Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Welcome to the Informer. With us this week are Managing Editor Dennis Kneale, Editor Bill Baldwin, Staff Writer Joanne Gordon, and Staff Writer Chana Schoenberger. Let's start with Dennis. This one billion dollar settlement between the brokers and the SEC. What do you think?
Dennis Kneale, Managing Editor: The market reacted pretty well to it on Friday. In the long run, though, this is a disaster for investors. This is not a good thing. If you talk to enough people on Wall Street, and we did this week, they are very bleak about the prospect of this. It's extortion to buy off politicians like Eliot Spitzer, the New York State Attorney General, and make him go away. It's not going to benefit shareholders. It's not going to make things better. It's going to make them worse.
David Asman: Chana, what do you think?
Chana Schoenberger, Staff Writer: I think you're right. I think this is a disaster, but there is a silver lining. The independent research that these firms will be funding will be required to give this research to their brokerage clients. That means that Merrill Lynch (MER) is going to have to give me independent research from people like Sanford C. Bernstein. It can only be better for people to know more about the companies they own.
Dennis Kneale, Managing Editor: Sanford C. Bernstein, this is an independent research firm, recommended WorldCom stock at the same time it's parent company Allied Capital (ALD) owned 11% of WorldCom the company. Even independent research isn't independent. There's always a conflict of interest. We forgot research exists to sell stocks.
David Asman: Wow, good debate, but we have to move on. Chana, cable programming, something that's near and dear to our heart here, what do you think about it?
Chana Schoenberger, Staff Writer: I am going to tell you about cable programmers, which are the people who actually do the channels. Companies like EW Scripps (SSP) who do the Home & Garden channel and the Food Network. The problem is the cable systems have such unbelievable heft these days. The top two, Time Warner and AT&T Comcast just have such heft that they are going to be able to squeeze power out of the channels and it's not going to be good for them.
David Asman: All right. Dennis, very quick response to this.
Dennis Kneale, Managing Editor: Everyone keeps betting against cable. Cable falls for a while, but it always comes back up. It is the medium of the future. I'd say stick with it.
David Asman: All right. Joanne, let's talk about real estate. We've all heard about the bubbles existing. There's a lot of conflict in that industry.
Joanne Gordon, Staff Writer: You've got to like the retail REITS, the Real Estate Investment Trusts. Simon Property Group (SPG) made a hostile bid for one of its competitors. This may not happen. They do not want to get rid of this portfolio. Now Simon isn't going to go into a bidding war. They're not going to go much over $18 over the stock price they've already put in. So, if you want to buy Simon (SPG), evaluate it on it's own merits right now, which are pretty good. Revenue's up 6% in the past three quarters. Earnings growth, I like them.
David Asman: Bill, would you buy Simon (SPG)?
Bill Baldwin, Editor: I'm wondering if by combining two big malls you wind up curing the vacancies in each of them.
Joanne Gordon, Staff Writer: Simon (SPG) has 92% occupancy right now. Occupancy is not a problem for them, right now. Plus, they don't have K-Mart in their malls, so they're not dealing with a lot of bankruptcy.
David Asman: All right. So, watch for Simon (SPG). Bill Baldwin, someone told me you are actually against a tax break?
Bill Baldwin, Editor: Not quite. But, let me just give you some good news and some bad news. The good news is that the Republicans on Capitol Hill just might increase the maximum loss you can take against your salary with your capital losses from rotten stocks. It's now $3000, might go to $8000. That's great. Now, here's the bad news. What if everybody does that and there's a wave of selling next year. Now, my advice is go ahead and sell losers in January, not in December when everyone else does. Sell them in January and buy those same rocket hot tech stocks back next December at even lower prices.
David Asman: Well, there's some advice. What do you think, Joanne?
Joanne Gordon, Staff Writer: On the whole, I do not think this is going to induce a wave of selling. You'll have a couple of short-sided investors who think this tax break will pay off their credit card bill. But, on the whole, I don't think you can buy off investor faith in the market.
David Asman: Thanks everybody. That's it for the Informer.
Makers & Breakers
David Asman: Welcome everybody to Makers & Breakers. Our guest stock picker this week is Price Headley. He's an investment strategist at BigTrends.com. He's brought a couple of international stocks with him. AngloGold (AU), which is based in South Africa and Teva Pharmaceuticals (TEVA) from Israel. Price owns both of them. But will these luminaries from Forbes own them as well? We'll ask Editorial Vice President Jim Michaels and Editor Bill Baldwin.
Price Headley, BigTrends.com: MAKER
Well, I've liked AngloGold (AU) since May when I was on your program. I like it because we're seeing increased global uncertainty. I don't think what happens in Iraq is going to reduce that. I think you're going to see increasing fear. I think that's going to see more upside for AngloGold (AU).
David Asman: Jim, do you like AngloGold (AU)?
Jim Michaels, Editorial Vice President: BREAKER
AngloGold (AU) is not a business you can analyze. It's a religion. So, if you want to have a rabbit's foot to put into your portfolio, go ahead and buy an AngloGold (AU) stock. I don't think it's going to protect you from disaster, but if it makes you feel good, buy it. I'm not going to buy it, so I'm a breaker.
David Asman: Bill, what do you think?
Bill Baldwin, Editor: MAKER
Let me tell you what I don't like. I don't like the overpriced U.S. stock market and I don't like the dollar and that's two reasons why I like this AngloGold (AU) stock.
Teva Pharmaceuticals (TEVA)
Price Headley, BigTrends.com: MAKER
This is another big trend in the generic industry and drugs. Basically, generics only make up about 10% of the drug sales compared to brand name sales. Teva's (TEVA) growing fast and basically gives you a lot of opportunity on the upside for the generic trend.
David Asman: You like generics?
Bill Baldwin, Editor: MAKER
David Asman: So, you like the price and you like the stock?
Bill Baldwin, Editor: You bet.
David Asman: Jim?
Jim Michaels, Editorial Vice President: MAKER
I don't think the stock is cheap. I think it's expensive, but I have to agree with Bill that it's in the right place at the right time, so I think I have to be a maker on this stock.
David Asman: Wow, everybody's a maker. I have to be a little bit of a skeptic. It's based in Israel; of course it's not the most stable part of the world. Does that affect the company at all?
Price Headley, BigTrends.com: I don't think so. They've got operations here, as well. I'm looking ahead and saying you've got a big upside for generics and President Bush has a proposal in place to see more generic competition to the brand names.
David Asman: Everybody's a maker on Teva (TEVA). Thanks everybody.