Whether the action can be accredited to the greatly debated Cash for Clunkers program or if it is merely the effect of natural economic forces, there is good news out of the auto industry these days… finally.

First, there is word from General Motors (NYSE:GRM) that it plans to expand production at three of its manufacturing facilities. For the nearly 2,400 workers that will be invited to work on the third-shift line, the news is the best they have heard in a while.

It is a similar story at cross-town rival, Ford (NYSE:F), except few American workers will be clocking in for the new shifts. The company is widely expected to announce its plans for a third major production facility in China later this week.

Ford’s news is strong evidence of Asia’s long-term growth potential, especially for American car manufacturers dealing with a weak currency back home.

A bit further down the supply chain, Dana Holding Corp. (NYSE:DAN), a major automotive industry supplier,  is adding to its spectacular six-month run today as its shares surge by nearly 30%.

The stellar gains come as the company kicks off a public offering of 27 million shares. The sale, which is likely to bring in close to $200 million, will be used to repay the company’s massive debt.

While $200 million won’t pull the company out of debt, it will help. The heavy load created by over a billion dollars in debt was one of the driving forces that took share price as low as $0.19 over the last year.

With shares of the company trading for close to $7.30 today, investors who got in at the bottom are sitting on gains of more than 3,700%. Not a bad profit for six months.

Room for more gains?

Over on the retail side of things, the situation is nearly as optimistic.

CarMax (NYSE:KMX) shareholders are smiling today as their company’s value has surged by double-digit proportions on news that the company’s second-quarter sales were better than expected.

Thanks to the crowds awakened by the Cash for Clunkers incentive program, the massive car retailer raked in a record-breaking profit of $103 million over the past three months.

Now the big question on everybody’s mind is will the profitability and growth be sustainable?

Already, there are signs the industry is beginning to slow. Some reports have new-car showrooms even emptier than before the massive incentive program. If that is the case, those recalled workers may be back in the unemployment line all too soon.

If you are a long-term investor, you can afford to keep your shares in the game. Eventually, today’s prices will look cheap.

But if you can’t stand some short-term volatility or are sitting on a hefty pile of profits, now would be a good time to pull some chips from the table.

Detroit has found safety in a calm meadow, but it is not out of the woods yet.
Source: Detroit Update: Finally Some Good News?

Here are listed sales in the filing, courtesy of 24/7WallStreet.com:

· 7/20/09… 1,817,000 at $28.7269 average in open market sale.

· 7/21/09… 3,915,100 at $26.9188 average in open market sale.

· 7/22/09… 2,254,200 at $26.6425 average in open market sale.

What took Buffett so long to start selling Moody’s? We have no idea. Moody’s runs one of the biggest scams on Wall Street. It charges the companies whose securities it rates (just like Standard & Poor’s and Fitch also do).

So what do you think these ratings agencies did when presented with a whole load of junk mortgage-backed securities to rate? They assigned them investment grade status and pocketed the cash.

If these ratings agencies had instead acted honestly and responsibly (rather than pimping themselves out to the highest bidder) the whole subprime debacle and the ensuing credit crisis could have been avoided.

Buffett isn’t the only investment whizz who thinks Moody’s is heading for trouble. Hedge-fund legend David Einhorn of Greenlight Capital is selling Moody’s short.

Yesterday, Moody’s shares tumbled almost 4% on the news that the Buffett had began to unwind his position in the company. We’d like to see Moody’s go out of business. But that’s maybe wishful thinking. Make sure you don’t own any shares in Moody’s. And if you’re feeling speculative, consider going short Moody’s along with Einhorn.

One of the easiest ways of deciding what stocks you should own is by “standing on the shoulders of giants.” We’re no geniuses here at Notes. But at least we are smart enough to recognize it. And that’s why we track what people far smarter than us are doing with their money.

