Home-haircut indicator: In the footsteps of the underwear indicator

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So, who out there cuts their own hair? I do, mainly because it is fading fast and it is a lot easier to have my wife take the clippers and then razor to my head rather than paying to go get my hair cut professionally. Now that I have started to outgrow my hair (a fact of life that many men have to accept), I have realized that it is both more convenient and cheaper to have my wife cut my hair.

This practice used to be a tradition, with fathers taking pictures while cutting their young boys' hair -- but it now turns out that home hair cutters are thriving during the recent economic downturn, at least according to a Wall Street Journal article (subscription required).

Continue reading Home-haircut indicator: In the footsteps of the underwear indicator

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It’s All About Certainty Of Closing

charlotterusse_E_20090831133349.jpgGulf Coast Town Center

A little while back, we told you about how Apax Partners played off Bankrate Inc.’s fear of the debt financing markets to force a lower deal price.

Now we’ve got another situation that shows that, in the current environment, the highest price is no longer guaranteed to win the war: Advent International Inc.’s pending acquisition of Charlotte Russe Inc.

In the “background of the offer” details in Charlotte Russe’s Securities & Exchange Commission filings, the retailer discloses that by early June, after going through several early rounds of merger talks, there were two parties who were seriously interested in the company, Advent and “Bidder B” (which may have been Golden Gate Capital, as previously reported by LBO Wire).

On June 18, Advent submitted a bid to buy Charlotte Russe for $15.25 a share, while Bidder B submitted a bid of $15.50 a share. (There were more negotiations later, with Advent ultimately agreeing to pay $17.50 a share.)

Advent’s bid wasn’t subject to the firm obtaining debt financing, while Bidder B’s bid was. Advent also was willing to grant Charlotte Russe the ability to pursue a claim against it should the firm breach its obligation to close the transaction, whereas Bidder B would only give Charlotte Russe the ability to collect a $25 million termination fee. And finally, Advent was willing to structure the deal as a cash tender offer followed by a merger, as Charlotte Russe wanted, while Bidder B wanted to conduct a one-step merger, which would likely take longer.

“The Charlotte Russe Board concluded that the risk that the transaction would not close was materially higher under Bidder B’s proposal than under the Advent proposal,” according to the filing. “In the judgment of the Charlotte Russe Board, the greater certainty of closing under the Advent proposal outweighed the $0.25 per share difference in price between the two proposals.”

AT&T Gained Little In Apple iPhone Deal, WSJ Contends

AT&T (T) is not getting much benefit from its position as the sole U.S. carrier for the Apple (AAPL) iPhone, the Wall Street Journal asserts in a Heard on the Street column.

The basic assertion of the piece is that while the company has added subs and likely kept others from defecting, those adds came at a considerable financial cost, while also creating a considerable strain on the company’s network, slowing performance enough that it has hurt the company’s reputation with consumers.

If this discussions sounds a little familar - it did to me - you might go back and reach my July post on this very question, in which Bernstein Research analyst Craig Moffett assesses whether the relationship with Apple is a blessing for AT&T - or a curse.

AT&T today is off 13 cents, or 0.5%, to $26.08.

Marvel, Fixing Disney’s ‘Boy Problem’

Tom Spurgeon worked as managing editor and executive editor of industry trade magazine The Comics Journal. He has written and edited books about the comic-book industry, wrote the comic strip Wildwood and currently runs the Web site ComicsReporter.com.

Deal Journal caught up with Spurgeon from his base in Silver City, N.M., to discuss Walt Disney’s $4 billion acquisition of Marvel Entertainment:

Deal Journal: What was your initial reaction to the Disney-Marvel deal?
Tom Spurgeon: This is usually dog days of summer for comics. This is just an astonishingly huge story. It’s validation for Marvel in a certain sense–Marvel had Disney as a role model. It’s almost like hearing about a wedding with a small town girl and a movie star. Certainly Disney is a role model for all entertainment companies of that generation. It’s definitely historically significant.

