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HEROES

Auto parts supplier Echlin Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ECH)") else Response.Write("(NYSE: ECH)") end if %> jumped $11 to $49 7/8 after rival SPX Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SPW)") else Response.Write("(NYSE: SPW)") end if %> made an unsolicited $3 billion cash and stock bid for the company. Under the offer, each Echlin share will be converted into $12 in cash and 0.4796 of a share of SPX stock. In an interview on CNBC this morning, SPX's chairman and CEO said the bid is "full and fair," but added that the company may consider including any "additional value" that Echlin could identify. SPX expects the combination will yield $125 million in cost savings during the first year and $175 million in annual savings thereafter. SPX, which has the highest sales per employee in the industry, hopes to improve its earnings by 30% in the first two years (with 10% coming in the first year). Some 3,000 Echlin jobs would be eliminated under the plan -- that's 10% of the company's workforce. The combined company will have about $4.5 billion in annual revenues, with 53% of those revenues coming from aftermarket parts, 33% from original equipment components, and 14% from "service solutions," according to SPX.

Digital prepress company Devon Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DEVN)") else Response.Write("(Nasdaq: DEVN)") end if %> rose $14 1/8 to $60 5/8 after Applied Graphics Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AGTX)") else Response.Write("(Nasdaq: AGTX)") end if %> agreed to acquire the company in a deal valued at about $440 million. Under the agreement, each Devon share will be converted into $30 in cash and 0.6 of a share of Applied Graphics stock. Based on its Friday close of $46 1/2, the bid values Devon at 1.69 times trailing sales and 2.17 times book value. Shares of Applied Graphics rose $2 3/8 to $52 1/2 on the news, and the stock was upgraded to "buy" from "accumulate" by Merrill Lynch analyst Robert Curran. In an interview with Reuters, Curran said the size of the deal was "slightly larger" than he had expected since the prepress industry is so fragmented and there are not many large players. The combined company, he said, will still represent "only a small percentage" of the prepress market.

Coinmach Laundry Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WDRY)") else Response.Write("(Nasdaq: WDRY)") end if %> rebounded $1 5/16 to $22 5/16 today after being wrung for a $2 1/4 loss on Friday. The stock had tumbled after a press release from investment advisor Asensio & Co. alleged that the provider of washers and dryers to multi-family properties had overstated free cash flow in its fiscal third quarter financial report. Coinmach responded with a press release of its own late Friday that reaffirmed "without qualification" the accuracy of its figures and suggested that Asensio was dissing the company in order to reap a quick profit from shorting the stock. Jefferies & Co. and Wheat First Union both helped the stock by reiterating their "buy" ratings. In theory, free cash flow is the total cash available to shareholders and creditors after all relevant growth projects have been funded. However, there are many ways to calculate free cash flow. Here's one way, along with a chart showing how the results stack up with those of Coinmach and Asensio: Earnings before interest and taxes * (1-tax rate) + depreciation (and other significant non-cash charges) - capital expenditures + or - changes in net working capital.

Coinmach $12.1 million or $1.14 per share
Asensio (neg.) $21.6 million or ($1.70) per share
Fool (neg.) $19.6 million or ($1.48) per share

QUICK TAKES: Athletic shoe giant Nike Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> ran up $3 1/2 to $44 3/8 after rumors circulated that super-investor Warren Buffet has been buying shares. Buffet's Berkshire Hathaway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRK.A and BRK.B)") else Response.Write("(NYSE: BRK.A and BRK.B)") end if %> already owns 4 million shares of Nike stock, or a 2.11% stake... Natural gas transport and communications services firm Williams Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMB)") else Response.Write("(NYSE: WMB)") end if %> rose $1 3/8 to $33 1/8 after Goldman Sachs upgraded the stock to its recommended list from "market outperform"... Shares of sunglasses maker Oakley Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %> gained $1 1/8 to $11 7/16 after BT Alex. Brown upgraded the stock to "buy" from "market perform"... Women's clothes retailer Ann Taylor Stores Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %> moved up $1 1/16 to $13 1/2 despite being featured in today's Daily Trouble feature.

