• Standard & Poor’s yesterday (Monday) reduced the credit rating of Royal Bank of Scotland PLC (ADR: RBS), lowering the rating of both the Edinburgh-based bank’s long-term and short-term debt. “The rating actions reflect Standard & Poor’s expectation that RBS’s financial profile may continue to weaken,” the analysts said, citing a “combination of mixed earnings prospects, deteriorating credit risk in its key geographies, and difficult market conditions” in which to shore up its capital, Bloomberg News reported. RBS stock sank over 20% on the downgrade.

• Shares of biotech firm Dendreon Corp. (DNDN) soared 33% yesterday (Monday) on news of a good drug trial. Provenge, Dendreon’s experimental prostate cancer drug, reduced the risk of death in 20% of trial participants, Reuters reported. Dendreon shares gained $1.73 to close at $6.93.

• Eli Lilly & Co. (LLY) announced yesterday (Monday) that it plans to buy ImClone Systems Inc. (IMCL) for $6.5 billion in a deal that values the biotech firm at about $70 share. This latest offer from Eli Lilly beat out Bristol Myers Squibb Co.’s (BMY) competing bid of $62 per share. However, Bristol Meyer’s will receive approximately $1 billion in cash for its 17% stake in ImClone, The New York Times reported.

• AgFeed Industries Inc. (FEED) announced yesterday (Monday) a $10 million share repurchase program to commence immediately. AgFeed, which does most of its feed and hog production business in China, will fund the share buyback with current cash reserves, Trading Markets reported.

• Bank of America Corp. (BAC) yesterday (Monday) reported third-quarter results earlier than planned, and revealed a 68% drop in profit, as well as plans to boost capital by selling stock and halving its dividend. Profit fell to $1.18 billion, or 15 cents per share, for the July-to-September period from $3.7 billion, or 82 cents per share, in the same period last year.

• U.S. Treasury Secretary Henry M. Paulson selected Neel Kashkari, a former Goldman Sachs Group Inc. (GS) executive and current assistant secretary to be the interim head of Treasury’s new Office of Financial Stability, The Associated Press reported. Kashkari will be in charge of the office created by the emergency legislation enacted Friday to fund the largest government bailout. Paulson was the head of Goldman before joining the Bush administration in 2006.

Source: Global Investing Roundups Tuesday, October 7th, 2008

• Eli Lilly and Co. (LLY) is in advanced talks to acquire ImClone Systems Inc (IMCL) for $70 a share, topping a rival bid from Bristol-Myers Squibb Co. (BMY), the Wall Street Journal reported yesterday (Wednesday). Bristol already owns about 17% of ImClone and has submitted an unsolicited $62-a-share bid of its own for the biotech company.

• CarMax Inc. (KMX) said yesterday (Wednesday) that it will layoff more than 600 employees, or 4% of its total work force, as it struggles with harsh credit conditions and low sales, The Associated Press reported. CarMax shares fell 64 cents, or 4.6%, to close at $13.36.

• Shares of IBM Corp. (IBM) tumbled 6% yesterday (Wednesday), their biggest drop in three years, on speculation that the company failed to meet third-quarter expectations. “There’s unconfirmed speculation that they are going to bring down their numbers for the quarter, that they are going to warn,” Tim Ghriskey, chief investment officer at Solaris Asset Management, told Reuters.

• Micron Technology Inc. (MU) yesterday (Wednesday) posted its seventh consecutive quarterly loss with a net loss of $344 million or 45 cents per share for the fiscal fourth quarter. “The global memory market continues to experience severe oversupply and price degradation,” said the memory-chip maker’s Chief Executive Steve Appleton, The Wall Street Journal reported.

• A study released yesterday (Wednesday) by Consumer Reports found that cereals marketed to children in the U.S. often have more sugar and sodium than their foreign-sold counterparts. Post Golden Crisp from Kraft Foods Inc. (KFT) and Kellogg Co.’s (K) Honey Smacks are both 50% sugar by weight, Reuters reported.

• Auto sales in Canada increased 1.7% in September, Bloomberg News reported. Toyota Motor Corp. (ADR: TM) had a 14% increase, which helped offset declines from both General Motors Corp. (GM) and Ford Motor Co. (F). Car sales climbed 5.1% while light truck sales slipped 2.2%.

Source:Global Investing Roundups Thursday, October 2nd, 2008

• Nationwide home prices fell a record 5.3% in July compared with a year ago, the Federal Housing Finance Agency said yesterday (Tuesday). Prices were down 0.6% from June on a seasonally adjusted basis, and are now at October 2005 levels.