DJ: What’s Disney’s motivation for acquiring Marvel?
Spurgeon: I think they have a boy need. They seem to do very well with little girls, but not so well with little boys. Especially since they neutered characters like Mickey Mouse and Donald Duck to turn them into corporate icons, more or less they’re safer–they’re not shown with pistols or anything. [Marvel] gives them boy-related content.

DJ: Which superhero do you think is next to be made into a movie?
Spurgeon: I like Disney working with Marvel on “Mighty Thor,” which Disney will inherit. It’s a very mythological, sumptuous world, visually splendid. I like the synergistic sense of that. Big large world, that will be right up Disney’s aisle as far as toys and rides and television shows are concerned, because maybe Marvel couldn’t do itself. There’s a lot of room for them to have a longstanding relationship. From the financial standpoint, this has to work for Disney. They talked about paying a premium for a premium company–they have to find value in these properties.

DJ: Speaking of which, how milkable are these properties? Are people still interested in superheroes?
Spurgeon: I think “Iron Man” gives people hope. Superheroes have struggled to a point where they’re being judged individually, instead of as a genre. So, for example, “Watchmen” didn’t work, but “Iron Man” did. The last “Superman” didn’t, but “Batman” did. These properties are being judged on an individual basis, which is good.

DJ: Will the deal damage the integrity of these comic books, or prolong their existence?
Spurgeon: Marvel’s always been able to be profitable comic-book makers–for Disney to mess with Marvel’s publishing side, that would be like cutting open the golden goose to get more eggs. Hopefully Disney will be smart enough to leave that alone.

DJ: What’s been the response from the blogosphere?
Spurgeon: I think everyone’s kind of reeling. Most people are interested in the publishing side of things; they see an opportunity for Marvel to make it into the bookstore market. They don’t see the Disney-ification because of the Pixar example, which has worked out OK.

Serious Money: Williams second to Apple; still leads Berkshire, Google & Microsoft

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In early May, I wrote about why I thought Williams Companies Inc. (NYSE: WMB) would outperform than four other, more popular stocks. I compared it to Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Microsoft Corp. (NASDAQ: MSFT) and Berkshire Hathaway Inc. (NYSE: BRK.B).

It was May 11, that I last followed-up on my series of posts, and since then, for about half that period WMB indeed outperformed all four stocks. Since then, however, it has since fallen back to second place, behind AAPL.

Continue reading Serious Money: Williams second to Apple; still leads Berkshire, Google & Microsoft

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Camelina – a Relatively New US Biodiesel Source

So what the heck is Camelina? Until I read that it was used as the greater source of the biofuel component for the test flight of the Japanese Airlines plane in February, I must confess I had never heard of it. So since it has obviously got some legs (there was a greater percentage of it than of the algae derived fuel) herewith some thoughts picked up as I wandered through some Web pages, seeking more information.

Camelina in a Montana test plot

Apparently camelina came to the United States out of Europe, though it started out in Central Asia and the Mediterranean. In Europe much of the early cultivation of the crop has been replaced with canola fields, and it appears to compete with it as a crop. It arrived in Montana in about 2004 where it appealed both to farmers – as a source of omega-3 fatty acids, and to researchers who were looking for a source of biodiesel. The early work suggested that it could be sold more cheaply ($2 a gallon in 2005) than soy-generated biodiesel ($3 a gallon), but a cheaper price is hardly guaranteed to induce farmers to grow it. The oil has historically been used for cooking, with the meal fed to animals.

Recent interest in the plant was spurred by the omega-3 content:

there is renewed interest in Camelina for its oil which is rich in the omega-3, alpha-linolenic acid (ALA). Ironically, this quality had contributed to its decline, due to difficulties with hydrogenating the highly unsaturated oil for margarine. Linseed (60% ALA) and Camelina (45% ALA) oils are by far the richest plant sources of omega-3. Rapeseed has lower levels of ALA (10%) and sunflower almost none. Camelina oil is more stable than linseed, due to its natural antioxidants, which also have health benefits in their own right.

