I've read all I can read on this board without responding. NYX will not soar, zoom, or skyrocket. Nor will it crash, sink, or plummett. Its an investment in the FUTURE of the company for crying out loud. They are building a global stock exchange....its going to take a little time. If you want to actually short or bet against the worlds first global stock market that will cover the 3 major time zones on the planet.....trade every major currency....along with cash equities in Tokyo/USA/& Europe....and has plans to leverage the Euronext platform to get into derivatives and futures......then go ahead! Short till your heart's content. If however you aren't worried about what the stock will be tomorrow, next week, or next quarter, and you have your eye on 2008-2009-2010 and believe in the potential of the company, then use the pullbacks to buy the stock. Look at CME's success.....do any of you recall the its first year as a publicly traded company? I do! I remember it falling from 80 down to 65 and I listened to the same "short" arguments as to why it was a bad investment. I also heard the same arguments again when CME fell from 225 down to 175 in 2005....that was the end of it for sure I was told. So where is it now? If a $10-$20 (with no change in the fundamental story)drop/downgrade/or worse yet...negative message board, is going to send you to the exits and make you question your decision, you should not be buying ANY stocks at all. The NYSE has been around for 150 years, but I suppose this pullback and GS downgrade is all she wrote for it....that's it....ye'old NYSE will just be a footnote in the history books now that GS downgraded it. Come on.....a 150 year old process is being automated. Global economies are linking their exchanges together. Profits will follow & NYX will do fine. If you don't think so, short it or put the money elsewhere...there are 6-7000 other stocks out there. If you're an investor and believe the story, buy the pullbacks. Time will tell who is right, why try to belittle the other guys thoughts? You should welcome it. Just like poker....I love to sit down at a table with fish....I'll tell him he's a great player! I don't want him to get up from the table!! Just like longs should love shorts and shorts should love longs. A few of Buffett's quotes to end the post:
Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
There seems to be some perverse human characteristic that likes to make easy things difficult
Let blockheads read what blockheads wrote.
the short term the market is a popularity contest; in the long term it is a weighing machine.
Here the link to more:
Atticus sells........wonder what they did with the cash....see arbitrage part two post
Atticus Capital LP Largest Holdings in 4th Quarter: 13F Alert
By Chris Cappucci
Feb 15 (Bloomberg) -- The following are Atticus Capital LP top 10 holdings by market value as of December 31, according to a filing with the U.S. Securities and Exchange Commission on 02/14/2007.
COMPANY NAME TICKER MARKET VALUE SHARES CHANGE
Phelps Dodge Corp PD US 2,113,065,303 17,650,061 817,600
ConocoPhillips COP US 1,379,098,028 19,167,450 8,964,200
NYSE Group Inc NYX US 695,092,169 7,151,154 -5,319,967
Norfolk Southern Corp NSC US 619,009,552 12,308,800 7,781,700
Mastercard Inc-Class A MA US 588,920,955 5,979,500 14,500
Union Pacific Corp UNP US 549,193,764 5,968,200 3,302,200
Sears Holdings Corp SHLD US 545,676,108 3,249,426 153,100
Burlington Northern Santa Fe BNI US 369,788,100 5,010,000 1,916,000
CSX Corp CSX US 352,318,747 10,232,900 4,057,200
Canadian Natural Resources CNQ US 325,661,140 6,118,000 -918,900
SOURCE: SEC 13F-HR
FILER: Atticus Capital LP
QUARTER ENDED: 12/31/2006
SEC RECEIVED: 02/14/2007
What did Atticus do with the cash from the NYX sell? Looks like they bought Euronext! All that are putting the selling pressure on nyx may be buying euronext knowing they are going to get .98 shares of NYX and about $27 in cash next month. The price movement in NYX, imho, is just mechanics at this point, and not reflective of the 2-3 year story. But who knows?? Certainly not me! Just relaying what may be helpful and looking for intelligent discussion.
Atticus Capital Increases Euronext Position to 15.4 Million Shares
NEW YORK, Feb. 14 /PRNewswire/ -- Atticus Capital today sent the following
letter to Jean-Francois Theodore, Chairman of the Managing Board of Euronext
February 14, 2007
Chairman - Managing Board
PO Box 19163
1000 GD Amsterdam
Dear Mr. Theodore,
Congratulations on your pending merger with the New York Stock Exchange.
