Updated from 6:59 a.m. EDT
Part of the philosophy of Stockpickr is to follow in the footsteps of smart people. This could mean a few different things.
First, it could mean piggybacking great investors, such as Warren Buffett or George Soros. Or it could mean buying what the CEOs, employees and directors of a company are buying; these are people who know the intimate details of their companies far better than you or me.
The perfect setup is when one of these company insiders or an entire board (in the case of a stock buyback) is buying shares at the same time that some smart savvy investors are.
Each Thursday we update the Stockpickr
portfolio, featuring the stocks of the week that had either big insider purchases or newly announced buybacks as well as "smart money" accumulating shares.
is in this week's portfolio. The maker of Budweiser said it will increase its buyback plan to $7 billion, up from an earlier target of $3.8 billion. The shares will be repurchased throughout the remainder of this year and next year.
InBev, the world's largest brewer, with global sales of $22.7 billion in 2007, has recently been trying to buy out Anheuser-Busch. In its latest bid, InBev offered $46.3 billion, or $65 a share, but Anheuser-Busch rejected the offer.
After evaluating the proposal for two weeks, Patrick Stokes, Anheuser-Busch's chairman of the board, said: "InBev's proposal significantly undervalues the unique assets and prospects of Anheuser Busch. The proposed price does not reflect the strength of Anheuser-Busch's global, iconic brands Bud Light and Budweiser, the top two selling beer brands in the world, with Budweiser selling in more than 80 countries today."
However, the king of beers did not reject the possibility of accepting a higher bid by InBev at a later time. Meanwhile, InBev filed a lawsuit trying to convince Anheuser-Busch shareholders that they have the power to remove Anheuser's board of directors and ultimately accept the takeover bid.
The inflated repurchase plan and Anheuser's new commitment to cut $1 billion in costs are an effort to increase earnings and prove to shareholders that InBev's original offer was too low.
In the first quarter, Anheuser produced sales of $4.01 billion, a 6.2% jump from $3.86 billion in the same period last year. A 20% surge in international beer sales helped boost total revenue. However, profit slipped 1.3% to $511 million, or 71 cents a share, from $518 million, or 67 cents a share. Earnings per share increased because of a smaller amount of outstanding shares due to ongoing stock repurchases.
We also like to see that the
is buying Anheuser shares. Since 1988, this $50 billion fund has earned an international reputation for financial innovation and an extraordinarily distinguished staff. Although its stock picks are highly secretive, we know that its portfolio also contains
Another stellar firm into Anheuser's stock is
. Markel is an insurance company and is often called a "mini Berkshire Hathaway"; in fact, many of its investments overlap with Buffett's. It also has investments in
So we have a buyback, a possible takeover situation, solid earnings and noteworthy investors into the stock. It might be time to take a harder look at Anheuser-Busch.
Next on the list is
. Rochester, N.Y.'s imaging giant announced that its board approved the repurchase of up to $1 billion in common stock. A repurchase of this size, which is authorized through the end of 2009, could reduce total outstanding shares by as much as 25%.
The company will fund the buyback with cash on hand and proceeds from a tax refund issued by the IRS. The tax refund is worth $581 million and is related to certain claims filed from 1993 to 1998. The refund is made up of past federal income taxes paid of $306 million and $275 million. "Our Board's decision to authorize this repurchase initiative underscores the rising confidence we have in Kodak's product portfolio, in our current financial position, and in the execution of our strategy," said Antonio M. Perez, chairman and CEO. "We strongly believe that at the current price, the purchase of our own stock is an appropriate use of our cash and will further enhance long-term shareholder value."
On May 1, Kodak reported a first-quarter loss of $114 million, or 40 cents a share, compared with a loss of $175 million, or 61 cents a share, in the same period last year. Total revenue was $2.09 billion, up 1% from $2.08 billion. A price hike in the cost of raw materials, which are used to make film and plates for commercial printers, drastically hurt first quarter earnings.
We like to see that the
is bullish on Kodak. This fund has a Morningstar rating of five stars and is run by Josef Lakonishok. With a five-year annual return of 12.48%, Lakonishok has served as CEO and partner for LSV Asset Management since its founding in 1994. The fund also likes
One of the most successful hedge funds of all time,
, is buying Kodak shares. Started by Jim Simons in 1982, its $5 billion Medallion Fund has averaged 38% annual returns, after fees, since 1989. Its other top picks are
So we have a buyback, a nice tax return to improve cash flow, and two extraordinary investors into the stock. It might be time to do some more homework on Eastman Kodak.
And finally we have
making this week's list. The parent company for the Chicago Mercantile Exchange and Chicago Board of Trade said it will repurchase as many as $1.1 billion in common stock and offer a special dividend of about $350 million. The Chicago-based company added that it will complete the stock buyback within 18 months.
CME has been in the process of trying to acquire the energy and metals exchange,
. The U.S. Department of Justice approved the deal but CME is still waiting for support by NYMEX members and shareholders. Since the deal was first valued at $11.2 billion in January, some NYMEX members say they will oppose CME's current $8.7 billion offer.
By initiating the new buyback and special dividend, CME is trying to entice NYMEX members to approve the merger. After the company completes the $8.7 billion purchase, CME will pay out the $5 a share dividend.
CME, which has been trading on the NYSE and Nasdaq since 2005, will officially stop trading on the NYSE next week and therefore will only trade on the Nasdaq. The move is expected to cause tension between
, the parent company of NYSE, and the CME because NYSE had plans to start doing business in the futures market, which is dominated by CME.
The world's largest futures exchange reported first quarter earnings that more than doubled to $284 million or $5.25 a share from $130 million, or $3.69 reported in the same period last year. The merger between Chicago Mercantile Exchange and CBOT can be credited for most of the earnings increase.
Jonathan Casteleyn from Wachovia Capital Markets has an outperform rating on the stock and commented, "CME Group has discounted many negative catalysts including new competition, delivering within financial trading, and new lowered earnings expectations." He continued, "We assign a long term franchise value which warrants an Outperform rating".
is a noteworthy investment firm who believes in CME. Founded in 1980 by Paul Tudor Jones II, the firm currently manages $15.4 billion. Its newest positions are
So we have a buyback, new dividend, a merger situation and a phenomenal investor into the stock. It might be time to pick shares of CME while it's cheap.
For more stocks and analysis, check out this week's
For the 10 most-recent portfolios, check out:
- Top 10 Insider Purchases and Buybacks XLVIII
- Top 10 Insider Purchases and Buybacks XLIX
- Top 10 Insider Purchases and Buybacks L
- Top 10 Insider Purchases and Buybacks LI
- Top 10 Insider Purchases and Buybacks LII
- Top 10 Insider Purchases and Buybacks LIII
- Top 10 Insider Purchases and Buybacks LIV
- Top 10 Insider Purchases and Buybacks LV
- Top 10 Insider Purchases and Buybacks LVI
- Top 10 Insider Purchases and Buybacks LVII
You can also review
from the prior week and Jim Cramer's
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of
LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the
and the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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