As of the end of the first quarter this year, this is how Warren Buffett’s holdings (via Berkshire Hathaway, his investment vehicle) looked like:

1. American Express Co. (NYSE:AXP) over 151.6 million shares, same as before.

2. Bank of America Corp. (NYSE:BAC) 5 million shares; same as last quarter.

3. Burlington Northern Santa Fe (NYSE:BNI) 76.77 million shares; HIGHER than 70.089 million shares of last quarter.

4. Carmax Inc. (NYSE:KMX) 12 million shares; LOWER than the 17.63 million and that is two straight quarters of declines.

5. Coca Cola (NYSE:KO) right at 200 million shares, still same as before.

6. Comcast (NASDAQ:CMCSA) 12 million shares, same as before.

7. Comdisco Holdings (NASDAQ:CDCO) roughly 1.5 million shares, same as before.

8. ConocoPhillips (NYSE:COP) is really lower than the 71.228 million shares reported as this has been used for cutting taxes, and we already know that the number is lower than what the filing says.

9. Constellation Energy Group (NYSE:CEG) was just updated this week so the number is actually about 12.4 million rather than what the filing shows as being 14.828 million shares.

10. Costco Wholesale (NASDAQ:COST) 5.254 million shares, same as before.

11. Eaton Corp. (NYSE:ETN) 3.2 million shares; looks like new holding but may have been missed before.

There’s a lot of talk these days about how Buffett has lost his touch. This may be so. But the guy remains the world’s most successful investor. If you have a medium- to long-term investment horizon, you could do a lot worse than consider following Buffett into some of these long positions. If you think you can outsmart the guy, go ahead. But we know who our money would be with…

This is from Today’s Financial News:

Carmax (NYSE:KMX) has been soaring of late. Good that our HSC members had a running start on this American demographics play!

On Dec. 22, 2008, I issued an HSC Alert to our Hot Stock Confidential members that I called: “This stock is going to rebound in spring due to this U.S. demographic mega-trend”.

Since they safely got in at $7.46 a share (or better), I can make my learned opinion available to a wider circle… considering the stock closed at $9.14 today, after trading as high as $9.30.

Here’s what I wrote back then:

In 1989, the number of live births in the United States surpassed four million for the first time since 1964, one of the last years of the Baby Boom generation. Since then, for almost twenty years straight, four million Americans have been born every year.

They are called the Echo Boom generation and by now represent over 70 million consumers in the United States. This year, the four-million strong segment born in 1990 finished high school and scattered across the nation’s campuses. And every year hereafter, another four million will be hitting the road… literally… in cars provided to them by the most indulgent parental generation in history.

My own son, High School Class of 2011, is already dropping hints that it’s high time for him to take driving lessons.

I suspect he’ll start ogling cars in about six months.

If it weren’t for the effect of parental buying behavior on the businesses catering to this demographic, I’d be inclined to ignore his automotive ambition. But age-appropriate spending on these kids can be tracked by following the stock price highs of Disney, Toys ‘R’ Us, McDonald’s, Apple throughout the 1990s and the first decade of the 21st century.

And after Aladdin and Toy Story, Happy Meals, iPods and Abercrombie and Fitch pre-torn pants, a car seems to be as inevitable to this generation as the Amen at church.

Of course, there’s a recession going on. And few parents may go and buy little Pugsley a brand-spanking new Mustang as a graduation present. My bet is that, notwithstanding a glut of new hybrids and SUVs, a wholesome percentage of this generation will get their first car at a used car lot.

At a place like CarMax Inc. for example. Sure, KMX-NYSE has taken it on the chin, reporting a $21.9 million loss during the third quarter as sales sank 23 percent for the quarter.

The company has imposed a hiring freeze at its headquarters, will temporarily stop store growth, and reduce staffing by natural attrition.

Since CarMax’s financing arm was hurt by a $23.8 billion write-down in the value of the company’s bonds and $16 million for loan adjustments on bad loans, I doubt the company will be extending liberal credit.

