FusionIQ NEW BUY on DG Fastchannel Inc. (DGIT) - Price Target $ 36.00

DGIT the Digital Standard in Advertising !!


We are initiating a NEW BUY with a $ 36.00 price target on DG Fastchannel, Inc. (DGIT) the leading provider of digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers and other media outlets.



Our Rationale is as follows:

DGIT IS THE MARKET LEADER - DGIT provides delivery services for 22 of the top 25 advertisers, as ranked by Ad Age.  The company works with 90% of the top 100 US advertisers
DGIT has High, Consistent Revenue Growth - Revenues have been up an average of 45% per year since 1995.  Adjusted EBITDA has been up 105% per year since 1995Ranked # 5 on the Fortune “Fastest Growing Companies in the World” list and on the Fortune Small Business list of the nation’s 100 fastest growing small public companies in 2009.
DGIT has solid Growth in High Definition Market.  DG FastChannel’s high definition revenue grew from just over $1 million in 2006 to $34 million in 2008 !!  The company has already earned $38.4 million in revenue during the first 3 quarters of 2009 and projects full year 2009 revenue of $55 million.
DGIT is seeing a cyclical Bottom in its 2nd largest Segment.  Revenue from the auto vertical (second largest for DG), which was down 20-30% in the first half of 2009, appears have improved in 3rd quarter ‘09 and will likely rebound further in 2010.
Great Balance Sheet - De-leveraging. DG completed an equity offering of 2.9 million common shares in 2Q09 for $52 million in net proceeds, all of which were used to reduce bank debtAt the end of the 3rd quarter, debt was down to $107.8 million or net debt of $81.  That is a net debt to EBITDA ratio of a mere 1.1x !!!
Additionally DGIT announced a partnership with Google TV whereby Google will use DG’s technology for video content ingesting, quality control and other workflow automation that will allow small business advertisers to buy remnant TV spots and upload their video ads !

FusionIQ Market Wrap for 12/2/09-Stocks end mixed.....

The stock market struggled but held its ground Wednesday as an upbeat assessment of the economy from the Federal Reserve offset drops in bank and energy stocks.  Most stocks finished higher after the Fed said regional economic activity has generally improved since its last snapshot in October. The central bank also said consumer spending has strengthened even as employment and commercial real estate remain weak.  The Dow Jones industrial average slipped 19 points to 10,452.68 a day after jumping 126 points. Reports of analysts' warnings about bank stocks hurt financial shares, while a steep drop in oil weighed on energy companies. Airlines jumped on hopes business is stabilizing.Gold managed to hold its gains in the face of a modest rebound by the greenback. The Dollar Index had traded near 52-week lows in the previous session, but managed to make its way to a 0.3% gain this session.  The dollar's advance helped undercut the stock market's gains, which had already begun to fade from fractionally improved 2009 highs as buyers took a breather. Stocks were left to surrender their gains and spend the afternoon with modest losses until some moderate support helped the broader market finish with a fractional gain.

FusionIQ Market Wrap for 12/1/09-Stocks start month on the plus side...

U.S. stocks rose, sending the Dow Jones Industrial Average to a 14-month high as Chinese manufacturing grew at the fastest pace in five years and Dubai World said it’s in talks to restructure less than half its debt.    The news helped give a lift to global indices and caused currency traders to step away from the greenback. With the dollar drooping again, the Dollar Index returned to 52-week lows before paring losses to finish with a 0.5% loss.  The pullback in the greenback stirred broad interest in both equities and commodities. That combination proved particularly beneficial for materials stocks and energy stocks, which finished with respective gains of 1.6% and 1.4%.  Materials stocks were led by gold plays, which advanced 3.8% as gold prices climbed to a new record high near $1204 per ounce before they closed pit trade with a 1.5% gain at $1200.20 per ounce.   Exxon Mobil Corp. helped send Standard & Poor’s 500 Index energy stocks to a 1.4 percent gain as oil rose for a second day.  The S&P 500 added 1.2 percent to 1,108.86. The Dow rose 126.74 points, or 1.2 percent, to 10,471.58.  The NASDAQ closed  at 2,175.81 up 31.21  or 1.46%

Three debalces from the market collapse, AIG, FRE and FNM heading lower again !!

If volume is the footprint on institutional traders then the recent volume surge and price weakness in three poster children of the stock market collapse; AIG, FNM and FRE is not a good sign.  Shares of all three continue to drift lower as volume picks up suggesting something is amiss !!

 American International Group (AIG)

Freddie Mac (FRE)

Fannie Mac (FNM)

FusionIQ Market Wrap for 11/30/09-Stocks end the month higher...

U.S. stocks rose, extending a monthly gain for the Standard & Poor’s 500 Index, as concern eased over a possible default by Dubai World. Oil rallied as a British yacht crew was seized by Iran, while aluminum and zinc led industrial metals higher. Treasuries were little changed.  Shortly before the market closed, Dubai's largest company said its planned restructuring of some units involved $26 billion in debt, easing some concerns about the size of Dubai's financial problems.  The S&P 500 extended its November rally to 5.7 percent as it rebounded from the first monthly decline since the index reached a 12-year low in March. S&P 500 financial shares added 2.7 percent today after the group plunged by the same amount on Nov. 27. The Dow Jones Industrial Average climbed 34.92 points, or 0.3 percent, 10,344.84 and extended its monthly gain to 6.5 percent.   The NASDAQ closed up 6 points to 2,144 and closed November up 4.9%.    Retail shares limited the advance as investors worried that the holiday shopping season might have gotten off to a tepid start. Black Friday data suggested weak sales during retailers' most important sales period and underscored concerns about the economy.  Black Friday, or the Friday after the U.S. Thanksgiving Day holiday, is seen as the start of the U.S. holiday shopping period and buyers typically flood the stores that day searching for bargains.  Bucking the retail share trend on Monday, online retailers' shares rose after analytics firm comScore said that online spending was the highest it had ever been on Black Friday, with Cyber Monday spending expected to be even stronger.

Yield Curve Focus

A change in the tone of Federal Reserve rhetoric caused yields on short-term Treasuries to plunge while equity prices rose smartly. First, Chairman Bernanke pointed to the significant challenges that remain for the economy, while St. Louis President James Bullard hinted that rates could be on hold longer than markets have assumed. Bullard went further over the weekend, arguing that the Fed should extend its purchases of mortgage-backed securities and agency bonds beyond the planned termination in March.


The spread between two- and 10-year Treasuries steepened to 265 basis points, two standard deviations above its trend since September. The yield on the three-month T-bill fell to 0.05% for the week ending November 20, down from 0.11% in September. Rates on a select number of bills due to mature in January 2010 fell below zero, indicating investors were willing to pay a slight penalty for the safety of owning risk-free U.S. government securities. Yet investors were not acting out of fear of a market meltdown. The move instead stems from expectations that further credit easing may be necessary before the economy can sustain a recovery.

While some current interest rate movements undoubtedly have to do with year-end funding issues and banks' efforts to improve their balance sheets, the dovish turn in Fed rhetoric and nervousness about the durability of the recent equity rally pushed up prices at the short end of the curve. The Fed's slight change in tone caused investors to overlook better than expected economic data and pull capital from riskier assets, pushing down yields on government bonds and money market funds.

Thus, the contradiction that has characterized financial markets since September lives on: Lower yields, higher bond prices, and rising equity prices, all in the context of a weak dollar. For now, yields, equity prices and the greenback will remain acutely sensitive to changing expectations about how long the Fed will support financial markets. Consensus reports felt for some time the Fed's March 31 target for ending its asset purchases would be undone by a weak labor market, fragile housing, and diminished business access to credit. The central bank will extend and probably expand its MBS and agency debt purchases. The Fed will continue to foster a steeper yield curve that allows banks to recapitalize and cushion themselves against a sudden reversal in equity prices, which is an ongoing concern at the central bank.


