Companies that aren't supposed to beat earnings estimates. Companies that aren't supposed to be acquired. Companies that didn't go down as much as they should have on weaker earnings.
That's the story of the day even as we know each day seems to change pretty radically.
First, companies that aren't supposed to beat earnings. Kimberly Clark (KMB) put some show on with these numbers. It should have missed by a mile, but Tom Falk continues to do an amazing job with restructuring (we have a particular fondness for Halyard Health (HYH), the spinoff we own, patiently, for ActionAlertsPlus.com) Yes, KMB pulled out of the competitive part of Europe, but that doesn't mean it wasn't hurt by the dollar. Simple fact: It triumphed over the weakness and gave hope to a group people seem on the fence about. Very positive.
Mylan Labs (MYL) used to be a perennial short because there are no real barriers to entry in the generic-drug business. You put up a factory, you make knockoffs, you have low margins, and who cares? It had a history of underperforming. But these days generics are, somehow, all the rage, and so are roll-ups. Everyone wants to be Actavis (ACT)/Valeant (VRX), including Mylan with Perrigo (PRGO), and now Teva (TEVA) with Mylan. These are mergers that that no one expects, and they make the short game perilous.
Or how about the Vertex (VRTX)-Gilead (GILD) expected tie-up? The odd thing about that term is "expected." It gets floated, and then, these days, like so many other mergers, it actually comes true. That's why I wouldn't get in front of Vertex on the short side, which would be a natural normally on what can only be described -- at least in another time -- as frivolous chatter.
Finally, there's IBM (IBM). Here's a tech company with no growth that had rallied into the print, delivered no growth and then didn't give up much of the gain it had because, it seems, there's no one left to sell it. So odd.
These are the mysteries that keep us going until something really good happens economically in China, which seems to matter so much more of late, or we bounce back in April here as we seem to be on the verge of being ready for that tightening.
Oh, and if oil stays right here, plus or minus two dollars, it's pretty much reached a natural level that makes drilling fine for good properties and the weak prey for the big. Another good sign.
Random Musings: Thanks so much for all of the kind words about our nuptials. Really quite the outpouring of goodness, and both Lisa and I thank you.