Shares of Dutch entertainment conglomerate PolyGram N.V. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PLG)") else Response.Write("(NYSE: PLG)") end if %> gained $3 1/4 to $52 3/8 after the company's U.S. film unit inked a deal to distribute three to five films annually from Hollywood director Ivan Reitman and former Universal Studios chairman Tom Pollock... Fellow Dutch firm Philips Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHG)") else Response.Write("(NYSE: PHG)") end if %> rose $3 3/4 to $76 5/16 after selling its materials analysis group to California-based Accurel Systems International Corp... RV and bus manufacturer Thor Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: THO)") else Response.Write("(NYSE: THO)") end if %> added $2 3/16 to $38 1/4 after reporting fiscal Q2 EPS of $0.47, hammering the I/B/E/S mean estimate of $0.31... Long-distance phone carrier LCI International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LCI)") else Response.Write("(NYSE: LCI)") end if %> rang up a $1 15/16 gain to $29 15/16 despite reporting Q4 EPS of $0.26, just shy of the First Call mean estimate of $0.27.

Wireless software provider Comverse Network Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMVT)") else Response.Write("(Nasdaq: CMVT)") end if %> was lifted $3 to $41 1/4 after a subsidiary of the company said it is developing unified messaging applications for the global system for mobile communications (GSM) smartphone market... National HealthCare Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Amex: NHC)") else Response.Write("(Amex: NHC)") end if %> gained $2 7/16 to $35 7/8 after the homecare and assisted living facilities operator reported Q4 EPS of $1.23, beating the First Call mean estimate of $1.13... Promotions company Cyrk Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYRK)") else Response.Write("(Nasdaq: CYRK)") end if %>, which introduced Pepsi Stuff and Marlboro Gear to the world, tacked on $2 9/16 to $12 15/16 despite reporting Q4 EPS of $0.02 versus $0.03 a year ago. The company said it will eliminate 450 jobs and take a restructuring charge of between $12 million and $15 million in Q1... IWL Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IWLC)") else Response.Write("(Nasdaq: IWLC)") end if %> increased $1 7/8 to $11 3/4 after the provider of telecommunications services to remote locations agreed to merge with CapRock Communications Corp. (OTC: CPRK).

Spray paint equipment maker Binks Sames Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BIN)") else Response.Write("(AMEX: BIN)") end if %> gained $4 5/8 to $47 1/2 after the company's board hired William Blair & Co. as an advisor to help sell the company... Quaker Oats Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OAT)") else Response.Write("(NYSE: OAT)") end if %> sprouted $2 1/4 to $52 11/16 after the company's CEO said he expects double-digit earnings growth in fiscal 1998 due to low interest rates, share buybacks, and lower operating costs... Houston-based barge operator Kirby Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KEX)") else Response.Write("(AMEX: KEX)") end if %> floated up $1 13/16 to $23 11/16 after announcing Q4 earnings from continuing operations of $0.27 per share, in line with the First Call mean estimate. Additionally, the company said it would repurchase 3 million shares, or 12% of its outstanding common stock, in a Dutch auction at between $21 and $24.50 per share.

Circuit board maker Continental Circuits Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCIR)") else Response.Write("(Nasdaq: CCIR)") end if %> gained $6 11/16 to $23 9/16 after agreeing to be acquired by electronic interconnect company Hadco Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HDCO)") else Response.Write("(Nasdaq: HDCO)") end if %> for about $185 million in cash, or $23.90 per share... Siebert Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SIEB)") else Response.Write("(Nasdaq: SIEB)") end if %> added $5 3/8 to $22 5/16 today after the brokerage firm announced a four-for-one stock split last Friday. The stock ran up better than 50% on Friday as well, due mainly to a minuscule float, or number of shares available for trading... Internet software developer Spyglass Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPYG)") else Response.Write("(Nasdaq: SPYG)") end if %> rose $1 5/32 to $6 25/32 after Finnish cellular phone maker Nokia <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOK.A)") else Response.Write("(NYSE: NOK.A)") end if %> announced an agreement to license Spyglass technology for its next generation of digital cable, satellite, and land-based set-top boxes. Nokia gained $4 3/8 to $95 1/4.

Audio enhancement technology firm SRS Labs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SRSL)") else Response.Write("(Nasdaq: SRSL)") end if %> advanced $1 1/2 to $8 1/8 after reporting Q4 EPS of $0.11, just beating the First Call mean estimate of $0.10... Telecommunications technology firm Coherent Communications Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCSC)") else Response.Write("(Nasdaq: CCSC)") end if %> soared $7 3/8 to $39 3/8 after Tellabs Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> agreed to acquire the company in a deal valued at about $670 million... Autonomous Technologies Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATCI)") else Response.Write("(Nasdaq: ATCI)") end if %> rose $9/16 to $6 9/16 after an FDA panel voted on Friday to recommend approval of the company's LADARVision laser vision correction system... Central nervous and immune system disease research firm Neurocrine Biosciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NBIX)") else Response.Write("(Nasdaq: NBIX)") end if %> gained $5/8 to $8 7/8 after announcing the discovery of new agents that can be used to treat endocrine and central nervous system disorders.

Plumbing products manufacturer Zurn Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ZRN)") else Response.Write("(Nasdaq: ZRN)") end if %> rose $4 13/16 to $41 7/8 after Jacuzzi maker U.S. Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USI)") else Response.Write("(NYSE: USI)") end if %> agreed to buy the company in a $765 million deal... Transmission tower designer Specialty Teleconstructors <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCTR)") else Response.Write("(Nasdaq: SCTR)") end if %> jumped $4 21/32 to $22 1/32 after agreeing to a merger with transmission tower operator OmniAmerica, Inc... TAVA Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TPRO)") else Response.Write("(Nasdaq: TPRO)") end if %> gained $1 3/32 to $9 1/2 after announcing a fiscal Q2 loss of $0.03 per share, slightly wider than the $0.02 per share loss expected by analysts surveyed by I/B/E/S. The company, formerly Topro Inc., is a provider of industrial automation services... Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> ascended $2 1/8 to $52 1/2 after sources said the company is close to inking deals and options with leasing companies for up to 200 of its 717-200 airplanes, according to Bloomberg News... Trans World Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Amex: TWA)") else Response.Write("(Amex: TWA)") end if %> soared $13/16 to $12 15/16 after reporting a Q4 loss of $0.44 per share on Friday, which was not quite as bad as the First Call mean estimate of a $0.54 per share loss.

GOATS

ConAgra Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAG)") else Response.Write("(NYSE: CAG)") end if %> plummeted $3 1/16 to $28 15/16 after announcing late Friday that it doesn't expect to achieve its double-digit earnings growth target for the coming six months. The Omaha-based food company anticipates fiscal 1998 second half earnings per share to be about the same or moderately lower compared with the second half of 1997 primarily because "the fresh meat and poultry sector is performing far below our earlier expectations," the company said. A drop in demand in Asia has resulted in an increase in supply in the U.S., creating a glut that is "severely depressing industry selling prices and margins." The news sent analysts scrambling to downgrade their recommendations. J.P. Morgan cut its rating of ConAgra to "market perform" from "buy." Merrill Lynch lowered its near-term rating to "neutral" from "accumulate" while keeping its "long-term buy" rating. Schroders changed its rating to "perform in line" from "outperform significantly," and Dain Rauscher trimmed its rating to "neutral" from "buy."

Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %>, the pharmaceutical company that makes Prozac (which goes off patent after 2001), slumped $1 15/16 to $61 3/4 on news that its expected blockbuster drug Evista is getting off to a slow start, according to data provided by industry research group IMS America Ltd. The company is experiencing strong competition from Merck's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> Fosamax, which also prevents bones from thinning and becoming susceptible to fracture. In related news, Lilly and Electronic Data Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> announced plans to create a new company called Kinetra, which will build a real-time, interactive electronic health information network for physicians and other health care professionals. Kinetra aims to expand connections among office-based physicians, health insurers, hospitals, laboratories, and retail pharmacists so that administrative and clinical information can be securely accessed from a single computer workstation instead of multiple systems. Lilly subsidiary Integrated Medical Systems (IMS) will become part of Kinetra. IMS already runs health information networks that connect 70,000 doctors to major hospitals, integrated delivery systems, and insurers.

