SAN FRANCISCO -- Clearly, today's session wasn't what most investors had in mind after a long weekend that featured (among more recreational activities) passage of tax-cut legislation. Despite the presumptive catalyst from the tax cut and a stronger-than-expected
report, declining stocks led advancers and major averages ended mixed.
Dow Jones Industrial Average
rose 0.3% behind strength in
, but the
shed 0.8% and the
Broader averages were scuttled by weakness in tech stocks, particularly big-caps
, which were downgraded by
After the closing bell, Sun Microsystems confirmed Goldman's caution (although not necessarily the continued "recommended list" rating) by
cutting expectations for its fiscal fourth-quarter revenue and earnings. After falling 8.8% to $18.67 in the regular-hours session, Sun was quoted with a bid-ask of about $17.50 in after-hours trading.
But does Sun's warning matter, wondered Bill Fleckenstein, president of
"Again, what is driving the stock market is not reasonable pricing or any really good case for why things get better," he lamented. "It's the hope and belief that stocks should go up again because
is cutting rates and companies are telling us it's the bottom, even if there's no documentation
as to why."
I called the famed short-seller today to get an update for the latest "Accountability Report Card."
Please note, these are first-quarter calls and the performance column assumes an investor held the stocks from the time the call was made through last Friday's close. Given most sources likely altered their portfolios during the intervening period, I've tried to track down as many as possible for an update.
Fleckenstein, for one, covered the shorts recommended here on
March 5 in the wake of the
aggressive rate cuts.
"Nothing has changed fundamentally,
actually things have gotten worse," the hedge fund manager declared. "But when you've got Easy Al spewing out 50 basis-point rate cuts, I have to be more of a trader
and was forced to cover."
Fleckenstein has recently retaken short positions in many of the same names, with the biggest bet being on
"People think happy days are right around the corner, but they're not," he said, citing the recent suffering of
as evidence "between now and quarter's end it might be safe to be short things that have bad news."
The Update, Please
As for the other sources cited in the table, here's the current thinking of those I was able to reach today (I'll try to catch up with the rest in the coming days):
Thomas McManus of
Banc of America Securities
has tinkered slightly with the 10 stocks recommended above. In March,
Procter & Gamble
. But P&G itself was ousted after the announcement of its Clairol purchase last week and replaced by
was replaced by
First Health Group
back in early April.
The portfolio is now a bit more focused on consumer discretionary spending vs. nondiscretionary, but "overall, it's still a defensive allocation approach," said McManus, whose macro concerns were recently detailed
Howard Rosencrans of
has not covered any of the four short positions recommended on
Jan. 23, including
, one short that most hurt his performance.
"I don't think they can make the numbers this year," he said matter-of-factly. "I see a significant shortfall
vs. earning estimates and a pronounced falloff in the stock price."
As for the others, Rosencrans concurs with
Doug Kass regarding
AOL Time Warner
uses "aggressive accounting" and feels
is vulnerable because of its sensitivity to employment trends that are "going the wrong way."
Regarding the macro outlook, he believes the major averages will avoid "pronounced erosion" through the summer but still believes it's a bear-market rally, rather than a new bull market.
Scott Bleier of
is sticking with the stocks mentioned above (in separate columns), save for
. He also noted
performance isn't as bad when gains from the
spinout are included.
As for new favorites, Bleier recommends
, but expects the overall market to be range-bound for much of the summer.
"Traders are looking for breakouts, but they're not going to get 'em," he said,
Stanley Nabi of
Credit Suisse Asset Management
remains enamored of energy stocks, but is "not prepared to be as aggressive" today on names such as
, which have had big gains. He sees more upside for oil service names such as
Transocean Sedco Forex
He believes financials will soon start to benefit from lower interest rates, despite fears about nonperforming assets and the possible end of the Fed's easing cycle. He continues to recommend the financials mentioned on
Feb. 27 and today added
to the list.
Finally, pharmaceuticals will soon start becoming attractive if they continue to be "traumatized over what's happening in Washington," Nabi said, citing
as a favorite.
Kent Engelke of
Anderson & Strudwick
still likes the small, regional banks mentioned above and today named two more:
Independent Community Bankshares
Finally (for today), Dwight Anderson of the
has exited from
because the stocks hit his (upside) targets.
Ospraie remains long the remaining names, save
, which Anderson said was sold because of fundamental concerns.
As for new recommendations,
Public Service Enterprise
is the only one the hedge fund manager is "passionate" about. Anderson believes the utility can comfortably beat earning estimates for both 2001 and 2002 based on its strong core operations. But "the sexiest part of the story" is that the company may have the opportunity to sell unregulated power to New York City this summer at rates comparable to those being charged in California.
Having started to see "energy surplus" charges on restaurant bills here in Northern California, I can attest that an opportunity to profit from any potential energy shortage in New York is not to be taken lightly.
As originally published, this story contained an error. Please see
Corrections and Clarifications.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
Aaron L. Task.