Interview: Wilmington Trust---Farr, Dorsey---Portfolio Manager
>> and we’re heading into the final full weekend of the holiday shopping season. more than three quarters of the retailer also offer some form of free shipping for online purchases, up 64% from a year ago according to consulting form forrester research. l.l. bean, selling boots and jackets for 93 years, is providing free delivery on all items for the first time. amazon.com is offering free shipping on purchases above $25 and unlimited shipping for $79 a year. retailers are anticipating that sale also outweigh costs. and darden restaurants raised its forecast thursday night. the outlook came as the company reported net income up 28% in the november quarter. the chief executive says it was a combination of sales growth and cost control.
>> when you look at our two big companies, red lobster and olive garden, they had terrific momentum. they’re also adding new restaurants and red lobster at almost 3%. in this environment, when you look at the competitors, that’s very strong. but at the same time we are doing a good job on the cost management side despite some head wind in some obvious places like utilities.
>> and darden restaurants says per share earnings will grow 15% to 20% through may. that compares with the previous forecast of low double digit growth. let’s check the stock at the close, up $4.01. looking for a happy investor? try someone who hones humana, stock up 61% this year. the chief executive said that performance is the result of a couple of things.
>> our business is doing very, very well. so that’s the single largest driver and people are getting excited about the medicare rollout that we’re in the middle of as we speak. and we’ve been a real early mover and benefitted from it, some in 2005, but we’re guiding to some significant upside for us with medicare in 2006.
>> this is the second largest manager of medicare coverage. shares down 62 cents at the close. let’s check in with our special segment, “outlook 2006.” dorothy farr is the director of asset allocation at wilmington trust. he says he’s pleased with the way equity markets performed in select international regions and domestically. he is on the telephone, so thank you for being with us.
>> thanks for having me. i think the holiday shopping season is so robust in atlanta that everyone is out shopping and it kept me from getting to the studios.
>> retail sales, what are you projecting?
>> we think the economy is strong and a lot stronger than a lot of people have thought. the economy was said to be a house of cards that was built on housing and i think the reports that we’ve seen recently have proved that that is incorrect. we have a strong and robust economy producing jobs and we’re pleased with how it looks.
>> so do you think splause is going to come to wall street this year?
>> to some degree we think he already has. we were expecting a more difficult year than it looks like we we are going to get. and stocks will finish up 6% to 8%. and if you’re investing overseas, you’ll do much better than that. we just think that the markets have been a little more generous than we anticipated.
>> how are you weighting your port folio in 2006?
>> well, one of the things we’re empathizing next year is caution. we think with interest rates headed higher and profit growth will slow down next year. so we think that could produce a difficult period for equities. we’re trying to find the areas of the equity market that look favorable. for us we think it’s international markets relative to the domestic equity markets . and we’ve been favoring those this year. and that’s worked out quite well and we think it will continue into 2006.
>> you do put a lot of emphasis on emerging markets . why do you see continuing value?
>> when we look at valuation spreads, things like the price earnings and yields across different regions and we still see relative value, we believe, in the international developed markets as well as the emerging markets , compared to the domestic markets . so the valuations we favor those markets . we see a lot of investors beginning to chase returns of the recent path. that tends to add another leg to this run. so we think 2006 will be a repeat in terms of good performance from international emerging and developing countries.
>> our thanks to dorsey farr. the latest performance enhapsing treatment for athletes has little to do with energy drinks. you might be surprised what olympic experts are suggesting to give athletes a leg up in 2006. we’ll check in for this week’s segment “money and sports.”
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Listen Market briefing --- Lori (slow)
NYSE --- Deb (fast)
Bonus --- Brett (slow)
bloomberg “after the bell.” i’m lori rothman. let’s look at the day that was on wall street. all three averages close lower, but the dow and s&p post gains for the week. so the dow closes down six points below 10,00 -- 10,900. the s&p loses 3 ½ to close at 1267 and the nasdaq at 2252 after a decline of eight points today. let’s check in with more on the stock trading today. deborah coss tranjoins us from new york with a inside look at the week’s biggest stories.
>> of course, the s&p and the dow jones average seeing their first weekly gain in three. one of the biggest stories is burlington resources, the bigger gainer in the s&p 500 this week. it was up 12%. and remember, conoco phillips agreeing to buy burlington resources, that a natural gas producer, for $35.6 billion. which is the energy industry’s biggest takeover since 2001. now, as we closed out today, you saw conoco and burlington down a little bit but it was a big week for burlington. conoco is using that acquisition to catch up with chevron, that is oil and gas fields become harder to find and more expensive to tap and those record prices have helped out in the acquisition area. edgar peters saying that in the energy area, certainly seeing a lot more merger acquisition activity going on and that encourages people too, because it’s a signal to them that things are undervalued. laggers in the s&p 500 for the week, you saw tech hardware and energy stocks, those were some of the worst performers this week, along with commercial services, crude oil falling for a third day in a row on friday, settling at the lowest price since november 30. this was a week where we saw crude oil going from $61 a barrel to closing out in friday’s session at $58.03. of course, it wasn’t just crude oil, it was heating oil and natural gas. and that on forecasts we are going to be seeing warmer weather across the u.s. now, that drop in energy that we saw this week helping out the transports. in fact, if you take a look in today’s session, transports a little bit lower. but within the transports, the airlines were among the biggest gainers. the airlines were trying to help out the transports but with that drop in energy prices helping out many of the airlines. pfizer, altria and u.t.x. all gainers this week. back to you, lori.
>> thanks a lot for that. goldman sachs stock was cut today and the move was made on concern fixed income revenue may fall next year. the stock was cut to market perform from outperform. goldman sachs outperformed. now, speaking of goldman, it is bonus time and some wall street managers are getting millions. c.e.o. hank paulson is getting a $37 million bonus after the company posted a second straight year of record earnings. bloomberg’s brett goehring is more with the story.
>> it certainly pays to be at the top on wall street. chief executives are wreeping the awards in a boom on trading, mergers and underwriting. and hank paulson is reaping more than most. his $37 million bonus in shares and stock options is more than double what lehman brothers is giving its c.e.o. and three times the amount that morgan stanley is giving its chief executive. one money manager calls that egregious.
>> i think that kind of pay scale is a little out of line. if you’re working in the trenches and you look at that, i’m sure that those guys are thinking, wait a minute, this is way too much.
>> so this is how paulson’s bonus breaks down. paulson gets almost $250,000 goldman shares and gets options valued at more than $7 million, according to an s.e.c. filing. his pay has jumped more than 25% in the past couple of years. this news comes after the company said fourth quarter profit jumped 37%, lifting its annual proficient it to a record. goldman’s shares are up 22% this year. c bert says it’s hrd to say if the success is the market or the c.e.o.’s.
>> i think the problem is that you run into, most people will look at that and say, ok, the company has done well, is he the one responsible for that or just the environment that he’s in?
>> but christian holland, who manages $6700 million says, if goldman and the others don’t pay up, other banks would offer them more attractive packages.
>> martha stewart living on the media says their c.e.o. plans to resign. fallo plans to leave after the company files the 2005 annual report with regulators. the company said that it’s disapointed he’s moving on. he helped martha stewart media return to profit and rebuild an advertising base after the founder was impressonned. he will -- well, the move combines the broadcaster with its french pay tv business canal plus and creating a company valued at $9 billion. la vendy will own 85% of the combined companies. sorry for the bad french accent, folks. anyway, we’ll wrap up with week in markets with our next guest, dorothy far. our special segment “outlook 2006” is next. “after the bell” continues after a short one.
