| Home | My photos | Forex | My trading | Contacts |
|
|
You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
|
Insider Selling Jumps to Highest Level Since 2007April 24 (Bloomberg) -- Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market. Gap Inc.’s founding family sold $45 million of shares in the largest U.S. clothing retailer this month, according to Securities and Exchange Commission filings compiled by Bloomberg. Daniel Warmenhoven, the chief executive officer at NetApp Inc., liquidated the most stock of the storage-computer maker in more than six years. Sales by the co-founders of Bed Bath & Beyond Inc. were the highest since at least 2001. While the Standard & Poor’s 500 Index climbed 28 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc. “They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.” Insiders Sell Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients. That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992. The index rose 1.7 percent to 866.23 today after the Federal Reserve said most banks that underwent stress tests hold enough capital and companies from Ford Motor Co. to American Express Co. posted better-than-estimated results. Looking Forward The S&P 500 has jumped 28 percent in 33 trading days, the sharpest rally since the 1930s, on speculation the longest recession since World War II will soon end. Stocks rebounded as President Barack Obama outlined a $787 billion package of spending and tax cuts to stimulate growth, the Treasury unveiled plans to finance as much as $1 trillion in purchases of banks’ distressed assets and the Fed pledged to buy more than $1 trillion of Treasuries and bonds backed by mortgages to drive down interest rates. With corporate America stuck in its seventh straight quarter of earnings decreases, the longest in seven decades, executives may have become too cautious, said Penn Capital Management’s Eric Green. Investors are looking to the final quarter of the year, when S&P 500 companies will increase operating income by 71 percent, according to analyst estimates compiled by Bloomberg. They forecast profits will fall 33 percent in the second quarter and 21 percent in the third. “Things are a lot better than they were,” said Green, director of research at Penn Capital, which oversees $3 billion in Cherry Hill, New Jersey. Recent history also shows that “insiders have been wrong,” he said. Confidence Game Jeffrey Immelt, CEO of General Electric Co., purchased 50,000 shares at prices from $16.41 to $16.45 on Nov. 13, when the stock closed at $16.86. The shares have since fallen 28 percent after the Fairfield, Connecticut-based company reduced its dividend for the first time since 1938 and lost the AAA credit rating from S&P that it held for more than 50 years. Insiders of consumer and technology companies have been selling the most stock relative to the amount they purchased this month, data compiled by Washington Service show. John Fisher, Robert Fisher and William Fisher, whose parents Donald and Doris Fisher founded San Francisco-based Gap in 1969, sold a combined 2.99 million shares at between $15.11 and $15.36 a share on April 3 and April 17, SEC filings show. Gap rebounded 55 percent from its low on March 6. The stock gained 1.1 percent since the Fishers’ last sale. Reasons to Sell Gap spokesman Bill Chandler said that “from time to time, based upon the advice of financial advisers, the members of the Fisher family will decide to sell stock.” Warren Eisenberg and Leonard Feinstein, who founded Union, New Jersey-based Bed Bath & Beyond in 1971, sold 1.05 million and 1.1 million shares at $30.90 apiece on April 9, the most since at least December 2001, the filings show. The offerings came one day after Bed Bath & Beyond surged 24 percent, the biggest advance in nine years, on a smaller than estimated decline in fourth-quarter profit. Spokesman Ken Frankel said Eisenberg and Feinstein, who currently serve as co- chairmen of the largest U.S. home-furnishings retailer, sold for “estate-planning purposes and diversification.” At NetApp, Warmenhoven sold 1.25 million shares, the most since at least 2002, for about $21.3 million between April 3 and April 21 at prices from $16.10 to $18.10 a share, the SEC filings show. Shares of the Sunnyvale, California-based company, up 49 percent from $12.52 on the March 9 stock market low, gained 3.3 percent since then. Moving On Warmenhoven sold shares he received from exercising stock options that were due to expire next month, according to an e- mailed response by Lindsey Smith, a spokeswoman for NetApp. He reaped a profit of about $7.3 million selling the shares at an average price of $17.08 apiece, based on the conversion price of $11.25 for options he held, the data show. “They’re going to say, ‘Thank you very much,’ and move on to cash or something else,” said David W. James, who helps manage about $2 billion at James Investment Research Inc. in Xenia, Ohio. “This is not a situation that suggests to us we’re seeing an economic recovery.” The Great Credit Card Battle To ComeThe next front in the banking wars will be over credit cards. Some of the nation’s biggest bankers — including representatives of Citigroup, JP Morgan Chase, and other recipients of billions of taxpayer dollars — are meeting today with the President to ask him back off his move to reform credit-card lending practices. What’s happening to credit card lending is a smaller replay of what happened to mortgage lending. For years, banks used every gimmick possible to get the public to use their cards — regardless of the credit worthiness of the customer. They lured borrowers with low “teaser” rates. They told borrowers they could get by paying minimum balances. And now that tens of millions of Americans are poorer than they used to be, the credit-card bubble is bursting. Credit card delinquencies are soaring. At the Bank of America, the largest U.S. lender by assets, 7.8 percent of credit-card accounts were delinquent in February by more than 30 days, up from 5.9 percent last August. Yesterday, Bank of America reported a $1.8 billion first-quarter loss in its credit-card services unit. As delinquencies mount and profits shrink, card lenders are raising fees and interest rates, including rates on existing balances. They’re also charging higher fees when customers exceed their credit limits, and shortening the duration of the teaser rates. When a customer makes a payment in excess of what’s owed, card companies now routinely apply the excess to balances with the lowest rates rather than those carrying the highest rates. And banks disclose very little of relevance: For example, most customers have no idea how long it will take them to pay off their balances if they make minimum repayments, or what interest they’re actually paying on their balances. As more and more Americans find themselves in the credit-card squeeze, they’re complaining loudly. But the bankers have their own loud lobbyists on Capitol Hill, whose voices haven’t been muzzled despite the giant bank bailout. Last month, the Senate Banking Committee reported a bill that bans rate increases for existing balances, among other things. But the vote was close — 12 in favor, 11 opposed — and its future in the Senate is uncertain. A House bill advanced yesterday, sponsored by Representative Carolyn Maloney, Democrat from New York, has only a fifty-fifty chance of succeeding. Meanwhile, the Fed is working on a set of watered-down reforms scheduled to go into effect a year from July, but that’s way too far off to avoid the pending battle. Enter Obama. The Treasury holds lots of cards given how dependent the big banks are on its solicitude. Meanwhile, the public has grown weary and suspicious of the bank bailouts. Knowing how unpopular the bailouts have become, the Administration is considering how to get additional capital to the banks without going back to Congress for the money. One big idea is to convert taxpayer-provided bank loans into bank equity — even though the swap puts taxpayers at greater risk (after all, loans have to be repaid, but equity can continue to fall). That’s why getting tough on the banks’ credit card lending practices has such appeal for the Administration, politically. It puts the White House on the side of the people rather than Wall Street, on an issue that the public is becoming more and more upset about. And the Administration’s push could be enough to get reform legislation through Congress. The bankers will tell Obama today that any new contraints on credit card lending will cause the banks to reduce the amount of credit card lending they do, which will hurt the economy. But it’s a weak argument because it presupposes that any lending is good for the economy — even lending to people who don’t know what they’re getting into and can’t repay the loans. It’s the same argument banks used two years ago, when precient observers warned that constraints had to be placed on mortgage lending practices. What may hurt the economy in the short term, we now know, may save it from even larger pitfalls to come. WSJ: BofA CEO Says Was Told to be Quiet on MerrillNEW YORK (AP) -- Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank's acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal. The New York AG's office plans to release the testimony on Thursday to federal regulators and overseers of bailout funds and banks, the newspaper reported after reviewing a transcript. "We believe we acted legally and appropriately with regard to the Merrill Lynch transaction," Bank of America spokesman Scott Silvestri told The Associated Press Thursday. He declined further comment about the report. Lewis testified in February to New York Attorney General Andrew Cuomo's office, which has been trying to determine if Merrill and Charlotte, N.C.