Tag - BBGI

Notwithstanding yesterday's positive market activity, stocks continued their month-long downward trend with the Dow closing down 161 points to shave 1.94% and close at 8,163.

Investors already on edge about upcoming earnings failing to meet even low expectations were spooked by an Obama administration panel suggesting that the economy is far from well and that another round of government stimulus plans may be necessary.

In addition to the Dow closing down, the Nasdaq was down 2.31% to close at 1,746 and the S&P 500 dropped 1.97% to close at 881.

The Russell 2000, a composition of major small-cap stocks, closed down 1.91% to 485.

Bucking the downward trend were small-cap stocks like Novogen Limited (Nasdaq:NVGN) up 37% on news that a Novogen-licensed oncology drug used by Marshall Edwards, Inc. showed promise for treating acute lymphoid leukemia. Researchers have also indicated that the drug in question, phenoxodiol, may be effective in treating autoimmune disease as well. Besides licensing agreements with Marshall Edwards, Novogen is its majority owner. 

Other small-caps leading the market today include EuroBancshares (Nasdaq:EUBK) up 26%; Community Financial Corp. (Nasdaq:CFFC) up 24%; Mexican Restaurants (Nasdaq:CASA) up 20%; and Beasley Broadcast Group (Nasdaq:BBGI) up 19%.

Small-cap decliners were lead by Hansen Medical (Nasdaq:HNSN) down 33% on news of weaker than expected Q2 revenues and lower sales.

Other leading small-cap decliners included First National Bancshares (Nasdaq:FNSC) down 29%; Bridgeline Software (Nasdaq:BLSW) down 23%; and trucking heavyweight YRC Worldwide (Nasdaq:YRCW) down 23% on news that the management and the Teamsters would continue their discussions on seeking ways to help YRC continue operating. The company reported loses of over $250 milling in the first quarter.

*****Stocks rallied out of the hole yesterday. And the financial media, which started the day reporting that pessimism about the economic recovery was driving stocks lower, finished by saying that improvements in credit markets were driving stock prices higher.  

Neither explanation gets to the heart of the matter.  

"Buy the rumor, sell the news" remains one of the most important rules for investing. When it became clear that stocks were grossly oversold and the global financial system wasn't going to self-destruct, investors bought stocks. In essence, they were buying the rumor that the economy would recover. 

There have never been any rosy recovery projections that investors could be disappointed in. Rather, now that we are at the start of the third quarter, the one most economists say will be the first to show growth in a year, it's time for some actual numbers to back up valuations.  

According to Barron's online, the current P/E for the Dow Industrials is 12.29. That's not cheap, but it's not expensive, either. Let's call it just right. With little reason to expect any upside, investors will be inclined to take their profits. In other words, they are selling the news. 

*****It will be particularly interesting to see how this dynamic plays out during earnings season. My early read on earnings is that estimates are low enough right now that companies should be able to beat expectations. But what will they say about the future? And how will investors react?  

I don't expect a lot of upside this earnings season. We'll find out soon enough,Alcoa (NYSE:AA) reports today… 

*****It's been a while since I answered any reader mail here in Daily Profit. Time to change that… 

Dan W. writes: I have been reading your newsletters for many months now and thanks for your talent. There is something I wanted to pass on. I grew up in the Far East and experienced communism with its May Day parades as an American dependant. I learned a most important fact even as a youngster that everything is or can be "owned by the state". What would prevent the Chinese government (communism) from taking over my stock if I invested in some of "their" companies in the near future? 
Normally when we talk about financial markets, there's an underlying assumption that we're also talking about free markets. The ideal of a free market is that investors and consumers are the ultimate regulators. If your business stinks, no one will buy your stock, debt or product. 

Of course, as has been proven time and time again, the ideal is not functional. From Carnegie and Vanderbilt to Enron to AIG (NYSE:AIG), it seems pretty obvious to me that financial markets cannot go completely unregulated because greed will motivate some people to behave in unethical ways.  NYSE:AIG, NYSE,PTR

Investors must believe their money is fundamentally safe from deliberate fraud (but not necessarily protected from incompetence, poor market conditions, and unwise decisions). That's what regulations achieve - you might lose money, but it won't (or shouldn't) be because the game is rigged.  

In my opinion, monopoly and anti-trust laws were America's first attempt to move from laissez-faire capitalism to a sort of hybrid, regulated capitalism. Also in my opinion, China's is approaching a similar hybrid capitalism, albeit from the opposite side of the spectrum.   

No need to debate the relative merits of China's economic development. The point is that China well understands that the road to its prosperity means fostering domestic business and accessing the capital markets.  

So I don't believe China's communist government is any threat to domestic business. In fact, given China's willingness to spend its currency reserves to support its economy, I'd say China's government is a friend to its domestic business.  
And besides, investing in China can mean buying companies already owned by the government, like Petrochina (NYSE:PTR) or Sinopec (NYSE:SNP). I probably don't need to remind you that American investors - including Warren Buffett - have done pretty well with state-run Chinese companies. 

Now, I don't mean this to sound like an endorsement of communism. It isn't. But I'm here to make money. And my sense is that China's government is smart enough to know that it is China's growing prosperity that keeps it in power. I can think of nothing that would threaten that prosperity more than a government takeover of a private business.  

On Thursday, July 2, I reported that there may be as many as 100 Chinese companies getting ready for an IPO (initial public offering). All it would take to completely shut China out of the global capital markets is for the government to take over a company.  
Just yesterday, Fiat announced that it was putting up $559 million for a joint venture with Guangzhou Automobile Group. Fiat's obviously not worried about the Chinese government taking the operation over. You shouldn't be either. 