We are writing this letter to clarify to you and the market what our
entire economic exposure is to Euronext N.V. In addition to the 11,069,136
common shares disclosed in our most recent public filing, we also have
added derivative exposure to Euronext through cash-settled total return
swaps in respect of 4,484,592 notional shares. As a result, we now have
total economic exposure to 15,451,711 Euronext shares.
We look forward to being one of the largest shareholders in NYSE Euronext.
Timothy R. Barakett David Slager
Chairman and CEO Vice-Chairman
About Atticus Capital LP
Atticus Capital, LP, is a leading asset management firm, with more than
$14 billion of assets under management. Founded by Timothy Barakett in
1995, the firm is headquartered in New York with an office in London.
Atticus invests in global securities markets on behalf of major
institutions, endowments, pension funds, and private investors. Timothy
Barakett, Chairman and CEO, and David Slager, Vice-Chairman, lead the
firm's portfolio management team. Nathaniel Rothschild, Co-Chairman, and
Matthew Edmonds, President, also sit on the firm's management committee.
Warren Buffett said it best: Humans have a talent for wanting to make something easy very difficult. (or something to that effect)
Its all about patience, expectations, earnings, and confidence in your own decision making. NOBODY on this board should make your investment decisions for you......NOBODY......PERIOD!!!!!! NOBODY cares about your money as much as YOU do! Successful investing, unfortunately, isn't easy. Its hard work...which is why everybody isn't rich, and also why these boards are full. :)
Anyway, just take the NYSE's 2007 number of $2.53, forget about ANY potential cost savings or accretive earnings brought on by the 2nd largest derivatives exchange in the world....just the $2.53 '07 estimates for NYSE alone....give it 20% growth for 5 years, which could be/should be obtainable with the global consolidation taking place:
2007 eps = $2.53
2008 eps = $3.03
2009 eps = $3.65
2010 eps = $4.37
2011 eps = $5.25
Investors will usually pay up to 2x the growth rate, if 20% growth is acheived, NYSE could fetch a 40 multiple on the 2011 number. 40 x 5.25 = $210 BY 2011?? Possible...but not guaranteed. Not even if somebody on TV says so or some analyst says no way. Price targets are just a theory based on the information at hand....nothing more...nothing less...trying to make more of it than that is a waste of time.
If the earnings exceed, or fall short, the above numbers will adjust accordingly....why not just wait and see what happens over the next 2-3-4 quarters as they work through the merger and try to build a global exchange, which, I imagine, is no easy task.
There's no need to worry about shorts, write Investor Relations, talk about arbitrage, what happens between certain hours of the trading day, or who is selling what to who. Bottom line: if management delivers the cost savings and NYSE Euronext enjoys the fatter margins and profits provided by the commodity exposure, NYX will be fine. Also as the industry consolidates......think 5 years from now and what the company may look like, or what it could be earning for its owners. Stocks are not lottery tickets and do not make you rich overnight, or over 12 months...it may take....oh no.....years!!! gasp!!
Let the industry consolidate and let the story play out. Just relax if you are long and believe in the story. Why the bashers are on any board, and why anybody even listens/responds to them is beyond me. I'll close with another Buffett quote: Forecasting tells you nothing about the market...it just tells you a lot about the Forecaster.
Let me get this straight. GS upgraded NDAQ on the potential move into derivatives and downgraded NYX after the acquisition of derivatives exposure. And if the downgrade is due to acquisition cost, that makes it even funnier. GS is basically saying: "We'll upgrade your company if you have the potential to become more profitable, but we'll downgrade you if you actually go do it".
If it wasn't so crooked, it would be lol funny.
