Headlines (Scroll down for complete stories):
1. Warren Buffett's Top 10 Stocks
2. Retail Sales, Inventories Rise
3. Dow Sets New Record High
4. India's Industrial Output Up 14.4 Percent
1. Warren Buffett's Top 10 Stocks
Billionaire investor Warren Buffett has made some new moves in the Berkshire
Hathaway portfolio: selling 4.75 million shares in Target, acquiring shares of
spin off Western Union from holding First Data, and buying 10.2 million
additional shares of gypsum maker USG.
Many of the moves will prove to be good for Berkshire, says Morningstar. And
Morningstar speculates that one of the moves probably didn't happen at all.
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Let's start with the portfolio move that wasn't. Morningstar analyst Justin
Fuller, CFA points out that, because the Securities and Exchange Commission
allows Berkshire to delay reporting holdings as it accumulates a stock, the
apparent sale of 4.75 million shares of Target stock probably didn't happen.
"Given that Berkshire still has sizable positions in relatively similar
retailers like Wal-Mart and Home Depot, it seems odd that Berkshire would do an
about face on Target," says Fuller. "It's still possible that Berkshire has
maintained a position in Target, with the disclosure being somewhat delayed."
Fuller says Buffett's most intriguing new portfolio development is his stake in
Western Union. Western Union spun off from First Data, giving Berkshire 10
million shares in the money transfer company. Morningstar estimates Western
Union's fair value price is $32 a share, which is about 45 percent higher than
its current share price.
Fuller's also "cautiously optimistic" about Buffett's amassing of USG stock.
Berkshire owns 16.7 million shares, or more than 18 percent, of USG, which has
recently emerged from asbestos related bankruptcy. Berkshire's core insurance
operations are well versed in asbestos liabilities, gaining Fuller's approval.
Overall, Morningstar says Berkshire Hathaway stock, now trading around $110,000
for the A shares and $3,660 for B shares, is still a good investment.
Morningstar gives Berkshire a five-star rating, and estimates its B share fair
value to be around $4,500.
But, for those of you who don't want to fork over a cool $110,000 or even $3660
to invest in a single share of Berkshire stock, could buy at least 80 percent of
the Oracle of Omaha's portfolio by investing in the company's top 10 holdings.
Berkshire reported holdings in 39 companies as of the third quarter of 2006,
according to SEC filings. But, Buffett's top 10 stocks make up more than 80% of
the portfolio: American Express, Anheuser-Busch, Coca-Cola, Conoco Phillips,
Johnson & Johnson, Moody's, Procter & Gamble, Washington Post, Wells Fargo, and
Wesco.
Buying one share of each of Berkshire's top 10 stocks would cost about $1,700.
That's less than half of what it would cost to buy a single B share of
Berkshire.
Editor's Note:
2. Retail Sales, Inventories Rise
Retail sales rose in December at the strongest pace in five months, indicating
that the all-important holiday shopping season turned out better than original
reports indicated.
The Commerce Department said Friday that retail sales increased 0.9 percent last
month, the strongest showing since a 1.4 percent increase in July.
The increase was better than the 0.7 percent advance that economists had
forecast and provided evidence that consumer spending was ending the year on a
firmer footing than initially thought.
Initial reports from the nation's big chain retail stores had set a gloomier
tone. They complained that holiday sales had fallen below expectations as mild
winter weather depressed sales of winter clothing.
In other news, business inventories held on shelves and backlots rose by 0.4
percent in November, the biggest gain in three months. The gain reflected a 0.2
percent rise in stockpiles being held by manufacturers and a 1.3 percent rise in
wholesale inventories, which was offset somewhat by a 0.3 percent drop in
inventories being held by retailers.
With the November increase, inventory accumulation may not be as much of a drag
on overall economic growth in the final three months of the year as had been
previously feared.
For all of 2006, retail sales rose by 6 percent, a solid showing but down from a
6.9 percent increase in 2005.
That slowdown reflected the fact that consumer spending, after a sizzling start
to the year, slowed in the spring and remained at lower levels for the rest of
the year as Americans were battered by soaring gasoline prices, rising interest
rates and a cooling housing market.
Consumer spending is closely watched because it accounts for two-thirds of total
economic activity. The 0.9 percent December advance bolstered the belief that
the Federal Reserve is on track to achieve a soft landing for the economy in
which growth slows enough to keep inflation under control without pushing the
country into a recession.
"It appears that households had a merry holiday spending money, despite what the
retailers may have been claiming," said Joel Naroff, chief economist at Naroff
Economic Advisors.
He said the strength in consumer spending in the final three months of the year
may be enough to push overall growth up to an annual rate of 3 percent or
better, significantly higher than the sluggish 2 percent growth rate turned in
during the July-September quarter.
And in a good sign for prospects in the new year, a survey showed that consumer
confidence shot up sharply in January as consumer worries about soaring energy
prices and a slumping housing market appeared to be easing.
The RBC Cash Index, based on results of the international polling firm Ipsos,
showed consumer confidence rising to 95.3 in early January, the best showing in
11 months and up sharply from a December reading of 86.9
The December gains in retail sales included a 3 percent jump in sales at
electronics and appliance stores, which followed an even bigger 5.8 percent
surge in November. Those increases reflected the introduction of sought-after
video game consoles such as Sony's Playstation 3 and Nintendo's Wii.
