'Fast Money' Recap: Yahoo! Stays in Play
The U.S. stock market showed some vigor Wednesday, closing to the upside on a decent inflation number and less-than-disastrous news from the financial sector. The Dow added 0.5%, the S&P 500 climbed 0.4%, and the Nasdaq ticked up 0.1%.
On
CNBC's
"Fast Money" TV show, the traders discussed billionaire investor Carl Icahn's after-hours decision to pursue a proxy battle to extract value from
Yahoo!
(YHOO)
.
Microsoft
(MSFT) - Get Report
recently walked away from an acquisition of the Internet company.
Finerman said that the risk/reward on Yahoo! is not fantastic at this level. She said that the stock has already risen because investors thought Icahn would join the fray. There's more certainty now that Icahn has officially joined the battle, but there's no certainty that Microsoft is still interested in buying, she said.
Macke said he believes Icahn will win the proxy battle. Microsoft will return to Yahoo! at some price, he said.
The traders discussed Icahn's pursuit of a 12-member slate for Yahoo's board, meaning he's seeking a full slate. Finerman said that a full board is much harder to win than a half board, because proxy advisory firms have a harder time condoning elimination of an entire board. She said this means there's higher risk that a deal will not get done.
Najarian said it's important to make sure Microsoft is still interested. He said he believes that because of the stock, Microsoft will still want to do a deal. He took off half of his Yahoo! position today, he said.
Adami said that he still believes the best Yahoo! trade is to own
(GOOG) - Get Report
.
Macke said he wouldn't own Yahoo! and he prefers Microsoft. Adami said he wouldn't own Yahoo! either, given that Icahn has had trouble extracting value from
Motorola
(MOT)
. Finerman agreed. Najarian said he would hold the remainder of his position.
Rolling Over
Tech stocks rolled over in late trading today. Najarian pointed out that selling occurred across the board, including in oil services, coal and agriculture. Macke agreed, saying the market tried to rally off decent news from
Freddie Mac
(FRE)
. Nobody believed the rally in the financials, he said, and sometimes that's all you need to get a selloff.
Finerman said she owns
Citigroup
(C) - Get Report
LEAPS, and she's still comfortable with her bullish position. Adami said Citigroup sets up well for a trade. He said the next 5% to 8% move in the stock will be higher.
Najarian urged viewers to look at
Visa
(V) - Get Report
,
MasterCard
(MA) - Get Report
and
American Express
(AXP) - Get Report
.
Jeff Macke said it's smart to buy the dip in the financials, but not because of Freddie Mac.
Throwing Out the Dishwasher
News broke that
General Electric
(GE) - Get Report
will be selling its appliance business. Adami said he thinks the company is selling low. It doesn't make sense to sell this business at this point in the economic cycle, he said. Macke agreed, suggesting that GE will probably go to Asia to try to sell the segment.
Macy's
(M) - Get Report
traded higher on decent earnings today. Macke pointed out that the stock saw a nice reaction to in-line numbers.
Deere
(DE) - Get Report
fell 10% after saying raw material costs might hurt it business. Adami said that Deere is setting out for a trade on the long side with a stop out on any close below $80.75.
Najarian said that Deere's problems today don't mean that the ag story is over. He said names like
Potash
(POT)
,
Monsanto
(MON)
and
Agrium
(AGU)
are worth playing. He said he likes
Terra Industries
(TRA)
at these levels.
About the Oil Pullback
Oil prices came back down a little today. Adami said that if the government releases oil from the Strategic Petroleum Reserve, that's bearish for oil prices. He pointed out that after Hurricane Katrina, the government tapped the reserve, and oil went down 8% to 10%. He said a similar move may happen if the SPR opens up again.
Independent oil trader Joe Terranova joined the show to elaborate. He said investors can expect a short-term pullback in oil, but that the commodity will continue to rise in price over the long term. He recommended a paired trade for the short run. Get short the
U.S. Oil Fund
(USO) - Get Report
and long the
U.S. Natural Gas Fund
(UNG) - Get Report
, he said.
Retail Results
Retail names have been exhibiting bullish action lately.
Kohl's
(KSS) - Get Report
and
Nordstrom
(JWN) - Get Report
report earnings tomorrow.
Macke said that retailers have been lowering expectations. He said that earnings from both Kohl's and Nordstrom should be "better than apocalyptic," meaning the stocks should go higher.
Finerman said that after a nice run in stocks like
Children's Place
(PLCE) - Get Report
and
J.C. Penney
(JCP) - Get Report
, her fund has sold out of those stocks.
Playing Defense
The traders then spoke with Jon Najarian about bullish activity in defense stocks. Najarian said that
Raytheon
(RTN) - Get Report
,
General Dynamics
(GD) - Get Report
and
Honeywell
(HON) - Get Report
are exhibiting bullish options activity.
Adami said he likes Honeywell because it's cheap on a valuation basis. He said he also likes
Lockheed Martin
(LMT) - Get Report
and Raytheon. Najarian pointed out that Raytheon trades with a price-to-earnings ratio of 10 and that traders were buying upside calls in the name above 52-week highs.
Computer Friends
The traders observed that social networking might not convert into profitable businesses. Macke said investors can get short companies that are buying social networking sites. Najarian said he thinks Google will be able to monetize social networking.
Trader Radar
Whole Foods
(WFMI)
traded on unusual volume today.
The traders then discussed the future of entertainment, pointing to themes such as virtualization and connectivity. They said
Apple
(AAPL) - Get Report
is leading the way in this space.
Macke recommended
Disney
(DIS) - Get Report
because it's a content provider. He said he didn't like
Sony
(SNE) - Get Report
as much.
Adami sadi that
EMC
(EMC)
is still a good play in storage. Finerman said that as people consume entertainment, they will also be eating junk food, so she recommended
PepsiCo
(PEP) - Get Report
.
Najarian picked
Cypress Semiconductor
(CY) - Get Report
. The company makes programmable chips for devices, he said, and it has a stake in
SunPower
(SPWR) - Get Report
. The stock is still cheap, he said. Moving on to energy, he also recommended
Fluor
(FLR) - Get Report
and
Siemens
(SI) - Get Report
as wind plays.
The traders then spoke with Tim Seymour about Turkey as an emerging market play. He said that the country gets a C-minus for political stability, a C-plus for its macroeconomy, a B for investability and an A for the market's valuation. He recommended
Turkcell
(TKC) - Get Report
, the
Turkish Investment Fund
(TKF)
and the
iShares MSCI Turkey Invest Market Index
(TUR) - Get Report
. He said he prefers the iShares fund to the Turkish Investment Fund.
Final Trade
Macke chose
UPS
(UPS) - Get Report
. Adami selected Deere. Najarian picked
E*Trade
(ETFC) - Get Report
.