• Chrysler LLC yesterday (Tuesday) unveiled three prototype electric cars, including a Dodge sports car, a four-door Jeep Wrangler, and a Chrysler minivan, The Associated Press reported. The company hopes to put one of them on sale in the United States sometime in 2010 to compete with General Motors Corp.’s (GM) much-hyped Chevrolet Volt.

• Oil prices pulled back more than 2% yesterday (Tuesday) after Monday’s record setting rally. Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange, after as low as $104.05 earlier in the day. The contract jumped $6.62 to settle at $109.37 on Monday.

• Lennar Corp. (LEN) yesterday (Tuesday) reported a loss of $89 million, or 56 cents per share, compared with a loss of $513.9 million, or $3.25 per share, a year ago. The loss was less than the 63 cents per share expected, according to Reuters Estimates. Lennar’s revenue plunged 53% to $1.11 billion in the quarter, beating estimates of $1.07 billion.

• E.I. du Pont de Nemours & Co. (DD), more commonly known as DuPont, yesterday (Tuesday) announced Ellen Kullman as its new president and chief executive officer. Kullman is the first woman to hold the chief post in DuPont’s 206-year history, Reuters reported. Kullman, who has been with DuPont since 1988 was seen as the likely successor to the retiring Charles Holliday.

• ImClone Systems Inc. (IMCL) stock shot up almost 7% yesterday (Tuesday) after a late-night Monday bid boost from Bristol Myers Squibb Co. (BMY). The latest offer of $62 per share for ImClone is a $2 boost over Bristol’s prior offer. Bristol also went hostile with the offer, taking the new bid directly to ImClone shareholders, Forbes reported.

• The Wall Street Journal yesterday (Tuesday) reported that Electricite de France SA (PINK: EICFF) would pay $23 billion (12.4 billion pounds) for British Energy Group PLC. EDF refused to comment on the report, but has scheduled a press conference for today (Wednesday), BusinessWeek
  reported.

Global Investing Roundups Wednesday, September 24th, 2008

• Oil prices extended their decline yesterday (Tuesday), falling $10 a barrel in a dramatic, two-day slide as the outlook for U.S., as well as global, energy demand grew weaker. Light, sweet crude for October delivery fell $4.56 to settle at $91.15 a barrel on the New York Mercantile Exchange, after earlier falling as low as $90.51 – the lowest level since Feb. 8.

• The Food and Drug Administration is closing U.S. borders to more than 30 generic drugs made by India’s Ranbaxy Laboratories Ltd. (OTC: RBXLY), citing poor quality in two of the company’s factories, The Associated Press reported. However, Ranbaxy can continue selling medicines made at any of its other factories.

• Best Buy Co. (BBY) said yesterday (Tuesday) that its second-quarter profit fell 19%, to $202 million, despite a 12% jump in revenue. Same-store sales jumped 4.2% and total revenue came in at $9.8 billion. A sluggish U.S. economy will continue to challenge the retail giant the second half of the year.

• Bristol-Myers Squibb Co. (BMY) said yesterday (Tuesday) that it might drop its $4.5 billion offer for the 83% of ImClone Systems Inc. (IMCL) it doesn’t already own. “There are situations in which we are willing, and we’ve disclosed that, we’re willing to walk away,” Jean-Marc Huet, Bristol’s Chief Financial Officer, said response to a question at a pharmaceutical investors conference, The Associated Press reported.

• Citigroup Inc. (C) Chief Executive Officer Vikram Pandit sent an e-mail to all 300,000 Citi employees reassuring them of the bank’s stability during this troubled time in the financial sector. “We can all be proud to represent Citi, an extraordinary institution, which has and will continue to play a critical role in global financial markets,” the e-mail read, BusinessWeek reported.

• General Motors Corp. (GM) officially unveiled its plug-in hybrid car the Volt yesterday (Tuesday) as part of the automaker’s 100th anniversary celebration. GM hopes the Volt will play a key role as it shifts to a more fuel-efficient line-up away from its previous reputation of large trucks and high horsepower vehicles, MarketWatch reported.

• Adobe Systems Inc. (ADBE) managed to beat Wall Street analyst expectations despite a slip in fiscal third-quarter profit. Net income for the San Jose, Calif.-based software maker for the period ended Aug. 29 dropped to $191.6 million, or 35 cents a share, compared with $205.2 million, or 34 cents a share, in the same period a year prior, MarketWatch reported. “We’re particularly impressed with Adobe’s profitability levels, which were higher than expected,” said Edward Jones analyst Andy Miedler.