But since bicycles are a pain, especially for cross-country drives, and part of the parental generation’ dream is to cut down on your second job as unpaid taxidrivers, I believe a combination of winter attrition, 16th and 18th birthdays, high school graduations, and college-bound freshmen will kick-start the used-car business in the second quarter of 2009.

Time to start looking at buying cheap now. KMX is currently selling at around $7.40 a share. I’d say buy under $8 and use price dips to and below $7 as additional buy-in opportunities in the coming weeks. I do believe 20-30% gains by May are a distinct possibility.

Well, today I advised our members to set a stop-loss at $9, to lock in better than 20% gains should the stock fall as unexpectedly as it rose today. I still think there’s some upside left.

After all, my son is now willing to barter: A driver’s license in exchange for the remaining merit badges required for Eagle Scout.

Can a used car be far away?

Source: Carmax is up over 20% on our HSC American demographics play!

• 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

• Circuit City Stores Inc. (CC) announced yesterday (Monday) that Chairman, Chief Executive and President Philip Schoonover would resign from all posts, effective immediately. Schoonover was the subject of increasing criticism as Circuit City posted slipping financial results over the past year. Vice Chairman James Marcum will serve as acting Chairman and CEO, Reuters reported.

• Microsoft Corp. (MSFT) yesterday (Monday) announced a $40 billion share repurchase program. The buyback plan – the largest ever on record – is slated to run through September 2013, MarketWatch reported. Microsoft gained 24 cents on the news to close at $25.40 on an otherwise down market day.

• McAfee Inc. (MFE) agreed to buy Secure Computing Corp. (SCUR) in a deal valued at $465 million. The second-largest maker of security software plans to expand its product line for protecting corporate networks and e-mail systems, Bloomberg News reported. The price of $5.75 per common share is a 27% premium over Secure Computing’s closing price on Friday.

• Electricite de France SA (PINK: ECIFF) yesterday (Monday) announced that it had offered to purchase Constellation Energy Group Inc. (CEG) for $6.2 billion, a 32% premium over Warren Buffett’s offer. The offer, made in conjunction with private equity firms KKR & Co. (KKR) and TPG Capital LP, was not accepted due to Buffett’s MidAmerican Energy Holdings Co.’s promise of an immediate $1 billion cash infusion. “The offer accepted provided immediate liquidity and a strategic transaction that we think is executable,” Constellation Chief Executive Officer Mayo Shattuck said on the call. “That, amongst other variables considered, represents a superior offer.”

• Moody’s Investors Service (MCO) yesterday (Monday) downgraded the financial strength rating of Washington Mutual Inc.’s (WM) main bank subsidiary to “E,” its lowest rating, saying the bank’s capital is insufficient to absorb its mortgage losses, The Associated Press reported. Moody’s also cut its rating on WaMu’s preferred stock further into junk status to “Ca” from “B2.”

• CarMax Inc. (KMX) said yesterday (Monday) that second-quarter earnings fell 78%, as a weak economy, high gas prices, and losses the company’s financing arm proved too much to overcome. Earnings for the quarter ended Aug. 31 fell to $14 million, or 6 cents per share, from $65 million, or 29 cents per share, last year. Total sales fell 13% to $1.84 billion from $2.12 billion a year ago.

• Sallie Krawcheck, head of Citigroup Inc’s (C) wealth management unit, will step down from the company, The Wall Street Journal said yesterday (Monday). According to the report, Citigroup will move the wealth management unit under the umbrella of its institutional clients group.

• Legg Mason Inc. (LM) yesterday (Monday) denied a report by The New York Post that it plans to go private to escape tumultuous markets and a deepening credit crisis. “While we don’t normally comment on market rumors, in this uncertain time we want to be clear that The New York Post story is not true and Legg Mason’s strategy has not changed,” Legg Mason spokeswoman Mary Athridge said in a statement.

Source: Global Investing Roundups Tuesday, September 23rd, 2008