It is a branch of the mustard family, and has the benefit over canola in that it is resistant to flea beetles, which are a problem for canola in Montana. Like canola it prefers cooler climates; for greatest yields being planted before the 15th – 20th March in Montana with harvesting in Late June to late July. (Similar dates hold for planting and harvesting in Wales.) Thus in 2006 there were somewhere between 7,000 and 20,000 acres planted in Montana, in 2007 this grew to 24,000 acres. It also has the benefit, over canola, of being able to survive drought and spring freezing. Further there is a winter variety that can be grown in areas with mild winters. The report from Montana State describes the oil content as:

Camelina oil has unique properties. The oil contains about 64 percent polyunsaturated, 30 percent monounsaturated, and 6 percent saturated fatty acids. Importantly, camelina oil is very high in alpha-linolenic acid (ALA), an omega-3 fatty acid which is essential in human and animal diets and has important implications for human health. The oil also contains high levels of gamma-tocopherol (vitamin E) which confers a reasonable shelf life without the need for special storage conditions.

In comparison to canola (rapeseed) which produces some 127 gal/acre, camelina is reported to produce in the 62 to 100 gal/acre range.

Field trials of production showed a wide range of results from 330 to 1700 lbs of seed per acre, with oil content varying between 29 and 40%. There are however a significant number of varieties of the plant and thus tests have been carried out to determine which might yield the better crop given the Montana growing conditions. Optimal seeding rates seem to be in the 6-8 lb/ acre range, because the small size of the seed (400,000 seeds per lb.) apparently make it more difficult to ensure germination and achieve an optimal plant density of around 9 plants/sq. ft. It does apparently grow better when the ground nutrients are supplemented with nitrogen up to levels of 80 lb/acre.

The Montana report ends with the following

At this point there are many more questions than answers when it comes to camelina production and use. Early experience in Montana has shown that with good management, and timely planting, good crop yields can be attained. As a broadleaf cool season crop, camelina could become a good complementary crop to wheat, providing a needed break from cereals in wheat production. Crop rotation is a great way to reduce disease and insect pressure for any crop, and there are few good economic crop rotation options for wheat in Montana. Weed control is a major limitation to camelina production. Currently there are no herbicides registered for use with this crop, which means rescuing a field that becomes infested with weeds is difficult.

However varieties of the plant produces its own herbicide.

Data on crop production is still somewhat limited since the USDA did not start data collection until 2007, and the 2008 report was issued this April. Production in Montana in 2008 was significantly down (at 12,200 acres) over that of 2007. The average yield was 569 lb/acre, down 4.8% over 2007, though the range from 400 to 1000 lb/acre makes it unlikely that any conclusion can be drawn from those numbers.

The Welsh report comments on the current extraction process:

Camelina typically contains approximately 35% oil. Cold pressing is not 100% efficient, the proportion of oil extracted being dependant on the type of seed and how well the press is set up.

As an example, a tonne (1000 kg) of Camelina will contain 350 kg of oil, of which the press will extract 250 kg. Cold pressing (400C) is required, because high temperatures will damage the antioxidants. Drought, lack of sunshine during seed formation, herbicide desiccation applied too early, and downy mildew infection may all lower the oil content of the seed.

In Wales they can get up to 1 t/acre.

Oregon is considering growing the crop after looking at trials in nearby states:

Under dryland conditons in Montana, camelina is expected to yield 1,800 to 2,000 pounds of seed per acre in areas with 16 to 18 in hes of rainfall and 900 to 1,700 lb/acre with 13 to 15 inches of rainfall. Under irrigation, seed yields of 2,400 lb/acre have been reported. Three years of yield trials at Moscow, Idaho show a 2,100 to 2,400 lb/acre seed yield potential with 25 inches of rainfall.

At present there are restrictions on the growing of canola in Oregon:

Oregon officials in 2005 restricted canola-for-oil production in the valley to protect the valley's high-value vegetable seed crops. Officials recently announced they are going to renew the prohibitions.