But relations have changed recently. NYSE chose Citigroup, not Goldman, to represent it its merger this year with European stock and derivatives market operator Euronext NV. And today, Joshua Carter, Goldman�s analyst covering exchanges, dropped his rating on NYSE stock to �sell� from �neutral,� simultaneously upgrading the rating on NYSE rival Nasdaq Stock Market to �buy� from �neutral.�
And there you have it. Citi upgrades to $113 and Goldman downgrades to $80. How funny and brutally obvious can it be? GS is just positioning itself for the next NYSE merger, maybe CBOE, or ISE....who knows....who cares? Then GS will help them, charge them a gazillion dollars, then "upgrade" due to the increase US derivative exposure. GS is like the stalker ex-fiance...lol....the stock and fundamentals or potential of the company have absolutely squat to do with each other at this point. GS is just flexing its muscles and setting NYX up in order to pull a little extortion on them later on.
I agree with the eventual combined earning power of the company. I'm sure all serious NYX shareholders have been to euronext.com to look at the products and services NYX has bought, but if you are worried about NYX's exposure to derivatives and commodities and haven't been to the site, obviously, you should look at what your investment actually is involved in.
On a side note, a little history that I find interesting. During CME's first year as a public company 2003-2004, it hit a high of around $80 in July of 2003....then fell to around $65....and it took it until January of 2004 to get back to $80. How many here remember what caused that drop? I do....vividly. It was the fact that Euronext was saying CME had a monopoly and they wanted into the US markets. It wasn't until Euronext was turned away that CME begin its climb.
CME didn't go to $500+ in its first year, it took a whopping 4 years.....and actually NYX has outperformed CME during its first year as a public company...its just more volatile as most early growth stage companies are. You must have a longer time frame to allow complete integration and realization of coming cost savings before you'll see NYX really hitting its stride.
I get the feeling that most of the mad/unhappy investors came onboard for the wrong reasons and have their expectations a little too high and their time frame a little too short.
Is this about where you all are with your estimates?:
2006 Euronext profit was 361,779,000 euros, which is 493,252,057 US dollars.
NYSE's 2007 estimate is for a profit of $388,616,000
So, looking at the Euronext's growth rates, its easy to see better than 25% growth, but lets just take 25% growth and say that Eurnonext could possibly turn in a profit of $616,565,071 (using the above 2006's actual profit then adding 25% onto it).
That said the total profit for NYSE Euronext could be $616,565,071 + $388,616,000 = $1,005,181,071.....just over a billion bucks. Not too bad....if obtainable.
Now what? Well, take the number of shares the Euronext had outstanding on the 2006 report of 112,138,650. Those were taken out by NYSE for .98 NYSE shares, so NYSE issued 109,895,877 (112,138,659 x .98). NYSE already had 156,700,000 out, so add in the 109,895,877 you now have a total share count of 266,595,877
the profit potential of $1,005,181,071 divided by the new number of outstanding shares 266,595,877 equals a profit per share of $3.77.
With the stock at 84-85, you now have a 2007 p/e of 22. If you take the $3.77 and give it a peer comparable of 30x, you'll have a one year target of $113..........which concurs with Citi's recommendation. But here's the kicker. I am assuming NO cost savings or other accretive acquisitions..........AND........if they can do $3.77 and post 20% growth for the next 5 years, NYSE Euronext could be/should be earning $9.42 a share by 2012.........assign a 25 multiple to that number and you're sitting at 25 x $9.42 = $235
I wonder what number(s) and assumptions the GS guy is using to come up with an 80 target? Thoughts? Of course all the disclaimers apply...do your own work and reach your own conclusions. As the carnival barker once said: ya' pays ya' money and ya' takes ya' chances
Welp, for all our "estimating" of what NYSE Euronext's earnings would/could look like...now we know. It appears interest expense, depreciation, and restucturing cost will eat up a lot of the combined profits...that can't be good. The 10k clearly states $2 would have been 2006's eps, all things being equal...so if we give NYX 25% growth this year...$2.50 looks like the number to use in putting together price targets...at least until we see Q2 or hear better news from Euronext in a couple weeks.
If the $2.50 estimate (assuming the 25% growth over 2006) for this year turns out to be a good number with Euronext included....this may be painful to see and calculate...and I hope its wrong, but here's how it could now possibly look: $2.50 at 20% growth = $6.25 in potential earnings by 2012....with a 25-30 multiple, we may be looking at $155 - $187 by 2012....a little less than what most on this board, self included, were hoping to see....but still not a bad 5 yr. return if it plays out that way!! These had to be the numbers Josh Carter was looking at when he put an $80 target on it, and why they remain relatively positive long term. Got to give him his due...it wasn't a popular call, but he made it, and now we might can see why....$2.50 in 2007 earnings with a 30 p/e = $75 smackers. He probably felt like he was being generous at $80.