QUICK CUTS: Determined software company Computer Associates International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %> sank $2 5/16 to $46 1/16 after announcing that it has commenced a cash tender offer of $108 per share for all outstanding shares of Computer Sciences Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSC)") else Response.Write("(NYSE: CSC)") end if %>. Getting the cold shoulder from CSC to its $9.8 billion offer, Computer Associates made the offer public last week and decided to commence the tender offer today. Morgan Stanley Dean Witter promptly cut its rating on Computer Associates to "outperform" from "strong buy"... A McDonald's Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %> franchised restaurant in Montreal, Quebec, closed Friday, helping sending McDonald's shares down $13/16 to $52 3/16. The restaurant owner told Reuters that the 20-year-old outlet closed because it was losing money, not because its workers were trying to unionize.

PepsiCo Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %> fizzled $13/16 to $35 11/16 after a subsidiary in Poland said damages from a fire on Friday at its Frito Lay plant totaled about $2 million, which should be covered by insurance. The plant expects to resume production by the end of the week... Exxon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> slipped $1 to $62 1/8 on rumors that it had turned off a catalytic cracking unit at its storm-damaged Baytown, Texas, refinery over the weekend for maintenance. According to Reuters, the company denied the unit was down. Last Wednesday, the company said it had shut its crude distillation unit after a storm spun through the area...Home equity lender The Money Store <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MON)") else Response.Write("(NYSE: MON)") end if %> fell $3 3/8 to $23 1/16 after PaineWebber lowered its rating on the company to "neutral" from "attractive."

CheckFree Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CKFR)") else Response.Write("(Nasdaq: CKFR)") end if %> dropped $3 7/16 to $24 after BancAmerica cut its rating of the electronic commerce services provider to "market perform" from "long-term attractive"... Applied Innovation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AINN)") else Response.Write("(Nasdaq: AINN)") end if %> dipped $3/4 to $7 1/8 after the telecommunications network management firm reported Q4 EPS of $0.07 versus a loss of $0.07 in the prior-year period... Healthcare management firm Continucare Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CNU)") else Response.Write("(AMEX: CNU)") end if %> tumbled $3/8 to $5 1/4 after it announced it will take about $5.5 million in write-offs, including costs related to the company's rehab project with Bally Total Fitness. Continucare also said it has acquired two healthcare services companies as well as a contract from Foundation Healthcare to provide outpatient physician services throughout Florida for a total of $15 million in cash.

Lift truck manufacturer Cascade Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAE)") else Response.Write("(NYSE: CAE)") end if %> skidded $1 to $15 after its CEO said in a statement late Friday that the company expects to report an earnings increase for the fourth quarter compared to the third quarter ended January 31, but results may still fall "somewhat short of expectations." Cascade expects to report EPS of $0.30 per share, short of First Call's mean estimate of $0.39... Korea Electric Power Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KEP)") else Response.Write("(NYSE: KEP)") end if %> was cut $5/8 to $9 7/16 as stock prices in Korea fell over 1% last night. Korea Electric Power is an electric utility that is 75% owned by the government of South Korea and provides electricity to more than 13 million homes throughout South Korea.

Oil and gas construction company Global Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GLBL)") else Response.Write("(Nasdaq: GLBL)") end if %> toppled $3/4 to $16 1/8 after announcing yesterday that one of its barges, the Cherokee, collided while under tow with an offshore platform in the Gulf of Mexico owned by Walter Oil and Gas. Both the barge and the platform caught fire, but the extent of damage is still under investigation... Pharmaceutical company Andrx Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADRX)") else Response.Write("(Nasdaq: ADRX)") end if %> slid $2 7/8 to $31 1/8 after reporting a fourth quarter loss of $0.07 a share, compared with a loss of $0.08 per share in the year-earlier period. For the year, the company reported a loss of $0.54 a share versus a loss of $0.33 in 1996. The First Call consensus estimate was for an $0.08 per share loss in the quarter and a $0.54 per share loss for the year.

FOOL ON THE HILL
An Investment Opinion
by Dale Wettlaufer

A Beneficial Purchase?

Diversified financal services company Beneficial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BNL)") else Response.Write("(NYSE: BNL)") end if %> jumped $30 5/8 to $112 7/8 after the company's management said that it has made good progress with a previously announced plan to realize shareholder value. In fact, the company is going right to the endgame in that exercise by retaining the services of Goldman Sachs and Merrill Lynch to look at selling the company or merging with someone else. With so many financially oriented companies out there with serious clout in their stock prices, there are numerous companies that might want to take a look at Beneficial.

