Top Takes From RealMoney
The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and how they played those ideas.
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1. Activist Investor Presses Barnes & Noble
By Tim Melvin
2:11 p.m. EST
The letter from Ron Burkle to the board of directors of
Barnes & Noble
(BKS) - Get Report
makes for interesting reading. The investor owns 19% of the company and is upset that the board has put in a poison-pill provision that kicks in whenever an outside investor accumulates more than 20% of the shares. In the letter he asks the board for permission to match founder Leonard Riggios's family holding of 37% of the company. He further asks that any future purchases by a family member serve as a trigger for the poison pill.
Burkle, who controls the shares through his Yucaipa investment fund, has criticized corporate governance at the company. Barnes & Noble is probably the last man standing among brick-and-mortar bookstore chains, and many considered it to be underpriced. I can't wait to hear the board's response to this latest activist salvo.
Position: None
2. Two Days of Gains
By Ken Shreve
2:08 p.m. EST
It's too early to get excited about a bona fide upturn. Today is only Day 2 of a rally attempt. A big percentage gain in higher volume on Thursday (Day 4), or later, would be bullish.
That said, I still believe stocks need more time to base. And, of course, Friday's employment data loom large. I do believe we move higher, at least, in the short term, if we see job gains.
Position: N/A
3. SanDisk, iPad, and NAND Flash in 2010
By Brian Gilmartin
12:04 p.m. EST
Anyone who has tried to trade semiconductor issues the past 10 years has been frustrated at best, and suicidal at worst. Thus, watching
SanDisk
(SNDK)
and the semi group get pounded
again
, after strong fourth-quarter results and above-seasonal guidance for the first quarter, has become commonplace.
Could this year be different? I won't make that prediction. However, DramExchange put out a note last week after the iPad announcement, with some interesting stats: 1.)
Apple
(AAPL) - Get Report
controls 20% of the NAND Flash demand; 2.) DRAMEX expects Apple to sell 1.5 million iPads in the first half of 2010, and 9 million-10 million total for the year; 3.) At those sales levels, the iPad would consume approximately 2% of total NAND flash demand in 2010.
My first thought when I read this was that SanDisk could be an ancillary play on this new product launch, particularly if iPad demand is stronger than expected.
We'll follow it and keep you posted. The recent volume drop in SanDisk leaves the chart looking spooky, but we'll give it some time.
Position: Long SNDK, AAPL
4. UPS v FDX
By Brian Gilmartin
11:44 a.m. EST
To shed some light on the pop in
FedEx
(FDX) - Get Report
vs.
United Parcel Service
(UPS) - Get Report
today, FDX has much greater operating leverage, or delta, than UPS, thus FDX has a higher delta to volume changes than does UPS.
In a Dec. 17 note, Deutschebank's Justin Yagerman detailed how a 100 basis-point change in the operating ratio for both FDX and UPS would boost FDX's earnings by 69 cents a share, or 16%, vs. 31 cents a share, or 11%, for UPS.
That's the power of operating leverage, which also had the opposite effect in 2007 and 2008.
I haven't read the UPS report, but if it talked about better volumes, or a continued acceleration in business, all things being equal, that benefits FDX more than it does UPS.
Position: Long FDX
5. Regional Banks Provide Sanctuary
By Don Dion
6:51 a.m. EST
Regional banks have and should continue to provide investors with sanctuary against the Obama administration's bank-bashing ways. Investors looking for a passive strategy should check out the
SPDR Regional Bank ETF
(KRE) - Get Report
, which offers inexpensive exposure to a pool of 50 banks. Investors looking for an actively managed fund with a great track record should consider the
FBR Small Cap Financial Fund
(FBRSX)
.
Position: Long FBRSX
This article was written by a staff member of RealMoney.com.