I also tend to think Jim Cramer knew about this number as well when he read the email the other night, which is why he was a little subdued and said he'd buy more under 80 and that he thought the stock would be a great stock over the next "couple of years". The 10k may have brought the same realization to him, making him stretch out from "stock of the year" to "great stock over the next couple years". Who knows? Certainly not me.
Oh well, it may not be the $5 eps, cost saving, money machine we had hoped for...but I'd take a double in 5 years if we could get it. It would have been nice to get it this year on an ATI type move, but for now it appears we may have been a little too optimistic.
Not MAYBE the best....THE ABSOLUTE 100% BEST THE GUY HAS EVER WRITTEN. If you don't like the story, short it. If you like the story, buy it. End of story.
If you are worried about NYX Tuesday, next month, Q2 of 2007.... or even Q4 of 2007....its simple: sell it, or if you think its overvalued and doomed, short it...on the other hand....if your analysis tells you that the fundamentals behind it, and as Bobrob says, will work to your advantage over the next 3-5 years, buy it. I really don't understand why these boards even exist!! I use them to find news articles I may have missed. In the end, buying stocks isn't rocket science....you either bet on what you believe, or against what others believe. And if you're allowing posters to make up your mind, well....you have worse problems than watching the tick by tick, day to day moves of the stock.
My take, for what it's worth, as its been since the numbers came out for what would have been 2006's earnings of $2, is that expectations from investors were, and still are, just running too high. Numbers do not lie.......the reality of this stock is this:
IF NYX can do $2.50 this year, and turn in 20% growth for the next 5 years, then that means they could be posting earnings of $6.25 in eps by 2012. A multiple of 25x on those projected earnings means it could possibly see $155+, but not this year or next.....but maybe by 2012, that is, as long as those projected earnings materialize. So from here, it could be about a double over the next 5 years or a nice little 14-15% per yr return. Not too bad, that would probably beat most mutual funds and the market as a whole. IT IS NOT a "man I'm going to retire in the Hampton's if NYX hits $200 this year" kind of stock as some want it to be so badly.
Hopefully the eps numbers above will prove to be low, as the cost savings kick in, new products are launched, and as any new acquisitions hopefully prove accretive quickly. NYX is a best of breed, globally reknown brand....but a get-rich-quick stock it's not. Keep your expectations in check, and give the NYX story time to play out. Thats all you can do. If you don't believe the numbers, sell it. If you do believe the numbers and feel there may even be some upside suprises in store, then you want to buy it as cheaply as possible so this fall should be welcomed, as painful as it may be in the immediate term, its how long term profits are made. Being able to recognize value and go against the crowd has been making people fortunes as longs as there's been a stock market, and thats always the way it'll always be. By the time any company is widely recognized as a great investment, those that recognized the opportunity and bought years earlier will be selling it to them. Maybe NYX is one of those, maybe it isn't....do your homework and place your bets.
Just do the math to see the potential here.
Use $1.25 for next year, which I think may be conservative, but thats the best way to be with stocks. Anyway, if they can post just 20% growth for the next 5 years, which seems feasible....Hank Paulson says this is the stongest global economy he's ever seen....a large part of ACM's business is global, and currently they are exceeding that rate....anyway look:
1.25 in 2008
20% higher in 2009 = $1.50
20% higher in 2010 = $1.80
20$ higher in 2011 = $2.16
20% higher in 2012 = $2.59 potential eps by 2012
Next consider they're building the London Olympic facilities for the 2012 games...that'll add recognition & earnings visability. Also Water, which is considered to be the next "crisis area", is a large part of their buisness, and the fact that the Dem's are likely to win in 2008 so environmental facilities/upgrades will be in favor, again, another ACM specialty.
