Tag - Cvgi

Stocks closed higher today, thus extending July's rally into the new month. Both the Nasdaq composite and the S&P 500 Index broke through psychological barriers.

The Dow closed up 114.95 points to end the day at 9,286.56; the Nasdaq finished over 2,000 at 2,008.60; and the S&P 500 broke through the thousand barrier to close at 1,002.62.

Stocks on the Russell 2000 moved up with the broader markets to help that bellwether of small-cap stocks end the first trading session of August at 564.19, representing a gain of 1.34% for the day.

Small-cap price leaders for today include Patriot Capital Funding (Nasdaq:PCAP) up 92% on news that Prospect Capital (Nasdaq:PSEC) will buy Patriot for $197 million; Commercial Vehicle Group (Nasdaq:CVGI) up 60%; Transcept Pharmaceuticals (Nasdaq:TSPT) up 40%; and Oncothyreon (Nasdaq:ONTY) up 41%.

Small-cap price decliners were lead by Huron Consulting Group (Nasdaq:HURN) down 69% breaking news of an ongoing accounting scandal. In a twist of irony the firm that helps clients avoid accounting pitfalls and remain on the right side of the law found itself showing the door to the entire management team as well as announcing it will it would restate financial results for the past three years. The firm is also fighting claims of employee payments viewed as "kickbacks". Huron was promptly downgraded by five research firms.

Other small-cap price decliners include Repros Therapeutics (Nasdaq:RPRX) down 49% on news that development of its uterine fibroids drug, Proellex, had been put on hold due to an increase in liver enzymes in patients; and Savient Pharmaceuticals (Nasdaq:SVNT) down 18%.

******Stocks closed higher today. Our leading indicator for investor expectations, oil prices, is up over $70 a barrel.

Despite the still-compelling argument that the economy is staging a tepid recovery that will take years to gather steam, and even though many feel that housing prices and unemployment have not yet bottomed, stock prices are clearly showing that investors believe that the financial crisis is past.

Of course, that's the exact opposite of what Deutsche Bank CEO Josef Ackerman told us Friday. But why fight the trend?

*****I've been looking for a quote from George Soros to share with you, but so far our great search engines Google and Bing have let me down. I'll have to paraphrase, and I'll try not to misrepresent his thoughts. On getting rich in the stock market Soros once said the key is to ride the trend based on false assumptions, and then get out before everyone else realizes it's false.

At first, it sounds silly. How could every trend be based on false assumptions? Surely there must be a solid reason for stock prices move higher, right?

Sure, there's always a good reason for stock prices to move higher when they do. The Internet increased productivity and opened the door for many new and innovative business models.

And the emergence of commodity demand from China coupled with robust consumer demand from Americans drove many assets to all-time highs.

*****But in each case, even though the rallies started on firm footing, they were eventually proved false. The Internet led to a massive misallocation of capital as even the most absurd business model scribbled on a cocktail napkin received start-up money and an IPO. And analysts perpetuated the cycle with fraudulent numbers based on unrealistic assumptions. You'll even recall so many of the "new economy" entrepreneurs claiming that the old rules no longer applied. They did, and in a big way.   

The American consumer demand that supported China's commodity demand was based on unsustainable rising housing values and refinance cash. And of course, Wall Street fraud again made the situation worse.

Investors, from individuals to Wall Street bankers, seem to always take things too far. And while it may not be possible to see in advance the exact moment when investors realize they've been duped, it's a good idea to understand the assumptions that may eventually be proved false.

Of course, it can take a long time. Greenspan's now famous "irrational exuberance" warning came two years before the Internet bubble popped. And the warnings that housing was a bubble likewise went unheeded for years.

*****It seems there's a fair amount of potentially false assumptions driving stocks higher. But we can't know in advance when, and from what level, stock prices may reverse.

We can, however, say confidently that government stimulus is supporting stock prices. And given the essentially endless supply of money that can be thrown into the economy, fighting this uptrend is an uphill battle.

*****Bloomberg reports that Lone Star is in the process of raising $20 billion for a distressed real estate fund. They see value out there in both actual real estate and mortgage backed securities.

This exactly the type of news that the bulls want to see. Asset prices have dropped, but the only way to know if they've dropped far enough is when buyers step in.

