Chicago, IL – November 23, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Dell Inc. (DELL), Berkshire Hathaway (BRK.A), Burlington Northern Santa Fe Corporation (BNI), JPMorgan Chase (JPM) and Wells Fargo (WFC).

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Here are highlights from Friday’s Analyst Blog:

Dell Falls Short of Expectations

Dell Inc. (DELL) reported third quarter 2010 EPS of 23 cents, below the Zacks Consensus Estimate of 27 cents.

Revenue for the quarter was $10.75 billion, down 17.0% from $12.97 billion reported in the year-ago quarter and up 1.0% from $10.62 billion reported in the previous quarter. The company’s third quarter reported revenue was adversely affected by the timing of the Windows 7 launch and due to backlog buildup in the company’s SMB and consumer businesses.

Large Enterprise posted revenue of $3.4 billion, an increase of 4.0% sequentially and decline of 23.0% year-over-year. In the last quarter, the company expended its networking partnership with Brocade and Juniper, and introduced products like PowerEdge 11g servers and expanded PowerVault storage systems.

Public revenue for the quarter was $3.7 billion, down 3.0% on sequentially and 7.0% from the year-ago quarter. Shipments were down 12.0% on a sequential basis, due to seasonality in the U.S. public sector business.

Small and Medium Business revenue for the quarter was $3.0 billion, up 5.0% sequentially and down 19.0% from the year-ago quarter. Shipments increased 9% sequentially. The segment benefited from steadily improving demand in both the Americas and the Asia-Pacific region, as well as better performance in EMEA during the second half.

Revenues for Consumer Business were down 10.0% year-over-year, but flat sequentially to $2.8 billion with shipments growing 4% sequentially.

Dell’s total sales in China, India, Brazil and Russia increased 18.0% sequentially and 5.0% over last year. China, the second-largest revenue generating country for Dell, reported revenue increase of 20.0% sequentially and 8.0% from the year-ago quarter.

Buffett Borrows for Rail Acquisition

Warren Buffett, the CEO and Chairman of Berkshire Hathaway (BRK.A) announced on Thursday to borrow $8 billion of loan for the acquisition of Burlington Northern Santa Fe Corporation (BNI). Berkshire Hathaway, which already owns a 22% stake in Burlington Northern, announced earlier this month it would acquire the rest for a total value of $34 billion. Buffet agreed to pay $100 a share in cash and stock to buy the rest of the company.

The $8 billion loan that will be provided by JPMorgan Chase (JPM) and Wells Fargo (WFC) is intended to be paid back in three years’ time.

For Berkshire, the acquisition of Burlington Northern, or BNSF, the second largest railroad, will be its biggest to date. With it, Berkshire is adding a railroad transportation business with its already diverse range of businesses including retail, manufacturing and insurance, as well as several regional electric and gas utilities.

The acquisition is expected to close in early 2010 and is subject to Burlington Northern’s shareholder approval. Post acquisition, Burlington Northern will operate from its headquarters as a wholly owned subsidiary of Berkshire Hathaway.

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• ExxonMobil (NYSE:XOM) shares were upgraded to "overweight" at Barclays Capital (NYSE:BCS)

• A regulatory filing showed Berkshire Hathaway (NYSE:BRK.A) nearly doubled its Wal-Mart (NYSE:WMT) holdings; added almost 112 million Wells Fargo (NYSE:WFC) shares; the filing showed a 1.28 million holding of ExxonMobil (NYSE:XOM) shares; and 3.2 million shares of SunTrust Banks (NYSE:STI)

• UBS (NYSE:UBS) CEO Grubel outlined an ambitious goal of annual pre-tax profits of $14.89 billion over the next 3-5 years

• Dillard's (NYSE:DDS) reported a smaller than expected third quarter loss, with a non-GAAP loss of 3 cents, versus estimates of a 51 cent loss on revenues of $1.36 billion, off estimates of $1.38 billion. Same-store-sales fell 9%

• Electronic Arts (NASDAQ:ERTS) said it plans to cut 1500 additional jobs. The firm reported second quarter adjusted earnings of 6 cents, a one penny miss, on revenues of $1.15 billion, which slightly topped Street projections of $1.12 billion. The firm forecast 2010 earnings of $0.70-$1.00, topping estimates of 89 cents on revenues of $4.2-$4.4 billion versus estimates of $4.26 billion

• Cadbury (NYSE:CBY) rejected the latest Kraft (NYSE:KFT) bid calling it "derisory"

• Moody's (NYSE:MCO) commented that AIG (NYSE:AIG) will be able to repay its Federal loans

• Wells Fargo (NYSE:WFC) lifted its growth expectations for the semiconductor group following release of third quarter numbers. Intel (NASDAQ:INTC) remained its first pick within the group, with "outperform" ratings also on Micron Tech (NYSE:MU) and Xilinx (NASDAQ:XLNX). Analysts increased 2010 growth expectations of 25% for the industry from 10-20% prior

• Goldman Sachs (NYSE:GS) added Polo Ralph Lauren (NYSE:RL) to its Conviction Buy List, with a price target of $94

• Goldman Sachs (NYSE:GS) also added Kroger (NYSE:KR) to its Conviction Buy List, with a price target of $27

