'Fast Money' Recap: Icahn Lifts Yahoo!

The trading panel says the financier has a shot at shaking up Yahoo!, but that's no reason to buy the stock.
By Mike Taylor ,

The U.S. stock market equivocated Tuesday. The Dow slumped 0.3%, and the S&P 500 was largely unchanged, while Yahoo! (YHOO) helped the Nasdaq shore up gains to the tune of 0.3%.

On

CNBC's

"Fast Money" TV show, the traders observed that

Wal-Mart

(WMT) - Get Report

shares had a great day, and

Hewlett-Packard

(HPQ) - Get Report

got beaten down.

Karen Finerman called Carl Icahn's actions in Yahoo! "Carl 101." She said that with an irate shareholder base that's ready to skewer management, Icahn is well positioned to implement change at the troubled Internet company. If Icahn can get Gordon Crawford at Capital Research on board, then he'll be set. If not, he'll have a hard time.

Jeff Macke said he wouldn't re-initiate a Yahoo! position on this news. He said he's interested in the upcoming battle because he believes Yahoo!'s management was actually destroying value at the company even before

Microsoft

(MSFT) - Get Report

launched a takeout bid.

Pete Najarian said he will take off half his Yahoo! long on the strength the stock showed today. He said he still believes in the Microsoft takeout story, and he says a deal will eventually get done.

Adami said the trade off the Yahoo! news is to get long

Google

(GOOG) - Get Report

. He said the stock probably could trade with a $700 handle, and on a valuation basis it's cheaper than Yahoo!.

Wal-Mart Wins

Moving on to Wal-Mart, Macke said he bought shares on today's dip. He said he liked what the company said on its earnings report, displaying that it is in touch with the consumer and executing on all cylinders.

Najarian said Wal-Mart has traded a lot like

Cisco

(CSCO) - Get Report

. He said the cautious forecast helped the stock pull back. There may be a similar opportunity in Cisco, he said.

Today,

Federal Reserve

Chairman Ben Bernanke said that the financial markets are "far from normal." Najarian said that he disagrees. He said he believes the markets are looking farther ahead and volatility is subsiding. He said that volatility is in a downtrend, establishing lower lows and lower highs.

Adami said that the financial markets may be in some disarray, but he observed recovery in the junk-bond market and the Fed's willingess to act as a backstop.

Reading Oil

Macke took some time to instruct viewers about how to trade oil. He said that, as with all commodities, he recommends taking a technical view of the charts. He said oil is clearly in an uptrend, and investors should play resistance and support. When oil comes back to a resistance level, people should get long, he said. He said he'd like to buy some at $110 a barrel.

Adami said

Halliburton

(HAL) - Get Report

is a good trade off rising oil. The company is executing internationally, he said.

Najarian said that a play in natural gas is breaking out. He recommended playing

Chesapeake Energy

(CHK) - Get Report

. He said not to fight the bull market in energy.

Late Action

After hours,

Applied Materials

(AMAT) - Get Report

made some cautious comments, sending shares into mixed trading. Najarian said he bought some today. He believes the solar play will continue to offer growth for the company, he said.

Adami said that the Street values Applied Materials' solar business at $3. He said it could be worth much more, and said the entire stock should be trading at $25.

Also in after-hours trading,

Electronic Arts

(ERTS)

had reported decent earnings, but shares rolled over during the conference call. Macke explained that the company doesn't have a plan or a pipeline and failed to take over

Take-Two

(TTWO) - Get Report

. He likes

Activision

(ATVI) - Get Report

, he said.

Whole Foods

(WFMI)

dipped down after hours. Macke said the organic trade is over.

The traders then welcomed

Liz Claiborne

(LIZ)

CEO Bill McComb to the show. He said his turnaround plan for the company is working. He said the company has divested of its narrowed portfolio, allowing growable brands to grow and fixing brands that had been shrinking. He said the company is focused on getting customers to show up to purchase the company's strongest brands.

The gang then turned to

Gartman Letter

author Dennis Gartman to discuss commodities and

John Deere's

(DE) - Get Report

earnings tomorrow. Gartman said Deere's business is strong but the stock has had a nice run. He said earnings are going to be spectacular and he wouldn't be short the stock.

Adami pointed out that

CNH Global

(CNH)

got hit hard after reporting earnings. He said the company isn't as good as Deere but observed that that's what can happen to a stock in the sector. Finerman said that Deere is already priced to execute very well.

Gartman went on to say that oil inventories don't matter. He said it was not smart for the U.S. to continue putting oil into the strategic reserve. A better policy would be to sell oil, he said. He said that natural gas is a good place to play, and he likes Canadian natural gas trusts. He also said he's long copper.

Second Guesses

The traders wondered whether

Hewlett-Packard

(HPQ) - Get Report

made a mistake today by agreeing to pay $14 billion for

Electronic Data Services

(EDS)

.

Najarian said he bought H-P on its dip today. He said earnings were good and the company is expanding to compete with

IBM

(IBM) - Get Report

.

Adami said he believes today may have been a capitulation day for H-P. He said the stock is 23% off its 52-week high, and this is an opportunity for investors to get long.

Macke was skeptical of the deal, saying H-P would be better off contenting itself with beating up on PC rival

Dell

(DELL) - Get Report

. Najarian argued that the company ought to be doing something with the money it has, and pointed out that it has already bought back stock and paid dividends.

Finerman said the company has already lost $12.5 billion in market cap today, meaning that the EDS acquisition is essentially free. Najarian agreed.

The traders then spoke with media honcho Michael Eisner. He said that he believes in a buildout to get 3D technology into movie theaters. He said Pixar is going big into the space.

Trade the Future

The traders discussed the future of energy. Macke said that crude oil is a chronic problem, so the commodity will continue its bull run. Adami recommended looking at

Hexcel

(HXL) - Get Report

, which offers technology that can make blades on wind turbines longer. Finerman suggested Fluor and

Flowserve

(FLS) - Get Report

.

Najarian said he also likes Fluor, but also recommended

Foster Wheeler

(FWLT)

,

Energy Conversion Devices

(ENER)

and

First Solar

(FSLR) - Get Report

. He pointed out that solar companies are finally starting to become profitable. He said he also likes

AES Corp.

(AES) - Get Report

because it's willing to diversify into any kind of cost-effective energy source.

Fast Messages

One viewer asked how to handle a big run in

Potash

(POT)

. Finerman recommended establishing how big a portion of the portfolio the stock should take up. Alternatively, the viewer can buy some put protection, the said.

Another viewer asked what's going on with

Visa

(V) - Get Report

. Adami said the stock has had a stellar run, but he'd rather own

MasterCard

(MA) - Get Report

. Najarian said he likes Visa.

A third viewer asked what to do about

Marvel's

(MVS)

success on the back of its film

Iron Man

.

Macke said to let the stock back off, and that he likes

Hasbro

(HAS) - Get Report

better as an

Iron Man

play.

Final Trade

Macke recommended the Short Dow30 ProShares. Adami picked

Alcoa

(AA) - Get Report

. Finerman chose

Golar LNG

(GLNG) - Get Report

.

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