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Weekly Guru Bargains Highlights: CIT Group Inc., AutoNation Inc., Allied Capital Corp., Liz Claiborne Inc., PNM Resources Inc.

July 07, 2008 | About:

Slumping sales and narrower quarterly margins are the sign of the times, especially with the shrinking dollar, rising energy prices, and deteriorating credit markets. Before the financial results from the second quarter of 2008 get posted, some of the Guru purchases are priced at near their lows. This week’s highlight of Guru Bargains: CIT Group Inc. (CIT), AutoNation Inc. (AN), Allied Capital Corp. (ALD), Liz Claiborne Inc. (LIZ), and PNM Resources Inc. (PNM).

For the complete list of Guru Bargains, go to: http://www.gurufocus.com/Guru_bargins.php

CIT Group Inc. (CIT): Down 59% Since Bill Miller Bought In the First Quarter of 2008

Commercial finance company CIT Group, Inc. (CIT)’s shares rose 15% last week Tuesday, as news spread wide that CIT will be selling their home lending assets and businesses to Lone Star Funds and Vanderbilt Mortgage & Finance Inc for a total of $1.8 billion. For the second quarter, CIT will be anticipating $2.5 billion in pretax losses.

Bill Miller added 33% more shares of CIT. While Dodge & Cox reduced their holdings of CIT, Edward Lampert, Hotchkis & Wiley, David Williams, Third Avenue management, Martin Whitman, Charles Brandes, and Bill Miller bought shares of CIT in the prior quarter. Also, David Dreman kept his shares about the same.

CIT Group Inc. has a market cap of $2.37 billion; its shares were traded at around $8.4 with P/S ratio of 0.77. The dividend yield of CIT Group Inc. stocks is 5%.

AutoNation Inc. (AN): Down 35% Since Bruce Sherman Bought In the First Quarter of 2008

The earnings of AutoNation, Inc. (AN) dropped 37%, as sales declined in Florida, California and other states. Edward Lampert, billionaire investor and Chairman of Sears Holdings, bought up shares of AutoNation last week. Lampert boosted his stake nearly 40% or 71.2 million shares. The Automotive retailer net a profit of $50.7 million or $0.28 a share compared to $77.6 million or $0.37 a share in the prior quarter. Overall profits dropped 12% for used vehicles and 10% for new vehicles.

Bruce Sherman bought his shares between $12.5 and $16.59; George Soros also bought 13,332 shares in the quarter that ended on 3/31/08. Edward Lampert and Hotchkis & Wiley kept their shares about the same, as Michael Price sold out all his AutoNation shares.

Edward S. Lampert is the current 10% owner of Auto Nation; his last buy of 62,319 shares was made on 6/11/08 at $13.93. Since late-May, Edward S. Lampert has purchased a total of 2.365 million shares between $13.78 and $15.87.

AutoNation Inc. has a market cap of $1.69 billion; its shares were traded at around $9.44 with a P/E ratio of 7.22 and P/S ratio of 0.10.

Allied Capital Corp. (ALD): Down 35% Since Mark Hillman Bought In the First Quarter of 2008

Allied Capital Corporation is a private equity firm specializing in buyouts, acquisitions, recapitalizations, note purchases, growth capital, and middle market equity and debt investments. The company raised $193 million in capital through unsecured debt. ALD shares are current at its decade low.

Mark Hillman upped his holdings of Allied Capital Corporation nearly 16% to 2.48 million shares, while John Keeley sold out all his holdings in Allied Capital.

Insiders made their buys in May and June around $13.81 to $22.77: Managing Director John Martin Fruehwirth bought 20,000 shares; Director Roijen Laura Van bought 5,000 shares; Director Lawrence L. Hebert bought 6,029 shares; Managing Director Justin S. Maccarone Jr. bought 3,900 shares; Chairman & CEO, Director William L. Walton bought 3,800 shares; Director Edwin Harper bought 2,500 shares; Managing Director Robert Minter Monk bought 1,500 shares; and Directors Alex J. Pollock and John D. Firestone each bought 1,000 shares.

Allied Capital Corp. has a market cap of $2.35 billion; its shares were traded at around $13.17 with P/S ratio of 4.82. The dividend yield of Allied Capital Corp. stocks is 18.45%.

Liz Claiborne Inc. (LIZ): Down 29% Since Bill Miller Bought In the First Quarter of 2008

Liz Claiborne, Inc. (LIZ) announced that they will expect growth through international markets; the apparel and cosmetics retailer currently has 60% in domestic and 40% in international markets. The company recently lowered their 2008 earnings by $0.10 to $1.40 and $1.60. Liz Claiborne Inc lost $31 million or $0.33 for the first quarter, despite sales increase of nearly 4.9% to $1.12 billion. Comparing to 2007’s first quarter, the company made a profit of $16.2 million or $0.16 a share.

Bill Miller bought his shares between $16.51 and $22.57. Bill Miller, Richard Aster Jr., and HOTCHKIS & WILEY own shares of LIZ.

Director Kenneth B. Gilman bought 5,000 shares on 3/27/08 at $19.91.

Liz Claiborne Inc. has a market cap of $1.24 billion; its shares were traded at around $13.08 with P/S ratio of 0.29. The dividend yield of Liz Claiborne Inc. stocks is 1.54%.

PNM Resources Inc. (PNM): Down 22% Since Arnold Schneider Bought In the First Quarter of 2008

This week, electric distributor PNM Resources, Inc. (PNM) signed a 5-year contract with Science Applications International for $19 million. The utility company plans to raise $242 million in capital through stock-offerings.

Arnold Schneider bought 779,375 shares between $9.17 and $19.90.

The Chairman, CEO, and Director Jeffry E. Sterba sold 5,200 shares late February at $11.90; SVP & CFO Charles N. Eldred sold 3,330 shares at $14.76; SVP Alice A. Cobb sold 3,000 shares at $12.76.

PNM Resources Inc. has a market cap of $892.36 million; its shares were traded at around $11.6 with P/S ratio of 0.50. The dividend yield of PNM Resources Inc. stocks is 7.84%.

Rating: 3.3/5 (10 votes)


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