National Lemming Day

 | Apr 24, 2013 | 1:16 PM EDT
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Could this be National Lemming Day? Is that what explains today's action? There are lemmings all over the place, and they seem to be doing their thing to excess everywhere I look.

First, there's the obvious lemming romp: Apple (AAPL). Finally those analysts who held out hope for some incredible dividend boost that would put Apple in the sainted 4% club or a new product that would save 2013 decided to jump off the cliff. We got a plethora of downgrades and price target cuts usually saved for accounting scandals or high-profile (and sudden) resignations. The hatred of this company's management is now so palpable that I am in the awkward phase of feeling bad for billionaires, irrespective of my great-great uncle Vladimir Lenin's admonition that if the rich are unhappy, it is their own fault.

But the lemming-like behavior isn't just concentrated in the once-sainted Apple territory.

Check out Eli Lilly (LLY). Here's a company that beat the Street with a sweet earnings report that showed it has handled the patent cliff that came from the expiration of the special status of its blockbuster schizophrenia drug, Zyprexa. But a patent cliff is one thing, a lemming cliff is another. The naysayers were all over the thing by saying that it was a lower tax rate, a research credit and a one-time payment that did the trick. Otherwise, it was all of the usual cost cutting, and the lemmings today are saying that cost cutting won't cut it. There's got to be some growth, and with flat revenue, there was none.

The drug shareholders quickly turn into lemmings once they get a load of the so-called bogus Lilly beat. They immediately come for AbbVie (ABBV), Bristol-Myers Squibb (BMY) and even sainted Pfizer (PFE), as the group, considered invulnerable for ages, suddenly has hair on it -- the technical term for "oh boy, things aren't as clean as I thought." Having sold Bristol-Myers about a point ago for my charitable trust, deciding not to be greedy, I have a little schadenfreude for these lemmings. It's about time that someone took profits in these stocks.

Speaking of profits, though, how about the mass lemming move in Amgen (AMGN) today? Wow! The lemmings were willing to pile over the cliff down 6 points, the worst decline for the one-time biotech king in three years. Why not? This quarter marked the first revenue miss by Amgen in about that length of time, as it looks like core products, epogen and aranesp, the anemia franchises, could be losing steam. One is tempted to blame the end of doping by athletes. In the meantime, the host of new drugs in the pipe aren't contributing anything new, so there's too much hope in the stock given its almost 23% run for the year.

And it might not be done going down, which is causing a lemming move in Gilead (GILD), Biogen (BIIB) and Celgene (CELG). The crime of these last three? How about all being up 40%, 43% and 55%, respectively.

Now, I understand that these stocks are up too much. They have the characteristics of classic growth equities, though -- namely, terrific prospects, strong predictable growth that's not expensive in the out years and crystal clear balance sheets to fund them. Still, the lemmings hate to see profits taken away, so they willingly follow others blindly off the cliff.

How about AT&T (T)? Holy cow!

  • no real revenue growth;
  • a possible tapering off of its monster buyback that has retired more than a half billion shares in the last few years;
  • not enough new cell phone subscribers, especially when you consider the competition from Verizon (VZ); and
  • a really nasty lack of wireline growth, for which a lack of small business growth is cited as the culprit. (Hmm, did the small businesses in Verizon's territory have a more robust time of things?)

So not one but two high-profile analysts, one from Citigroup and the other from Morgan Stanley, downgrade the stock. Now here's some real lemming-like behavior. Think of it. When Verizon reported that bang-up number the other day, it was pretty clear that its business was coming out of the hide of somebody. But nobody saw that. Worse, AT&T's weakness is being used as an excuse to sell Verizon! No winners in that group today. Oh, and should I point out that AT&T actually did add post-paid customers? Oops! What's the point of being positive, even as the stock yields 5%? Sorry!

Kind of funny when you think of it. But lemming behavior is always a terrific curiosity.

You want some really hideous lemming behavior? Check out the vast suicidal wave that's engulfing the consumer packaged goods stocks because the beat of Procter & Gamble (PG) is regarded, similar to Eli Lilly, as a beat with no soul. Yes, that $0.03 EPS beat came on the heels of disappointing revenue growth, and, more important, some commentary on the call made you sound like a chump for riding P&G from $63 to $80, where it was coming into the quarter. The culprit? How about a forecast of $0.69 to $0.77 cents for the next quarter when the Street was looking for $0.81 cents?

That's because P&G will have to spend more money to stay in place and because the conditions are "choppy," the actual word used on the call. Choppy! Holy cow! If I want to hear the word choppy, I will take my Boston Whaler out to the ocean with a storm coming my way.

You know the analysts are going to try to nail that 15% gain down before it becomes 10%, even as I actually like to hear about spending to build up the franchise.

What a terrific reason to blast Colgate (CL), right? I mean, isn't Colgate feeling the pain of Procter, even as it sure hasn't indicated that before? How about the exodus from Kimberly-Clark (KMB), even as the company was on the show last night saying all the right things about how the business is performing above expectations.

Anyone want to draw a conclusion that PepsiCo (PEP) could be another Procter? The market's doing so, even as I just spoke to the CEO at PepsiCo, too, and the future's pretty darned bright. Could that be an opportunity? Or is that just way too glib given that the world's supposed to be ending?

Wow! Hershey (HSY) is clobbered even as Credit Suisse says it will beat the quarter!

Jump first, ask questions later -- or maybe don't even bother to ask questions given how well those stocks have performed.

Look, all of these moves can be justified on a discipline basis. The market is filled with haves and have-nots, and the haves are a smaller group than the have-nots, even as they have rallied far more than the multitude of disappointments out there.

And not all groups are experiencing lemming behavior. Panera Bread (PNRA) is down around 4 points on what's perceived to be the first quarter in multiple years that you didn't get a raised forecast. Brinker (EAT) didn't really deliver either, but Starbucks (SBUX) and McDonald's (MCD) are having a good day. Maybe that's because they are perceived to be more akin to Yum! Brands (YUM), which is up nearly 5 points. But how does that explain Chipotle's (CMG) strength?

And Whirlpool's (WHR) profit-taking on an in-line quarter hasn't hurt Stanley Black & Decker (SWK) or Masco (MAS). I am chalking those up to the powerful wave of domestic spending from the wealth effect.

And Boeing's (BA) magnificent quarter is moving Honeywell (HON), Precision Castparts (PCP) and Alcoa (AA).

Still, though, National Lemming Day is defining the action. The bulls just have to hope that analysts don't think it is National Lemming Week and more analysts take the plunge tomorrow.

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