• Goldman Sachs (NYSE:GS) removed Coca-Cola Enterprises (NYSE:CCE) from its Conviction Buy List, but maintained a "buy" rating on the shares

• Tyco International (NYSE:TYC) released better-than-expected third quarter earnings of 61 cents a share, 7 cents above estimates, on revenues of $4.42 billion, slightly higher than estimates of $4.32 billion

• Burlington Northern (NYSE:BNI) CEO advised Berkshire Hathaway (NYSE:BRK.A) is liquidating shares of rival railroads Norfolk Southern Corp. (NYSE:NSC) and Union Pacific (NYSE:UNP) as it readies its purchase of Burlington

• Google (NASDAQ:GOOG) moved further into the market for digital advertising on cell phones with the acquisition of AdMob for $750 million

On Tuesday, the 30-stock Dow Jones industrial average closed down 17.53 points, or 0.18%, to 9,771.91.  The broad Standard & Poor's 500-stock index added 2.53 points, or 0.24%, to 1,045.41 and the tech-heavy Nasdaq advanced 8.12 points, or 0.40%, to 2,057.32.  On the NYSE, volume slowed to 1.38 billion shares.  

The news of a sale of 200 tons of gold to India sent gold futures surging $32.10 to $1086.  Treasury prices declined with the 10-year off 16/32 to 101-08/32 and the corresponding yield surging to 3.47% from 3.41% Monday.      

Burlington Northern (NYSE:BNI) surged 28% to $97 after the $26 billion offer from Berkshire.  Technology stocks were under pressure following a Morgan Stanley (NYSE:MS) analyst downgrade of semiconductor companies. Intel (NASDAQ:INTC), the world’s biggest computer-chip maker, fell 2.7% to $18.50 and Novellus Systems Inc. (NASDAQ:NVLS) declined 5.2% to $19.71.  Shares in basic materials, oil and gas and industrials rose 1.8%, 1.5%, and 1.3%, respectively in yesterday's trade.  Meanwhile, automakers reported October sales numbers mostly higher from a year ago.  General Motors (NYSE:GM) posted its first y/y sales gain, in nearly two years, as its sales rose 5%; Ford (NYSE:F) said its sales rose 3%; Toyota (NYSE:TM) sales, although flat, were ahead of estimates of a 6% decline.  Chrysler sales fell 30%.

Nevertheless, corporate earnings so far have continued to beat Wall Street estimates, with 84% of the S&P500's 358 firms reported so far currently beating Street estimates.  Meanwhile, the S&P 500 is currently trading 55% above its 12-year low hit on March 9. 

Today’s earnings calendar includes quarterly reports from the following: Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWX), News Corp. (NYSE:NWS), Prudential (NYSE:PRU), Qualcomm (NASDAQ:QCOM), Devon Energy (NYSE:DVN), and Becton Dickinson (NYSE:BDX).

Speaking at a Brookings Institution conference, Bernanke, however, added a note of caution, saying, “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time."

This morning’s stock futures indicate Wall Street would open with gains, helped by increased M&A activity, optimistic guidance from companies, and words from Warren Buffett that Berkshire Hathaway (NYSE:BRK.A) is "buying stocks right as we speak."

Yesterday, the 30-stock Dow Jones industrial average gained 57 points, or 0.6%, to 9,683.41, its highest point since October 6.  The broad Standard & Poor’s 500 index edged up 0.3% to close at 1,052.63, its highest level in almost a year.  The tech-heavy NASDAQ advanced 10.86 points, or 0.52%, to 2,102.64.  NYSE volume picked up to 1.5 billion shares yesterday from 1.2 billion on Monday, with advancing shares outpacing decliners by a seven-to-three margin.  Treasury prices declined, with the 10-year off 6/32 as its yield rose to 3.447% on increased risk demands.

Best Buy (NYSE:BBY), the country’s largest home-electronic chain, and Kroger (NYSE:KR) painted a mixed picture.  Best Buy reported a 22% plunge in quarterly earnings and its shares shed more than 5% to $38.32.  However, the company lifted its FY10 earnings outlook to a range of $2.70 to $3.00 per share and said it sees full-year revenue of $48 billion to $49 billion.  Kroger shares dived 7.5% after the company reported weaker-than-expected earnings and cut its outlook.  Health care shares declined 0.8% as President Obama reiterated his commitment to medical care reform, sending shares of Coventry Health Care (NYSE:CVH) down 7.1%, and United Health Group (NYSE:UNH) down 3.7%.   

Eight of the ten S&P500 industry groups moved higher on the day.  Basic material (+2.5%) and industrial (+1.1%) sector shares led the advance on improved recovery prospects and higher commodity prices.  The gains in the Dow Average were led by materials and industrial companies like Alcoa (NYSE:AA) and Caterpillar (NYSE:CAT) as the index gained for the seventh time in eight days.  Alcoa (NYSE:AA) shares jumped 8.1% and were the leading gainers on the DJIA; AK Steel (NYSE:AKS) shares advanced 5.7%, and US Steel (NYSE:X) shares gained 4.8%.  Among industrial recovery stocks, Textron (NYSE:TXT) shares gained 6.6%, Caterpillar (NYSE:CAT) rose 6%, Deere (NYSE:DE) advanced 4.4% and General Electric (NYSE:GE) added 4.2%. Oil and gas shares rose 0.9% as weekly crude inventory numbers are expected to show a 2.4 million decline last week.

However, the dollar failed to capitalize on the positive US economic news and sank to fresh yearly lows against a basket of currencies, due to its role as a funding currency given the fall in the benchmark US 3-month Libor rate to its lowest on record and the Fed's well-publicized promise to keep interest rates low.

The deal is mutually beneficial. For Energy Conversion, this increases its exposure in the rooftop solar technology apart from increasing its order backlog. The company will also be able to tap into Johns Manville’s customer base spread across the industry segments aerospace, automotive and transportation, air handling, appliance, HVAC, pipe and equipment, filtration, waterproofing, building, flooring, interiors and wind energy. For Johns Manville, this will facilitate its entry into the field of solar energy.

Johns Manville is a prominent manufacturer and marketer of premium-quality products for building insulation, mechanical insulation, commercial roofing and roof insulation, apart from fibers and nonwovens for commercial, industrial and residential applications. The company operates 40 manufacturing facilities spanning North America, Europe and China.

Energy Conversion is a technology, product development and manufacturing company. It is engaged in the invention, engineering, development and commercialization of new materials, products and production technology in the fields of alternative energy technology and information technology.

Energy Conversion will report its second quarter numbers on August 27. The consensus estimate expects the company to swallow a loss of four cents per share while we expect the company to barely break-even. We reaffirm our BUY rating on the stock.

With the onset of hurricane season, IPCR wants to make sure that losses from hurricanes and tornadoes do not let Validus walk away from the deal. However, the risk-reward ratio is balanced. IPCR is well capitalized against the risk arising from hurricane losses.

Though there were more than a dozen bidders vying for ownership of IPC, most of them were unwilling to take the potential risk arising from the alliance. Validus took the bet.

Hurricane losses can severely impact the insurer’s profitability. Though IPCR’s second-quarter net income improved, storm losses can eat into the company’s profitability in the coming quarters. Depending upon the intensity of the hurricane, losses may outweigh the value of business underwritten.

Earlier in June, IPC’s amalgamation agreement with Max Capital Group Ltd (MXGL) had been terminated.

Berkshire Hathaway (BRK.A) may have been willing to take a bet on IPC disregarding its potential losses. Last June, Berkshire offered to buy IPC in cash for $1.7 billion. However, a clause prohibited the latter from its third-quarter dividend caused the rejection of the proposal.

The combination of IPCR and Validus is expected to make way for strategic and profitable diversification into multiple short-tail lines with favorable rate trends. The rates are firming due to increase in overall demand for reinsurance.

The combined entity will also have a wider scale of operation with an increased capital base. As such, we are reiterating our Hold recommendation on the shares of IPCR.

Earlier this month, Bermuda-based PartnerRe (PRE) announced its agreement to acquire Paris Re in a deal that would make it the fourth-largest reinsurer in the world by shareholders' equity.

* Alcoa (NYSE:AA) shares gained 3.3% Friday after Goldman Sachs (NYSE:GS) resumed coverage of the company with a "buy" rating

* Toyota (NYSE:TM) announced a Prius hybrid face-lift, with 80,000 Japanese orders already placed. The firm expects to sell up to 400,000 units globally per year

* Takeda Pharmaceutical announced plans to purchase anti-cancer drug maker IDM Pharma (NASDAQ:IDMI) for $2.64 per share in a cash tender, which represents a 65% premium to Friday's close

* MGM Mirage (NYSE:MGM) was upgraded by JP Morgan (NYSE:JPM) to "overweight" from "neutral." JP Morgan (NYSE:JPM) also raised the price target to $11 from $9, due to improved liquidity from its capital raising and low projections from 2009-2010 Las Vegas returns

* Goldman Sachs (NYSE:GS) added shares of Bank of America (NYSE:BAC) to its conviction buy list, and raised the price target from $7 to $15, due to capital-raising efforts and solid results from mortgage and capital markets operations

* State Street (NYSE:STT) announced plans to offer non-government guaranteed senior notes and common shares.  The company also said it expects full-year earnings of $4.25 to $4.50 per share, ahead of Street estimates of $3.83 a share

Will Berkshire Hathaway (BRK.A) devotees hear words of hope and promise from Warren Buffet at the annual meeting in Omaha, Nebraska this weekend? It seems unlikely. Yet, America's most respected investor is expected to draw an estimated 35,000 investors to the Midwest city for the event.

Shares of Berkshire Hathaway have slumped 40% to their lowest level since Buffet assumed office, and the net worth of the company shrank by 9.6% in 2008. As the world sank deeper into the worst downturn since the Great Depression, Buffet had warned investors that the economy would be in "shambles throughout 2009."

"Most of the Berkshire businesses whose results are significantly affected by the economy earned below their potential last year, and that will be true in 2009 as well," Buffett wrote in his annual letter to shareholders on Feb. 28.

Buffet has admitted to making some investment blunders of late. Of the more notable ones would be the move to buy into ConocoPhillips (COP) at a time when gas prices were near their peak, just before energy prices slumped. Such moves not only cost his business empire several billion dollars, but also stripped Berkshire of its triple-A credit rating.

However, Berkshire still has strong credit and plenty of cash. Moreover, with two-thirds of its businesses in utilities and insurance, Berkshire is expected to be more resilient in volatile times. The 78 year-old top boss of the group also played a key role in steadying the economy by injecting $8 billion into Goldman Sachs (GS) and General Electric (GE), calling them "the symbol of American business to the world."

While everyone has been wondering about who will eventually succeed Buffet, as long as the Oracle of Omaha is still around, investors would value his insight more than ever during these troubled times.

Will Berkshire Hathaway (BRK.A) devotees hear words of hope and promise from Warren Buffett at the annual meeting in Omaha, Nebraska this weekend? It seems unlikely. Yet, America's most respected investor is expected to draw an estimated 35,000 investors to the Midwest city for the event.

Shares in Berkshire Hathaway have slumped 40% to their lowest level since Buffett assumed office and the net worth of the company shrank by 9.6% in 2008. As the world sank deeper into the worst downturn since the Great Depression, Buffett had warned investors that the economy would be in "shambles throughout 2009."

"Most of the Berkshire businesses, whose results are significantly affected by the economy, earned below their potential last year and that will be true in 2009 as well," Buffett wrote in his annual letter to shareholders on Feb. 28.

Buffett has admitted to making some investment blunders as of late. Of the more notable ones would be the move to buy into ConocoPhillips (COP) at a time when gas prices were near their peak, just before energy prices slumped. Such moves not only cost his business empire several billion dollars, but also stripped Berkshire of its triple-A credit rating.

However, Berkshire still has strong credit and plenty of cash. Moreover, with two-thirds of its businesses in utilities and insurance, Berkshire is expected to be more resilient in the recession. The 78 year-old top boss of the group also played a key role in steadying the economy by injecting $8 billion into Goldman Sachs (GS) and General Electric (GE), calling them "the symbol of American business to the world."

While everyone has been wondering about who will eventually succeed Buffett, as long as the Oracle of Omaha is still around investors will value his insight more than ever during these troubled times.

Zacks Investment Research
]]> http://www.straightstocks.com/stock-watch/buffett-calling-troubled-investors-zacks-tale-of-the-tape/feed/ 0 http://www.straightstocks.com/stock-watch/company-news-for-april-9-2009-corporate-summary/ http://www.straightstocks.com/stock-watch/company-news-for-april-9-2009-corporate-summary/#comments Thu, 09 Apr 2009 14:24:19 +0000 Zacks Market Commentaries http://www.zacks.com/stock/news/18989/Company+News+for+April+9%2C+2009+-+Corporate+Summary

* Ryder System (NYSE:R) expects first quarter earnings of 22 cents to 24 cents a share ex-items, missing Street estimates of 46 cents and the firm's earlier projection of 40 cents to 50 cents per share

* Juniper Networks (NASDAQ:JNPR) said its first quarter results will meet projections, although warned revenues are likely to miss, coming in at $760 million to $765 million

* Genentech (NYSE:DNA) plans to withdraw its psoriasis drug, Raptiva, from the US market due to the risk of PML

* Moody's Investor Services (NYSE:MCO) downgraded Berkshire Hathaway (NYSE:BRK.A) to AA2, following last month's downgrade from Fitch

* ING (NYSE:ING) announced plans to focus banking activity on European operations, with divestitures of up to $10.6 billion to lower its risk profile

* News from a Kuwaiti paper advised a consortium offer of $21 per share for Textron (NYSE:TXT)

* Wal-Mart (NYSE:WMT) expects first quarter operating results at the high end of 72-77 cent per share range. Same-store-sales rose 1.4%, excluding fuel, missing estimates of 3.2%

Timing is also everything in investing.

What would John Templeton's career have been like if it wasn't shaped by the stock market of the Great Depression? In the same vein, Warren Buffett made his fame by going on a buying binge during the Super Bear Market of 1972-1974.

Great investors emerge when the going gets tough because that's when the talent rises to the top.

But both of these men, considered by many to be among the great investors of the last 75 years, also have characteristics that fueled their greatness.

Warren Buffett, in his search for his successor to run Berkshire Hathaway, said that the key characteristics he was looking for were:

1. Independent thinking
   
2. Emotional stability
   
3. A keen understanding of both human and institutional behavior

Do you have what it takes?

Be a Contrarian

John Templeton was born in Tennessee but ambition took him to Yale University, where he put himself through college during the Great Depression.

He started his career on Wall Street at the worst possible time, in the late 1930s. Stocks had already crashed during the Depression, but hadn't recovered. It wasn't exactly the 1920s on Wall Street.

In 1939, with the world going to war, he borrowed money to buy 100 shares each of 104 companies that were selling at $1 a share or less. Some might have thought he was crazy. 34 were in bankruptcy at the time. Ultimately, only 4 of the companies ended up being worthless and the rest went on to large profits.

One key to Templeton's success was investing where others were not. "The other boys at Yale came from wealthy families, and none of them were investing outside the United States, and I thought, 'That is very egotistical. Why be so shortsighted or near-sighted as to focus only on America? Shouldn't you be more open-minded?'" he said.

Later in his career, as he ran the Templeton mutual funds, Templeton was one of the first to invest heavily in companies outside of the United States, especially in an emerging Japan. He, and his customers, made large profits by doing so.

Timing is Everything

Warren Buffett hasn't always been in the markets. In 1969, as stocks were heating up Buffett cashed out of all of his holdings, telling Forbes Magazine in 1974, "When I got started the bargains were flowing like the Johnstown flood; by 1969 it was like a leaky toilet in Altoona."

But by 1974, after two years of stock market carnage, Buffett was back in the game. Forbes asked him what he felt about the markets that year: "Like an oversexed guy in a harem," he shot back. "This is the time to start investing."

By the time the interview was set to run in the magazine, the markets had rallied 15% and Forbes asked him if he was still feeling the same way.

"I don't know what the averages are going to do next," he replied, "but there are still plenty of bargains around." He told Forbes that the situation reminded him of the early 1950s.

Sound familiar?

Recently, Buffett was back to his predicting ways, telling the New York Times on Oct 16: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors."

Patience is key to great investing. Templeton and Buffett added to their portfolios during the worst days of the stock market and waited it out. Templeton held his 1939 investments on average for 4 years.

Bear markets are opportunities to elevate your investing game. Don't settle for being just an average investor. Dare to be great.

Since first jumping into the exchange-traded funds market two-plus years ago with 20 dividend-weighted exchange-traded funds, WisdomTree Investments has firmly been cast as a value-styled management shop.

That focus on weighting index-based ETF portfolios on business fundamentals -- rather than traditional  market-cap size figures -- hasn't changed. But the New York-based firm launched Thursday an ETF focused squarely on large-cap growth stocks.  

But two items stand to separate the WisdomTree LargeCap Growth ETF (NYSEArca: ROI) from the pack.

For one, the new fund focuses on corporate earnings, otherwise known as net income or profit, to weight stocks in its portfolio. That's different from rivals such as the $9.2 billion iShares Russell 1000 Growth Index (NYSEArca: IWF) and the $4.6 billion iShares S&P 500 Growth Index (NYSEArca: IVW). Both use straight market capitalization sizes to determine portfolio weights.

"The only pure competitors for ROI on the large growth side are traditional market-cap-sized indexes," said Luciano Siracusano, WisdomTree's chief investment strategist.

The lowest-priced large-cap growth ETF on the market is the Vanguard Growth ETF (NYSEArca: VUG). It has an expense ratio of 0.10% and tracks the MSCI U.S. Prime Market Growth Index. WisdomTree's ROI is expected to be 0.38% per year.

That leads to the second big point of departure for the new ETF. As an early advocate of using fundamental data rather than market-cap size metrics to weight portfolios, WisdomTree is a pioneering nontraditional ETF provider. Besides dividend streams, its portfolios are branching into another key measure to value businesses -- net earnings.

Assessing The Field

WisdomTree isn't alone in offering nontraditional index-based ETFs. PowerShares has a series of funds based on the FTSE RAFI indexes created by Research Affiliates and FTSE. Those use a broad set of fundamental valuations to design portfolios. The closest in terms of style to ROI is probably the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF). But that's categorized as a large-cap value fund by Morningstar.

Another nontraditional ETF provider using different fundamental valuations is RevenueShares. Its closest rival to ROI would be the RevenueShares Large Cap ETF (NYSE: RWL).  It takes the blue-chip universe and weights those names by annual sales. And again, Morningstar categorizes RWL as a large value fund.

The closest competitor is probably SPA ETF's MarketGrader Large Cap ETF (NYSEArca: SZG), which uses a quantitative strategy to select 100 large-cap stocks. It is classified as a large-cap growth fund by Morningstar, although it is not explicitly screened to capture growth stocks alone.

ROI is the only non-traditional ETF with an explicit growth focus.

ROI's index starts with around 300 stocks based on four growth factors: earnings-per-share growth; sales-per-share growth; book-value-per-share growth and stock-price-per-share growth.

By contrast, the Russell 1000 Growth Index uses a combination of price-to-book values and projected earnings estimates. Other benchmarks throw in a few other factors to create a different valuation mix.

"All of the pure growth indexes use multiple factors to select components," said Siracusano. "But they determine weightings in the same way -- by market capitalization sizes."

Even though the benchmark underlying WisdomTree's new fund uses a different methodology to rank stocks, ROI's list of constituents looks much the same as its market cap weighted rivals. For example, some 17 of the top 20 companies listed in the WisdomTree LargeCap Growth Index are also in the Russell 1000 Growth Index as well as the S&P 500 Growth Index.

"But since we weight our index by [net] earnings, the characteristics are different from the other growth indexes," said Siracusano.

Backtested data from WisdomTree shows its index has a lower price-earnings ratio. Here's how it shaped up heading into November:

In the past 10 years through Sept. 30, WisdomTree says its large growth index outperformed the Russell 1000 Growth index by an average of about four percentage points per year. It lists the following average annualized returns for that period:

• 4.76% for the WisdomTree LargeCap Growth Index
• 3.06% for the S&P 500 Index
• 0.59% for the Russell 1000 Growth Index

"We created it to provide investors with an ability to own growth companies, but in a portfolio that has a lower PE ratio than other cap-weighted growth funds," said Jeremy Schwartz, WisdomTree's research director.

Looking Underneath The Hood

The WisdomTree LargeCap Growth benchmark is rebalanced once a year. After its last reconstitution, on March 31, several significant differences showed up compared with growth indexes that stuck to market-cap weighting methodologies.

One was that Apple (Nasdaq: AAPL) was given a larger weighting than Occidental Petroleum (NYSE: OXY). In a traditionally weighted index, the computer maker could expect to receive more than twice the weighting than the oil producer since its market cap was about $127 billion and Occidental's was around $60 billion at the time.

But in the WisdomTree index, more weight was actually given to Occidental since it had greater net profits -- $5 billion compared to Apple's $4 billion.

Another example is Google (Nasdaq: GOOG). It wasn't as high in the WisdomTree index as in the other major growth indexes. Perhaps most notably, ROI had Berkshire Hathaway among its Top 10, whereas none of the other indexes did.

In terms of sectors, Schwartz says that the WisdomTree index has the highest weighting to Technology, just like the S&P and the Russell index. The Vanguard benchmark, the MSCI US Prime Market Growth Index, has 394 holdings and a similar sector breakdown as the Russell 1000 Growth Index and S&P 500 Growth Index.

"We're cutting out the PE multiples from our weightings system," said Schwartz. "We're looking at the bottom line for corporate profits to weight our index."

In other ways, the indexes are similar, even given their distinct methodologies. In terms of holdings, the WisdomTree index has 300 growth stocks, similar to the S&P 500 Growth, which has 315 holdings. The Russell 1000 Growth stands apart in terms of holdings, with 600 stocks. With the lowest number of holdings among the three, the WisdomTree index is the most large-cap-oriented.

ROI's expense ratio is expected to wind up slightly less than PowerShares' lineup of RAFI-based index funds. It  recently lowered costs on the domestic fundamentally weighted ETFs to 0.39%. (See story here.) Meanwhile, the RevenueShares large-cap ETF charges 0.49% a year.  

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6.5% unemployment in October — worst since early Clintontime.  Worse still were the revisions of the August and September numbers.  And as Karl Denninger noticed, the number of unemployed plus the number of people working part-time who’d like to work full-time now tops 11%.  (And who knows what the real figure would turn out to be once John Williams applies Carter-era standards to the numbers.)

As I write, the president-elect is meeting with his “Transition Economic Advisory Board,” his temporary brain trust as it…

More from Jason in Money Morning:

Last month, the iconic investing guru once again displayed his enthusiasm for railroad stocks by adding to his already sizeable stake in Burlington Northern Sante Fe Corp. (NYSE:BNI). After picking up 7.85 million shares of Burlington in early October, Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B) last week added another 825,000 shares to its holdings at a price of $79.65 apiece

Buffett has been bullish on railroad stocks for the past year. Buffett made his…

While from one perspective things look rather difficult, from another there is a ray of hope. What can you expect to earn from stocks over the next five years? It should make for an interesting letter. Note: this will be a little longer than usual, but part of it is there…

Warren Buffett Holdings | Investing in Stocks

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But for investors with "a clear head and a keen eye for opportunity" boldness can pay big dividends.

Taipan Daily editor Justice Litle says there are five proven strategies for building wealth... regardless of whether the bulls or the bears are in charge. 

Strategy #1: Superior Information

One of the oldest and most successful wealth-building strategies hinges on superior information -- learning something important before everyone else.

In today's hyper-connected and heavily regulated markets, it is much harder to come by superior information (without a keen willingness to break the law). But back in the 18th and 19th centuries, no one played the superior information game better than the Rothschilds.

The Rothschilds were known for maintaining an extensive (and secretive) information network, connected by financial hubs in five European cities: London, Paris, Vienna, Naples and Frankfurt. Nathan Rothschild, a bullion dealer on the London Stock Exchange, made legendary use of this information network during the Napoleonic wars. This network laid the foundations of the Rothschild fortune.

Richard Bookstaber recounts the backstory in his book, A Demon of Our Own Design:

By the end of the final hour of the battle of Waterloo on June 17, 1815, just 10 hours after first contact, a quarter of the Duke of Wellington's troops lay dead. The French losses numbered nearly 30,000. Within the space of half a day, Waterloo claimed more casualties than any other battle in history.

Given the communications limitations of the period, Great Britain could not immediately know about the carnage of Waterloo or the swift victory... Wellington's Envoy, Major Henry Percy, was dispatched to send the news of the victory to the War Office in London, but he and his horse were affected by the physical toll of the battle.

Even with his best efforts, he did not arrive until late on the night of June 21. Until that time, all of Britain waited in suspense -- all of Britain but one man, Nathan Rothschild.

Because the Rothschilds were known for having superior information -- and because he had made a show of stopping by the prime minister's house on the way -- all eyes were on Nathan Rothschild as he took up his usual post at the London Exchange.

England's victory was a hugely bullish event. Nathan Rothschild knew this full well. But rather than buy British consols (the main trading vehicle of the day), Nathan began to sell.

The heavy selling was a very loud -- and very false -- signal. Rothschild's bearish actions fairly shouted, “Britain has lost! Napoleon has won! Abandon all hope...”

Of course, it was the exact opposite that had actually happened. So once everyone had panicked out of their positions, and the market hit rock bottom, Nathan Rothschild turned around and began to buy. And the family made a spectacular killing. Nathan Rothschild’s masterstroke was twofold: He knew how to acquire superior information, and he knew precisely how to use it.

Strategy #2: By Hook or by Crook

For a thousand years -- from roughly 800 AD to 1800 AD -- the Rhine River in Europe served as a revenue source for the Holy Roman Emperor and his minions. Cargo ships were required to pay tolls at various points along the Rhine, providing a sort of interstate tax revenue on traded goods.

The Raubritters, or robber barons, were originally renegade feudal lords who levied unjust tolls on these passing ships (to the great annoyance of the emperor and the church). The term “robber baron” was later resurrected in 19th-century United States and applied to the financiers and captains of industry who had amassed huge sums by ruthless means.

Few of the latter-day robber barrons were as successful, or as hated, as Jay Gould.

In the aftermath of a failed gold corner, which in turn led to the Panic of 1869, Gould was dubbed “the Mephistopheles of Wall Street.” In addition to being a railroad titan, Gould was known for being one of the most manipulative, cunning and creative financiers in history. His strategic maneuvering included bribery, bankruptcies, lawsuits, insider trading, stock manipulation and much more.

One of Gould's favorite techniques was the “bear raid,” in which a company's shares would be hammered into the ground with strategic selling. This allowed Gould to then step in at rock-bottom prices (precisely when the selling onslaught stopped), wrest control from the board, and establish himself as chairman or president. Many of the maneuvers Gould pioneered would inspire the formation of the Securities and Exchange Commission (SEC), created some 40-odd years after his death.

In his book Dark Genius of Wall Street, Edward Renahan describes how it was done:

Jay Gould would transact virtually all of his Wall Street business for the balance of his short life through a series of special partnerships with a variety of brokerage firms. This device allowed him the luxury of trading anonymously whenever he cared to, and of trading on both sides of a speculation through different brokers. Eventually, Jay would spread his business over so large a network of Wall Street houses that he became something of a phantom; ever present, but frequently invisible and always inscrutable.

In light of his larger-than-life reputation as a heartless crook (still stoked by books and news articles to this day!), Gould never really received credit for the positive things he achieved. Dirty dealings aside, Gould's business acumen greatly aided the expansion and development of America's railroads, thus aiding the dramatic long-term expansion that followed.

Even Mephistopheles had some good in him it seems...

“Free Money” From the Government? Follow the detailed instructions outlined in this letter and you’ll learn how to add $4,570 to $11,450 to your bank account every month, courtesy of the U.S. government. Sound too good to be true?Read on and learn how you can boost your bank account every month …

Strategy #3: Looking to the Future

Claude Shannon, the brilliant scientist of Bell Labs fame, was perhaps best known as the father of “information theory”... an idea so big it is almost impossible to overstate its influence. Wikipedia captures some of the magnitude:

[Information Theory] is at the crossroads of mathematics, statistics, computer science, physics, neurobiology, and electrical engineering. Its impact has been crucial to success of the Voyager missions to deep space, the invention of the CD, the feasibility of mobile phones, the development of the Internet, the study of linguistics and of human perception, the understanding of black holes, and numerous other fields.

As if being the father of information theory were not enough, Shannon did still more. In the late 1930s -- a decade before revealing his famous theory -- Shannon hit on the idea of the digital computer, using Boolean algebra to prove that any problem could be solved with electrical circuits. This led to the 1s and 0s system of binary computing in use today.

Shannon's discoveries meshed together beautifully. The 0s and 1s made digital computing possible, while information theory enabled the means of sending digital information across great distances without garbling the transmission.

As far as digital technology goes, Claude Shannon basically cracked the philosopher's stone. In terms of brilliance and influence, many rank Shannon above Einstein for this reason (plus the follow-on impact of Shannon's ideas on the everyday world).

Just as a great scientist should be, Shannon was deeply playful. He loved to tinker with Erector Sets and odd materials, and was known to juggle in the halls of Bell Labs while riding around on a unicycle. (He invented one of the first computer chess programs and one of the first artificial intelligence devices, among other things.)

One of his quirkier inventions was a cigar-shaped box with nothing but a switch on one side. On flipping the switch, a mechanical hand would come out, flip the switch off, and retreat back into the box again.

We mention Shannon here, though, because he was a wildly successful investor. In his book Fortune's Formula, William Poundstone recounts Claude Shannon's view of markets. “You know the economists talk about the efficient market where everything is equalized out and nobody can make any money really, it's all luck and so on,” Shannon once said. “I don't believe that's true at all.” (Hear, hear! Neither do we.)

Given his track record, Shannon had good reason to doubt the academics. Poundstone notes that Shannon’s performance even stacked up against the Oracle of Omaha’s:

When Warren Buffett bought Berkshire Hathaway in 1965, it was trading at $18 a share. By 1995 each share was worth $24,000. Over thirty years, that represents a return of 27 percent. From the late 1950s through 1986, Shannon's return on his stock portfolio was about 28 percent.

As of record books in the early ‘80s (just before the great equity bull market took off), Claude Shannon had the majority of his investment account in one stock, Teledyne, that he had purchased for just $1 per share. In 1981, this $1 stock was worth $194.38 per share... a nearly 200-fold return.

Even more impressive from an ROI (Return on Investment) standpoint were Shannon's returns on Hewlett Packard (HPQ) ... a stock he had purchased at just 13 cents per share. The Shannons had a 63,000% return on Hewlett Packard as of 1981. Given Shannon's deep aversion to selling companies he believed in, that return no doubt grew even more impressive in the years that followed.

Claude Shannon not only invented the future, he and Betty (his wife) invested heavily in it.

But rather than take a cerebral, formula-laden approach, as one might expect, the brainy Shannons were the type of common-sense investors who would, say, sample a piece of Kentucky Fried Chicken before buying stock in the company. (They actually did that.) The Shannons looked to the future, bought companies they believed in... and held on tight.

Take Wachovia (NYSE:WB) for instance. Just a few hours ago, we all thought Citigroup (NYSE:C) was going to take ownership of the majority of the failing bank’s assets. It was a deal propped up by the Federal Reserve, but one Wall Street embraced and even welcomed.

It is not going to happen.

Instead, Wells Fargo (NYSE:WFC), one of the original Wachovia suitors, is stepping in and taking over the acquisition. Citigroup appears to be totally out of the equation, getting Bernanke and the Fed off the hook.

Move over, coming through

Just a few days ago, Wells Fargo decided to pass on Wachovia, telling us it was not happy with the company’s books and mortgage debts. Now, it is forcing a major competitor in a ditch trying to get its hands on the company at a substantial premium. Wells Fargo will pay $7 per share, an 80% premium over yesterday’s trading price.

This news proves Warren Buffett is on the ultimate value-hunting spree. As a major shareholder in Wells Fargo, you know he had something to do with this deal. Buffett and his Berkshire Hathaway (NYSE:BRK-B) have spent tens of billions over the last week or so, scooping up stakes of some of the nation’s largest and strongest companies at hugely discounted prices.

If you were one of the brave investors willing to buy shares of Wachovia at their lows this week around $0.79, your wisdom is evident. With the news from Wells Fargo this morning, shares of Wachovia are soaring, trading in the pre-market hours for over $6.30.

As this market settles, look for more and more surprise deals like this. Strong companies with large cash reserves are either going to buy their competitors or crush them. It will be very interesting and very profitable.

More on this news on the way.

Source: Breaking news: Wells Fargo (WFC) buys Wachovia (WB)

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"First, you can't buy the kind of stock Buffett got on any market, anywhere in the world. Berkshire Hathaway is buying $5 billion of perpetual preferred stock with a 10% coupon. These shares are senior to both Goldman's other preferred stock and its common stock. That means no other shareholders will receive any dividends until Buffett has been paid his 10%, in full, each year.

"And that's not all... To sweeten the deal for Buffett, Goldman agreed to include a warrant (a long-term call option) that entitles Berkshire Hathaway to buy an additional $5 billion in regular common stock, at $115 per share. (Goldman's trading for about $130 now.) Thus, if Goldman can turn things around, Berkshire will receive an enormous payday down the road. It will be entitled to buy stock at $115, no matter what the price has risen to five years from now.

"Most investors have no idea what this means. When they read about a warrant being granted, they just shrug. They can't do the math to figure out how much Goldman has given to Berkshire. It's like reading Greek to most people. So let us tell you what no newspaper will...

"The value of an option to buy stock in the future at a fixed price is based almost entirely on the duration of the option. The further out you go in time, the more valuable they become. Right now, the only similar options you can buy on Goldman are $120 calls that expire in January 2011 - about two and a half years from now. These options would cost you $42 to buy today.

"Using these options as a rough guide, our options trading expert, Jeff Clark, estimates the options Buffett received from Goldman are worth about $78 each. On a $5 billion position, that's a total value of $3.2 billion.

"In other words, Buffett received a security worth about $3.2 billion in exchange for his $5 billion investment in a high-yielding preferred stock. His net exposure is only $1.8 billion. On this capital at risk, he's getting paid $500 million per year. That's a 27.7% annual return. And he may eventually end up owning 10% of the company."

Source: Warren Buffett is Buying Four Percent of Goldman Sachs

Maverick Capital Management Holdings Analysis

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Blue Ridge Capital | John A. Griffin Holdings Analysis

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Concurrent with the announcement, the Board approved a significant $5 billion share repurchase program. The new strategy has generated a significant turnaround in organic revenue growth. In mid-February this year, Berkshire Hathaway (BRK.A) disclosed the ownership of a substantial stake in Kraft Foods. The Buy recommendation is maintained.

Since the stock offering in 2001, Kraft’s stock has traded between a 13 to 22 P/E multiple. With the turnaround in organic revenue growth and positive earnings comparisons expected to begin with the fourth quarter of 2008, the stock appears attractive. The target price of $36.50 is based on a 19 P/E on this year’s earning estimate of $1.92.

Read the full analyst report on KFT

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