It has long been assumed by many investors that acquiring Valueclick (VCLK) would be the first step in "plan B" for Microsoft (MSFT) if its bid to take over Yahoo  (YHOO) was unsuccessful. When MSFT's Steve Ballmer recently ruled out a slew of acquisitions of smaller internet players after pulling its bid for Yahoo, ValueClick's stock seemed to lose some of its "takeover bait" premium over the next couple of trading sessions. Since that time, the sell off in ValueClick shares has intensified and the stock has set new 52 week lows three times over the last week as rumors swirl that it is now hunting for some strategic acquisitions of its own. As might be expected, investors appear to be pricing in 1) concerns over dilution that might accompany any acquisition 2) typical "sell the buyer, buy the seller" arbitrage or 3) that an acquisition is signaling the switch of management efforts to acquiring instead of being acquired.

Much of the chatter regarding ValueClick acquisitions has focused on the possibility of their acquiring a company that would gain them entrance to the "Pay Per Click" [PPC] advertising space, the very high margin business that the Google empire was built upon where advertisers bid for placement in search results that are offered when consumers seek information on specific keyword search terms. This business was invented by Goto.com, which became Overture.com and was acquired by Yahoo and is now Yahoo Search Marketing. This space has been dominated by Yahoo and Google (GOOG), with Microsoft making a late run to gain a foothold in this space and round out "the big three" in the PPC space. While there has always been a "second tier" of companies trying to gain traction in the pay per click space, none have been able to come close to challenging "the big three" for various reasons.

By Jennifer Yousfi

Although meat-and-dairy prices are expected to zoom even higher from their current record levels, this slice of the commodities boom won’t be a slam-dunk profit play for investors: Many food producers are watching the revenue gains they’re reaping from the rising market prices get wiped out by even bigger spikes in commodity-related expenses.

Anika Therapeutics (ANIK), a developer of products for tissue protection, healing and repair, announced that it has begun shipping Monovisc. The single-injection viscosupplement therapy is approved in Europe for treatment of osteoarthritis symptoms in all synovial joints.

Via Pubmed:

If you are a dividend investor, last weeks melt-down provided a great opportunity for buying dividend stocks. As the price goes down, the yield goes up. Many companies continued to increase their dividends giving investors something to be happy about. Below are several companies that increased their dividends last week:

• Excel Maritime (EXM) Boosts Qtr Dividend Guidance 100% To $0.40/Share
• Medtronic (MDT) Raises Qtr. Dividend 50% to $0.1875
• New York Mortgage Trust (NYMT) Raises Dividend 33% to $0.16/Share
• CSX Corporation (CSX) Increases Dividend 22% to $0.22/Share
• Best Buy (BBY) Increases Dividend 8% to $0.14/Share
• Peoples Financial Corp. (PFBX) Raises Dividend 7% to $0.29/Share
• H&R Block (HRB) Raises Dividend 5% to $0.60/Share

As I expected, UnitedHealth (UNH) lowered its profit guidance for this year. The company now sees EPS coming in between $2.95 to $3.05.

Chief Executive Stephen J. Hemsley noted the quarter's results were hurt by lower margins, adding that second-quarter weakness also stems from reduced margins at its risk-based businesses and Medicare operations. "We are continuing to take the aggressive specific steps necessary to improve our operating performance, as well as to better position our organization for sustained future growth," he said. To stop weakness in the risk-based operations, the company has been letting go of some customers who didn't generate enough profits.

Farmers in Iowa and other regions across the U.S. are deciding if they plan to replant after recent flooding wiped-out entire crops. Not unexpected, prices for the soft agricultural commodities reacted to the news of the flooding with higher prices as traders began worrying about whether supply would be anywhere close to current demand levels.

Fortunately, many farmers now take out crop insurance, allowing them to recover at least some of their initial investment (covering up to around 85% of average recent production). Since the floods of 1993, the number of acres of USDA-insured land has more than doubled. This leaves many farmers with a dilemma - take the insurance, or replant? If farmers take the insurance, supply will be down and prices are sure to stay high into the fall, and could potentially go higher. If farmers decide to replant, the potential exists for getting closer to a normal supply-demand balance, and preventing further prices increases.

