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Early Movers for Friday Feb. 15, 2013

U.S. markets continue to be mixed with 14,000 acting as resistance for the Dow Jones Industrials. Until some meaningful event occurs, I expect earnings and individual company news to dominate media headlines. The way it should be.

Early Movers

Shares of Herbalife (HLF) are significantly higher as Guru Carl Icahn has taken a 12.7% stake in the nutritional-supplement company and said he plans to discuss strategic alternatives with the company. After Icahn’s stake was revealed, CNBC immediately reached out to Ackman and which he responded:

"We invest based on a careful analysis of the facts. After 18 months of due diligence, we have concluded that it is a certainty that Herbalife is a pyramid scheme. Our conclusions are unaffected by who is on the other side of the investment. Our goal was to shine a spotlight on Herbalife. To the extent Mr. Icahn is helping achieve this objective, we welcome his involvement." (source)

Things are certainly getting interesting in this billionaire battle over who is right. Icahn’s stake comes after a heated argument between he and Ackman. I wonder if he really did his due diligence and whether or not his ego made this investment. Keep in mind, Ackman spent 18 months doing his research whereas Icahn spent about a month. Time will tell.


A day after Warren Buffett’s Berkshire Hathaway purchased Heinz (HNZ) several packaged food makers reported earnings.

Campbell Soup (CPB) reported EPS of $0.70/share versus analyst estimates of $0.66/share. The company also announced further restructuring plans such as eliminating 260 jobs in Mexico as it closes a plant and restructures operations in that country.

Gurus have been buyers and sellers of Campbell Soup (CPB). Ray Dailo and Ken FIsher have recently added to their positions, but even then, there positions are insignificant.

Staying on the packaged foods theme, J.M. Smucker (SJM) reported EPS of $1.47 for its third quarter versus analyst estimates of $1.39 as the company had an increase in revenue and saw its margins increase as well. The company also raised its full year guidance to the lower end and now expects to earn between $5.17-$5.22/share.The company also said iit considers itself well-positioned for profitable growth as it continues to integrate recently acquired Sara Lee.

Not much Guru activity on J.M. Smucker (SJM). Ariel Capital Management’s John Rogers has been reducing his stake in recent quarters while Gotham Capital’s Joel Greenblatt has been adding to his. Neither’s position is significant.

Burger King (BKW) earned $0.23/share versus analysts estimates of $0.15/share. Same store sales were up 3.2% in 2012 and expenses were significantly lower.Total company restaurant expenses dropped to $161.2 million from $351.3 million, driving a 41% drop in total operating costs and expenses. The company continues to revise its menu items and plans on adding lattes and flavored coffee in an attempt to make up ground on long time rival McDonalds (MCD)

Gurus have been bullish on the fast food chain with Whitney Tilson, Jim Simmons and Bill Ackman establishing positions. Bill Ackman’s stake is the most significant.Burger King currently represents 6.9% of the Pershing Square portfolio.

Disclosure: None

About the author:

I'm in love with value investing and in particular Joel Greenblatt's "magic formula". I run a well diversified portfolio

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