Sales were up 3.8 percent at gasoline stations, reflecting in part higher pump
prices during the month. Those gains still left pump prices below the $3-plus
records set last summer.
Auto sales rose by 0.3 percent after having been flat in November.
Excluding the volatile gasoline and auto sectors, retail sales would have risen
by 0.7 percent in December, the best showing since January 2006.
The 0.9 percent overall gain pushed retail sales to a seasonally adjusted total
of $369.9 billion in December after a 0.6 percent November increase, which had
originally been reported as a stronger 1 percent gain.
Sales at department stores and other general merchandise stores rose by 0.9
percent while sales at specialty clothing stores were up 0.6 percent. However,
sales at hardware stores fell by 1.1 percent, reflecting the continued troubles
in the once-booming housing industry.
© 2007 Associated Press.
Editor's Note:
3. Dow Sets New Record High
U.S. stocks mounted a broad advance Thursday as investors snapped up technology
shares such as Microsoft Corp. and optimism about the economy boosted industrial
stocks, pushing the Dow to a record close.
It was the first time in 2007 that the Dow Jones industrial average closed at a
record high, led by a 3.5 percent rise in Microsoft, as well as gains in shares
of United Technologies Corp. and 3M Co.
Microsoft shares jumped to their highest level since March 2002 and were also
the biggest positive influence on the Nasdaq and the S&P 500 index.
With crude oil prices down more than 15 percent since the start of the year,
investors are putting money in areas that they see poised to outperform after
lagging the market last year.
"This is the time of year where you're usually seeing reinvestment demand from
pension funds" and other investors, said Frank Gretz, market analyst and
technician for Shields & Co., a brokerage in New York. "It's momentum."
The Nasdaq rose 1 percent and hit a fresh six-year high. Shares of Google Inc.
were among the top positive influences on the index after Goldman Sachs raised
its profit view of the Web search company.
The Dow Jones industrial average was up 72.82 points, or 0.59 percent, at
12,514.98. The Standard & Poor's 500 Index was up 8.97 points, or 0.63 percent,
at 1,423.82. The Nasdaq Composite Index was up 25.52 points, or 1.04 percent, at
2,484.85.
Shares of Microsoft rose $1.04, to $30.70, while Google shares rose 2.1 percent,
or $10.26, to $499.72.
A higher-than-expected profit from biotech company Genentech Inc. brightened the
outlook for corporate earnings at the start of the reporting period. Its shares
rose 4.4 percent to $87.40.
Genentech's positive earnings news late on Wednesday followed an upbeat report
from aluminum maker Alcoa Inc., which gave higher-than-forecast results on
Tuesday.
Earlier on Thursday, a government report showed a larger-than-expected drop in
the number of Americans filing new claims for jobless benefits last week.
Shares of big manufacturers rose, with 3M up 1 percent, or 80 cents, to $78.65,
and United Technologies up 1.6 percent, or $1.01, to $63.70.
"There was a strong weekly jobless claims number, indicating the economy may be
on better footing than previously thought," said Michael Sheldon, chief market
strategist at Spencer Clarke in New York.
February crude fell $2.14 to settle at $51.88 a barrel. Shares of Exxon Mobil
Corp. slipped 1 cent to close at $70.98.
Energy shares helped lead stocks' advance earlier in the day, but lost ground as
oil prices extended losses.
From the beginning of the year, front-month crude prices have fallen more than
$9, or 15.2 percent.
Trading was active on the New York Stock Exchange, with about 1.68 billion
shares changing hands, below last year's estimated daily average of 1.84
billion, while on Nasdaq about 2.43 billion shares traded, above last year's
daily average of 2.02 billion.
Advancing stocks outnumbered declining ones by a ratio of about 12 to 5 on the
NYSE and by 2 to 1 on Nasdaq.
Editor's Note:
4. India's Industrial Output Up 14.4 Percent
India's industrial production rose 14.4 percent in November compared to the same
month a year ago, the government said Friday, suggesting that the slowdown seen
in October was temporary.
Industrial growth in the first eight months of the current fiscal year, which
ends in March 2007, rose to 10.6 percent from 8.3 percent in the same period a
year earlier, the Commerce and Industry Ministry said in a statement.
A month ago, the government reported 6.2 percent growth in October, stoking
fears that the economy could be slowing.
On Friday, revised estimates showed industrial production grew just 4.4 percent
in October, but the November figures suggested it was a temporary slowdown and
that the economy's performance continued to be robust.
Earlier this week, Finance Minister P Chidambaram said he expected industrial
production to register a double-digit growth rate in the current fiscal year.
That, in turn, will help the broader economy grow almost 9 percent this year,
bringing to close to China's sizzling growth pace. India's growth has averaged
more than 8 percent annually the past three years.
Among industries, manufacturing output grew 15.7 percent in November compared
with 7 percent in the same month a year ago, the government statement said.
Mining production jumped 7 percent in November compared to a drop of 2.1 percent
last year.
© 2007 Associated Press.
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