HP Insiders Vote Sell Sell Sell

Hewlett Packard (NYSE:HPQ) insiders are exercising their options and voting with their pocket books. Ann Livermore, Shane Robinson, Mark Hurd have all made major dispositions.

What is particularly telling is that they are all breaking down the doors to get out at the same time. A quick review of their last conference call would indicate nothing but positive outlooks for the future. Hmmm

Institutions seem to have been trimming back their positions. Hmmm

So is it buy the printers and lap tops but sell the stock? If you believe in executive summaries and one pagers the HP insiders have just pasted one right on your financial forehead.

H&R Dividend Bluff

H&R Block (NYSE:HRB) announced a dividend increase of 6%. Sounds good? The company wants you to know that this is the tenth consecutive year that the dividend has increased. In the same press release they also mention that this will be the 180 consecutive quarter where a dividend was paid. Given four (4) quarters per year that's about 45 years. Long term approach is nice but in this case no longer appropriate.

Earnings will be released on the morning of June 21. But the board feels confident enough on what I could only believe is the advice of management to increase the dividend a full two weeks before they can actually inform the market of what the real results are. Hmmm Cart in front of the horse?

Here is the real kicker. The dividend increase is payable to shareholders of record Sep 10, 2007 and will be paid on Oct 1. The record date is 90 days following the announcement of its payment. Sounds like they want the dividend valuation to be deeply embedded in the stock price before they come out with full disclosure.

So far H&R has been losing cash and has been relying on borrowings. Last quarter their current ratio was negative. Hey isn't this the stock that Buffet kicked out presumable for being unworthy. Look for tough news on the upcoming earnings release and conference call. The dividend increase is just a pre-headache medication.

CIBC Employee Class Action Lawsuit

Canadian Imperial Bank of Commerce (NYSE:CM)was hit with an employee class action lawsuit yesterday. The action is seeking a whopping CDN $ 600 million which at current exchange rates has approximately a 5% discount when converted to US$.

The action if successful would equal 25% of last years annual profits. There is some cause for concern.

The lawsuit relates to unpaid overtime allegedly forced out of approximately 10,000 current and former employees who performed duties as personal bankers (read front line tellers) Many of these employees are paid approximately $35,000 per annum so when you squeeze a nickle out of these folks it hurts real bad. There are so many of them that the nickels have added up.

CIBC has not commented as yet and probably will drag their feet as they work the legalisms to their advantage. It appears unlikely that the suit will be easily dismissed. The class action also will blaze new grounds as American Style litigation comes to a more staid Canadian Judicial System. There will be ramifications for other employers (banks and other companies) who have routinely engaged in similar practices.

The CIBC shareholder may find themselves hijacked as issues of labor and employee rights are fought on the platform of CIBC earnings which may or may not be available to shareholders.

This will not go away. The question is what will this do to costs and margins as court imposed judgements overtake management models. Consensus on earnings will need to be looked at quite closely.

Exxon & Chevron Delayed in Newfoundland

Exxon (NYSE:XOM) and Chevron (NYSE:CVX) received some hard news that they already knew about. Canada's easternmost province wants 5% equity of any development in the very massive offshore oil fields located incredibly close to North American markets and customers.

The 5% stake is considered standard by international practices. The model is similar to that followed by Norsk Hydro the highly respected Norwegian State Oil company as well as other entities. The added advantage is the political stability offered by this environment. Both Canada federally and Newfoundland & Labrador provincially have democratically elected governments.

Both Exxon and Chevron have dispersed their development teams and refused to negotiate leaving the projects on hold while energy customers suffer geopolitical supply risks.

The politicians are encouraging the oil companies to come back to the table now. An election is planned in the fall and the electorate may ask for substantially more. A few hurricanes and international problems and we will probably see the oil companies back at the table.

Big oil may feel it has the upper hand and is most likely overplaying it. Newfoundland and Labrador feels that they have been mistreated and are probably prepared to keep this project on ice for decades if required.

Car Makers Will Play HardBall With Desparate Governments

Cerberus has taken Chrysler off the hands of Daimlerchrysler (NYSE:DCX). The big trick will be restructuring $18 billion in health care costs. UAW is about to enter into new contract negotiations and is warning its members of new realities. The guys on the shop floor and in retirement do not have $18 billion.

Ford (NYSE:F) and General Motors (NYSE:GM) basically have the same problem. Their guys on their shop floors and in retirement do not have the money to fix their problems either. Shareholders are uninspired and the car buyer does not want to pay exorbitant costs for healthcare.

State and local governments who traditionally fight for auto plant investments will be held to ransom to fund the problems. If politicians want a plant to open, remain or expand they will have to do more than just co-invest in property plant and infrastructure.

The $18 Billion under funded Chrysler health care bill is only $60 for every man women and child in a 300 million US population. (Make adjustments for states and local governments). New locations fighting for the first plant will only be too ready to help alleviate the problem in return for large scale employment and tax revenue commitments. In fiscal 2006 the state of Michigan spent approximately $45.1 billion on all activities.

Governments will need to protect and invest in their own revenue bases before someone eats their lunch. Politicians running for election will be very motivated to lock in prosperity. Politicians will make speeches about improved design and productivity and then simply write some big cheques. They cannot face the consequences otherwise.