Terex Insiders Unload

Terex Corp (NYSE:TEX) recently announced earnings and increased guidance for the year. But insiders are all selling. Ronald Defeo (Exec Chairman and CEO) has been consistently selling. 20% of insiders shares have been sold in the past six months. In the meantime institutional holdings have increased approximately 1.6%

Terex Corporation manufactures equipment for construction, infrastructure, quarrying, mining, shipping, transportation, refining, and utility industries worldwide. What do you believe for the future?

Terex Stock has risen from under $40 this time last year breaking through the $90 level just recently and now pulling back. I am sure that the executives and insiders are all continuing to work very hard. But basically their gut instinct is to sell when it comes to managing their own money. Real guidance? True intentions? Sometimes its short and sweet just like that.

Gap Which Changes Start When

Gap (NYSE:GPS) made a surprise appointment with Glenn Murphy taking over as Chairman. Some point to his lack of apparel expertise and shriek. Others point to his successful retail background and shout hurray its time for a change. Well its time for something at Gap. The stock has done nothing for something like three years.

After a six month search its a relief that someone will take the job. Gap may have learned a few things about itself as it interviewed a variety of candidates. While we always point to the CEO as the knight in shining armor we should also look at the board of directors who presided over the past three years and essentially proved helpless in creating shareholder value.

Here is something that everyone should know about the new guy. At his previous job as boss over Shoppers Drug Mart he took the company public and essentially tripled the stock over about five years. When he was hired Shoppers Drug Mart had been taken private by a consortium led by KKR. He has a wealth creation pedigree. True he has no apparel experience. Isn't that what divisional staff are for?

Chrysler Circles The Wagons

Cerberus is still closing the acquisition of 80% of Chrysler from Daimler (NYSE:DCX) and Chrysler is already circling the wagons. Latest news is that many of their dealers are receiving letters to increase sales or face losing the franchise within 180 days. Chrysler confirms that these letters have been sent.

Legal observers comment that most dealers are capable of fighting off this type of action as state courts are usually sympathetic to the dealer. Certain dealers many of whom have been receiving this letter have also been blocked from purchasing used cars from factory. These two actions indicate that the economic incentive to sell new Chryslers may not be as strong as it should be. Sending everyone to the principal's office for discipline will not drive sales.

In the next 180 days the new models will come onto the market. In the arcane world of car dealers new car allocations are influenced by last years sales levels. Could there be an intimedation factor present? By the way if new car sales do not look good shooting a few dealers will not solve the product and marketing problems.

If you want to close down a significant part of your dealer network you need to be ready to replace them in some fashion. Otherwise you give away market share.

Does current operating management need a shield against pointed questions from Cerberus?

Subtle Valuations in ABN AMRO Takeover Battle

Barclays (NYSE:BCS) launched another salvo attempting to capture the ABN Amro (NYSE:ABN) prize. Most commentators continue to favor the Royal Bank of Scotland (LON:RBS) offer as the superior deal. They point out that something like 40% of outstanding shares are in the hands of the arbs who will go for the highest prize.

Barclays still comes to the table with something supposedly inferior. So why bother? Banks are highly political creatures. Central Banks, Bank Regulators and politicians all have their finger in the pie. What an arb may be screaming about does not count behind the closed doors of backroom power.

Barclays has shown up with the ultimate in political support. Namely the Chinese with a supporting role from Singapore. The whole world is after China to devalue its currency. Complaints about Chinese economic dominance are plentiful. Therefore they have many attractive cards with which to negotiate. Royal Bank of Scotland will merely slice and dice ABN like a common private equity fund and then return to their previous business plan. Somewhat unimaginative when you ponder it some.

While this level of state sponsored equity infusion is troublesome it is the way China operates. If you want access to their huge foreign (Read US) currency reserves as well as access to the Chinese market I would be looking at what Barclays may be able to do in the medium to long term future.

Bank investors typically do not exit this asset category. They will adjust their holdings from one financial institution to another depending on how well current management team seems to be performing. So when you exit ABN AMRO where will you redeploy. Barclays gives you a more than viable solution for re-investment problems.

Share prices supposedly reflect the value of all future earnings. Barclays may yet be offering the best long term value.

Allstate Dodges Subprime Question

Allstate (NYSE:ALL) recently announced their quarterly earnings. In the conference call they of course took a question on the sub-prime exposure. Their response is that they feel very comfortable and feel that they took the necessary steps several years ago. They also claim to hold approximately $4.8 billion in subprime mortage securities and $164 million in ABS CDO's.

If you listen very carefully to the response they do admit to experiencing valuation declines. ie they are losing money. They claim to have not been bothered by the ratings declines. Who cares when you are losing money? The $4.8 billion is approximately equal to all of 2006 earnings. It would appear that the asset class will be costing them money as a result of increasing subprime woes.

Listen to this quote from Danny Hale the CFO

"And again, although we're comfortable with our holdings, given the current market environment we expect continued downward pressure on the market valuations. But to date none of them have been downgraded or put on negative watch. We'll continue to monitor the subprime market developments and make the appropriate valuation adjustments going forward."

Basically they know they will be taking a hit but they are soft pedalling and trying to put investors to sleep.

Jay Gelb (Lehman Brothers) just asked the question and never challenged or probed. For that matter no other analyst poked their finger into the problem either. The holdings are approximately 22% of Allstate's equity.

They have a problem here.