Tuesday, December 23, 2008

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.

Sunday, December 21, 2008


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.

Saturday, December 20, 2008

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.

Friday, December 19, 2008

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.

Wednesday, December 10, 2008

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.

Monday, December 8, 2008

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.

Sunday, December 7, 2008

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.

Thursday, December 4, 2008

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:

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:


-Ed Warner

Monday, December 1, 2008

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.