• Constellation Energy Group Inc. (CEG) shares plunged $17.23, a decline of over 35%, to close at $30.76 yesterday (Tuesday) on investor concerns that banks would pull the utility’s credit lines, Reuters reported. The cost to insure Constellation’s long-term debt soared 60%, a record high, according to Markit Intraday.

Source: Global Investing Roundups Wednesday, September 17th, 2008

Phase 1 Investor editor Rob Fannon recently wrote that biotech was one of the few market sectors to show positive returns as  many other stocks were getting hammered. He sees great values in the sector.

There’s a good reason for this strength. A struggling economy won’t hurt biotech and medical as much as, say, an automaker, retailer, or restaurant chain… And biotech is one of the few industries showing solid sales growth.

A big holding in the S&P Biotech ETF, Gilead Sciences, just reported a 22% increase in quarterly sales growth. A slew of big biotech players report earnings next week, and I expect more great numbers.

Several ETFs give you broad exposure to biotech. Just enter “biotech” in the search box on www.etfconnect.com for a full list of funds. (A warning on the HOLDRs Biotech ETF – I’d avoid it… It’s ridiculously weighted toward just four high-profile companies.)

The really huge gains in biotech will be made with the best individual companies. Pick the right one and you could easily multiply your money by four or five times.

Today, Steve Sjuggerud of Daily Wealth calls biotech, the first “screaming buy” of 2008.

I asked Rob about the Genentech buyout offer from Roche – the one that I called the “catalyst” for the sector back in July.

Rob said the Genentech bid “is a bad move for Roche… but it’s terrific for the industry, for a couple reasons.”

• First, big, profitable biotech companies like Biogen (BIIB), Gilead (GILD), Genzyme (GENZ), or Celgene (CELG) are perceived as safer ways to play biotech. Like Genentech, these companies already have drugs on the market that command premium pricing and offer multiple years of remaining patent protection. They could be takeover candidates as well.

• Second, once Genentech is acquired, $40 billion of money dedicated to biotech will need to find a new home. Investors will search for new spots to park this cash… We’re seeing it already. Sector valuations are already on the rise.

According to Rob, the whole sector “is prone to swift surges of joy.” An easy and diversified way to own biotech is through the SPDR biotech ETF (XBI). It holds mostly mid- and large-cap companies.

But Rob says the real money will be made in small-cap biotechs – like the ones he often features in his newsletter. He told his readers, “I’m betting the entire small-cap space could jump as high as 25% in the coming months. And that could be just the beginning…”

I trust Rob, who’s finally bullish about biotech. Everything is lined up, as far as our “cheap, hated, uptrend” mantra goes. And the sector has just begun to rise. You haven’t missed a thing.

In short, if you haven’t bought biotech yet, buy it now! It’s the first “screaming buy” of 2008.

Likewise, Jim Nelson in the Penny Sleuth sees great profit opportunities for biotech right now.

You see, investors have been too busy buying up investment banks and mortgage fiascos. Now that the dust is starting to settle (even though we expect that to take quite a while), more and more interest is being paid to technologies and biotechs. That hasn’t happened on any large scale since the tech bubble burst.

A few weeks ago, Big Pharma went head first into this recent breakout, when Switzerland-based Roche Holdings offered to buy up the other 44% of Genetech Inc. (NYSE:DNA) that it didn’t own. The news of this possible deal sent shares flying 15% overnight.

Just a few days ago, Bristol-Myers Squibb (NYSE:BMY) offered to buy ImClone Systems (NASDAQ:IMCL) — a small $5 billion biotech — for $60 per share. While that one was instantly rejected it did send ImClone shares flying, giving investors a nice, one-day 40% gain.

These stories are starting to roll in now.

But now that the party is over, biotech stocks are coming back in a big way. According to mutual-fund research firm Lipper, two biotech funds were amongst the top five best-performing vehicles in July – a dramatic reversal from June when commodities funds were leading the charge.

Big Pharma is buying up promising biotech companies in an effort to boost profit margins. This creates great opportunities for investors, and it’ only just the beginning…

Forget financial, energy, and retail companies. Well, maybe you shouldn’t just forget them. There are deals there, too. But, something much better is starting and you need to know about it…For the past few years, Wall Street has beaten down one of the most lucrative industries in the whole lot of them…biotechs.

Biotechs offer investors with  to get in on breakthrough technologies, while they are still in the lab. Many times, they also offer average people with a way to invest in future cures and solutions to the world’s most dangerous diseases. That’s quite a one-two punch.