-based Bank of America failed to provide adequate disclosures to shareholders about the more than $15 billion in losses Merrill incurred in the 2008 fourth quarter and hefty bonus payments. Had they had that information, BofA shareholders might have voted down the deal. The Journal said in Thursday's edition that Lewis doesn't say in the transcript that he was told specifically to remain silent about Merrill's burgeoning losses. But the paper quotes Lewis as testifying that disclosing that information "wasn't up to me," and that he was warned by Paulson and Bernanke that failing to complete Merrill's takeover would "impose a big risk to the financial system." Citing a person familiar with the matter, the newspaper said Paulson told the NY AG's office last month that Lewis may have misread some remarks about Treasury's disclosure requirements as instead pertaining to his bank's obligations. The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under and insurer AIG received its initial government support. Both the government and Wall Street were under substantial pressure to contain the financial meltdown. Bank of America had received $25 billion in federal bailout funds, but was later given an additional $20 billion as Lewis showed trepidation about completing Merrill's purchase and said the bank needed help offsetting the losses it was absorbing from the troubled brokerage. Just a few weeks after the deal was completed, Bank of America's earnings report showed the major hit its balance sheet would take on the Merrill transaction, quickly making Lewis the target of much shareholder fury. Two of the nation's largest state pension funds are seeking to lead a class action lawsuit against Bank of America, alleging the bank's management "misstated or omitted" important information about Merrill's financial health before the deal was completed. And Finger Interests Number One Ltd., which owns about one-fifth of one percent of Bank of America stock, is asking shareholders to vote against re-electing Lewis as well as lead director O. Temple Sloan and Jackie Ward during the bank's annual meeting April 29. Bank of America warned of worsening loan default problems this week even as it posted a first-quarter profit of $2.81 billion. The amount of its problem loans more than tripled to $25.7 billion and Lewis said he couldn't predict when the bank's credit morass would end. GM Employee Stock Fund Dumps All Company SharesWASHINGTON (AP) -- The manager of General Motors' employee stock fund has sold off all remaining shares of the troubled auto maker, which is closing plants and slashing costs in a bid to avoid bankruptcy. General Motors revealed in a regulatory filing late Friday that its employee stock-purchase plan has unloaded all shares of the company in favor of short-term and money market investments. The plan's financial manager, State Street Bank and Trust Co., said it began selling off shares of the Detroit automaker in late March "due to the economic climate and the circumstances surrounding GM's business." GM disclosed the development in a filing with the Securities and Exchange Commission. State Street said the General Motors Savings Plan now consists entirely of short-term, cash-based investments. By the end of May, the GM Common Stock Fund will be eliminated as an option for company employees, the investment manager said. The selloff underscores the grim outlook for GM, which plans to shut down more than a dozen plants over the summer to conserve cash, slash costs and align production levels with demand. The company is racing against the federal government's June 1 deadline to squeeze larger concessions from bondholders and the United Auto Workers union. The cost-cutting efforts are expected to lead to thousands more layoffs and temporary factory closures. Recession Leads to Downshift for the U.S. Shipping IndustryMost of what we buy in Arizona comes by truck or train, whether it’s avocados from Mexico or cars from Detroit. And that makes the freight-transportation business a leading economic indicator and a key sector to watch for a recovery during a recession. So far this year, there hasn’t been enough good news in the industry to indicate an upward swing. Overall, the freight transportation business remains in a slump because consumers aren’t buying, companies aren’t ordering and factories aren’t manufacturing as much as they were a year ago, experts say. “We were in a recession before the recession hit the rest of the economy,” said Karen Rasmussen, president and chief executive officer of the Arizona Trucking Association. “It started in 2006, and we’re usually the first ones to see a recovery. We are seeing little things here and there but nothing that would establish a trend so far.” Much of the industry, particularly rail and overseas shipments, wasn’t doing that badly for most of 2008 until the Lehman Brothers collapse in September, which resulted in frozen credit and global problems. Freight shipments have picked up some since then, leading some experts to hope that the sector has bottomed out, enabling a recovery to start. But when? The American Trucking Association’s seasonally adjusted For-Hire Truck Tonnage Index, based on a survey of members, rose a total of 4.8 percent in January and February, indicating that business picked up nationwide. But the ATA said that does not erase a 7.8 percent contraction in December. Truck-shipment data isn’t available at the state level. But the industry is hurting, as the Arizona Department of Commerce reported this month that trucking jobs dropped almost 12 percent in March compared with a year earlier. Last year was particularly hard