MARKET TALK: Don't Underestimate NAL Oil's Dealmaking Ability

MARKET TALK: Don't Underestimate NAL Oil's Dealmaking Ability 10:53 EDT Tuesday, March 24, 2009

   Edited by John Shipman    Of DOW JONES NEWSWIRES     

10:53 (Dow Jones) NAL Oil (NAE.UN.T) is stronger than its bigger rivals might think when it comes to making acquisitions. Take for example, NAL's pact to acquire Alberta Clipper Energy (ACN.T). The deal calls for NAL's strategic partner Manulife (MFC) to buy a 50% working interest in ACN.T's assets and NAL will use these proceeds to reduce debt. CIBC says MFC's "financial flexibility and focused interest in direct ownership of oil and gas assets allows NAE.UN.T to fight above its weight" when targeting acquisition opportunities. In Toronto, NAE.UN.T recently down 3.8% at C$6.51. (BED)

10:44 (Dow Jones) T-3 Energy (TTES) shares tumble after the oilfield company says Chairman, CEO Gus Halas leaves "to pursue other interests." Pritchard Cap's Brian Uhlmer says investors are probably unhappy with lack of transition period for Halas, who's being replaced by former TTES director and Natl Oilwell Varco ( NOV) CFO Steven Krablin. Uhlmer says there could be uncertainty over direction since Krablin is known for being more aggressive than Halas in terms of acquisitions. TTES down 27% to $10.82. (JHT)

10:33 (Dow Jones) Kynikos Associates president Jim Chanos -- pivoting from his op-ed in today's WSJ urging preservation of mark-to-market or another "honest accounting" model -- tells CNBC his short-centric firm won't be party to Treasury's now-detailed plan for toxic-asset cleanup, though he likes its prospects. "We have thought about looking at it, but ... I think there are better opportunities elsewhere -- not because we don't think we could possibly make money, we just think the political risks are too high," says Chanos, who's wary of complaints about his ilk, even though hedgies bucked the finance industry trend of taking taxpayer bucks. "My God, if short-sellers made money doing this, think about the hue and outcry." (JB)

10:28 (Dow Jones) Yesterday's rally, a "big, big rally," pushed the S&P 500 above its 50-day moving average, an important marker, UBS' Art Cashin notes. But it has just as quickly produced a heavily overbought market, so some pullback is in order, he says. But the bulls must take care to keep it orderly. "Back at the beginning of the year, we had a rally that took the S&P above the 50 DMA," he says. "That lasted a week." He sees resistance around 840-845, and support at 804. DJIA off 75; S&P 500 down 9. (PJV)

10:25 (Dow Jones) Goldman Sachs upgrades CBS to neutral from sell, saying its current valuation overestimates risk of financial distress at the media company. The firm remains cautious on the advertising-heavy company's prospects in the recession, lowering 2009, 2010 and 2011 EPS estimates 6%-25%. But Goldman notes CBS is the only network growing its ratings this year. Firm says "while the near-term dollar impact of likely share gains in network ads is small relative to declines in the local TV station ad market, the success fortifies the longer- term syndication pipeline." CBS up 0.9% at $4.46. (NAT)

10:21 (Dow Jones) Dundee Securities sees some irony after its analysis of CF Industries' (CF) rationale for rejecting Agrium's (AGU) takeover bid. CF makes the point that the timing of the offer is "opportunistic" because of the recent decline in valuations across the fertilizer sector. Analyst Richard Kelertas says it's hard to argue with that, but CF's own bid for Terra (TRA) isn't any different in that respect. "We believe that both companies are attempting to purchase at a cyclical low in the industry which, in our opinion, makes perfect business sense," Kelertas says. CF off a fraction; AGU down 0.9%. (AMG)

10:17 (Dow Jones) Existing home sales data show one bright spot: housing seems to be falling at a decelerating level, FusionIQ CEO Barry Ritholtz writes on his blog. Even though year-over-year prices are still dropping at a double-digit pace, unit sales are falling at a slower pace, he says. "The second derivative improvement suggests that we may be nearing a point where the unit sales may stop dropping," Ritholtz writes. "But that does not mean we are at a bottom yet, and it certainly does not imply a turnaround is at hand." (SMR) (http:// www.ritholtz.com/blog/2009/03/annual-existing-home-sales-errata/)

10:08 (Dow Jones) Banks open lower -- as could be expected after huge rally yesterday sparked by Treasury's plan to clean up toxic assets -- but recently paring declines. RBC says the program is a positive "but no silver bullet for weak bank fundamentals," and warns clients of continued credit deterioration led by commercial real estate and construction loans. Bank of America slides 3.5% to $7.52; Citi drops 3%; to $3.03; JPMorgan off 1.4% to $28.46; Wells Fargo loses 3.8% to $16.66. (DMK)

10:01 (Dow Jones) Williams-Sonoma (WSM) managed 4Q expenses and inventory well in a dismal environment for discretionary home furnishings, pushing EPS ex items to 31c vs 16c Street view. But unlike many retailers, its sales outlook suggests the 1Q hasn't seen a pickup in trend, and WSM has a long road ahead, JPMorgan says. "Given the recent move and the fact that earnings are not expected to be positive until 4Q, we think it will be difficult for the stock to hold current levels," firm says. WSM up 7.1% at $11.98 ahead of 10:00am conference call. ( MEL)

9:57 (Dow Jones) Closure of Outback Steakhouse Canada's locations in Ontario gives comfort to Octagon Capital's outlook for competitor Keg Royalties Income Fund (KEG.UN.T). "This eliminates another competitor and proves the theory put forward by Keg management that 'concept or fad restaurants' don't work in the long run," firm says; keeps buy rating for Keg and C$12.50 target price. (AMG)

9:55 (Dow Jones) Emerging-market stocks pull back after yesterday's rally. BoNY's EM ADR index retreats 2.4% at 194; Latin America index down 2.8%, while Asia index declines 2.6%. Brazil miner Vale (RIO) down 4% to $14.32, while Peru's Buenaventura (BVN) declines 4.7% to $22.76 as gold under pressure in New York. (CSS)