"I would like to grow canola, but the state interferes with that, too," Van Leeuwen said.

Fears are canola will attract insect pests common to canola and brassica crops and that canola will cross pollinate with cauliflower and broccoli, lowering seed purity and eventually driving vegetable seed contractors out of the valley.

Camelina may overcome some of those concerns.

So my quick look suggests that it about on a par with canola (rapeseed) with some survival benefits over that plant as a crop, that it is only just being introduced into the United States as a crop and that, while it has potential, and there are some productive strains identified, it is still a little early in the game to know if it will pan out quite as well as the Biofuels Digest suggests.

Semi industry looking more chipper

The semiconductor industry appears to be recovering rapidly from the recession, according to the latest industry figures. Sales in July were down 18.2 per cent on the same month last year, according to the Semiconductor Industry Association. However, that compares to an average monthly fall of 25 per cent in the first six months of the year. And [...]

As Venture Funds Shrink, So Will Salaries

Or so a couple of investors predict, a prospect that no doubt thrills Limited Partners.

Former venture capitalist Chris Dixon (he worked at Bessemer) argues that VCs raise bigger and bigger funds and push more and more money at startups — for the same valuation, even when those startups don’t need it — so they can keep justifying their management fees, which Dixon points out can add up fast when you take 2 percent of a $500 million fund every year for 10 years.

Dixon’s latest project is Hunch, a startup he co-founded that teaches machines how to help people make decisions. It appears not to have taken venture capital. He calls for VCs to adopt performance-based compensation — not just for their startups, but for themselves.

But venture funds are getting smaller, as NVCA data shows, and Trevor Loy argues that LP’s tighter purse strings are inevitably encouraging a different type of VC — one who’s satisfied with management fees of $300,000 to $400,000 a year rather than $1 million and who expects to show up every week to work.

Loy’s Flywheel Ventures pulls three quarters of its investments out of R&D labs and requires partners to spend 20 hours a week at each of their startups for the first year to 18 months. He adds that the biggest fund the firm can comfortably deploy is $150 million.

If a small fund puts up great returns, “you can make that back in carry,” he says. “But the years of GPs making $1.5 million in salary even if returns are negative does not work anymore. I think the biggest fallout in the industry is the $400-$500 million-plus IT funds. There’s no business model for that.”

(Although cleantech and biotech funds may continue to be large).

You agree? Are the days of big VC salaries really gone?


Verizon Cuts Prices On Some BlackBerry Models

Verizon (VZ) has cut prices on some Research In Motion (RIMM) BlackBerry models, according to Morgan Keegan analyst Tavis McCourt.

The analyst writes in a brief research note today that a survey of mobile devices at major carriers found the following cuts:

  • BlackBerry Tour: $149, down from $199.
  • Pearl Flip: $39, down from $79.
  • Storm $49, down from $99.

McCourt writes that he suspects RIMM is bearing at least some of the incremental costs through higher rebates to Verizon.

RIMM today is down $1.51, or 2.1%, to $72.32.

Analyst upgrades, downgrades and initiations: BA, FRO, GENZ, JBLU, MS, VARI …

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Analyst upgrades:

  • FBR Capital upgraded Frontline (NYSE: FRO) to Market Perform from Underperform to reflect the company’s above-average day rates and alleviated near-term financing pressures. The firm raised its target on shares to $23 from $14.
  • Baird upgraded Varian Medical (NASDAQ: VARI) to Outperform from Neutral and said checks at ESTRO meeting indicate European radiation therapy market demand will remain “respectable” in 2010 and that launch of Unique could drive incremental demand in developing markets. The firm has a $49 target on shares.
  • Goldman believes GameStop (NYSE: GME) Street expectations are beatable and valuation is attractive. The firm upgraded shares to Conviction Buy from Neutral and has a $28 target.
  • Borg-Warner (NYSE: BWA) was upgraded to Outperform from Market Perform at Wells Fargo.
  • KKR Financial (NYSE: KFN) was upgraded to Outperform from Market Perform at JMP Securities.
  • Cathay Pacific (OTC: CPCAY) was upgraded to Outperform from Neutral at Credit Suisse.