So why have investors stopped investing in these ground-floor companies?As the leader of the free world said, “There’s no question about it. Wall Street got drunk…it got drunk and now it’s got a hangover.”

That’s really the only way to describe what has happened the past few years. If you have ever had a bit too many to drink in your life, you know that you sometimes get a little too focused on certain things, and forget about other things completely. That’s what Wall Street did with the biotech industry…

You see, investors have been too busy buying up investment banks and mortgage fiascos. Now that the dust is starting to settle (even though we expect that to take quite a while), more and more interest is being paid to technologies and biotechs. That hasn’t happened on any large scale since the tech bubble burst.

A few weeks ago, Big Pharma went head first into this recent breakout, when Switzerland-based Roche Holdings offered to buy up the other 44% of Genetech Inc. (NYSE:DNA) that it didn’t own. The news of this possible deal sent shares flying 15% overnight.

Just a few days ago, Bristol-Myers Squibb (NYSE:BMY) offered to buy ImClone Systems (NASDAQ:IMCL) — a small $5 billion biotech — for $60 per share. While that one was instantly rejected it did send ImClone shares flying, giving investors a nice, one-day 40% gain.

These stories are starting to roll in now. There’s a perfectly reasonable explanation for it…

*********************************

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Big Pharma is struggling to keep up with shareholder demands of larger profits, while they are fighting generics and more competition. To combat falling margins, these mega companies are buying up biotechs that have a few promising products in their pipelines. These new products are the future of the industry, and Big Pharma knows it.

All these deals are also bringing new interest to the industry. Investors, who have previously forgotten about the pharmaceutical industry, are just now starting to jump back in. Over the past few weeks, biotechs have outperformed the rest of the market in a big way. This is only the start. Smart money says we have a long way to go from here:

But, if you want to try and call the bottom of the financials flop, or the mortgage bankers’ bankruptcy, be my guest. We’ll be busy looking for the best biotech to own as the industry starts its march north.

Source: Biotech Rally Just Beginning

• Bristol-Myers Squibb Co. (BMY) yesterday (Thursday) offered $4.5 billion in cash for biotechnology company ImClone Systems Inc. (IMCL), the Associated Press reported. ImClone’s board has yet to comment on the proposal, which offers its stockholders $60 per share, a 30% premium to its Wednesday closing price of $46.44. Bristol-Myers already owns about 17% of ImClone.

• Eastman Kodak Co. (EK) said yesterday (Thursday) that second-quarter profit fell, as traditional film-based revenue slumped 14% to $847 million. Sales climbed 1% from $2.47 billion to $2.49 billion, and revenue from digital businesses rose 10% to $1.64 billion.

• Diana Shipping Inc. (DSX) said yesterday (Thursday) that second-quarter profit more than doubled due to higher charter rates and an increase in operating days, the Associated Press reported. The company said its earnings for the quarter ended June 30 increased to $56.7 million, or 76 cents per share, up from $26 million, or 41 cents per share, for the same period last year.

• Light, sweet crude oil for September delivery fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange yesterday (Thursday). Prices are up 59 percent from a year ago, but have dropped 11% this month on concerns demand in the U.S. is pulling back.

• Google Inc. (GOOG) has plans to start-up a venture capital fund to provide seed money to promising start-ups, MarketWatch reported. Google follows in the footsteps of other tech giants with similar funds such as Intel Corp. (INTC), Cisco Systems Inc. (CSCO) and Microsoft Corp. (MSFT).

• CBS Corp. (CBS) shares slumped 3% after the television network lowered its outlook based on slackening advertising sales, Forbes reported. Advertising sales fell 6% due to fewer primetime viewers and less spending by local stations. CBS reduced its guidance to the nearly flat from a prior estimate of growth of 3% – 5%.

• MasterCard Inc. (MA) fell almost 10% yesterday (Thursday), as investors worried about the effect waning consumer spending would have on debit and credit card use, Bloomberg News reported. MasterCard shares dropped $26.58 to close at $244.15.

• Standard & Poor’s lowered the rating on the three major U.S. automakers yesterday (Thursday), as domestic car companies continue to lose ground to foreign competition. General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC were all lowered to a rating of “B-minus,” six levels below investment grade, Reuters reported.

Source: Global Investing Roundups Friday, August 1st, 2008

Main Street investors watched helplessly as Regeneron lost nearly $500 million from its market cap in roughly three weeks. Should we just chalk it up to typical biotech volatility?

