The Wall Street Journal brings an interesting look into how some FA's are changing their tune on Buy and Hold strategies. While, we are never big fans of the "this time its different" mentality, but still a worthwhile view of a trend in today's financial apparatus.
The fundamentals suggest you are getting a stock that is quite attractive and with a nice yield to boot. However, much of the fundamental strength comes from cost cutting and certainly not growth, and the historical ranges are based on an era where the hard-wired phone was not in decline.
The market seems to have taken solace in parsing the data contained in the grim 1Q09 report. However, do not underestimate the damage that has been done and how much time and effort it will require to rebuild our economy.
Examples of this sort of behavior are clear from the founding family behind Gap, Inc (GPS), the CEO of NetApp, Inc (NTAP) and the founders of Bed Bath & Beyond (BBBY) have all made major sales recently. According to the study, insiders bought $42.5 million in shares through April 20 which would make it the lowest amount bought in a month since July 1992.
Intel reported first quarter earnings that greatly outpaced analysts expectations. This is a good sign for all chip stocks and could be a good sign for the tech sector as a whole.
Burger King, at least in March, did not see the growth that analysts were hoping to see and that along with margin compression is leading to a rough trading day. At Ockham, we just initiated coverage on Burger King last week with a Fairly Valued stance.
We are not overly impressed by the rating change from Deutsche Bank, as the company is going to struggle to even break even in the coming nine months (IP made $2.02 in 2008).
