matisse capital management

Market News Around the World

Pfizer Q2 net down 17%.

World's most profitable banks in 2008.

3 companies raising dividends.

US bank regulators should learn from Canada.

250 companies cut dividends in Q2, most since 1958.

How to beat the market's stagnant trend.

Chavez buys Banco de Venezuela from Santander (STD).

9 stocks that raised dividends in Q2. 

Dividend stocks you'll never have to sell.

Recession proves world economies more interconnected.

California's "funny money."

"The truth is, we and everyone else misread the economy," said Joe Biden this weekend. "The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there....We misread how bad the economy was, but we are now only about 120 days into the recovery package..."The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money."  Full story here.

And chances of an economic recovery are being made more difficult by volatility in the price of oil.  See NYT chart, left, and New York Times story here.   Price volatility is similar to the "OPEC price wars of the mid 1980's and the 1990-91 Gulf War."  According to a Deutsche Bank analyst: “Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories.”

More Companies Raising Dividends

The following companies recently announced increases in their dividend payments to shareholders, even as many businesses have cut payouts during this recession.   

   DEL, Del Monte Foods - from $0.04 to $0.05, quarterly

   DRI, Darden Restaurants - from $0.20 to $0.25 quarterly

   DUK, Duke Energy Corp. - from $0.23 to $0.24, quarterly

   MDT, Medtronic Inc. - from $0.188 to $0.205, quarterly

   O, Realty Income Corporation - from $0.1420625 to $0.142375, monthly

   PETM, Petsmart Inc. - from $0.03 to $0.10, quarterly

More Dividend Slashers - 6/20

   BPOP, Popular, Inc. - from $0.02 to suspended

   BXP, Boston Properties - from $0.68 to $0.50, quarterly

   ELT, Callaway Golf Co. - from $0.07 to $0.01, quarterly

   PGC, Peapack-Gladstone Financial Corp. - from $0.16 to $0.05, quarterly

   VMC, Vulcan Materials Co. - from $0.49 to $0.25, quarterly

Market News Around the World

Swiss bank regulators take a tough approach.

National Grid's (NGG) powerful dividend.

Unilever's "safe dividend" goes quarterly. 

Judge orders former Health South CEO to pay shareholders billions.

Canada needs accountants.

Medtronic raises its dividend.

'East' Germany coping better than west.

GM will sell Saab to Swedish carmaker.

Boston Properties (BXP) cuts its dividend.

UK real estate lending 'close to zero.'

Bulldozing US cities for their survival.

In Canada, resale home prices hit a new high.

The US housing recovery that isn't.

20 largest stock buybacks.

More Companies Raising Dividends

The following companies recently announced increases in their dividend payments to shareholders, even as many businesses have cut payouts during this recession.   

   BCR, CR Bard - from $0.16 to $0.17, quarterly

   CLX, Clorox Corporation - from $0.46 to $0.50, quarterly

   NFG, National Fuel Gas - from $0.325 to $0.335, quarterly

   TGT, Target Corp. - from $0.16 to $0.17, quarterly

   VLGEA, Village Super Markets - from $0.20 to $0.215, quarterly

   VSEC, VSE Corporation - from $0.045 to $0.05, quarterly

Japan's Home Prices, Post-Bank Crisis

The US seems to be adopting the "Japan approach" to its current banking and housing crises - a slow, patch the holes as they appear strategy.  In 1990, Japan's banking crisis began in earnest. The Nikkei plunged and so did property values, as you can see, left.  Nominal home price changes have been negative each year since. The housing index chart (below, left) shows that home prices rose over 40% between 1985 and 1990 but, on an inflation adjusted basis, they are now close to 1980 levels.  Will US housing follow?  Looking back, most experts agree the cause of Japan's crisis was excessive risk taking by banks that filtered through the economy.  A combination of declining profit margins, deregulation, and weak regulation of banks led to: aggressive expansion, credit liberalization and inflated asset values.  Sound familiar?  Hopefully the US housing market will not go sideways, or gradually downward, for 20 years like Japan's.

Japan's financial crisis took an entire decade to play out as follows:

1989-90:The stock market peaked in 1989, then collapsed in 1990, dropping an incredible 43% (the Dow is currently down 38% from its peak).  Japan's banks were allowed to hold equities as part of their capital base.  Over the next three years the market experienced high volatility, with a general downward trend.

1992: Land and home prices begin a steep decline and defaults rise on consumer loans.

UK Dividend Stocks Weathering the Storm

Are UK dividend stocks holding up better than their American counterparts?  According to Investment Week: "of the UK companies reporting in Q1, 65% increased dividends, 10% maintained... with just 25% making some sort of cut."  The article also noted that: "The worst cuts have come for stock-specific reasons and have all been telegraphed by clear balance sheet weakness."