Actually, scores of hedge funds had anticipated Regeneron’s downward spiral weeks in advance. As I’ll explain, the group took advantage of another biotech “glitch,” sold Regeneron’s shares short, and pocketed a cool 30% return… while naïve investors were blindsided.

Last week, I described the “ivory tower glitch,” which occurs when academic studies shove around biotech stocks. Well, before those studies go public, scientists and researchers often present the data at academic conferences. This unpublished data can sometimes move entire sectors of the industry.

The most famous (or infamous) of medical conferences is ASCO, the annual meeting of the American Society of Clinical Oncology. This is the “Super Bowl” of cancer meetings.

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But ASCO has a dark side, which last year cost Regeneron investors a third of their investment. You see, before every scientific conference, organizers release “abstracts” – one-page appetizers summarizing each presentation. At clinical conferences like ASCO, the abstracts can contain highly anticipated data on new drugs… the kind of information that can move a stock up or down 75% in one day.

Here’s the catch: ASCO has traditionally released abstracts to the public at the beginning of the conference. Yet ASCO members – cancer doctors and researchers who pay annual membership dues – received this information a full three weeks in advance.

Clearly, the scientists on Wall Street’s payroll selectively ignored the Confidential label on ASCO’s abstract books. This data leak created a “glitch”… allowing some investors to trade on “insider” information, while the rest were left in the dark.

In its abstract last year, Regeneron summarized disappointing trial results for its lead cancer drug. Investors who saw this data weeks early had a chance to set up short positions, knowing the market would punish the company. Sure enough, when the public got the bad news, Regeneron’s stock lost 11% in a day and continued to drift lower for weeks.

Regeneron is just one example of dozens of similar ASCO “glitches.” So now, after enduring numerous complaints, ASCO is trying to level the playing field. This year, conference organizers released the 2008 abstracts to everyone all at once… last night at 9:00.

You might want to check them out to see if any of your biotech holdings are presenting at this year’s ASCO meeting. You can bet dozens of volatility-junky hedge-fund managers and analysts are scouring through the pages as you read this, getting ready to make major moves in the market.

If you’re looking for short-term volatility trades, check out the presentations from the usual suspects – big biotech players in the cancer market, including Imclone (IMCL), Genentech (DNA), Onyx (ONXX), Celgene (CELG), Exelixis (EXEL), Medarex (MEDX), and Immunogen (IMGN).

If history is any measure, we’re heading into a span of volatile trading days in biotech. At least this year, we’re all in the same boat.

Good investing,

Rob

P.S. Even with the newly level playing field, it’ll be hard for individual investors to gain an edge over hedge funds when it comes to ASCO. But my friend and colleague Dr. George Huang has developed a system that uses a similar, little-known glitch to generate an average 75% profits a year. Click here to read more about it.

Source: What Hedge-Fund Managers are Reading this Morning

Two weeks ago, Yahoo Chairman of the Board and co-founder Jerry Yang rebuffed Microsoft’ $47.5 billion (or $33 a share) bid, sending shares down $4.43 (or 15%) to $24.24. That of course didn’t bode well for Icahn, who said he owns 59 million Yahoo shares.

“The board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft,” Icahn said in his letter. “I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.”

If necessary, Icahn’ strategy is to seek antitrust clearance from the Federal Trade Commission to purchase up to $2.5 billion worth of shares – about a 6% stake. Also, with all of Yahoo’ 10 board members up for re-election on July 3, Icahn will move to nominate his own list of board candidates, one being Mark Cuban.

Reviving talks with Microsoft won’t be easy, as rhetoric increasingly intensified between Yang and Microsoft CEO Steve Ballmer during takeover negotiations.

But if anyone has the experience and moxie to push talks further, it’ Icahn, who has used his clout to push action at struggling mobile phone pioneer Motorola Inc. (MOT) and drugmaker ImClone Systems Inc. (IMCL).

Most recently, Icahn has been at the forefront of Blockbuster Inc.’ (BBI) up-to $1.35 billion bid for Circuit City Stores Inc. (CC). If that deal falls through, Icahn said he would acquire the struggling electronics retailer.

In his letter to Yahoo, Icahn said the board “completely botched” a successful merger with Microsoft and that he is acting on shareholders’ behalf to establish a new board.

Icahn also penciled his name in as one of the nominees for Yahoo’ board.
“I think he’ playing his cards pretty smart here,” Troy Mastin, an analyst at William Blair & Co., told Bloomberg Television. “I wouldn’t be surprised to see Microsoft and Yahoo together in the next few months.”

Source: Yahoo ‘Completely Botched’ Microsoft Merger