Continue reading Analyst upgrades, downgrades and initiations: BA, FRO, GENZ, JBLU, MS, VARI …

Analyst upgrades, downgrades and initiations: BA, FRO, GENZ, JBLU, MS, VARI … originally appeared on BloggingStocks on Mon, 31 Aug 2009 12:00:00 EST. Please see our terms for use of feeds.

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Apple Makes It Official: Music-Related Event September 9

apple eventApple (AAPL) has made it official: the company will hold a product launch event on September 9 at Yerba Buena Center For The Arts in San Francisco. Festivities start at 10 a.m.

The logo for the event features a woman in silhouette listening to an iPod, and reads “It’s only rock and roll, but we like it.”

There has been widespread anticipation that Apple will be launching refreshed iPods and an update to iTunes; whether the much-anticipated tablet PC shows up, we’ll have to wait and see.

AAPL today is down $2, or 1.2%, to $168.05.

Meanwhile, here’s a nice version of the song, with Mick and Tina Turner:

Index: Global Credit Conditions Improved in August

NEW YORK (Reuters) - Global credit conditions improved in August as the number of companies at risk of defaulting on their debt fell, and credit conditions are now better than the average since 1990, according to risk management firm Kamakura Corp.

The number of companies with a high risk of defaulting on their debt globally fell 2.3 percentage points in August, the fifth consecutive month of decline, to 12.4 percent of the global public company universe, the company said on Monday.

This is down from its recent peak of 24.3 percent in March, Kamakura said. The all time low was 5.4 percent in April and May of 2006.

A company is considered troubled when its default probability is in excess of 1 percent. The index hit a high of 28 percent in September 2001.

The number of companies with a default probability of more than 20 percent fell by 38 to 258, or a drop of 0.1 percentage point to 1.0 percent of the 26,951 companies in Kamakura’s database.

Those with a 10 percent to 20 percent default risk also fell by 0.2 percentage point to 1.3 percent of the total universe, the company said.

Companies with a 5 percent to 10 percent default risk dropped by 0.5 percentage point to 1.8 percent in the month, and companies with a 1 percent to 5 percent default probability decreased by 1.4 percentage point to 8.4 percent, Kamakura said.

(Reporting by Karen Brettell; Editing by Kenneth Barry)


Aug. 31st, 2009 @ 12:00pm – SharpCharts Not Appearing, Now Fixed

Around 12pm Eastern, our SharpCharts charts stopped appearing or they would only appear in the default style.  The problem was traced to a database server that had suddenly started running very, very slowly for some reason.  If that server had stopped working completely, our system would have detected that and things would have been fine.  However because it had not totally stopped working and was just running really slowly, it caused problems for everything else.

The problem was fixed about 12:20pm Eastern.  We are now working on finding the cause of the server slowness as well as trying to do a better job of handling this kind of situation in the future.  We apologize for whatever inconvenience this outage has caused.

Baker Hughes to acquire BJ Services

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Baker Hughes to Buy BJ ServicesSome big acquisition news in the oilfield service industry today, as Baker Hughes (NYSE: BHI) announced that it would be buying BJ Services (NYSE: BJS).

The deal is for cash and stock, and is reportedly valued at $5.5 billion.

According to the details that have been released, BJS stockholders will be getting 0.40035 shares of BHI stock in addition to $2.69 in cash.

Continue reading Baker Hughes to acquire BJ Services

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CMS Pros Form New Small-Cap PE Firm

Three senior investment pros with in the CMS private equity group are leaving to form a new small-cap private equity effort, and already have made their debut investment.

The news was announced earlier today in a mass email from Michael Rafael, a CMS director who is leaving alongside Daniel Eisenstadt (managing director) and Marc Nathan (director). All three will be partners with MDM Equity Partners, which ”will invest in and operate small businesses.”

