The combination of a bad market and companies losing share in their own prospective markets make Ford and Motorola buys. F trades at 6.65 and MOT at 11.20 and change. I think both will return 30% by 12.31.2008.-JDA
Buy new IPO Intellius when it comes out. This company can be found at the bottom of the page of records returned when you access Switchboard.com. They provide in depth personal information mostly state and telephone records for a price. I got an insight into this world when I interviewed at Kroll in April 2007. This a trend of data mining will only pick up.-JDA
People’s United Bank is a great buy after purchasing VT best bank; Chittenden Bank which I am personally familiar with. Excellent bank. Look for People’s United Bank which is just under 20 going to 25 by the end of 2008.-JDA
Buy SAIC. It is at 19 and change. Expect it to go to 25 by the end of the year.-JDA
NYT DealBook reports RiskMetrics, parent of ISS(Institutional Shareholder Services) has filed to go public. ISS has a unique and is valued by investment banking divisions on Wall Street. It has few solid competitors. This is great buy when it IPO’s.-JDA
In August 2007, DARPA ( Defense Advanced Research Projects Agency) gave out awards for technological excellence. The military has been a known documented precursor for future technology which eventual finds itself into the public sphere. Companies like PHIAR still private and Energy Focus (Ticker EFOI) are a good bet to be winners. EFOI is currently trading at 5.30. I think it ends at 12.31.2008 at 7.10.-JDA
Saw this in InvestmentNews today. I was reading the article. Think they are onto something with this piece which mentions Taleo. Having some experience with software management for HR functions I believe Taleo has a way to go. It is currently at 22.22. Expect it at 40 by 12.31.2008.-JDA
InvestmentNews
Going small is fund’s secret to finding hidden gems
But managers aren’t afraid to cut their losses when necessary, despite liquidity constraints
January 7, 2008
The basic premise behind the management of the Managers AMG Essex Small/Microcap Growth Fund (MBRSX) is finding good companies that few other analysts have yet to identify as prospects.
“We want to identify growth early, wherever it is coming from,” said Nancy Prial, who has managed the fund since it was launched in 2002.
She oversees the fund from the Evanston, Ill., office of Essex Investment Management Co., a Boston-based firm with $2.9 billion under management.
The mutual fund has $130 million under management. Essex has a subadvisory agreement with the fund.
In order to capture a stock’s growth potential as early as possible, Ms. Prial doesn’t hesitate to go small in terms of market capitalization.
While the portfolio’s weighted average market cap is $700 million, Ms. Prial said, she will invest in companies with market caps as low as $50 million and as high as $1.5 billion.
Once inside the portfolio, which typically holds about 90 stocks, a company can grow close to the $5 billion range before the position is trimmed.
“When it comes to our sell discipline, some of it depends on the uniqueness of the story,” Ms. Prial said.
The annual turnover rate of about 50% is respectable and likely kept below average by the kinds of liquidity constraints that typically accompany smaller-cap stocks.
However, Ms. Prial said, she and her team aren’t shy about cutting their losses when necessary.
“Smaller-caps tend to have a higher propensity to disappoint, and our turnover rate is a byproduct of our process,” she said. “We’re very focused on identifying our mistakes as early as possible.”
Both the buy and sell discipline appeared to pay off last year, when the fund gained 17.5%, which compares with a 7.7% average gain for the small-cap-growth category, as measured by Morningstar Inc. in Chicago.
The Standard & Poor’s 500 stock index gained 5.5% in 2007.
The fund, which has earned a five-star rating from Morningstar, isn’t limited to traditional growth stocks or growth sectors, according to Ms. Prial.
The initial research process covers all public companies with market caps between $50 million and $1.5 billion — a process that can include more than 500 companies annually.
“We don’t differentiate between growth and value at that point,” Ms. Prial said.
The Essex team looks for specific growth catalysts that can be identified and justified.
That includes a heavy emphasis on earnings reports, which are compared with previous quarters. “We’re looking for companies that have something changing for the better,” Ms. Prial said.
The process also means that the portfolio might be allocated to many of the traditional growth sectors, such as technology and health care, as well as sectors not always associated with growth stocks, such as energy.
One example of a company that made the cut into the portfolio is Dublin, Calif.-based Taleo Corp. (TLEO).
Ms. Prial described the management solutions company, which specializes in human-resources management software, as a “very early-stage company” in the area of on-demand technology and upgrades.
Taleo’s stock finished 2007 at $29.78 a share, up 126% for the year.
Finding companies such as Taleo requires an open-minded attitude, according to Ms. Prial, who gives a lot of credit to her all-female team of four research analysts.