Of course, Lone Star could be wrong…just sayin'. 

*****Last week, it was reported that Warren Buffett has a $1 billion paper profit on his investment in Chinese electric car battery company BYD (BYDDF.PK).

At SmallCapInvestor Pro, we've bought into a Chinese battery company too. This one makes batteries for cell phones, not cars. But it fits our thesis of buying Chinese stocks that have ridiculously low valuations.

You'll find this stock in the latest SmallCapInvestor Pro Special Report called Going for Growth: 3 Top Chinese Stocks to Buy NOW. Click here to get your copy.

*****The Managed America web video conference is coming up next Monday, August 10 at 6:00 P.M. It's free to attend and you can register right now. Click here to register for this free online event.

*****Finally, let's have a look ahead at the economic data for this week:

08/04/2009: Pending Homes Sales numbers
08/05/2009: Challenger Jobs Report
08/05/2009: Factory Orders
08/05/2009: ISM Non-manufacturing Index
08/05/2009: weekly oil inventory report
08/06/2009: Chain Store Sales
08/06/2009: New Jobless Claims.

Best Regards,

Ian Wyatt
Editor
SCI Daily

American Equity Investment Life Holding Co. (Nasdaq:AEL), Crosstex Energy LP (Nasdaq:XTEX) and Crosstex Energy Inc. (Nasdaq:XTXI) are among the new 52-week lows in Wednesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Commercial Vehicle Group Inc. (Nasdaq:CVGI), MI Developments Inc. (Nasdaq:MIM), Culp Inc. (Nasdaq:CFI), PHH Corp. (Nasdaq:PHH), Secure America Acquisition Units (Nasdaq:HLD.U) and Macatawa Bank Corp. (Nasdaq:MCBC).

Here are the new 52-week lows among small caps:

Cypress Semiconductor Corp. (Nasdaq:CY), Pamrapo Bancorp (Nasdaq:PBCI) and Commercial Vehicle Group Inc. (Nasdaq:CVGI) are among the new 52-week lows in Tuesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Dynamics Research Corp. (Nasdaq:DRCO), CNB Financial Corp. (Nasdaq:CCNE), Flagstone Reinsurance Holdings Ltd. (Nasdaq:FSR), GSC Investment Corp. (Nasdaq:GNV), UMH Properties Inc. (Nasdaq:UMH) and Riviera Holdings Corp. (Nasdaq:RIV).

Here are the new 52-week lows among small caps:

Small-cap shares pushed lower early Thursday, unable to sustain a mild opening bump when weekly claims numbers came in better than expected. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 6.46, or 0.91%, at 701.65.

The New Home Sales report, which came out at 10:00 a.m. ET were weak, which was no surprise, and took some of the supportive edge off the weekly claims data. New home sales were at an annual rate of 526,000 last month, which was below the forecast of 585,000, and was the lowest rate since October 1991.

It should be noted that durable goods orders, which also came out ahead of the opening this morning, were softer than expected. In addition, the weekly claims figures are often volatile, and even though today’s headline number was better than the forecast, the claims numbers still point to extensive layoffs and a rise in the unemployment rate.

Even though the market was able to sink its teeth into some fresh economic data this morning for the first time since Tuesday, the focus point remains fixed on earnings, which served up mixed signals into today’s action.

Among large-cap headline companies, Starbucks Corp. (Nasdaq:SBUX) missed the forecast and was pummeled early today, trading down 10% just after the cash U.S. opening. In addition, Amazon.com Inc. (Nasdaq:AMZN) had sloppy results and was down 4% early today. On the upside, Ford Motor Co. (NYSE:F) had a surprising . . .

Shares of Commercial Vehicle Group, Inc. (Nasdaq:CVGI) are gaining ground out of the gate after the supplier of integrated systems for the global commercial vehicle market reported first-quarter results that beat analysts’ expectations. The small cap attributed results to a slightly higher truck build rate as well as strength in its construction, military and specialty markets.

Shares jumped 16%, or $1.55, to $11.42 after the opening bell. For detailed price information and recent news stories about Commercial Vehicle Group, click CVGI.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices fell today on more financial problems and fears of a consumer slowdown. The small-cap index dropped 15.56 points, or 2.16%, to 704.65. The Dow Jones Industrial Average (INDU) retreated 246.79 points, or 1.92%, to 12,606.30.

