of the EPS, but after netting that out they still beat the street by $0.04 per share. The strong growth in the Ag and Nutrition segment and emerging markets carried the load this quarter. Ag and Nutrition sales grew 23% this quarter on strong global demand for the company's corn, soybean and crop protection products. A favorable currency exchange rate played a major role in offsetting the high costs they incurred from freight, energy and raw materials. For the second straight quarter, DD has raised the floor on their FY’08 earnings estimate $.05 to $3.45 to $3.55 per share. DD does forecast 2nd half earnings in ’08 to decline from a year earlier though.

The results posted in Q2 were pretty much right along with what we had expected going forward back when we pitched the stock right after Q1 earnings. Fundamentally, nothing has changed as the growth in emerging markets and Ag and Nutrition has been able to prop the earnings up while some of the other segments have posted slower or flat growth because of the current economic conditions. One thing I would like to point out is that in the conference call management did allude to the way that they maintained margins with rising energy and commodity costs was successfully raising prices, and with some of those bubbles bursting I can’t help but think that they are still going to maintain those higher prices, therefore expanding margins. One thing that I have definitely been concerned about is the growing momentum of the dollar relative to other major currencies, because 60% of their revenues came from abroad and currency exchange contributed to 5 percentage points to revenue growth in Q2. As such a widely multinational company, the comeback in the dollar is something to definitely be aware of as that will cut back into revenue growth and create more exposure to the depressed auto and housing industries. Since one of their main drivers of earnings growth has been accelerated growth in the emerging markets, the rebound in the dollar could cut into expected revenue growth in those markets in the future.

Overall, I see no reason to change our position on DD. They seem to be in a relatively stable place right now, as upside and downside seem to be very low right now we shouldn’t expect any significant price volatility for the rest of ’08. I still see it as a long term play as I believe we will reach our price targets sometime in the range of 12-36 months once the domestic and global economies can get themselves back on their feet.

GS Q3 08 earnings release 9/16/2008

For the third quarter Goldman Sach's posted eps of $1.81 per share compared with $6.13 per share for the third quarter of fiscal year 2007. The mean street estimate was $1.72 and GS easily beat these expectations however, increased uncertaintly concerning investment banks led the stock down over 5% on the day to a price of $133.01 per share at the close. Some highlights from the earnings release were securities services posted it's second best net quarterly net revenue in history to the tune of $916 million. GS is also the number one world-wide in announced and completed mergers and acquisitions despite decreases in revenue from financial advisory. Other than asset management and securities services, the rest of Goldman Sach's businesses deteriorated throughout the quarter however, relative to their peers, have been able to maintain profitability.



The en vogue question from analysts during the conference call was the potential for GS to merge with a commercial bank in order to increase it's capital base. The response by David Viniar was one of certainty that the company would not merge with a commercial bank in the near future. He added that even if they did merge, the frm could not use these deposits in order to fund their core businesses. Goldman Sachs continues to prove that they are the superior risk managers in the field of pure investment banks. Witnessing the history of the "universal bank" within the United States I do not believe that it is necessary for GS to merge with a larger institution. If anything, we are seeing true darwinism within the industry and it looks like only the most fit banks will survive. I personally believe GS is one of those companies and could benefit moving forward with increased purchasing power due to the lack of a number of viable competitors. I believe that we should hold onto this stock and upon further investigation, look into building our position further after the recent events in the financial markets settle somewhat.

UASBIG Blog Info

Hello all,

This is where we will be posting any updates (earnings, news releases, down more than 5% etc.) for any of the names that are currently in our portfolio. We would like to keep this standardized to ensure consistency and efficiency. Please refer to the following format for how we'd like to see posts:

GS 3Q Earnings 9/16/2008-(Analyst Names)

-First Paragraph- Regurgitation of what press release/management says regarding earnings, as well as whether or not they beat or missed street estimates

Second Paragraph- Your opinion/analysis of the event, implications? Buy more? Sell? Hold? Why?

This needs to be done within 24 hours. So for the companies you have previously been involved with, know these dates. For future companies analyzed, know the dates. Gary Jacobson, DeForest Hinman, Matt Reiner, Professor Smith, and Professor Faugere will all have access to this link. Clearly, any profanity or nonsense will not be acceptable. Keep it professional. We will also be posting dates regarding conference calls and group events through this blog as well as e-mails. Put this website on your favorites and check it like you check your e-mail. We will send out an e-mail regarding log-in information, so be on the watch for that.

Best Regards,
James Fowler and Ed Warner