One possible acquirer that comes to mind is General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>, whose GE Capital could whip that company into shape. As compared to a potential acquirer like super-regional bank Norwest Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOB)") else Response.Write("(NYSE: NOB)") end if %>, GE Capital wouldn't have to deal with selling the insurance underwriting operations of Beneficial. Those operations account for between 1/12th and 1/10th of Beneficial's revenues. GE frequently looks for specialty insurance operations that are well run, but with less than $200 million in written premiums last year, the attraction to GE might be negligible.

The attraction for Norwest is in the home equity lending business of Beneficial. As perhaps the most skilled bank in the U.S. at turning over assets through a massive amount of securitization activity, Norwest could process the loans quite efficiently. Contrary to popular notions, though, it's not as if Norwest would gain any operating leverage over these assets that Beneficial doesn't already have. At a level of assets greater than a couple of billion dollars, most financial companies have already reached economies of scale unless they aren't well run. Judging by Beneficial's return on assets in the past year, which reached about 2% before charges for the disposition of overseas units, its profitability is already very good. Without even approaching the financial leverage of banks -- where equity-to-assets reaches into the mid-4% range -- Beneficial's ROE of better than 17% is respectable.

One might say that Beneficial's results are securitization-driven, which pumps up financial performance. That wouldn't be unfair, seeing as better than 20% of Q4 revenues were made up of gains on sales of loans and receivables. Comparing that performance to the banking world, where securitization gains don't make up such a sizable portion of revenues, profitability at Beneficial would probably fall lower than 15% return on equity. For a company with $16 billion in assets, that's sub-par.

Fear not, though, as the company still has room to be geared up. Its equity-to-assets ratio of 11% means that assets could be grown in the neighborhood of 50% to get Beneficial to the same leverage ratio as other financial companies. Instead of the rich price-to-assets ratio of 0.38 to which the market has bid Beneficial on this news, the company would trade closer to a 0.25 price-to-assets ratio. That's still rich for any diversified financial company that is not a premium performer. Any potential buyer would have to ask if this is the time to gear up the balance sheet of a diversified financial company or if that entails too many risks.

With cheap money the rule of the market, some might say that gearing up the balance sheet is easy and obvious, yet risky. Currently, there is a ton of cash, or liquidity, sloshing around the U.S. debt markets looking for a return. The racy financial executive could take advantage of that fact and gear the heck out of Beneficial and look like a genius growing earnings with that leverage. With money managers looking for yield in the debt markets, there's little reason for the finance companies to stop feeding asset-backed securities into the trusts created to hold these receivables. After all, the yields on pools of credit card receivables and better-quality home equity loans beat the heck out of Treasuries. Once the pipeline dries up, though, what happens?

Well, it takes a satiated borrower to dry up the pipeline. Even then, satiated borrowers get solicitations to borrow more. In that case, it's not the borrowing pipeline that dries up -- it's a large increase in borrowers that fail to repay loans that could hurt the industry. After trending up last year, consumer delinquencies have flattened. The prudent executive would probably be better off preparing for the next step up in delinquencies and bankruptcies rather than a step down. Credit card solicitations have increased and yields on debt have fallen. Where to go for that yield, then? Straight to the home equity borrower or the credit card borrower.

Is it worth upgrading Beneficial to "buy" from "hold" today? If you're an arbitrageur wanting to risk your money, fine, heed the buys. Individual investors should probably consider that synergies are elusive at this level of assets and that the forward returns available to those buying now just declined by a good portion. Sure, someone could come in and financially engineer this company to produce EPS growth over the next couple years. But at what price? The margin of safety available to investors looking at Beneficial today or looking at all but the largest acquirer just declined. There are a ton of value-priced financial companies out there that don't need a financial re-engineering, especially outside the credit card sector where it appears that few, if any, companies pose a value proposition at current levels.

CONFERENCE CALLS

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ANOTHER FOOLISH THING

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Dale Wettlaufer (TMF Ralegh), Fool

Alex Schay (TMF Nexus6), Fool

Brian Bauer (TMF Hoops), Fool
Editor