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The Best And Worst For August 21

Posted: Aug 22, 2008 16:22 PM by Eric Fox

Tickers in this Article: SNPS, JDSU, IUSA, DKS, SGLP, CRM

The biggest gainer on the U.S markets on August 21, 2008, was SemGroup Energy Partners, L.P. (Nasdaq: SGLP), which ended the day up $1.69 to $9.86. The biggest loser was Salesforce.com (NYSE: CRM), which ended the day down $12.05 to $53.25.

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The Gainer
SemGroup Energy Partners owns and operates midstream assets in the energy industry. Midstream assets are defined as infrastructure that is used to move oil and gas through the supply chain to the end user. This typically includes pipelines, crude oil trucks, gas processing plants, and storage and terminal facilities.

The company is organized as a master limited partnership (MLP), a type of legal structure that has tax advantages for the company and the investor. The company can avoid paying taxes at the corporate level, which lowers its cost of capital. The investor does not pay tax on some of the distributed dividends because much of it is considered a return of capital rather than income. (To find out more, read Discover Master Limited Partnerships.)

SemGroup Energy Partners has been in the news since mid July when the company lost 50% of its value in one day after it was revealed that SemGroup, L.P., its parent company, was undergoing liquidity issues. SemGroup, LP, is a private company that owns 36.4% of SemGroup Energy Partners. Even more importantly, SemGroup Energy Partners gets approximately 80% of its revenue from the parent.

It was not clear what caused the large move up in SemGroup Energy Partners. The only news out yesterday was not good, as the company issued a press release stating that they may be delisted from Nasdaq due to a failure to adhere to its listing requirements. The company has not filed its 10-Q for the second quarter ending June 30, 2008 because of the problems involving its parent. There was a large rally in energy on Thursday and it was probably swept up in that rising tide.

The Loser
Salesforce.com provides customer relationship management (CRM) software to businesses. CRM software allows businesses to collect information about its customers and have that information available to its employees so that it can service them more efficiently. The company sells it software mostly on a monthly subscription basis.

Although the company raised guidance on revenues and earnings for 2009, investors dumped the stock. There was a growth in its deferred revenue category, a leading indicator of future revenue growth. Total deferred revenue grew by $9 million sequentially from the first quarter, to $480 million. Deferred revenue is a liability account established on the balance sheet by a company when it has received payment for a service but has not yet provided that service to its customer. Later, when the service is provided, the revenue is recorded. The only problem was that this growth was not high enough to satisfy Wall Street. By end of trading Friday the stock was back up 5.1%. (Learn about other leading indicators in World's Wackiest Stock Indicators.)

Other large gainers on August 21, 2008, were infoGROUP (Nasdaq:IUSA), which was up 19% after its CEO resigned, and Dick’s Sporting Goods (NYSE:DKS), which was up 14% after reported earnings. On the losing side, JDS Uniphase Corp (Nasdaq:JDSU) was down 12.5% after missing earnings, and Synopsys (Nasdaq:SNPS) was down 11% after disappointing earnings and an analyst downgrade.

By Eric Fox

Eric J. Fox, is the founder of Brittain Capital Management, LLC., which manages the Alesia Fund, LP., a Value oriented long/short investment partnership. You can read more of his views on investments at his blog - Stock Market Prognosticator.

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