Starbucks (SBUX) announced a major change of course yesterday when the hyper-expansive coffee retailer announced that it will shutter 600 under-performing stores and lay off as many as 12,000 employees as it comes to terms with an unexpectedly difficult operating environment. CEO Howard Schultz, who built the iconic company from its Seattle roots into a national chain and one of the most recognizable brands in the world, recently was brought back to try to rekindle some of the magic as the company’s shares have fallen over 60% from their all time high reached in 2006 and are now trading at levels not seen in five years.

Schultz has been working frenetically to turn things around at Starbucks. Since his return to the helm, SBUX has dropped breakfast items from its menu, announced a reduction in planned store openings and the closure of 100 under-performing, company-owned stores. Yesterday’s announcement demonstrates a greater sense of urgency as the once high-flying retailer adjusts to a tough economic environment.

Government contracts are very important for the security industry, but ultimately most of them – even the largest  – should mostly serve as beta-tests and reference sites for what should be a much larger industrial/commercial and institutional market.  Over the long term, we believe commercial/industrial contracts are steadier and involve greater recurring revenues.  But, of course, during economic slowdowns it might just be a big help to depend on those Government contracts. 

With natural gas prices lagging oil, it looks like the run is not over. The only thing that may hurt pricing will come from Europe, since they are ready to hike rates, possibly. Horizontal shale drilling has given the US a feasible method of obtaining energy, while still making a profit as natural gas demand is up along with pricing. There is plenty of excitement surrounding these shales as their reserves could be huge. This, in turn, could make smaller companies into much bigger ones overnight.

Goodrich Petroleum (GDP) looks good going forward with respect to growth. Since no one knows how high the price of natural gas will go, it is better to follow, than buck the trend. With stocks that have risen this much you need an exit plan - the most important aspect of any investment. Don't marry the stock, just date it, as for every up cycle there is a down cycle.

In my book, Put Your Money To Work - What you Need to Know to Invest in Stocks, I wrote a chapter about the characteristics of a great business. The two main characteristics include having a strong franchise or brand that can allow for years of longevity and sustain pricing power and margins; the second being that the company has a strong management, which can best be judged by how much money is earned on the capital employed or simply earnings as a percentage of assets.

Premier Exhibitions (PRXI) is the company that does the "Bodies" exhibition as well as other exhibitions including "Titanic: The Artifact Exhibition," "The Universe Within;" "Sports Immortals and The Traveling Exhibition;" and "Dialog in the Dark." It has operations in the United States, Canada, Germany, Norway, France, Greece, Japan, Switzerland, Chile, Argentina, China, Mexico, Hungary, South Korea, and England.

The Haynesville Shale appears to be the next platform for stock growth. With so few options in this market for growth, without agricultural plays such as (POT) and (IPI), the energy market looks primed for growth through the end of the year. Also, if you think that OPEC will help us, you are sadly mistaken. Since they have had low prices for so long OPEC will keep them up for as long as the US market doesn't belly flop. This is an interesting time for our economy but luckily we are resilient. By next year we will start flooding the market with high fuel economy and hybrids cars with smaller, cheaper batteries that will run a vehicle alone up to 40 miles per gallon. I know I'll here about that statement but Dodge already has a plan for such a model. We will wait and see. Until then, exploration and production of natural gas looks good. With nothing new to push down the price and an inability to hike rates unless Europe does, we will still see high prices. Don't blame the speculators, as they wouldn't be speculating if there was a high inventory.

The Haynesville Shale appears to have a plethora of resources with respect to natural gas. Chesapeake Energy (CHK) made a great move getting in there and that is why their stock is up so much since I made the call on theupdown.com. Even more important was the news of an agreement with Plains Exploration & Production (PXP). This could be a great move for CHK, but PXP could end up making out like a bandit. For PXP this is an instant move into shale that could hold up to 23 to 44 trillion in unrisked, unproven reserve potential.

Smithfield Foods (SFD) has seen its shares trimmed nearly 50% in just the past four weeks. The main culprit: soaring feed corn costs trimmed Q4 earnings by 94%. A series of events then unfolded to systematically destroy the share price:

(1) S&P downgraded SFD's debt ratings
(2) D.A. Davidson cut its opinion from neutral to under-perform
(3) COFCO, China's largest pork producer announced its intention to purchase a 5% stake
(4) SFD announced a plan to raise $350 million through the sale of senior notes.

Tractor Supply (TSCO) July 1, 2008 : $28.50 (9:45 AM price)
52-week range: $28.01 [Jan. 22, 2008] – $53.55 [Aug. 8, 2007]

Recreational farming and ranching has been booming in suburban and rural areas of America. Tractor supply serves this market with livestock and pet products, hardware, tools, snow blowers, mowers and other products. Following the acquisition of a competitor in 2002, sales and earning grew dramatically. 2007 saw all-time records in every category yet today's poor economy has caused TSCO shares to plummet by 58% from an March 2006 high of $67.60 to just $28.50 currently.

Two related pieces of news on Monday, one that was the day's headline and the other that drew a little less attention.

First, the big news: auto makers, especially US-based ones, got hammered by their product mixes. As expected, Americans are responding to a rise in gasoline prices by turning away from trucks and demanding cars, especially small ones. Of course, this spells nothing but hard times for the likes of Ford (F), GM (GM) and Chrysler, who are still hung over from a decade-long party fueled by high-margin pick-up trucks and SUVs. Economic incentives, whether state-imposed or market-driven, work after all.

While it is important to always undertake a large amount of due diligence when researching an investment idea, it is just as important to make sure that after a period of time you’re not the only one who has come to the conclusion that your particular investment is so extraordinarily undervalued. 

That is why I have been thrilled that one of the premier father-son duos in value investing has been investing along side of me in the Resource America companies (REXI), (RSO) and the Atlas America companies (ATLS), (AHD), (ATN), (APL).  For those who are interested my investment thesis on Resource America can be found here, my Atlas America thesis here and my Atlas Energy Resources thesis here. 

Consumer confidence keeps heading lower as gasoline keeps heading higher and property values plummet. This double whammy has the potential to put the consumer into a long tail-spin. In such an environment, as disposable income declines, credit card use goes up.

Visa (V) would benefit from such credit card use, as it already has. The stock has recently pulled off its high of $90 and sits a good 12% lower. Meanwhile, credit card issuers will not fare so well. Companies like Capital One, which issue unsecured debt, will see increasing amount of delinquencies and loan defaults. Capital One (COF) is sitting a mere 10% above its 52-week low and has collapsed from $53 to $39 within 5 weeks.

Sometimes the best investments are right under our noses and temporarily stink like bad milk. One of my favorite analysts, Chris Mayers at Capital & Crisis, wrote this about Lundin Mining (LMC) last Friday and it's still true today.

In that spirit, I’m going to take another look at LMC, which is one of the last of the mid-tier mining companies left and a deep value play.

I added the Alpine Global Dynamic Dividend Fund (AGD) to this site’s Income Portfolio, primarily to get some exposure to higher yielding international stocks. I like the fund for several reasons:

• It gives exposure to high-yielding international stocks.
• It does not use leverage or pay out capital to sustain the dividend.
• It uses a dividend capture strategy to collect extra dividends during the course of the year, enhancing the yield.
• High dividend yield, paid monthly.

However, this closed end fund has not been performing well since the start of the year, with further acceleration downward over the last couple of months. I chalk this up to a couple of reasons: They have a significant international exposure, which has generally underperformed for the last couple of months. And, primarily, many higher yielding stocks will be financials, which have been hit as hard throughout the world as well as on the U.S. markets.

On the heels of a follow-up report by the Security Industry Association (which very conservatively projects Chinese security industry spending by 30% to $11 billion in 2008), we have contacted three independent sources just back from viewing Chinese commercial and government security installations to check just which companies appear to lead the Chinese market. Our sources remind us that the government-sponsored China Public Security Guide estimates the 2008 market at over $26 billion – bigger than the SIA study, but to us clearly less independent.  Our sources are convinced that China Security & Surveillance (CSR) has major advantages in the mid-sized China security surveillance market and should be a company to watch closely.

We have done background work on a number of Chinese security companies. While we find two of the companies, a leader in fire systems and the other, a leader in geospatial surveillance software, interesting in their own right, they are both much smaller than our focus in this blog – China Surveillance & Security (CSR) – China’s leading domestic security surveillance company, and our Chinese researches reiterate that this is the company to watch.