Economic calendar chock full this week ...

The Economic Calendar is likely to influence trading this week as a host of market moving releases come out this week starting today with the Chicago Purchasing Managers Reports and the Dallas Fed Manufacturing Activity Report.

As the week progresses we will get a look at the housing market (12/1) with Construction Spending and Pending Home Sales.

Then rounding out the week we get a detailed look at the labor markets with the ADP Employment Outlook, Initial Jobless Claims and Non Farm Payrolls.

As we always say news is not as important as how the market reacts to it. That said the market’s reaction to the recent negative news out of Dubai shows traders have itchy trigger fingers at these elevated levels as compared to their comfort level with less than rosy news at lower levels.

We would expect a lot of volatility this week as these economic releases roll out. We would suggest reviewing stops and targets this week.

FusionIQ Market Wrap for 11/25/09-Stocks end higher on lighter volume

U.S. stocks finished higher on Wednesday, with materials and consumer discretionary shares leading the gains, after a drop in weekly unemployment claims to the lowest level in more than a year.   The Dow Jones Industrial Average rose 30.69 points, or 0.3%, to 10,464.4. The S&P 500 Index climbed 4.98 points, or 0.5%, to 1,110.63. The Nasdaq Composite added 6.87 points, or 0.3%, to 2,176.05.  Trading volume was thin Wednesday ahead of the Thanksgiving holiday.  A new 52-week low for the Dollar Index and a generally pleasing batch of economic data helped stocks make their way higher.  However, buyers lacked the potency to push through resistance near 2009 highs as participation lacked ahead of the Thanksgiving holiday.   Renewed pressure against the U.S. dollar sent the Dollar Index to a 1.1% loss, its worst single-session percentage drop in nearly four months. The drop also put the Dollar Index at a fresh 12-month low.   Initial jobless claims for the week ending November 21 fell more than expected to 466,000, which marks the first time in one year that initial claims fell below 500,000. Meanwhile, continuing claims fell more than expected to 5.42 million, which marks a multi month low. However, the decline in continuing claims still stems mostly from the expiration of unemployment benefits.

According to IMF 50% of bank losses likely to still be hidden

“There are still some important losses that have not been unveiled. It’s possible that 50 percent (of bank losses) are still hidden in their balance sheets. The proportion is greater in Europe than in the United States.”

-Dominique Strauss-Kahn, International Monetary Fund’s chief

 “In an interview with French newspaper Le Figaro, Strauss-Kahn also said the IMF thought the euro currency was probably a bit too strong.

“There are still some important losses that have not been unveiled,” Strauss-Kahn was quoted as saying in response to a question on banks, according to excerpts of the interview that were sent to media ahead of publication on Wednesday.”


Half of banks’ losses may be unknown: IMF chief
Estelle Shirbon
Reuters, Nov 24, 2009 3:01pm EST

FusionIQ Market Wrap for 11/24/09-Stocks retreat on lower volume

U.S. stocks on Tuesday finished modestly lower, with financials fronting the losses, after the Federal Reserve hiked its growth estimates for next year, offsetting a report that had the economy growing at less than initially estimated in the third quarter.  Losses in equities were limited today as the Conference Board’s consumer confidence index unexpectedly rose to 49.5 in November, topping the median economist estimate. The S&P/Case- Shiller home-price index for 20 cities increased 0.27 percent in September from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August. The gauge fell 9.36 percent from September 2008, more than forecast, yet the smallest year- over-year decline since the end of 2007.  The Standard & Poor’s 500 Index lost less than a point to close at 1,105.65. The Dow fell 17 points, to 10,433.71. The Nasdaq was down 6.83 to 2,169.  About 6.9 billion shares changed hands on all U.S. exchanges, 24 percent fewer than the three- month average as trading slowed before the Thanksgiving holiday.