Notes & Tidbits On A Slow Friday

  • The big story of the day is JC Penney’s (JCP) announcement that first quarter earnings will be much less than they previously forecast: 50 cents vs. previous forecast of 75 to 80 cents (JCP Press Release).
  • Also being talked about is former Bear Stearns (BSC) CEO and current Chairman James Cayne having sold his entire Bear stake on Tuesday for $10.84 a share.  This has led many to believe that JP Morgan’s $10 a share in stock offer will go through and a higher bid will not be forthcoming.  But The Wall Street Journal reports that Cayne and his wife recently closed a $26 million purchase for a new living space.  Maybe he just needed the money now and it doesn’t have to do with his outlook for the merger (WSJ – subscription required).
  • Walmart (WMT) has been one of the strongest performing stocks this year and there’s no mystery why.  In tough times, people “trade down” and trading down is Walmart’s sweet spot.  Citigroup analyst Deborah Weinswig wrote that Walmart is the only retailer they follow that has improving traffic and it has outcomped Target (TGT) for three straight months – the first time that’s happened since the last recession (“Walmart Shares Are A Recession Special” (subscription required), Barron’s, Tuesday March 25; also see my “Dan Gross: Tough Economy Is Walmart’s Sweet Spot”, Top Gun FP, February 27, 2008 and “How To Make 12% In Walmart In 2008 – Even If The Stock Goes Nowhere”, Top Gun FP, February 19 2008).
  • People are passing around an article from The Oregonian on a JP Morgan Chase memo to mortgage brokers on how to get risky mortgages approved by Zippy, Chase’s in house automated loan underwriting system: inflate income and assets, don’t disclose gifts for the down payment, etc… (The Oregonian).

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