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Program: Tuesday, December 2, 2003
12/02/03: Invesco Funds Now Faces Civil Action SUSIE GHARIB: Invesco Funds Group is the latest firm to get caught in the mutual fund scandal. New York Attorney General Eliot Spitzer and the Securities and Exchange Commission brought civil charges today against the Denver-based company and its CEO for participating in a "massive mutual fund timing scheme." Stephanie Woods reports. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Regulators charge Invesco Funds Group accepted trades by dozens of market-timers in its mutual funds to generate higher management fees. In a statement, Invesco parent company, AMVESCAP (AVZ), defended its actions, saying it did not engage in wrongful conduct and there are no clear regulations that bear specifically on which market timing activities should be permissible. Analysts say market timing may be legal, but it often comes at the expense of individual shareholders. GREGG BREWER, MUTUAL FUNDS RESEARCH, VALUE LINE: The financial industry is full of this kind of conflict, where what`s best for the investor or the shareholder or the account holder isn`t always what`s best for the company that is serving them. WOODS: Lee Pickard is a former SEC attorney who now represents broker-dealers and mutual fund companies. He says market-timing is a short sighted strategy for fund firms. LEE A. PICKARD, SECURITIES DEFENSE ATTORNEY, PICKARD & DJINIS: It gives them very little incremental revenue - additional revenue, and yet it`s disruptive of the way they manage investors monies in these pools. WOODS: Tomorrow the Securities and Exchange Commission will consider reforms to give investors more information about fund trading practices. The SEC is also cracking down on late-trading, which is already illegal. Regulators may impose a strict 4:00 p.m. deadline for mutual funds to receive orders, but already retirement benefit managers say that will short-change their investors. JAN JACOBSON, AMERICAN BENEFITS COUNCIL: The SEC proposal would hurt retirement plan participants by placing them in next day or later trading status. WOODS: But others say it`s just that type of wiggle room that caused the trouble in the first place. BREWER: If the rule is 4:00 is the last trade deadline, 4:00 should be the last trade deadline. Once you open it up that, well, 4:05 is OK, then Pandora`s box has been opened, and you wind up with a situation where this could happen again. WOODS: But analysts agree whatever new rules the SEC imposes will make little difference unless regulators are willing to enforcing them. Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
SUSIE GHARIB: Just a few months ago, investors were worried about deflation. But now many fear inflation will soon make a comeback, partly as a result of higher commodity costs. Erika Miller checked in with some experts for the outlook. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: From steel to gold to copper, prices for most industrial materials have soared over the past few months. The Journal of Commerce Economic Cycle Research Institute`s industrial price index is now running at a 30 percent annualized growth rate. In May, the reading was flat. The Index is closely watched on Wall Street because historically, rising commodities prices tend to lead to more widespread inflation. But some analysts say there are special factors these days that should keep the overall inflation rate low. MICHAEL HOLLAND, MARKET STRATEGIST, HOLLAND & CO.: Commodity and physical inflation is being offset by labor savings and productivity. So what we`re getting is continuing deflation, or disinflation, on the labor side, while we`re getting physical commodity inflation. MILLER: Experts say a big reason for that commodity inflation is strong demand from China, which is transforming itself from an agrarian to an industrialized nation. Most other countries are also consuming more raw materials as a result of improving economies. And while demand has been increasing, supplies are dwindling. CHARLES OBER, PORTFOLIO MANAGER, NEW ERA FUND: This has been one of the best years. There has been a shortage of supply because nobody has invested in building new mines and facilities. And so consequently supply has been constrained, and yet demand has been very strong. MILLER: Against that backdrop, most experts predict commodities prices will continue to creep higher, but almost no one is worried about pervasive `70s-style inflation because commodities are a much smaller percentage of the economy nowadays. OBER: It doesn`t impact our economy as much as it used to. We have become more of a service economy, more technology-related. So we`re not going to see it in everyday overall consumer prices for a period of time. MILLER: So what would it take to really spark inflation fears? Experts say the most important factor is the labor market. They say the economy would have to create hundreds of thousands of jobs a month for the better part of a year before inflation pressures would rise significantly. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use. 12/02/03: One On One With Tenet Healthcare CEO Trevor Fetter SUSIE GHARIB: Tenet Healthcare laid out today its prescription for turning around the ailing hospital chain. CEO Trevor Fetter met with Wall Street analysts and investors to talk about how the company is dealing with multiple scandals and lawsuits. Earlier today, I asked Fetter what`s his message for investors. TREVOR FETTER, PRES. & CEO, TENET HEALTHCARE: We are in the midst of a turnaround. We are navigating some very difficult times. And we have made a lot of progress, but there is still a lot more work to do. Most important thing we are trying to do is restore credibility with our major customers, particularly the U.S. government. GHARIB: Mr. Fetter, it seems like Tenet is facing an endless stream of problems, government investigations into the improper Medicare billing practices, allegations of physicians doing unnecessary surgeries, patient lawsuits. IRS tax issues, which one of these is your priority? FETTER: I have to say if we have one priority, it`s with the government and government agencies to restore our relationship with them. They`re our largest customer. They`re also our largest regulator and there is probably nothing more important than that. GHARIB: There are doubts that Tenet can pull through. There is talk of breaking up the company. FETTER: I don`t think that necessarily solves the problem. I mean, first of all, I think it can be done. It is a worthwhile endeavor and very much worth trying to turn this company around. I believe these problems can be solved, and I believe that that our employees are very focused and motivated about solving them and getting that behind us. The company of the future is one that will be known for high quality and high integrity and I think that many of our employees share that vision. And I think it is something that we can deliver upon. GHARIB: You`ve sold some hospitals. Are you planning more asset sales? FETTER: Not at the moment, no. You know, at the beginning of this year we had 114 hospitals. Some of those hospitals were in markets where we didn`t have much potential to grow or they were in stand alone markets that didn`t have much of a network with other of our hospitals. Post the sale of these 14 hospitals, we are left with several core markets and those are the markets that we are going to focus on. GHARIB: I understand that the company`s balance sheet is not of immediate concern, but as Tenet faces more investigations and legal claims, are you financially prepared? Will you have to take more charges? FETTER: Well, we are very fortunate because during the company`s period of prosperity, from 2000 through 2002, the company took steps to restructure its balance sheet. So I inherited a very strong balance sheet. In fact today we have over $800 million in cash on our balance sheet. We have a very solid situation in terms of the liquidity. We had a billion dollar credit line that is undrawn. So I`ve been very concentrated and focused on making sure we have a balance sheet that`s prepared to withstand the kinds of liabilities that we may have in the future. GHARIB: Do you think you are going to have to take more charges? FETTER: I think that as we continue to turn the company around, there will be other charges in a variety of nature. We`ve led investors to expect that. GHARIB: As you know, investors are focused on earnings. Can Tenet`s hospitals generate earnings growth? FETTER: Tenet has some very solid hospitals. Now there is a period of time here where we have to, you know, readjust our strategy and move beyond the aggressive pricing strategy that the company had employed in the recent past. And so it is a difficult period here in terms of earnings. But the earnings power of the hospitals that underlie our core business is very strong. GHARIB: Why should investors be interested in Tenet stock? FETTER: Well, I`m not out pitching Tenet stock. I`ve been meeting with investors to disclose and answer their questions about the various issues that affect us. But underlying all of the issues and all of the headlines is a very solid business, 100 very strong hospitals in key markets around the country. We have 110,000 employees, as I mentioned, who are working very hard to deliver quality care. We`ve launched initiatives to reduce costs, to improve quality and to make this a company that has excellent relationships with its key customers. And I think there is a period of time that it will take to get those issues sorted out, and to affect this turnaround. But at the end of the day, there is a very strong business here. GHARIB: Mr. Fetter, thank you very much, I appreciate you talking to NIGHTLY BUSINESS REPORT. FETTER: Thanks, Susie.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
PAUL KANGAS: Small cap has generally meant big returns on Wall Street this year, and one fund that`s profited from the trend is Century Small Cap Select Investor. In the first 11 months of the year, it was up 46 percent. And perhaps even more impressive is the fact that over the past three years, its annualized return was 18.75 percent versus a negative return for its category generally. The co-portfolio manager of Century Small Cap Select is Lanny Thorndike. And Lanny, welcome to NIGHTLY BUSINESS REPORT. LANNY THORNDIKE, CENTURY SMALL CAP SELECT FUND: Good evening. Thank you. KANGAS: It doesn`t take a genius to make money investing in small caps in this market but how did you manage to stay in positive territory when the market was tanking, was it your stock picking process? THORNDIKE: I think it definitely was the process. I think - you know, we like to take a lot of credit as managers but we focus really on profitable companies that have 15 percent ROE, return on equity over rolling three-year periods, and we think consistent growers are the place to be. KANGAS: Well, many value managers have been saying that with the market uptrend this year, it is getting harder to find stocks that are fairly priced. Is that true among the small and mid-cap growth stocks? THORNDIKE: I think that is true. You know, as we look at the market, there has been a tremendous amount of sector rotation whereas a year ago health care and financial stocks were really the place where you were getting high profitable growth. Now it has been technology and retail. So there is always a rotation and usually one or two sectors are always out of favor. KANGAS: Interesting, Lanny. What are some of your largest holdings right now and do you still see them as good buys at current levels? THORNDIKE: I think two stocks that we like currently would be Online Resources (ORCC) which is in the bill payment processing and technology business for small banks, and another would be Credit Acceptance Corp. (CACC) which does financing for independent auto dealers. It had been a risky space five years ago and the company has done a terrific job of turning it around. KANGAS: And you`ve done a terrific job of selecting it as one of your portfolio members, I think. You know, you have been heavily invested for a while, as you mentioned or you touched on, in financial services and health care. Are you staying with any of those sectors if the economy keeps picking up steam? Do you think it is going to be good for these stocks? THORNDIKE: Well, I think right now we`re in a low interest rate environment, financials have done well. If interest rates really rise tremendously, they`re likely to underperform. Health care, because of the demographic in Baby Boomer and retirement issues are likely over long period of times to be great place for innovation as our population ages. But I`d say right now retail and technology seem to have done very well in the last three months. KANGAS: Lanny, we just have about 25 seconds left. Any last minute thoughts for our viewers? THORNDIKE: Well, I guess as an investor, I try and focus on profitable companies with good, quality management teams, where not just you have a charismatic CEO, but a very high level of integrity focused on sort of long-term shareholder returns. I think that`s the place for shareholders to focus over long periods. KANGAS: Very good, indeed, Lanny, thanks so much for being with us. THORNDIKE: Thank you, Paul. KANGAS: My guest, Lanny Thorndike, of the Century Small Cap Investor Fund.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/02/03: "Paul Kangas' Stocks In The News" PAUL KANGAS: Wall Street opened modestly lower as sellers took profits after yesterday`s sharp rally. In the absence of any major economic or earnings reports, that kept buyers on the sidelines too. At mid-morning, the Dow was down 37 points, the NASDAQ off only 4. The high-tech sector firmed up in early afternoon after Merrill Lynch and UBS boosted Intel`s (INTC) earnings estimates a bit, and that rally helped the blue chips trim their losses. But as oil prices spiked higher and the dollar moved to a new record low against the euro, blue chip stocks lost their footing and fell in late trading. So the Dow Industrial Average closed off 45.41 points at 9853.64. The NASDAQ Composite lost 9.75 points to 1980.07. The S&P 500 dropped 3.5 points to 1066.62. Over in the bond market, the 10-year note inched up 1/32 to 98 30/32, with the yield at 4.38 percent. Boeing`s (BA) plans to lease aerial refueling tankers to the Air Force is officially on hold. The Defense Department froze the $18 billion contract today, while its investigators look into contacts between Boeing`s finance chief and a former Pentagon procurement officer who was later hired by the aircraft maker. Boeing fired both individuals last week, and yesterday longtime chairman and CEO Phil Condit resigned. Most active big board issue on 18.4 million shares, General Electric (GE), moving up $0.45. Followed by Liberty Media (L), down $0.31. The company says its in talks with the heirs of cable TV pioneer Bob Magness. The company wants to buy out the family`s stake in Liberty. And that`s a move that would cut Chairman John Malone`s voting stake. Wal-Mart Stores (WMT) down $1.48, similar to the loss yesterday. A lot of analysts not too happy with the company`s holiday sales figures so far. Lucent (LU) was down $0.06. AT&T Wireless (AWE) off $0.13, fifth in big board volume. Merck (MRK) has been starting to perk up recently, up $0.42 today. Hewlett-Packard (HPQ), a $0.61 gain. Time Warner (TWX) rose $0.20. But Disney (DIS) down $0.59 in that board shake-up. And Micron Technology (MU) was down $0.29. Texas Instruments (TXN) said it sold its 29.1 million remaining share stake in Micron for a profit of $125 million. IBM (IBM) down $0.26. The company is teaming up with Eastman Kodak (EK) to make it easier for health centers to manage digital medical data like imaging. Kodak stock fell $0.32 to $23.94. Not much of a market today for good news or bad. ACE Limited (ACE), the big Bermuda-based insurance company, plans to spin off its financial guarantee business through an initial public offering in the first half of next year. And then the big steel company, Nucor (NUE), off $4.01. The company says dropping tariffs on imported steel could hurt the domestic industry. And the stock certainly looked like it today. Also McDonald Investments downgraded it from buy to hold. Omnicom Group (OMC) had a good day, up $3.95. Morgan Stanley upgraded it from underweight to equal weight. And Entravision (EVC) doing well, up $1.21. Morgan Stanley upgraded this one from equal weight to over weight. On the downside, Navistar (NAV) down $0.55 on the close. It traded as low as $41.43. Fourth-quarter earnings came in at a dollar versus a loss of over $7.50 last year on restructuring charges. But the company sees next year`s earnings below Wall Street estimates. The stock had a negative reaction as you might expect. America West Holdings (AWA) off $1.13. The company`s second tentative labor contract was rejected by the majority of its pilots. Now it`s time to move on to Movado (MOV), the watchmaker, up $1.92. Third-quarter earnings higher, $0.80 versus $0.73 a year ago. And the company increased next year`s earnings estimates to as high as a $1.81 a share. Huffy Corporation (HUF) stock backpedaling by $0.86. It traded as low as $5.34. The company is expecting a fourth-quarter loss of $0.08 to $0.10. The Street was looking for earnings of $0.23 a share. Microsoft (MSFT) topped the active list on NASDAQ, down $0.18. Intel (INTC) off $0.19, even though, as I touched on earlier, Merrill Lynch and UBS increased Intel`s earnings estimates, but just by a touch. Cisco Systems (CSCO), a $0.07 loss. Amgen (AMGN) fell $0.34. Dell Incorporated (DELL) an $0.08 gain, fifth in volume. Oracle (ORCL) dropped $0.11. But Comcast A (CMCSA) was up $0.29. Applied Materials (AMAT), a $0.15-loss there. Nextel (NXTL) down $0.74, tenth in volume. eBay (EBAY) lost $0.43 a share. McDATA (MCDTA), down $1.33 after the close yesterday. The company posted a loss in the third-quarter of $0.44 a share versus earnings of $0.02 the year before. The company sees fourth-quarter earnings coming in at only a penny a share at best. Then Overstock.com (OSTK) up $3.93. The company`s post-Thanksgiving online sales rose more than 150 percent over a year ago. And then over on the American Exchange, Cubic Corp. (CUB), which manufactures scientific and technical instruments, fourth-quarter earnings were lower, $0.32 versus last year`s $0.38. And that`s despite a rise of 7.6 percent in sales. And those are the "Stocks in the News."
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9853.64 -45.41 - .5
HIGH 9900.45
LOW 9837.27
NASDAQ COMP. 1980.07 -9.75 -.5
HIGH 1996.08
LOW 1978.23
VOLUME 1,383.3
PREVIOUS 1,342.4
UP VOLUME 585.4
DOWN VOLUME 778.7
DOW TRANSPORTS 2936.36 -25.22 - .9
DOW UTILITIES 252.89 +.08 + .0
CLOSING TICK +651
S&P 500 1066.62 -3.51 - .3
S&P 100 524.71 -1.89 - .4
MIDCAP 400 574.71 -1.12 - .2
REUTERS/CRB 256.74 +2.37 + .9
NYSE COMPOSITE 6139.62 -7.73 - .1
VALUE LINE 354.3 -.95 -0.27
RUSSELL 2000 553.6 -.99 -0.18
WILSHIRE 5000 10441.68 -29.38 -0.28
U.S. TREASURIES
5-YEAR NOTE 3.375%
Nov. 15,2008 99 26/32 +2/32 3.41
10-YEAR NOTE 4.25%
Nov. 15,2013 98 30/32 +1/32 4.38
30-YEAR NOTE 5.375%
Feb. 15, 2031 103 7/32 +1/32 5.15
LEHMAN BROS.
LONG BOND INDEX 1709.54 +2.87
DOW CLOSE 9853.64 -45.41 - .5
ADVANCES 1614
DECLINES 1634
NEW HIGHS 528
NEW LOWS 4
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
GE GE 29.48 +.45 +1.6
L Liberty Media 10.68 -.31 -2.8
WMT Wal-Mart 53.02 -1.48 -2.7
LU Lucent Tech 3.14 -.06 -1.9
AWE AT&T Wireless 7.21 -.13 -1.8
MRK Merck & Co 42.50 +.42 +1.0
HPQ Hewlett-Packard 22.45 +.61 +2.8
TWX Time Warner 16.69 +.20 +1.2
DIS Disney 22.58 -.59 -2.6
MU Micron Tech 12.76 -.29 -2.2
NASDAQ CLOSE 1980.07 - 9.75 - .5
VOLUME 1,821.5
PREVIOUS 1,848.0
ADVANCES 1530
DECLINES 1696
NASDAQ ACTIVES
MSFT Microsoft 25.66 -.18 -.7
INTC Intel 33.85 -.19 -.6
CSCO Cisco Systems 23.11 -.07 -.3
AMGN Amgen 58.89 -.34 -.6
DELL Dell Inc 34.97 +.08 +.2
ORCL Oracle 12.40 -.11 -.9
CMCSK Comcast Sp A 30.37 +.29 +1.0
AMAT Applied Matl 24.06 -.15 -.6
NXTL Nextel Comm 25.55 -.74 -2.8
EBAY eBay 56.46 -.43 -.8
AMEX CLOSE 1117.17 + 4.62 + .4
INDEX SHARES
DIA DIAMONDS TRUST 98.75 -.35 -.4
QQQ NASDAQ 100 35.69 -.19 -.5
SPY S&P DEP.RECEIPTS 107.38 -.21 -.2
STOCKS IN THE NEWS
IBM IBM 90.75 -.26 -.3
ACE ACE Ltd 38.32 +1.25 +3.4
NUE Nucor 52.66 -4.01 -7.1
OMC Omnicom Group 84.02 +3.95 +4.9
EVC Entravision Comm 10.21 +1.21 +13.4
NAV Navistar Intl 42.90 -.55 -1.3
AWA America West Hldg 14.35 -1.13 -7.3
MOV Movado Group 29.17 +1.92 +7.1
HUF Huffy Corp 5.94 -.86 -12.7
MCDT McData Corp 9.32 -1.27 -12.0
OSTK Overstock.com 20.20 +3.93 +24.2
CUB Cubic Corp 26.90 -3.20 -10.6
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