Barron’s writes that shares in ethanol companies moved up before the Bush speech asking for less reliance on foreign oil. But, corn supply is not unlimited and the price of the commodity is rising while the price of oil is dropping. This could hurt Archer Daniels Midland (ADM), Pacific Ethanol (PEIX), Vera-Sun Energy (VSE) and Aventine Renewable Energy Holdings (AVR).
Certain IPOs from 2006 have done very well. These include Acme Packet (APKT) up 117%, Acorda Therapeutics (ACOR) up 164%, Chipotle Mexican Grill (CMG) up 159%, Crocs (CROX) up 106%, Home Inns and Hotel Management (HMIN) up 172%, and Isilon Systems (ISLN). Some IPOs from 2006 that did poorly include American Telecom (TES) down 34%, Aventine Renewable Energy (AVR) down 45%, Basin Water (BWTR) down 44%, Cardica (CRDC) down 53%, Digital Music (DMGI) down 51%, Himax Tech (HIMX) down 47. Another huge loser was Vonage (VG) off 59%. Topping off the companies that did unusually well were Mastercard (MA) up 152%, New Oriental Education (EDU) up 124%, Nymex Holdings (NMX) up 110%, Omniture (OMTR) up 117%, Omrix Bio (OMRI) up 203%, Osiris (OSIR) up 130%, Reiverbed Tech (RVBD) up 215%, and Vanda Pharma (VNDA) up 147%.
Even though earnings from Alcatel-Lucent (ALU) were very poor, the company still plans to improve its margins by cutting 200 hundred million euros in costs in 2007.
More of the Barron’s Round Table participants gave their picks. Meryl Witmer likes Navistar (NAV), Kaiser Aluminum (KALU), and Texas Industries (TXI). Oscar Schafer likes Flamel Tech (FLML) Avis Budget Group (CAR), Shire (SHPGY), Capitol Energy (CPX.Canada) and Tesco (TESOF). Fred Hickey thinks several stocks are shorts: Research in Motion (RIMM), Apple (AAPL), LAM Research (LRCX), Heelys (HLYS). Mario Gabelli likes Cablevision (CVC), Groupe Danone (DA), General Mills (GIS), International Flavors and Fragrance (IFF), Waste Management (WMI), GATX (GMT), and Liberty Media Capital (LCAPA).
If Altria (MO) spins off Kraft (KFT) and divides up its big tobacco business, the potential return is 20% over the next 18 months. The company, the world’s largest cigarette firm, no longer trades at a premium to Renolds (RAI), Carolina Group (CG), BAT (BTI) or Imperial Tobacco (ITY).
Highbridge Capital’s top five long positions are Hewlett-Packard (HPQ), Ashland (ASH), Molson Coors (TAP), Pepsi Blottling (PBG), and Verizon (VZ). Its top five shorts are Interpublic (IPG), Analog Devices (ADI), Merck (MRK), Medimmune (MEDI) and UST (UST).
BMC Software’s (BMC) stock has more than doubled, but sales and cash flow are flat. The stock is at $34 but should probably trade in the high $20s.
The European versions of the Dogs of the Dow returned 19% last year. The 2007 portfolion would include Lloyd (LLOY), France Telecom (FTE), ENI (E), Deutsche Telekom (DT), ABN Amro (ABN), BT (BT), HSBC (HBC), Vodafone (VOD), Royal Bank of Scotland (RBS), Forts (FORSY), Barclays (BCS), ING Group (ING), Societe Generale (SCGLY), Royal Dutch Shell (RDSA), BNP (BNPQY).
Douglas A. McIntyre
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