James Cullen
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Cal-Maine gets a Barron's boost, but is it a value trap?

Posted Jun 16th 2009 1:00PM by James Cullen (RSS feed)
Filed under: Commodities, Agriculture, Stocks to Sell

In the most recent edition of Barron's, fund manager Scott Black touted shares of Cal-Maine Foods (NASDAQ: CALM), the country's largest egg producer, as a stock worth buying. The company generates a return on equity of over 30%, and Black said that at just over 5x earnings, the stock is extraordinarily cheap. When the market revalues Cal-Maine at "just eight times [next year's estimated] earnings, you've got a $38.50 stock." Shares of CALM, which closed Friday at $22.90, were up to $24.86 by Wednesday morning.

I'm familiar with Cal-Maine, having been introduced to the company more than a year ago when it was the focus of a presentation at the Boston College Investment Club. Last summer, I spoke with the company's CFO, Tim Dawson, who gave me a much better understanding of the egg business. Though I came away convinced that Cal-Maine is in very capable hands, I believed then -- as I still do now -- that the stock is not a buy. Here's why.

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Goldman CEO Blankfein cautious on recovery

Posted Jun 11th 2009 12:20PM by James Cullen (RSS feed)
Filed under: Goldman Sachs Group (GS), Recession, Financial Crisis

Talk of "green shoots" abounds with the S&P 500 up 40% from its lows in March 2009, but Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein remains cautious in his outlook for the global economy. "I think it's going to be a long, protracted recession," he said while speaking on a panel at the annual International Organization of Securities Commissions (IOSCO) conference in Tel Aviv.

Blankfein also emphasized the importance of intelligent regulation and risk management, warning fellow finance executives not to discount the latter. "The culture of risk management is very important and hard to legislate, but at the end of the day, you have to make sure that the people on the risk management side of your operation are just as capable, and maybe therefore, just as well-paid and have the career opportunities as people on the producing side of the business."

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Developers Diversified (DDR) deal signals pain level for undercapitalized REITs

Posted Jun 9th 2009 1:50PM by James Cullen (RSS feed)
Filed under: Deals

The Buffalo News reports that shopping center owner Developers Diversified (NYSE: DDR) is set to close on a deal to sell back 11 properties in upstate New York that it bought from privately-held Benderson Development in early 2004. The kicker: on a price-per-square foot basis, Developers Diversified will be selling out at a steep discount to its original purchase price.

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Markets are up, but what about housing?

Posted Jun 9th 2009 9:00AM by James Cullen (RSS feed)
Filed under: Housing

The major indices continued to rally into the close Monday, after spending most of the day down substantially. The Dow ended the day up fractionally and the S&P 500 was down less than one point. Institutional money continues to enter the markets, says Jim Cramer, and that has limited the size and duration of pullbacks.

Even as the uncertainty comes out of the markets, the clarity that replaces it is tepid at best. But with the S&P 500 resting at seven-month highs, one troublesome sector has badly lagged: housing and home-building stocks.

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