Rafael writes that the trio’s first investment is in the veterinary services sector, without prividing additional details. The above photo is from the sparse MDM website, but appears to be for a hot dog shop in Albuquerque (we’ll assume that Raphael was referring to literal animals, not metaphoric ones).

I spoke briefly to Raphael on his cell phone, and he promised to call back later in the afternoon. I’ve also sent an email to CMS chief investment officer William Landman, to see what these departures mean for his small-cap effort going forward (Philadelphia-based CMS also manages mezz investments, real estate investments and a life insurance co-op).


Will eBooks Kill Off The Hard-Cover Book?

tombstoneCould the hard-cover book be headed for extinction?

Arnaud Nourry, CEO of French publishing group Hachette Livre told the Financial Times that pressure from Google’s (GOOG) digital library project and from the move by Amazon (AMZN), Barnes & Noble (BKS) and others into electronic books is forcing publishers to consider drastic price cuts. He thinks one result could be the death of hardback books.

Hourry also said publishers are “very hostile” to Amazon’s pricing strategy of charging far less for electronic editions than for hard-cover books.

Monday links: junky expectations

Merger Monday is back!  (Clusterstock)

Do world stock markets discount the volatility of the Shanghai market?  (Felix Salmon)

“This is why the speculative grade market has rebounded so smartly this year. After a horrendous 2008, 2009 has been a strong year in spite of climbing default because prices anticipated the Moody’s doomsday scenario.”  (Falkenblog)

“Deep-value manager Third Avenue Management Inc. is launching its first debt fund, which will invest in a concentrated portfolio across the credit spectrum.”  (WSJ also 24/7 Wall St.)

Activist hedge funds are still finding it rough going out there.  (FT)

Using JunkDEX to track the “speculative frenzy in junk financials.”  (VIX and More)

Looking for a better market parallel.  (Daily Options Report)

What have we learned in the past 25 years about what drives stock returns?  (CXO Advisory Group)

“Out of sight of most investors, who were focused on more popular, more easily understood strategies like long-short equity, managed-futures traders have become engineers of change, fusing academic research with new technology.”  (Institutional Investor)

“As a trader, I’m always putting out little fires (i.e. closing poor trades at small losses) and I’m constantly working proactively and aggressively to avoid out-of-control disasters.”  (Kirk Report)

“We contend that the current turnaround in markets and confidence has been so quick because information and news spreads so much faster now than it ever has.”  (Bespoke)

“The question is not why do markets behave irrationally but why do they ever behave rationally?”  (The Psy-Fi Blog)

Flash trading is a profitable business for Direct Edge.  (WSJ)

Do we really need Bear Stearns 2.0?  (Dealbreaker)

Companies can only cut costs for so long.  Revenues must increase to generate earnings growth.  (WSJ)

It is still too early to make a call on TARP profitability.  (NYMag, Big Picture vs. NYTimes)

“Last week’s data persuaded me to move the Econbrowser Emoticon back into neutral, signifying that I now judge overall output to be growing slowly rather than declining.”  (Econbrowser)

“(E)verywhere you see what’s being hailed as recovery, you see massive government intervention. Massive.”  (MarketBeat)

It’s well past time to put Fannie and Freddie out of their misery.  (Breakingviews)

“As sterling as his résumé is, one question is inescapable: Is [J. Christopher] Flowers a one-hit wonder as a private equity investor?”  (Fortune also Clusterstock)

Who wouldn’t get into the wind farm business given these tax incentives?  (WSJ)

Add the MUI or men’s underwear index, to your list of unconventional economic indicators.  (WashingtonPost also Free exchange, Time)

On the difficulties in putting together a list of ten books for first-year economics students.  (Mankiw Blog, EconLog)

“Fundamentals are fundamentals, and anyone arguing that they’ve changed needs a pretty good explanation for why. Social proof isn’t enough, even though it feels like it is.”  (Ezra Klein)

What might be coming in Hank Paulson’s memoir.  (Vanity Fair)

Is Apple (AAPL) the new Microsoft (MSFT)?  (Silicon Alley Insider)

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