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Warren Buffett’s Annual Letter: Mistakes, Buybacks and Apple
Warren Buffett published his annual letter to shareholders over the weekend. The annual update, which has become one of the largest events in the calendar for value investors, provided Buffett's views on one of the most turbulent and extraordinary years for the financial markets in recent memory. Q4 2020 hedge fund letters, conferences and more Read More
* US: Dow: 13473.50 (-0.81%), S&P 500: 1441.48 (-0.99%), NASDAQ: 3065.02 (-1.52%)
* Europe: CAC: 3382.78 (-0.70%), DAX: 7234.53 (-0.78%), FTSE: 5810.25 (-0.54%).
* Asia-Pacific: Australia: 4505.30 (0.52%) China: 2115.23 (1.93%), Hong Kong: 20937.38 (0.54%), India: 5704.60 (0.50%), Japan: 8769.59 (-1.07%).
* Metals: Gold: 1765.00 (-0.60%), Silver: 33.98 (-0.09%), Copper: 3.72 (0.03%)
* Energy: Crude Oil: 92.39 (3.43%), Natural Gas: 3.47 (3.18%)
* Commodities: Corn: 7.41 (-0.10%), Soya Bean: 15.48 (-0.10%), Wheat: 8.64 (0.03%)
* Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2883 (0.64%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.6006 (0.13%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 78.2450 (-0.08%)
* 10 year US Treasury: 1.713% (-0.030)
Market and Economy News Update
U.S. markets end lower: U.S. markets closed near the lows of the day on Tuesday amid fears of a slowdown in global growth. Investors also braced for the unofficial start of the third-quarter earnings season. The Dow Jones Industrial Average (INDEXDJX:.DJI) slumped 110.12 points, or 0.81 percent, to end at 13,473.53. The S&P 500 (INDEXSP:.INX) declined 14.40 points, or 0.99 percent, to finish at 1,441.48, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) tumbled 47.33 points, or 1.52 percent, to close at 3,065.02.
Oil prices rally: Oil prices rallied on Tuesday amid investor concerns of a supply disruption in a turbulent Middle East. Traders were worried the conflict in Syria may spill over to other countries in the region and disrupt oil supplies. Crude oil for November delivery surged 3.4 percent, to settle at $92.39 a barrel on the New York Mercantile Exchange. Brent oil for November settlement jumped 2.4 percent to $114.53 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
* Alcoa Inc. (NYSE:AA) reported third quarter earnings excluding one-time items of 3 cents a share, on revenue of $5.83 billion. Analysts expected the aluminum producer to post break-even per-share earnings and revenue of $5.54 billion.
* Yum! Brands, Inc. (NYSE:YUM), the parent company of Pizza Hut and KFC, posted third quarter profit excluding some items of 99 cents per share, 2 cents above the average analysts’ estimate. Revenue for the period came in at $3.14 billion, missing estimates of $3.6 billion. The company raised its full-year earnings forecast, but still fell short of the Street’s view.
* Chevron Corporation (NYSE:CVX) fell 1.7 percent in extended hours trading after it reported in its interim update that third-quarter earnings are expected to be substantially lower than in the second quarter. The oil giant is scheduled to post results on November 2.
* Wells Fargo & Company (NYSE:WFC) ended 2 percent lower after the U.S. government filed a mortgage fraud lawsuit against the biggest U.S. mortgage lender, alleging that the bank failed to follow underwriting rules on thousands of government-insured loans.
* VeriFone Systems Inc (NYSE:PAY) declined as much as 8.5 percent following a Forbes report that rival company Square is on the verge of announcing a partnership with NYC to implement a payment systems in city cabs. Shares of VeriFone, however pared losses to end 8 percent lower, after the New York City Taxi Commission refuted the report.
* Consumer-electronics retailer Best Buy Co., Inc. (NYSE:BBY) said CFO Jim Muehlbauer will leave the company at the end of the 2013 fiscal year.
* Metlife Inc (NYSE:MET), the largest U.S. life insurer, launched an asset management business on Tuesday that will focus on real estate and private-placement debt.
* Chip maker Intersil Corp (NASDAQ:ISIL) slid 4 percent after lowering its third-quarter revenue outlook due to weakness in the global personal computing markets. The company estimated revenue of about $151 million in the third quarter, compared to the average analysts’ estimate of $159.6 million.
* Oil producer Continental Resources, Inc. (NYSE:CLR) jumped 2.8 percent after the company said it plans to triple its production and proven reserves in the next five years.
* Owens Corning (NYSE:OC) plunged 8 percent after lowering its full-year earnings outlook due to weakness in its roofing and composites businesses. The construction and industrial-materials company now expects adjusted earnings before interest and taxes to be between $280 million and $310 million, down from its prior forecast of $360 million to $420 million.
