Tuesday, July 28, 2009

The Least Helpful Call Today

The Least Helpful Call you will receive today is so un-helpful as to be almost unbelievable.

But since we here at NotMakingThisUp strive not to make things up, well, here goes:

Barclays is today upgrading Varian from “Underweight” to “Equal Weight.”

For those of you who recall something about Varian being lately in the news, you are correct. Just yesterday, the medical and scientific equipment maker announced it had agreed to be acquired by Agilent Technology, for $52 a share.

Varian's stock rose $11.41 yesterday to a closing price of $50.61—bringing its total gain from its March 9 low of $19.83 to a healthy $30.78.

Apparently, the sudden move from “Underweight” to “Equal Weight,” after $30.78 a share in gains in the last four months, is due to the fact that there’s still $1.39 a share in gains to be had, assuming Agilent gets the necessary approvals to complete the tender by the expected close of December 31.

Which is why the Barclays upgrade of Varian is, we have no doubt, the Least Helpful Call you will receive today.

Jeff Matthews
I Am Not Making This Up

© 2009 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: inquiries will be ignored. This content is intended solely for the entertainment of the reader, and the author.


tom brakke said...

A caveat: I don't know if my comments apply to the specific case mentioned in your posting.

Let's say that there is an announcement made after the market has closed. It could be that it's good news, such as a takeover, or bad news, like an earnings miss. A research firm that puts out a report prior to the next day's open needs to put a price on it. Despite the fact that there may be after-hours trading occurring, the previous close is the price used most of the time.

Sometimes you'll see analyses of research performance that don't properly adjust for that fact, and analysts get credit for simply getting a report out with an outdated price on it. No risk and lots of gain for them, so you typically see reports produced upon the news. It might be just documentation of the events, or there might be some gamesmanship going on.

For the users of performance information, it's essential to understand how the calculations are made in situations like this to determine whether the performance record is as it seems.

Anonymous said...

Jeff: I've got a least helpful call to match Barclays/Varian - Jeffries & Co "pound-the-table" Buy on Yahoo, where they raised the price target to $20 as of 7/20/2009. With YHOO trading at $15+change today, investors following Jeffries & co. recommendation would have gotten creamed! Keep those Least helpful Calls coming, Jeff!

Anonymous said...

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