*****As you probably know, I am very bullish on companies in certain segments of the Chinese economy. Energy and commodities, especially, will do well as China spends heavily on infrastructure to support its economy. I've been covering a few of them in my SmallCapInvestor PRO service to the delight, and profit, of my subscribers. Click HERE to find out more.

Small-cap stocks posted a solid gain Tuesday, erasing morning losses to climb to the highest daily close since early February. By the close, the Russell 2000 (NYSE:IWM) was up 5.44, or 0.75%, at 729.79.

The impressive recovery move off morning lows generated a bullish outside reversal on daily charts, which helps offset some of the topping pattern formed by Friday’s lower close after making new move highs. It should be noted that downside action on Monday was forged on extremely light volume, which took some of the edge off the lower price action coming into today’s session.

Looking ahead to Wednesday’s session, the market still needs to establish the ability to hold above the 731 zone, which formed a double top back in early February. Clearly, sellers emerged in that area late Tuesday, pulling the index back off the highs. Above that 731 point, resistance is at 735 and 743. If the market starts to struggle, then support is at 726, 720.50 and 715.

Much of the bearish morning tone was linked to overnight losses in Fannie Mae (NYSE:FNM), which tumbled 8% after investors were cool to earnings results and a downgrade in the company’s credit rating. However, Fannie Mae reversed course after a conference call with company officials, and ended up climbing more than 8%. Without that bearish impetus to stir jitters about the mortgage market, credit crunch and banking worries, the bears quickly lost favor. By late mid-morning, . . .

Beasley Broadcast Group, Inc. (Nasdaq:BBGI), Helicos BioSciences Corp. (Nasdaq:HLCS) and CSK Auto Corp. (NYSE:CAO) are among the biggest percentage gainers in Tuesday's trading among companies with market capitalizations under $750 million.

EnteroMedics Inc. (Nasdaq:ETRM), Crawford & Company (NYSE:CRD.B) and Idenix Pharmaceuticals, Inc. (Nasdaq:IDIX) are also among the top small-cap percentage gainers.

Here are Tuesday's biggest percentage gainers:

Beasley Broadcast Group, Inc. (Nasdaq: BBGI) shares are soaring despite any major news from the 46-year-old radio station operator. After plummeting to an all-time intraday low of $4.86 on Dec. 19, shares of the Naples, Fla.-based company have been picking up steam.

The turnaround may be fueled by a cash dividend announced on Dec. 14. The dividend, $0.0625 for each share of common stock, is payable on Jan. 18 to shareholders of record on Dec. 31.

The stock’s previous plunge was prompted by a C.L. King analyst who said the radio industry’s revenue may have dipped 4% to 5% during November.

"After six consecutive monthly decreases, it appears November continued the difficult months for radio," C.L. King analyst James Boyle wrote to clients. “Not enough larger groups are changing much to stem audience erosion or ad share attrition or to prop up rate card discipline and surmount the biggest problem, weak advertiser demand, we suspect," he said.”

In afternoon trading, BBGI shares are up 23.28%, or $1.20, at $6.35. Over the last 52 weeks, shares have ranged from $4.60 to $9.63.

The Russell 2000 (NYSE: IWM) is gaining ground on the second-to-last trading day of the year amid news of possible asset sales by big banks. However, gains are being tempered by news of new home sales in the U.S., which fell more than expected during November. After trading above 782, the Russell dipped to 776 almost immediately after the housing data was released.

The Commerce Department reported that sales of new U.S. homes fell by 9% in November to a seasonally adjusted annual rate of 647,000. Economists were expecting that new home sales would fall to 715,000 from 728,000 in October.

At 11:27 a.m. ET, the small-cap index was up 4.92 points, or 0.64%, to 778.43. The Dow Jones Industrial Average (INDU) was up 26.98 points, or 0.2%, to 13,386.59.

Citigroup Inc. (NYSE: C) and HSBC Holdings are among U.S. and European banks that are considering major asset sales, The Wall Street Journal is reporting this morning. Citigroup could sell an 80%-held student loan, its North American auto-lending unit, its 24% stake in Brazil credit-card operation Redecard and the bank's Japanese consumer finance business. HSBC might liquidate its auto-finance business.

In other economic news, the Chicago arm of the National Association of Purchasing Managers reported that business activity in the Chicago area expanded in December, which topped expectations

McCormick & Schmick's Seafood Restaurant (Nasdaq: MSSR), Green Plains Renewable Energy Inc. (Nasdaq: GPRE) and Golden Cycle Gold Corp. (Nasdaq: GCGC) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage losers:

Accredited Home Lenders Holding Co. (Nasdaq: LEND), Medis Technologies Ltd. (Nasdaq: MDTL) and Virco Mfg. Corp. (Nasdaq: VIRC) are the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage losers:

Build-A-Bear Workshop, Inc. (NYSE: BBW) cut its second-quarter guidance to between $0.07 and $0.10 per share, down from between $0.15 and $0.19 per share. The St. Louis-based company cut its view because of less-than-expected sales over the last two months.

Terremark Worldwide, Inc. (Nasdaq: TMRK) delayed filing its annual report with the SEC, citing delays in collection and compilation of certain financial information.

These are the biggest percentage losers in Friday's trading among companies with market capitalizations under $500 million:

Brean Murray maintained its “buy” rating on employee training software maker Saba Software, Inc. (Nasdaq: SABA), while reducing the target price to $7 from $8.

Legal software maker EPIQ Systems, Inc. (Nasdaq: EPIQ) announced an upgraded version of its eDiscovery software. The Kansas City-based company added features that allow legal professionals to more quickly review trial and financial transaction documents.

These are the biggest percentage losers in Wednesday's trading among companies with market capitalizations under $500 million: