Here’s a scary thought. Washington Mutual (NYSE: WM) scores higher than 94.2 percent of banks on Institutional Shareholder Services’ Corporate Governance Quotient, and Wachovia (NYSE: WB) beats 98.6 percent. Since both these banks are having some governance issues, it makes one wonder what those lower down the rankings are like.

Things must have been pretty bad for Wachovia to fire CEO Ken Thompson, without having a replacement lined up. It was only last month that Thompson relinquished the Chairman role to Lanty Smith, who now also assumes Thompson’s CEO role on an interim basis while a search is carried out.

On June 2, The Wall Street Transcript interviewed Greg Ebel, Chief Financial Officer of Spectra Energy Corp. (SE). Key excerpts follow:

TWST: Please begin with a brief historical sketch of Spectra Energy and a picture of the things you are doing at the present time.

Mr. Ebel: We have been around for about 16 months now, but the assets have been around that we operate for anywhere from 70 to 100 years. It's an old company that came together, which spun off from Duke Energy. It's a pipeline, transportation, storage, gas processing and gas distribution business that shifts about 12% of the natural gas consumed in North America. We have got about 265 Bcf of storage, which was one of the largest storage positions in North America.

Additionally, we are one of the largest producers of natural gas liquids in Canada. We are one of the largest producers of natural gas liquids gathering and processing in the United States, through a joint venture with ConocoPhillips and we have the second largest natural gas distribution company in Canada named Union Gas.

TWST: I understand that you have accomplished a great deal during the 16 months. Would you tell us about it?

Mr. Ebel: Beyond just setting up as a separate public company — which in itself has its challenges that we successfully overcame — we put in place 13 new projects in 2007 from $650 million worth of projects.

We also launched a capital expansion program that will see us expand our various systems by over $1 billion a year for each of the next three years. And then on top of that, in our first year we had financial results that were up 9% or 10% in excess of what our targets were and where the Street was estimating we would come in. So all in all, it was a very successful first year.

TWST: What are your plans for the next three years?

Mr. Ebel: This year alone, we will bring into service some 13 projects worth $1.5 billion. Those projects will provide approximately $200 million in EBIT — earnings before interest and taxes — and then in both 2009 and 2010, you would see us again invest approximately $1 billion or so in expansion projects, and those projects do everything from move gas throughout the Gulf region from the Mid-Continent region down into Florida, from the Gulf up into the Northeast, and all bringing added supply alternatives to the fastest growing markets, meeting our customer needs.

We will be expanding our operations in Ontario, which is an important hub for gas that moves from the West into the Northeast, and then the expansion of our processing business in Western Canada. Again, some 13 projects this year and another $1 billion a year in each of the next two years that will, by 2011, provide some $500 million in incremental EBIT from where we are today.

TWST: What about possible challenges or problems? What might you worry about?

Mr. Ebel: One of the things I worry about currently would be the economy, although we are in the near-term largely protected on that front because of the nature of our contracts, our transportation contracts, which are very much firm transportation contracts, if you will, fixed price contracts for capacity. Over the long term, if we were to see a sustained economic decline, that could impact overall gas demand. That would be one of our concerns.

In terms of project costs, there is a lot of work being done in the energy infrastructure business and that puts some risks on our project cost. We've been able to manage that quite well and in fact have made a number of organizational changes to ensure that we are watching those closely and can actually deliver our projects on time and on budget. The other big part of our business that I mentioned earlier is the joint venture with ConocoPhillips, which is the largest natural gas processing and gathering business in the US. That has a direct relationship with oil by producing natural gas liquids that trade very much in correlation with oil. Obviously the oil prices make that business and the process and cash generated from it extremely robust. Obviously high oil prices can have impacts on consumption, so that's one of the things we are watching closely as well.

TWST: What would be the two or three best reasons for the long-term investor to look closely at Spectra?

Mr. Ebel: I think the key reasons are, first and foremost, a home grown stable of expansion projects that give visibility on earnings growth to the better-than-the-pack earnings growth and opportunities they see. Also, solid dividend growth opportunity, sound financial management and overall a relatively safe harbor in what is a somewhat dodgy financial market situation and economic situation we see out there today.

2008-06-03T05:52:59-04:00 The Wall Street Transcript

On June 2, The Wall Street Transcript interviewed Greg Ebel, Chief Financial Officer of Spectra Energy Corp. (SE). Key excerpts follow:

TWST: Please begin with a brief historical sketch of Spectra Energy and a picture of the things you are doing at the present time.

Mr. Ebel: We have been around for about 16 months now, but the assets have been around that we operate for anywhere from 70 to 100 years. It's an old company that came together, which spun off from Duke Energy. It's a pipeline, transportation, storage, gas processing and gas distribution business that shifts about 12% of the natural gas consumed in North America. We have got about 265 Bcf of storage, which was one of the largest storage positions in North America.

Additionally, we are one of the largest producers of natural gas liquids in Canada. We are one of the largest producers of natural gas liquids gathering and processing in the United States, through a joint venture with ConocoPhillips and we have the second largest natural gas distribution company in Canada named Union Gas.

TWST: I understand that you have accomplished a great deal during the 16 months. Would you tell us about it?

Mr. Ebel: Beyond just setting up as a separate public company — which in itself has its challenges that we successfully overcame — we put in place 13 new projects in 2007 from $650 million worth of projects.

We also launched a capital expansion program that will see us expand our various systems by over $1 billion a year for each of the next three years. And then on top of that, in our first year we had financial results that were up 9% or 10% in excess of what our targets were and where the Street was estimating we would come in. So all in all, it was a very successful first year.

TWST: What are your plans for the next three years?

Mr. Ebel: This year alone, we will bring into service some 13 projects worth $1.5 billion. Those projects will provide approximately $200 million in EBIT — earnings before interest and taxes — and then in both 2009 and 2010, you would see us again invest approximately $1 billion or so in expansion projects, and those projects do everything from move gas throughout the Gulf region from the Mid-Continent region down into Florida, from the Gulf up into the Northeast, and all bringing added supply alternatives to the fastest growing markets, meeting our customer needs.

We will be expanding our operations in Ontario, which is an important hub for gas that moves from the West into the Northeast, and then the expansion of our processing business in Western Canada. Again, some 13 projects this year and another $1 billion a year in each of the next two years that will, by 2011, provide some $500 million in incremental EBIT from where we are today.

TWST: What about possible challenges or problems? What might you worry about?

Mr. Ebel: One of the things I worry about currently would be the economy, although we are in the near-term largely protected on that front because of the nature of our contracts, our transportation contracts, which are very much firm transportation contracts, if you will, fixed price contracts for capacity. Over the long term, if we were to see a sustained economic decline, that could impact overall gas demand. That would be one of our concerns.

In terms of project costs, there is a lot of work being done in the energy infrastructure business and that puts some risks on our project cost. We've been able to manage that quite well and in fact have made a number of organizational changes to ensure that we are watching those closely and can actually deliver our projects on time and on budget. The other big part of our business that I mentioned earlier is the joint venture with ConocoPhillips, which is the largest natural gas processing and gathering business in the US. That has a direct relationship with oil by producing natural gas liquids that trade very much in correlation with oil. Obviously the oil prices make that business and the process and cash generated from it extremely robust. Obviously high oil prices can have impacts on consumption, so that's one of the things we are watching closely as well.

TWST: What would be the two or three best reasons for the long-term investor to look closely at Spectra?

Mr. Ebel: I think the key reasons are, first and foremost, a home grown stable of expansion projects that give visibility on earnings growth to the better-than-the-pack earnings growth and opportunities they see. Also, solid dividend growth opportunity, sound financial management and overall a relatively safe harbor in what is a somewhat dodgy financial market situation and economic situation we see out there today.

Complete Story »

SE The Wall Street Transcript

BMB Munai: Cheapest Oil Producer in Kazakhstan

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I worked in the oil industry in Kazakhstan from 1993 through 2007.  During that time, the price of crude oil fell to a low under $10/bbl and then began to hit new highs.  At the same time, the stock price of a number of Kazakhstan oil exploration and production companies increased by many multiples due to successful exploration, production, oil price increases and sometimes simply due to speculation. 

While this was happening, the stock prices of several other Kazakhstan oil companies were crushed as they were not able to navigate the politics; and at times corruption inherent in a new republic that was suddenly independent from the Soviet Union and the communist system. Although the risks were evident, at some point it became apparent that the potential rewards of investing in Kazakhstan oil companies more than offset the risks, at least for me. 

2008-06-03T05:52:21-04:00 Nathan Rogers

Nathan Rogers submits:

I worked in the oil industry in Kazakhstan from 1993 through 2007.  During that time, the price of crude oil fell to a low under $10/bbl and then began to hit new highs.  At the same time, the stock price of a number of Kazakhstan oil exploration and production companies increased by many multiples due to successful exploration, production, oil price increases and sometimes simply due to speculation. 

While this was happening, the stock prices of several other Kazakhstan oil companies were crushed as they were not able to navigate the politics; and at times corruption inherent in a new republic that was suddenly independent from the Soviet Union and the communist system. Although the risks were evident, at some point it became apparent that the potential rewards of investing in Kazakhstan oil companies more than offset the risks, at least for me. 

Complete Story »

KAZ Nathan Rogers

Supply-Side Fairy Tales

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Greg Mankiw offers a strong endorsement of a proposal to cut the corporate income tax from 35 to 25 percent, claiming "It is perhaps the best simple recipe for promoting long-run growth in American living standards." (Hat tip Mark Thoma.) A good case can be made for cutting or even eliminating the corporate income tax. But Mankiw's argument does not cohere.

Let's start positive. Mankiw is right to point out that the "incidence" of the corporate income tax might not in fact be as progressive as its proponents would wish. He quotes studies suggesting that workers end up paying 70% to 92% of the taxes in the form of lower wages. I'm skeptical of those numbers, but it is surely true that some fraction, perhaps even a large fraction, of the corporate tax burden falls on workers and customers rather than presumptively wealthier investors. Mankiw does us all a service by reminding us of this.

2008-06-03T05:51:41-04:00 Steve Waldman

Steve Waldman submits:

Greg Mankiw offers a strong endorsement of a proposal to cut the corporate income tax from 35 to 25 percent, claiming "It is perhaps the best simple recipe for promoting long-run growth in American living standards." (Hat tip Mark Thoma.) A good case can be made for cutting or even eliminating the corporate income tax. But Mankiw's argument does not cohere.

Let's start positive. Mankiw is right to point out that the "incidence" of the corporate income tax might not in fact be as progressive as its proponents would wish. He quotes studies suggesting that workers end up paying 70% to 92% of the taxes in the form of lower wages. I'm skeptical of those numbers, but it is surely true that some fraction, perhaps even a large fraction, of the corporate tax burden falls on workers and customers rather than presumptively wealthier investors. Mankiw does us all a service by reminding us of this.

Complete Story »

Steve Waldman

StatoilHydro: Bullish on Exploration

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StatoilHydro ASA (STO), the Norwegian integrated oil company, saw net income rise 62% in the first quarter compared to 2007 as realized oil prices rose 42% year-over-year. The company also surprised on Wall Street estimates by 34.29% for the quarter. StatoilHydro has a 2008 P/E of 11.05.

Full Analysis

2008-06-03T05:44:23-04:00 Zacks.com

Zacks.com submits:

StatoilHydro ASA (STO), the Norwegian integrated oil company, saw net income rise 62% in the first quarter compared to 2007 as realized oil prices rose 42% year-over-year. The company also surprised on Wall Street estimates by 34.29% for the quarter. StatoilHydro has a 2008 P/E of 11.05.

Full Analysis

Complete Story »

STO Zacks.com

Starlims: The Ever-Changing Story

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Back in August 2007, fellow IOI colleague Zack Miller posted about a newly IPO’d Israeli company called Starlims Technologies (LIMS). The company competes in the Laboratory Information Management Systems market and has over 20 years experience marketing in this space. Its software “manages the collection, processing, storage, retrieval and analysis of information generated in laboratories.”

Almost prophetically, Miller nailed it:

2008-06-03T05:39:57-04:00 Aaron Katsman

Aaron Katsman submits:

Back in August 2007, fellow IOI colleague Zack Miller posted about a newly IPO’d Israeli company called Starlims Technologies (LIMS). The company competes in the Laboratory Information Management Systems market and has over 20 years experience marketing in this space. Its software “manages the collection, processing, storage, retrieval and analysis of information generated in laboratories.”

Almost prophetically, Miller nailed it:

Complete Story »

LIMS Aaron Katsman

Bristol-Myers, ImClone, Genentech Release Promising Data at ASCO

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One of the pharmaceutical industry’s biggest and most high profile society conferences is the American Society of Clinical Oncology, or ASCO, meeting. This year’s ASCO meeting was held here in Chicago, and Jason Napodano, CFA, our Senior Pharma/Biotech analyst, is here to give us the inside scoop.

Jason, welcome back.

2008-06-03T05:32:24-04:00 Zacks.com

Zacks.com submits:

One of the pharmaceutical industry’s biggest and most high profile society conferences is the American Society of Clinical Oncology, or ASCO, meeting. This year’s ASCO meeting was held here in Chicago, and Jason Napodano, CFA, our Senior Pharma/Biotech analyst, is here to give us the inside scoop.

Jason, welcome back.

Complete Story »

BMY IMCL DNA Zacks.com

Homes: Buy One, Get One Free!

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A San Diego developer recently offered a "buy one, get one free" promotion on homes in Southern California.  From a recent article at 10news.com:

Michael Crews Development is offering new, 2000-square foot cityscape row-homes worth $400,000 in Escondido for free -- if you buy one Royal View Estate home in San Pasqual Valley starting at $1.6 million.

 

2008-06-03T05:27:06-04:00 Bespoke Investment Group

Hickey and Walters (Bespoke) submit:

A San Diego developer recently offered a "buy one, get one free" promotion on homes in Southern California.  From a recent article at 10news.com:

Michael Crews Development is offering new, 2000-square foot cityscape row-homes worth $400,000 in Escondido for free -- if you buy one Royal View Estate home in San Pasqual Valley starting at $1.6 million.

 

Complete Story »

XHB ITB Bespoke Investment Group

The Foreclosure Tourism Phenomenon [Housing Tracker]

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2008-06-03T05:26:48-04:00 SA Editor Judy Weil

Complete Story »

SA Editor Judy Weil

Yield Hunters Struggle

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Those that have owned the Dow Jones Dividend Select ETF (DVY) over the last year know that dividend stocks have severely underperformed the overall market.  Below we highlight a chart comparing the price change of SPY and DVY since the start of 2006.  As shown, the two traded pretty much inline with each other until the credit crisis hit dividend-paying financial stocks last summer.  Investors looking for a nice yielding dividend ETF have gotten anything but that over the past year with DVY.

2008-06-03T05:25:10-04:00 Bespoke Investment Group

Hickey and Walters (Bespoke) submit:

Those that have owned the Dow Jones Dividend Select ETF (DVY) over the last year know that dividend stocks have severely underperformed the overall market.  Below we highlight a chart comparing the price change of SPY and DVY since the start of 2006.  As shown, the two traded pretty much inline with each other until the credit crisis hit dividend-paying financial stocks last summer.  Investors looking for a nice yielding dividend ETF have gotten anything but that over the past year with DVY.

Complete Story »

SPY DVY Bespoke Investment Group

Bill Gross: Prepare for Coming Inflation

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Bill Gross, the Chief Investment Officer over at PIMCO, was on CNBC late last week talking about inflation.  I did not get a chance to listen to the segment until today but I am glad I did, as it was quite insightful.  It should be clear from watching the video and from the constant chatter in the media that inflation will likely remain a significant overhang for the U.S. Economy in the coming year or so.

One of Gross’s primary arguments is that the housing bubble and the resulting efforts by the Federal Reserve to prevent asset depreciation in the housing sector have essentially tied the hands of the Federal Reserve when it comes to dealing with inflation.  As a result, the Federal Reserve has essentially given up on fighting inflation in an effort to ease the pain of the masses as they try to deal with falling housing values. 

2008-06-03T05:23:35-04:00 Prudent Speculations

Prudent Speculations submits:

Bill Gross, the Chief Investment Officer over at PIMCO, was on CNBC late last week talking about inflation.  I did not get a chance to listen to the segment until today but I am glad I did, as it was quite insightful.  It should be clear from watching the video and from the constant chatter in the media that inflation will likely remain a significant overhang for the U.S. Economy in the coming year or so.

One of Gross’s primary arguments is that the housing bubble and the resulting efforts by the Federal Reserve to prevent asset depreciation in the housing sector have essentially tied the hands of the Federal Reserve when it comes to dealing with inflation.  As a result, the Federal Reserve has essentially given up on fighting inflation in an effort to ease the pain of the masses as they try to deal with falling housing values. 

Complete Story »

Prudent Speculations

Banking Sector Continues to Trend Lower

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One of the main reasons that I am taking an intermediate term bearish stance on the market is due to the banking sector which continues to get hammered.  There have been some banks holding above their January/March panic lows while others have been setting new lows.  I was first turned on to the idea that the market topped when I saw that the banking sector topped and started heading lower.

The banks led us down in January and March and led us back up to the recent high we just set.  Now, they are again taking leadership to the downside.  This is NOT what you want to see.  We haven't seen the Financial ETFs (XLF) or (UYG) challenge their respective spike lows from earlier this year, but we want to be on guard because we see a lot of individual stocks breaking.  Let's take a look at a few charts.

2008-06-03T05:20:44-04:00 Kunal Vakil

Kunal Vakil submits:

One of the main reasons that I am taking an intermediate term bearish stance on the market is due to the banking sector which continues to get hammered.  There have been some banks holding above their January/March panic lows while others have been setting new lows.  I was first turned on to the idea that the market topped when I saw that the banking sector topped and started heading lower.

The banks led us down in January and March and led us back up to the recent high we just set.  Now, they are again taking leadership to the downside.  This is NOT what you want to see.  We haven't seen the Financial ETFs (XLF) or (UYG) challenge their respective spike lows from earlier this year, but we want to be on guard because we see a lot of individual stocks breaking.  Let's take a look at a few charts.

Complete Story »

AIG BAC C GE LEH MER WB XLF UYG Kunal Vakil

Tuesday Outlook: Markets in Check

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The Houston power outage, where our hosting service resides, caused our server to be down late Saturday and all day and night Sunday. It was just one of those things and that’s enough about housekeeping.

Yesterday the old financial sector bugaboo resurfaced as many companies within the sector were downgraded by “Johnny on the spot” S&P and one wonders, has the horse already left the barn? So the financial sector bottom pickers were silenced again. This type of action is like walking through a minefield.

Volume remains modest while breadth was quite negative as you would expect.

I’ll leave these sectors with one DeMark chart which indicates trend exhaustion. When you see the “9” on weekly charts markets may move sideways for awhile or suffer a correction. If not, then the underlying trends are very strong and this should be ignored. [Not too brilliant to say they’ll move sideways, down or go up now is it?] But, DeMark is flashing a warning on over a dozen markets. The QQQQ is below and was featured two weeks ago in this manner. [This is the best image I can produce from this view.]



Go to page 2 - Commodities, Emerging Markets >>

2008-06-03T05:19:44-04:00 David Fry

David Fry (ETF Digest) submits:

The Houston power outage, where our hosting service resides, caused our server to be down late Saturday and all day and night Sunday. It was just one of those things and that’s enough about housekeeping.

Yesterday the old financial sector bugaboo resurfaced as many companies within the sector were downgraded by “Johnny on the spot” S&P and one wonders, has the horse already left the barn? So the financial sector bottom pickers were silenced again. This type of action is like walking through a minefield.

Volume remains modest while breadth was quite negative as you would expect.

I’ll leave these sectors with one DeMark chart which indicates trend exhaustion. When you see the “9” on weekly charts markets may move sideways for awhile or suffer a correction. If not, then the underlying trends are very strong and this should be ignored. [Not too brilliant to say they’ll move sideways, down or go up now is it?] But, DeMark is flashing a warning on over a dozen markets. The QQQQ is below and was featured two weeks ago in this manner. [This is the best image I can produce from this view.]



Go to page 2 - Commodities, Emerging Markets >>

Complete Story »

SPY MDY QQQQ IWM XLF KCE XLY XHB IYR DVY IYT IEF TLT

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