So what will that $2.59 in potential earnings be worth? A global company deriving its income from infrastructure work in a global economy thats finally realizing its time to industrialize and upgrade? Lets give it a PEG of just 1.5 x its growth rate.....so 20% proven and steady growth x 1.5 = 30. A p/e of 30 x possible earnings of $2.59 = a 2012 target price of $77
A potential triple over the next 5 years...if earnings exceed our projections....cool...maybe we get there quicker. If earnings fall short, well then the above projections are worthless and will need adjusting. But for now, after listening to the Conference Call, the earnings seem on track and the above estimated growth rates seem conservative. ACM appears to provide market beating returns over the next 5 years....you just have to block out the noise that Mr. Market whines about every day.
Saw this when I quoted DKS. I am not a subscriber, but the beginning doesn't look like its going to be bullish to say the least:
Room to Run for Under Armour?
By David Reilly and Karen Richardson
Word Count: 1,038 | Companies Featured in This Article: Nike, Adidas, Dick's Sporting Goods
Investors who have been cheering on Under Armour Inc. may want to wear the athletic-apparel maker's sweat-wicking gear when it posts third-quarter results next week.
Revenue growth could falter, and early indications are that the fourth quarter isn't off to a good start. Competition also is heating up as Nike Inc. and Adidas AG look to grab share in the market for compression undergarments, which are meant to keep moisture away from a wearer's body during athletic activities in warm and cool weather.
In addition, the prospect of a slowing economy could hurt sales of Under Armour's tight, stretchy gear, ...
Over the next week/month/quarter....we can guess/debate/argue what the Indices are going to do......we can guess/debate/argue what NYX's share price is going to do.....we can guess/debate/argue about gold, oil, china...etc....believe there's a guru that knows all........OR...............we can use good old fashion math to take the emotional swings out of investing. If you're trading, this is of no interest.....if you have a 5 year time horizon and aren't freaking out over every tick...well, you've probably already ran these numbers.
NYX 5 yr estimated growth rate is 23%, lets use 20%.
NYX's next years estimates are for $3.39
Lets pay 1x the growth rate to remain on the somewhat conservative side (is NYX worth 2x its growth rate?? If so...these estimates are way low, but better safe than sorry):
2008: 3.39 x 20 = 68 (can we see this price again?)
2009: $4.07 x 20 = $81
2010: $4.88 x 20 = $98
2011: $5.85 x 20 = $117
2012: $7.00 x 20 = $140
So from here ($88), my guess, by the numbers is that NYX offers a 5 year return of about 10% per year ($88 compounded forward at 10% for 5 years = $141). If the earnings are better, great, we'll adjust our targets upward, if those earnings don't materialize....well, we'll have to adjust downward. For now, it appears to be a market performer. Entry point is everything when projecting your desired rate of return. If you overpay, your returns will suffer. If you buy solid businesses at good prices, you may be one of the lucky few that can beat the markets! If you moved in on NYX at $70'ish...maybe you've bagged a double and your 5 year annual return will be in the 15% range....most likely a market beating return.
Good luck to everybody....keep your expectations in tact and emotions out of your portfolio.
From the Barron's article:
Booming trade with so-called VIPs has helped, but luring high-rollers is expensive, and this highly mobile faction can easily decamp to casino hotspots as they emerge in Singapore, Japan, or Thailand.
The article has some good points. No doubt WYNN and LVS have a lot of expectations built in and their price reflects it. But, the above clip from the article, while put forth as a negative, is actually a positive and is part of the potential payoff in owning these names. One of the reasons Wynn and LVS carry such high valuations is due to the fact that as those areas emerge (Sinagpore, Japan, and/or Thailand), these two operators have shown they possess the money, reputation, and expertise to develop them....therefore, the value/theme in owning Wynn and/or LVS is basically a bet on further International expansion being a plus, not a negative. I remember the riverboat/casino boom and bust in 1992+-, and this could end the same way as the article suggest...who knows....certainly not me....but if you want exposure to the international expansion of gaming and destination resorts, Wynn and LVS may be the bet to make, but the article is 100% right......they come at a hefty price/multiple and you have to have some blind faith in Steve Wynn's and Sheldon Adelson's experience as developers and operators.
Good Luck, we're in a market that punishes any missteps!