Dividend Slashers - 6/7

   CBL, CBL & Associates Properties - from $0.37 to $0.11, quarterly

   CSA, Cogdell Spencer - from $0.225 to $0.11, quarterly

   KRC, Kilroy Realty - from $0.58 to $0.35, quarterly

   RTP, Rio Tinto, PLC- interim dividend canceled

   STLD, Steel Dynamics - from $0.10 to $0.075, quarterly

   WOR, Worthington Industries, Inc. - from $0.17 to $0.10, quarterly

Performance of Global Markets YTD

The performances of various stock indices around the world, since the beginning of January 2009, are listed below.  It is evident from this list that investors have a higher appetite for risk than they did a year ago, as emerging markets (especially the BRIC countries) are outperforming the others by a wide margin.  Or perhaps investors perceive emerging markets as less risky and less exposed to the banking problems in the US and UK? 

   RTS.RS, RTSI Index, Russia: +88.3%

   BSESN, BSE Sensex, India: +49.1%

   SSE, SSE Composite Index, China: +47.3%

   BVSP, Bovespa Index, Brazil: +44.0%

   STI, Straits Times Index, Singapore:  +34.9%

   HSI, Hang Seng Index, Hong Kong: +27.3%

   OMX, OMSX Stockholm 30, Sweden: +20.2%

   GSPTSE, TSX Composite, Canada: +18.6%

   AORD, All Ordinaries, Australia: +7.9%

   GDAXI, DAX Index, Germany: +5.9%

   FCHI, CAC 40 Index, France: +4.7%

   NZ50, NZX Index, New Zealand: +3.4%

   FTSE, FTSE 100 Index, UK: +0.7%

   DJI, Dow Jones Industrial Average: -0.2%

Companies Raising Dividends

The following companies recently announced increases in their dividend payments to shareholders, even as many businesses continue to cut payouts during this recession.   

   AAON, AAON Inc., from $0.16 to $0.18, semi-annually, yield = 1.7%

   ACE, Ace Limited, from $0.29 to $0.31, quarterly, yield = 2.8%

   AFSI, AmTrust Financial Services, from $0.05 to $0.06 quarterly, yield = 2.6%

   AIZ, Assurant Inc., from $0.14 to $0.15 quarterly, yield = 2.6%

   ARG, Airgas Inc., from $0.16 to $0.18, quarterly; yield = 1.7%

   CAH, Cardinal Health, from $0.14 to $0.175, quarterly; yield = 2.3%

   FDS, FactSet Research Systems, from $0.18 to $0.20, quarterly; yield = 1.5%

   FLO, Flowers Foods, from $0.15 to $0.175, quarterly, yield = 3.3%

   HNZ, HJ Heinz, from  $0.415 to $0.42, quarterly; yield = 4.6%

   JCS, Communications Systems, Inc., from $0.12 to $0.14, quarterly; yield = 5.7%

   KNX, Knight Transportation, Inc., from $0.04 to $0.05, quarterly; yield = 1.1%

   LOW, Lowe's Companies, from $0.085 to $0.09, quarterly; yield = 5.9%

   NC, Nacco Industries, from $0.515 to $0.5175, quarterly; yield =  5.9%

   NOC, Northrup Grumman, from $0.40 to $0.43 per share, quarterly; yield = 3.6%

   POR, Portland General Electric, from $0.0245 to $0.255, quarterly; yield = 5.7%

   PPDI, Pharma. Product Dev., from $0.125 to $0.15, quarterly; yield = 2.9%

   SVU, Supervalu, from $0.1725 to $0.175, quarterly; yield = 4.2%

   TAP, Molson Coors Brewing, from $0.20 to $0.24, quarterly; yield = 2.2%

   UHT, Universal Health Realty Inc., from $0.59 to $0.595, quarterly; yield = 6.9%

   XEL, Xcel Energy, from $0.2375 to $0.245, quarterly; yield = 5.7% 

Disclosure:  The author is long Flowers Foods (FLO).

Market News Around the World

Jobless claims are down slightlythis week to 631,000, from 643,000 the prior week, a change of -1.8%, but still a negative sign for the economy, moving the market south.  Many analysts point to the US auto industry as a source of many lay offs.  Nationally, the unemployment rate now stands at 8.9 percent, according to Barron's Econoday.  Things are tough on the other side of the Atlantic as well; S&P just lowered its outlook on Britain from stable to negative.  The full story is linked below with other news around the world:

S&P: Britain's outlook is "negative:" NYT

Northrop Grumman (NOC) raises its dividend: RTT News

IMF: Britain may have to nationalize more banks: Telegraph

Without Fiat deal, Chrysler may close all dealerships: Daily Finance

Perdigao (PDA) will take over Sadia (SDA): Bloomberg

Petrobras (PBR) gets $10 billion loan from China: Brazzil Magazine

Recession killing-off shopping malls: WSJ

Florida's BankUnited - this year's biggest failure: Forbes

3 companies with 'safe' dividends: Money Morning

Home prices drop 19.1% over last year: WSJ

Best Performers of the Top Small Cap Funds

Zack's recently named three top-performing small cap funds.  These were FRBR Focus (FBRVX), Conestoga Capital Advisor Small Cap (CCASX), and Queens Road Small Cap Value Fund (QRSVX).  I have added three other strong performers to this group, looking for small caps outperforming the market: T. Rowe Price Diversified Small Cap Growth (PRDSX), T. Rowe Price Small Cap Stock (OTCFX) and Goldman Sachs Small Cap Value Fund (GSSSX).  I analyzed the composition fo each fund, to find the best performing small cap stocks in these holdings year-to date, as a starting place, looking for possible investments.  The results were as follows:

    PALM, Palm Inc., +241.7%

    ADVS, Advent Software,+66.5%

    KMX, CarMax, Inc., +61.9%

    PENN, Penn National Gaming, +59.1%

    SBAC, SBA Communications Corporation, +54.4%

    NVEC, NVE Corp., +45.6%

    ILMN, Illumina, Inc, +43.4%

    WHG, Westwood Holdings Group Inc., +38.9%

    USU, USEC Inc., +37.9%

Dividend Slashers - 5/16

   AKR, Acadia Realty Trust - from $0.21 to $0.18 per share, quarterly

   MAKSY, Marks & Spencer Group, PLC - from £0.225 to £0.17, semi-annually

   MLHR, Herman Miller - from $0.088 to $0.022 per share, quarterly

   PC, Panasonic Corporation - from ¥22.5 to ¥7.5 per share, semi-annually

   STI, Sun Trust Bank - from $0.10 to $0.01 per share, quarterly

   TNK, Teekay Tankers, Limited - from $0.72 to $0.59 per share, quarterly

Dividend Slashers - 5/11

   BBT, BB&T Corp. - from $0.47 to $0.15 per share, quarterly

   BVF, Biovail Corporation - from $0.375 to $0.09 per share, quarterly

   CLF, Cliffs Natural Resources - from $0.0875 to $0.04 per share, quarterly

   CSFL, Centerstate Banks of Fla. - from $0.04 to $0.01 per share, quarterly

   REG, Regency Centers - from $0.725 to $0.46 per share, quarterly

   SLG, SL Green Realty Corp. - from $0.375 to $0.10 per share, quarterly

   SSS, Sovran Self Storage - from $0.64 to $0.48 per share, quarterly

   SXI, Standex International - from $0.21 to $0.05 per share, quarterly

   TM, Toyota Motor Corp. - from ¥140 to  ¥100 per share, annually

Market News Around the World

The annual change in auto sales by manufacturer between April '08 and April '09 are presented in the chart, left (click to enlarge).  Less expensive vehicles fared best over the past year.  BMW sales were down nearly 40%, Toyota 42% and Chrysler at the bottom with more than a 50% decline, contributed to, no doubt, by its pending bankruptcy.  Despite this grim data, Bernanke seems to fell that the economy is stabilizing and could turn upward later this year, per his remarks to the congressional Joint Economic Committee.  Other news from around the world follows:

Canadian insurers' profits could fall 1/3 (SLF, MFC): Globe and Mail

The financial markets are ahead of reality: Telegraph

Legg Mason (LM) reports loss, cuts dividend: FT

France wants to regulate hedge funds: FT

Petrobras (PBR) lifts its first oil from ultra-deep Tupi field: Brazzil Mag  

Japan's economy falls back into deflation: BBC

 China experiencing deflation: NYT

BT will cut its dividend: FT

Sun Life (SLF) will issue shares for dividend reinvestment: Reuters

EU fines Intel (INTC) €1.06 Billion: FT

Companies Raising Dividends

   IBM, International Business Machines - from $0.50 to $0.55 per share, +10.0%

   OXY, Occidental Petroleum - from $.32 to $0.33 per share, +3.1%

   SWY, Safeway Inc. - from $0.0828 to $0.10 per share, +20.8%

   VMI, Valmont Industries - from $0.13 to $0.15 per share, +15.4%

   XOM, Exxon Mobil - from $0.40 to $0.42 per share, +5.0%

Highlights from Exxon's 2008 Annual Report

Exxon (XOM) recently produced its 2008 report and proxy statement for its 2009 annual meeting.  As I am a shareholder, I took the time to delve through the report and accompanying documents.  While 2008 was in many ways a banner year for the company, accoring to the WSJ, in Q1 2009, "Exxon's spending exceeded its cash flow," and the company is taking steps to preserve cash.  Note: I bought XOM stock in 2008 because the P/E was under 8x and the company's current dividend yield was 2.5%, well above its 5-year average of 1.8%.   Below are some of the highlights from the recent report:

• 2008 earnings per share were $8.69 (a record), up 19.4% over 2007. Projections for 2009 are significantly lower at $4.20 per share.  Note: Q1 EPS was $0.92, below the consensus of $0.95.  The company has announced it will slow, but not discontinue, its share buyback program.
• Over the past five years, XOM has increased its annual dividend by 58%; dividends have increased for 26 consecutive years.
• XOM expects oil and natural gas to remain the primary energy sources, meeting close to 60% of global demand.
• Reserve replacements for 2008 were 103 percent of production.  Finding and acquisition costs average $0.66 per barrel of oil.
• Reserves = 72 billion oil equivalent barrels, of which a significant portion is in the oil sands of Canada.
• At year end 2008, the current ratio = 1.47, and LT debt to total assets = 3.1%.