* International Paper Company (NYSE:IP) raised its quarterly dividend to 30 cents a share from 26 cents a share.
* Israel-based electronics equipment maker Orbotech Ltd. (NASDAQ:ORBK) fell 6.7 percent after cutting its full-year revenue outlook for the second time. The company now expects to generate about $400 million in revenue for the year, down from its earlier forecast of between $430 million to $450 million. Analysts were expecting revenue of $434.1 million.
* Super Micro Computer, Inc. (NASDAQ:SMCI) plunged 12.5 percent after narrowing its fiscal first-quarter guidance, citing a steep decline in prices for hard disk drives and memory.
Hedge Fund News Update
* The Procter & Gamble Company (NYSE:PG) closed 0.6 percent lower after activist investor Bill Ackman, who has been critical of how the company has been run, did not turn up at the company’s annual meeting this morning.
* Entertainment trade newspaper, Variety, is being sold to online publisher Jay Penske and Daniel Loeb’s Third Point LLC for about $25 million, Reuters reported.
* Hedge funds gained 1.26 percent last month, according to industry adviser Hennessee Group, compared to a rise of 2.42 percent in the S&P 500 (INDEXSP:.INX).
* Winton Capital Management LLC, the $28 billion UK hedge fund manager, saw net profits rose by 23 percent last year to 162 million pounds, after its assets under management jumped 65 percent.
* Hong Kong-based hedge fund, Ardon Maroon Fund Management, has launched an Asia-focused fund with seed capital from a European family office, according to a Reuters report.
Brokerage Upgrades and Downgrades on Tuesday, October 09, 2012
* Allot Communications Ltd. (NASDAQ:ALLT) was raised to “buy” from “hold” by analysts at Jefferies Group with a target price of $30.
* Cardinal Health, Inc. (NYSE:CAH) was lifted to “buy” from “hold” by analysts at ISI Group with a target price of $46.
* Interpublic Group of Companies, Inc. (NYSE:IPG) was upgraded to “buy” from “neutral” by analysts at Citigroup with a target price of $14.
* Primero Mining Corp (NYSE:PPP) was raised to “outperform” from “neutral” by analysts at Macquarie.
* Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR) was lifted to “buy” from “hold” by analysts at Jefferies Group with a target price of $28.
* Shoe Carnival, Inc. (NASDAQ:SCVL) was upgraded to “buy” from “neutral” by analysts at Sterne Agee with a target price of $28.
* Trinity Industries, Inc. (NYSE:TRN) was raised to “strong buy” from “market perform” by analysts at Raymond James with a target price of $39.
* Arch Coal Inc (NYSE:ACI) was cut to “sell” from “neutral” by analysts at Goldman Sachs with a target price of $5.
* Baidu.com, Inc. (ADR) (NASDAQ:BIDU) was lowered to “underperform” from “neutral” by analysts at Credit Suisse with a target price of $83.
* DirecTV (NASDAQ:DTV) was downgraded to “neutral” from “overweight” by analysts at JPMorgan Chase with a target price of $58.
* Edison International (NYSE:EIX) was cut to “hold” from “buy” by analysts at Jefferies Group.
* Fluidigm Corporation (NASDAQ:FLDM) was downgraded to “neutral” from “buy” by analysts at Mizuho with a target price of $17.
* Illinois Tool Works Inc. (NYSE:ITW) was lowered to “neutral” from “overweight” by analysts at JPMorgan Chase with a target price of $60.
* Lazard Ltd (NYSE:LAZ) was cut by analysts at Keefe, Bruyette & Woods from an “outperform” rating to a “market perform” rating with a target price of $33.
* Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR) was downgraded to “market perform” from “outperform” by analysts at Oppenheimer.
* Progress Software Corporation (NASDAQ:PRGS) was lowered to “neutral” from “buy” by analysts at Mizuho with a target price of $14.50.
* RenaissanceRe Holdings Ltd. (NYSE:RNR) was cut by analysts at Janney Capital from a “buy” rating to a “neutral” rating.
* State Auto Financial (NASDAQ:STFC) was downgraded to “underperform” from “market perform” by analysts at Keefe, Bruyette & Woods with a target price of $12.50.
* Taseko Mines Limited (USA) (NYSEAMEX:TGB) was lowered to “hold” from “buy” by analysts at Canaccord Genuity.
* Terex Corporation (NYSE:TEX) was cut by analysts at JPMorgan Chase from an “overweight” rating to a “neutral” rating with a target price of $26.
* The Dow Chemical Company (NYSE:DOW) was downgraded to “neutral” from “positive” by analysts at Susquehanna.