On a year-to-date basis, the Russell 2000 has lost 8.01%, while the Dow is off 4.96% and the S&P 500 has shed 4.59%.

The bears were in the driver’s seat today as news of more pain at major financial firms sparked worries that the subprime mortgage mess could take its toll on the American consumer.

Small-cap stocks opened with a drop and never looked up on news that Merrill Lynch & Co., Inc. (NYSE: MER), the world’s largest brokerage house, may incur $15 billion in losses from investments in securities backed by mortgage loans.

Mortgage lenders nationwide frequently packaged loans and sold them as securities to financial companies, and as a result both parties have suffered billions in losses as U.S. home prices started to stagnate in the second half of 2006 and many borrowers defaulted on their loans and went into foreclosure.

Adding to the gloom was New York-based credit card issuer American Express Co. (NYSE: AXP), which announced that it will absorb a fourth-quarter pretax charge of about $440 million due to slower spending by card members and an increase in delinquencies.

Shares of Commercial Vehicle Group, Inc. (Nasdaq: CVGI) are going in reverse on news before the start of trading that the maker of products for commercial vehicles swung to a third-quarter net loss.

The net loss for the three months ended Sept. 30 was $0.13 per share, compared with a profit of $0.84 per share a year earlier. Wall Street was expecting the New Albany, Ohio-based company to report a net income of $0.05 per share, according to four analysts polled by Thomson Financial.

Commercial Vehicle Group also reported that its quarterly revenue fell 31.76% to $160.9 million from $235.8 million in the third quarter of 2006.

“While our construction market business remains strong on a global basis, our 2007 results continue to be impacted by the slow down and product content shift in the North American Class 8 heavy truck market,” said president and CEP Mervin Dunn in a statement.

The U.S. Federal Highway Administration defines Class 8 heavy trucks as vehicles with a tractor or single trailer of less than five axles.

Looking ahead, Dunn said that the company does not know how the Class 8 truck market will develop in 2008.

At 12:06 p.m. ET, shares of Commercial Vehicle Group (CVGI) were off $0.96, or 7%, to $12.73. That’s near the 52-week low of $12.60, which was set on Oct. 1. The 52-week high of $23.57 was established on Dec. 5, 2006.

Shares of Commercial Vehicle Group, Inc. (Nasdaq: CVGI) went into reverse on news the supplier of system solutions for the commercial vehicle market reported a second-quarter net loss.

The net loss for the quarter ended June 30 was $0.2 million, or $0.01 per share, compared with a net income of $15.5 million, or $0.72 per share, during the same three months of 2006, the New Albany, Ohio-based company reported before the start of trading. Four analysts polled by Thomson Financial were projecting earnings of $0.15 per share.

Revenues also did a U-turn, falling 32.45% to $158.6 million, compared with $234.8 million for the second quarter of 2006. Wall Street was expecting $169.21 million.

Stocks opened lower across the board, despite news of an unexpected drop in weekly jobless claims.

At 9:59 a.m. ET the Russell 2000 was down 4.32 points, or 0.53 percent, to 815.88.  Dow Jones Industrial Average was down 27.55 points, or 0.20 percent, to 13,459.98.

The number of American workers filing jobless claims in the week ended March 12 fell 5,000 to 293,000, the Labor Department said before the opening bell.  That’s the fifth straight week of declines and a sign of string job growth.  Economists were expecting jobless claims to increase 18,000 to 315,000.

A smaller-than-expected rise in quarterly U.S. GDP is weighing on small cap stocks this morning.  In specific company developments, a decline in quarterly net income lowered shares of Commercial Vehicle Group, Inc. (Nasdaq: CVGI), while news of earnings below expectations hurt shares of Intervoice, Inc. (Nasdaq: INTV).

At 11:26 a.m. ET the Russell 2000 was down 4.52 points, or 0.54 percent, to 829.28.  The Dow Jones Industrial Average had added 5.93 points, or 0.05 percent, to 13,111.43.

These are the biggest percentage losers at 10:44 ET among companies with market capitalizations under $500 million: