Word On The Street
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Beer Trade
News broke Monday that Anheuser-Busch (BUD) has hired Goldman Sachs Group (GS) and Citigroup to help look at the company’s opportunities. European beer king InBev issued a takeover offer for BUD last week. Najarian said he thinks BUD is going higher. Macke mentioned he likes Molson Coors (TAP). Adami said look at Boston Beer (SAM) because the stock is heavily shorted.
Dennis Gartman On Hedge Funds & Oil
Dennis Gartman author of The Gartman Letter joined the traders to discuss the news that hedge funds are getting out of oil. Gartman said data published by Bloomberg that shows hedge fund managers have reduced their bullish bets on oil by 80% since July is very good data. He said take the data at face value. Gartman explained that the government is going to be looking at hedge funds for the reason why oil is higher, so its smart for them to flee the commodity. He said investors should always want to be on the same side of the big traders and the data shows the big traders are selling oil. Gartman expects to see the government create a new definition for what a hedger is as they investigate crude oil speculators. Najarian explained that the Bloomberg data doesn’t count index funds as part of the group getting out of oil, instead they show up as hedgers.
Exchange Stocks
Despite record volumes, Exchange stocks have been beaten-up this year. The traders discussed if the sector represents any opportunity. Macke said the reason the exchange stocks have stunk is because they are printing money and that’s when the government starts getting in your business. Also, the group is a target for those that are going after speculators. He said he likes NYSE (NYX) the best and he feels it’s the most compelling name. Finerman disclosed her hedge fund is long NYX and she added to the position today. Adami said the NYX is a lot cheaper than the CME Group (CME). He thinks you can own NYX here. Macke said enter at your own risk with CME.
Chartology With Dan Fitzpatrick
The gang spoke with TheStreet.com’s Dan Fitzpatrick about the technical picture from a few construction stocks. Fitzpatrick said buy Granite Construction (GVA) if the stock breaks above $40. He mentioned that GVA is above the 50-day moving average and making higher lows when it pulls back. He said McDermott (MDR) is showing a pattern of higher lows and he would look to buy the stock if it breaks over $62. Finally, he noticed that Fluor (FLR) is trading in a range and if the stock continues to trade above $187 he would buy. If FLR trades under $168, which is support, he would sell.
Hurricane Trade
Hurricane season kicks off this week and the traders discussed some potential plays. Addison Armstrong, Tradition Energy Director of Market Research joined the group to discuss his take on the hurricane season. Armstrong said we have had two years of little to no hurricane activity and that isn’t ordinary. He said if the season comes on strong look to play the oil fields services sector – especially the companies that have contracts with drillers in the Gulf. Finerman said she would take the other side of the trade with anything related to hurricanes because most of the stocks have a built-in hurricane premium.
POPS&DROPS
POPS- Quicksilver (ZQK) popped 7% after the apparel company received postive comments from Morgan Keegan. Adami said stay with ZQK. Jabil Circuit (JBL) jumped 9% after Raymond James upgraded the stock to strong buy with a $18 price target. Najarian said he likes this stock and thinks it goes higher.
DROPS- TiVo (TIVO) dropped 9% after the company was hit with a lawsuit from Dish Network and Echostar. Macke said the stock is going nowhere. Marriott (MAR) fell 2%. Finerman said the company offered a disappointing forecast. Lions Gate (LGF) slipped 8% after the movie maker reported a larger-than-expected loss. UAL (UAL) moved down 8% after the company’s CEO said it will not bid to buy US Air. Najarian said stay away. Warner Music Group (WMG) fell 9% after the music publishing company was downgraded to underperform by Merrill Lynch. Macke said he doesn’t like WMG. Berkshire Hathaway (BRK.B) dropped 2%. Finerman said investors shouldn’t judge the stock on one day’s performance. The Bank of Ireland (IRE ) lost 7%. Macke said he has concerns about this stock.
Trader Radar
Shares of Warner Music Group (WMG) were among the most actively traded stocks on the NYSE Monday.
Final Trade
Macke picked the Short Dow30 ProShares (DOG) for a short trade on the Dow. Adami said buy Celgene (CELG). Finerman likes Bon-Ton Stores (BONT) for the “Million-Dollar Portfolio Challenge.” Najarian recommended National Semiconductor (NSM).
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