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The Euro Zone Dominates Headlines Again and Boeing Loses a Large Order
Posted by: earningsyield (IP Logged)
Date: March 18, 2013 10:39AM

U.S. equity markets will attempt to rebound after Friday’s losses, but that rebound might not come as issues in Europe are once again making headlines. In a crazy twist to European troubles, euro zone finance ministers want to tap into Cyprus’s savings in order for the country to receive a $10 billion euro bailout package. The news immediately caused a run on cash across Cyprus’ banks and has sent European equity markets and the euro lower.

From a value investor’s point of view, I’m hoping issues like these scare the markets a bit. They have been trading at a Shiller P/E of 23 versus a historical mean of 16.5, thus making it a bit tougher to find bargains.

Company’s Making Headlines

Indonesia’s Lion Air, a long-time Boeing (BA) client, has struck a deal to purchase 234 airplanes from AirBus. The deal is worth approximately $24 billion. The deal is the largest deal the European plane maker has ever received and comes at a time when Boeing (BA) is trying to find a solution to overheating batteries which causes the FAA to ground all 787 Dreamliners. I haven’t followed the story closely but Boeing’s (BA) struggles, and previous delays, might push some customers to the other side. Just recently, Turkish Airlines signed a contract for 117 jets. Boeing has recently stated Dreamliner flight could restart within weeks and not months.

Gurus were net sellers of Boeing (BA) last quarter as a handful of them reduced their positions. Gurus who reduced or sold out include:
Anheuser-Busch InBev. (BUD) and the Department of Justice (DOJ) are asking courts to extend a current stay involving the $20 billion deal to purchase Mexico’s Grupo Modelo. Anheuser-Bush is seeking more time as it tries to resolve the DOJ’s concerns regarding the deal, including selling assets to Constellation Brands (STZ).

In the last quarter, Gurus were net sellers of Anheuser-Busch. Gurus who either sold out or reduced their position include:
One bull to keep an eye on is Tom Russo, as he has added to BUD in almost every quarter for the past five years, and it now represents about 5% of the Gardner, Russo & Gardner portfolio.

Finally, Dow Jones component United Technologies (UTX) was upgraded to “Buy” from “Hold” over at Citigroup based on “attractive valuation” following its acquisition of Goodrich. Citi also raised UTX’s price target from $88 to $110.

Gurus have been mixed on UTX. The one transaction to take note of is Lee Ainslie’s sale, which comes right after he established a 2.5% position for the Maverick Capital portfolio.



Guru Discussed: Lee Ainslie: Current Portfolio, Stock Picks
Jim Simons: Current Portfolio, Stock Picks
Stocks Discussed: BA, BUD, UTX, STZ,
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