“It is an unusual concentration of women, and I think that has been very instrumental to our success,” she said.
The investment team has been together since the fund’s 2002 launch.
Once the initial company screenings are completed, the research shifts toward a fundamental process that looks at each company with regard to such factors as market share, cyclical effects and management changes.
“We need to understand which varieties of growth we’re dealing with in order to understand the opportunities,” Ms. Prial said. “And we also need to understand how much we want to pay for a stock.”
Sector allocation isn’t part of the basic research process, but it does factor into the overall portfolio allocation.
The portfolio’s current top three sectors, represented by technology, health care and industrials, make up about 60% of the fund.
The goal, according to Ms. Prial, is to maintain a balance of diversification and concentration with regard to sector weights.
Questions, observations, stock tips? E-mail Jeff Benjamin at jbenjamin@crain.com.
After years of promising efficient food production Monsanto appears to be hitting some home runs. Check out this story on Bloomberg.
Monsanto Profit More Than Doubles; Forecast Raised (Update4)
By Jack Kaskey
Jan. 3 (Bloomberg) — Monsanto Co., the world’s largest seed producer, more than doubled first-quarter profit and raised its earnings forecast for this year after increasing demand for food and ethanol boosted corn-seed sales in Brazil and Argentina.
Net income rose to $256 million, or 46 cents a share, in the three months ended Nov. 30, from $90 million, or 16 cents, a year earlier, St. Louis-based Monsanto said today in a statement. That tops the 35-cent average estimate of 10 analysts surveyed by Bloomberg.
Monsanto rose the most in more than a month and reached a record in New York Stock Exchange trading as Chief Executive Officer Hugh Grant’s push to increase market share in Latin America helped double corn-seed purchases by farmers in Brazil and Argentina. Higher prices for Roundup weed killer and early 2008 orders from U.S. farmers also helped boost first-quarter sales 36 percent to $2.1 billion.
“Operating margins just exploded,” Mark Demos, who helps manage $21.9 billion at Fifth Third Asset Management, including 442,000 Monsanto shares, said in a phone interview from Minneapolis. “When you are in a strong up-cycle, it can be stronger than even the executives think.”
Monsanto raised its full-year forecast to $2.50 to $2.60 a share from a November range of $2.20 to $2.40. Twelve analysts in the survey had estimated $2.59, on average. The forecast excludes a potential per-share gain of 22 to 24 cents in the second quarter should Solutia Inc., a chemical maker spun off from Monsanto in 1997, emerge from bankruptcy.
Shares Gain
Monsanto rose $6.78, or 6.1 percent, to $118.25 at 10:47 a.m. in New York Stock Exchange composite trading. A close at that price would be the highest ever and the biggest gain since Nov. 28. The shares more than doubled in 2007, the ninth-biggest gain among members of the Standard & Poor’s 500 Index.
“The stock is telling you that this is pretty conservative guidance,” Fifth Third’s Demos said.
Gross profit rose to 50 percent of sales from 44 percent a year earlier, Monsanto said. The company’s Dekalb corn-seed brand may grab as much as an additional 3 percentage points of U.S. market share, extending yearly gains, Monsanto said.
First-quarter results “highlight the strong performance of our Latin American business,” Chief Executive Officer Hugh Grant said in the statement. “With the most significant part of our annual business cycle still to come, we believe these results position us for another strong fiscal year for our business.”
Global Demand
Monsanto, which doubled gross profit in three years, said in November that earnings may double again in five years because of rising global demand for genetically modified seeds that boost yields of corn, soybeans and cotton.
Farmers in Brazil planted half their soybean fields with Roundup-resistant seeds last year and the seeds may account for 95 percent of Brazil’s soybean market by 2010, Monsanto said last year.
Brazil is the second-biggest soybean producer after the U.S. and the third-largest corn producer behind the U.S. and China.
Brazil doesn’t allow genetically modified corn seeds to be planted, and Monsanto’s sales fell to 30 percent of the market last year, a drop of 3 percentage points, the company said in November. Monsanto acquired 10 percent of the market in September with the $100 million purchase of Brazil’s Agroeste Sementes.
Brazil’s biosafety committee in August approved Monsanto’s insect-resistant corn, the first endorsement needed before the gene-modified seed can be planted.
To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net .
I received a job alert at a company called Interactive Intelligence. The company has won several awards in the industry. The PE is expensive at 62, but I believe it is still a buy. It is at 26. I expect it to go to 32 by June 30, 2008.-JDA
The margin of error as it considers oil production is just too thin. China and India are consuming it left and right. Despite the cliche it is true. I think the play is ARENA RESOURCES currently trading at 42.72. I think it will reach 63 by April 30.-JDA
