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Hickey and Walters (Bespoke) submit:
Below is a list of the best performing Russell 1,000 stocks since the July 2nd correction low. As shown, Hewitt Associates (HEW) is up the most with a 40% gain, followed by MBIA (MBI) (26.56%), Anadarko (APC) (24.01%), priceline.com (PCLN) (22.37%), and Marshall & Ilsley (MI) (22.37%). Hewitt and a few other stocks on the list are trading in overbought territory, but most are not. This shows just how oversold stocks were before we got this bounce.click to enlargeComplete Story »

Ravi Nagarajan submits:Warren Buffett was highly critical of Kraft’s (KFT) acquisition of Cadbury (CDSCY.PK) throughout the takeover process. It is therefore not entirely surprising to learn that Berkshire Hathaway cut its stake in Kraft by nearly 23 percent during the first quarter. It is not common for Mr. Buffett to openly criticize managers so it was all the more notable to hear him say that the deal made him feel poorer, particularly due to the “dumb transaction” involving the sale of Kraft’s pizza business to fund part of the acquisition. In a 13F Filing with the Securities and Exchange Commission Monday afternoon, Berkshire reported holding 106.7 million shares of Kraft as of March 31, 2010 compared to nearly 138.3 million shares on December 31, 2009. In addition to the sale of Kraft shares, Berkshire liquidated shares in several other companies and added to positions in three companies. No new positions were initiated during the quarter. Let’s take a brief look at the Kraft sale and other transactions revealed in Monday’s report.Complete Story »

optionMONSTER submits: By David Russell An interesting headline from the credit markets caught my eye recently: "U.S. junk bonds post $417 million weekly inflows."Complete Story »

Stephen Castellano submits: Three stocks which we previously noted had left the "low-quality" weekly portfolio as of April 9, 2010 led the performance of all model portfolio stocks on Monday, April 12. These included Arch Coal Inc. (ACI) up 3.28%, SunTrust Banks Inc. (STI) up 2.76%, and EOG Resources, Inc. (EOG) up 2.31%. ACI and EOG have already experienced double digit gains for April. Interestingly, these stocks moved off the "low-quality" list due to significantly higher analyst revisions, probably as the result of analysts anticipating positive 1Q10 reported results. A theme we have increasingly been highlighting over the last few weeks is the surge in "low-quality" stocks as they continue to anticipate or react to "surprisingly" positive data points or anecdotes. Finding "low-quality" stocks that are likely to face easy fundamental comparisons and positive estimate revisions are likely to bear fruit in the weeks ahead.Complete Story »

Research Recap submits:
Regional banks are in the news again following a raft of ratings changes, mostly downward, by Sanford C. Bernstein. From Street Insider via AlacraPulse, Bernstein:Complete Story »

Davy Bui submits: Scanning the 13F-HR SEC filing of Paulson and Co. suggests that John Paulson employs an active trading strategy. Readers can best view Paulson's moves in spreadsheet format but some broader themes do emerge:

• Similar to some of the other money managers already profiled here (Berkowitz, Klarman), Paulson is bullish in the financial sector, as evidenced by sizable new positions in Wells Fargo (WFC), JP Morgan Chase (JPM) warrants, CIT Group (CIT) and Bank of America Units to complement his already huge holding of the bank's common stock (BAC). Paulson's fund also added substantively to existing stakes in Citigroup (C) and Suntrust Bank (STI).
• While Paulson made some big moves in the financial sector, his single largest new add was Comcast (CMCSA), the cable and now media company.
• Upon examining its holdings, it is evident the fund heavily employs a merger arbitrage strategy. The three large divestitures -- Schering Plough (SGP), Wyeth (WYE) and Liberty Media -- were all related to corporate merger/spin-off activity.
• Perhaps the most intriguing insight to be gleaned from Paulson's holdings is that he appears to be a financial sector bull and a gold bug. The single largest holding revealed in the filing is the gold ETF (GLD) and the fund also has large stakes in several gold miners: AngloGold Ashanti (AU), Gold Fields (GFI) and Kinross Gold (KGC). Apparently, Paulson has taken the stance that the financial sector can thrive despite the massive economic uncertainty that a large gold holding would imply. Or, perhaps one is a hedge on the other.

Martin Whitman is receding more into the background these days and letting other managers helm the funds at Third Avenue. As such, Third Avenue's 13F-HR filing (available here in spreadsheet format) may not be a good reflection of Whitman's thinking. Whitman has always been a big proponent of moving into the financial sector at times of crisis but this time around, he was too early and picked some bad stocks to play. Despite numerous funds and managers, Third Avenue's filing was rather sedate:Complete Story »

J Clinton Hill submits:Hillbent scans the market for significant positive and negative earnings surprises which may be potential catalysts for future bullish or bearish price action. The results generated are not intended to be comprehensive but allow investors to focus on the top or bottom earnings results and provide a starting point for further research efforts and the market direction. It is important to note that a positive, negative, or in-line earnings surprise is not necessarily a respective overall positive, negative, or neutral event for a reporting company. Some of these companies may still be experiencing year-over-year positive, negative, or flat growth rates. Complete Story »

Daryl Montgomery submits: President Obama proposed placing new limits on the size and activities of big U.S. banks on January 21st. The new plan, known as the Volcker Rule, would effectively prevent banks from owning hedge funds and private equity funds and place curbs on the market share of liabilities for any given firm. It follows last week's proposed new tax on the big banks to recoup losses from the 2008 bailout.The administration apparently hadn't informed Wall Street about the impending news. The U.S. market was caught off guard and predictably sold off sharply with the banks leading the way. The European and Asian markets sold off in sympathy.Complete Story »

David Tepper isn’t exactly a household name, but he will be when 2009 is said and done. Tepper, who runs hedge fund Appaloosa Management, is estimated to return over 120% after fees in 2009 and Tepper will personally make over $2B. The manager of the $12B fund made a series of very bold bets that the U.S. economy would thwart depression and rebound sharply in 2009. He was right. The fund specializes in distressed debt and as we mentioned earlier this year, 2009 was a once in a generation opportunity. Tepper capitalized on it in a big way. He has been reported to keep a pair of brass testicles on his desk, but the real thing was on full display in late 2008 and early 2009 as Tepper moved his fund into the most dangerous of dangerous sectors – the banks. He reportedly purchased Bank of America (BAC) near $3.72 and Citi (C) near $0.79. With Bank of America trading at $15.33 and Citi at $3.34, Tepper’s fabulous year is perfectly summed up.Complete Story »

Caterpillar, Inc. (CAT) – Bearish option traders are bracing for potential CAT-share price erosion through expiration in February 2010. Shares edged nearly 0.75% lower in late afternoon trading to stand at $57.94. One pessimist purchased a put spread to prepare for potential declines. The transaction involved the purchase of roughly 7,000 puts at the February 55 strike for a premium of 2.35 apiece, marked against the sale of 7,000 puts at the lower February 35 strike for 49 cents premium each. The net cost of the trade amounts to 1.86 per contract. The investor responsible for the spread probably holds a long position in the underlying. Under this assumption, the trader has established downside protection, which kicks in if Caterpillar’s shares fall beneath the breakeven price of $53.14 by expiration day in February.Morgan Stanley (MS) – Analysts at Barclays Capital slashed fourth-quarter earnings estimates for Morgan Stanley to 40 cents from 90 cents today. Perhaps the bearish options activity observed on MS during the trading session was partly inspired by the significant profit-forecast revision at Barclays. Either way, investors populating Morgan Stanley’s January 2010 contract appear pretty pessimistic on the second-largest U.S. securities firm. Traders threw in the towel on MS by shedding nearly 20,000 calls at the January 31 strike for an average premium of 75 cents apiece. Some investors may be closing out previously established long call positions. Analysis of the existing open interest at that strike suggests traders are likely cutting their losses by selling the calls today. Investors abandoning bullish bets do not paint a rosy picture of where MS’s share price may settle during the first weeks of 2010.Complete Story »