on truckers. They had to deal with record-high diesel prices, on top of a reduced demand for hauling lumber and other construction materials; reduced demand for clothes, electronics and other products made in China, India and other countries and shipped to the U.S. in containers; and reduced demand for mining materials and cars and trucks. Many drivers lost their jobs or shut down their companies, said Pam Howerton, who for 24 years has operated Security Truck Park Inc. in west Phoenix. The lot rents space by the day, week or longer to truck owners. She sees firsthand how the truck business has slumped as she’s lost customers she had served for decades. “The main thing people are complaining about is that there is just no freight,” she said. “People who used to drive every day a week now just drive a few days a week. It’s not paying their insurance. It’s not paying their costs.” I’m really sympathetic. I feel for them. I really do. It hurts me to see them hurt.” Knight Transportation, the largest public trucking company in the Phoenix area, reported Wednesday that shipments fell in the fourth quarter of 2008 and the slump continued into this year. But as the first quarter progressed, the decline in its shipments started moderating and shipments began increasing. Loads hauled per week grew from about 12,150 in January to 12,800 so far this month, Kevin Knight, chairman and chief executive officer, said in an earnings conference. In contrast to the trucking business, most of last year was good for the rail business, said Tom White, a spokesman for the Association of American Railroads in Washington. Because the dollar was weak for part of the year, foreigners were able to buy American products cheaply and there was a huge demand for coal, commodities and American goods, he said. It also helped that high diesel prices made it cheaper to transport goods by rail than truck. Volumes of cargo moved on rails nationwide last year were running only a few percentage points below the previous year, but in mid-November the bottom dropped out, White said. Union Pacific Corp., the country’s largest railway company and operator of a line through the Phoenix area, reported a 26 percent increase in earnings, to $2.3 billion, in 2008. Even though it also posted a profit in the fourth quarter, business volumes fell 12 percent compared with a year earlier. White is cautiously optimistic. “At this point, about the best we can say is that maybe it shows signs of having bottomed out,” he said. “But that’s a little difficult to call right now because of the fact that we have had some really bad weather conditions in recent weeks and that has adversely affected our traffic. It’s a little difficult to come up with any sort of pattern yet.” Reports on container shipments around the world show that international trade also dropped off sharply in the fall with the credit-market freeze. As a result, various trade publications report that ships have been idled and orders for new ships and containers have been canceled. The shipping industry also now has to deal with increased piracy on some key trade routes, leading to more security costs and, in some cases, longer trips to avoid problem areas. Singapore-based Neptune Orient Lines, a large container-shipping company that plans to move its American headquarters to metropolitan Phoenix this year, said in its 2008 earnings report in February that “the collapse in global trade over recent months is without precedent.” It said shipments rapidly deteriorated beginning in September and continued to fall every week. Neptune spokesman Mike Zampa said the U.S. exports to Asia rose in 2007 and part of 2008, but then fell. Recently, they have begun to rise again. “It is not significant,” he said. “There is nothing that would indicate that we are out of a recession, nothing that would indicate the U.S. shipping-container industry is past the worst of it. But at least it’s a glimmer of hope.” Neptune plans to move its American headquarters from Oakland to metro Phoenix but has not announced the exact location. From here, the company will manage operations of 130 ships and thousands of containers as they move among ports throughout North, Central and South America. The company doesn’t expect to be hurt by pirates, who have increasingly begun attacking ships in the Gulf of Aden near Somalia, Zampa said. That is a major shipping route leading to the Red Sea and Suez Canal. “Some carriers have begun to go clear around the tip of Africa to avoid it, but most shipping lines are still conducting routes through the canal,” said Zampa, director of corporate communications. He said Neptune’s ships have security plans and trained crews, and follow prescribed routes through the area. Also, the ships are high and fast. “We keep constant surveillance for approaching craft,” he said. “And one thing in our favor is that our ships are fast and powerful and create quite a wake. And that is really one of the best deterrents against small pirate crafts. The wake can discourage unwelcome approaches.” |
|
|||||||
Previous Issues
|
| ©2007 Olesia | Home • My photos • Forex • News • My trading • Contacts |