MSFT: Nomura Skeptical Of YHOO, RIMM Talk

Nomura Equity Research’s Rick Sherlund, who maintains a Buy rating on shares of Microsoft (MSFT)?, this afternoon issued a note to clients to refute rumors floating around saying the company will acquire Yahoo! (YHOO) or possibly Research in Motion (RIMM).
Sherlund maintains a Buy rating on Microsoft shares and a $32 price target. As far as vague rumors that have floated around today, Sherlund states simply, “we do not see a compelling strategic fit and think this is unlikely.”
On the intense speculation regarding Yahoo!, he has a little more to offer on why an outright buyout makes no sense, writing?

We believe Microsoft has the benefit of scale in search through their current relationship with Yahoo and see no need to acquire the company. ?It is possible that Microsoft may be part of a larger group to invest in a minority position in Yahoo for some strategic business relationship, but this is very different than Microsoft buying Yahoo, that ship sailed by a few years ago and is unlikely, in our view, to be revisited given that Microsoft now has the scale they desired in search through their existing relationship with Yahoo. There are other parts of Yahoo that are likely of strategic interest to Microsoft, but there are likely smarter ways to work together than buying the company.

A New Royalty Trust From SandRidge Energy

After the successful 2011 debuts of SandRidge Energy's (NYSE: SD  ) two oil and gas royalty trusts, SandRidge Mississippian Trust I (NYSE: SDT  ) and SandRidge Permian Trust (NYSE: PER  ) , the Oklahoma-based company is at it again.
If it ain't broke
Moving to exploit the same region that made the Mississippian Trust I a success, the parent company has filed the initial IPO paperwork with the SEC to give birth to SandRidge Mississippian Trust II, with the proposed ticker symbol "SDR."
I'm a big fan of SDT and the Mississippi Lime region. The play has a significant upside to many of the unconventional plays being developed right now. For example, the region is believed to contain 52%-55% oil, versus other plays that contain a higher percentage of not-so-lucrative dry gas. From a production standpoint, the play has great economics: Limestone's porosity and natural fractures can reduce drilling expenses by half.
The stats
Now that we have three SandRidge trusts to think about, let's run a side-by-side comparison of the whole family.

?	Mississippian Trust I	Mississippian Trust II	Permian
Royalty % -- Initial Wells	90%	80%	80%
Royalty % -- Development Wells	50%	70%	70%
No. of Initial Wells	37	67	509
No. of Expected Development Wells	123	206	888
Rese! rves Att ributable to Trust	19.3 MMBoe	26.1 MMBoe	21.8 MMBoe

Source: Company filings.

The new trust has both a higher royalty stake in developing wells and a larger estimated reserve base compared to its Mississippian sister. In the end, though, the only thing that matters is the trusts' production numbers.
Show me the money
SandRidge expects target distributions for the Trust to increase through the second quarter of 2016; the Trust itself is set to expire at the end of 2031. Let's take a look at the more immediate distribution schedule.

2012	Target Distribution
Q1	$0.40
Q2	$0.58
Q3	$0.59
Q4	$0.61
Total	$2.18

Source: Company filings.

It should be noted that the first-quarter payment is lower because of administrative costs associated with the formation of the trust. The expected total payout for 2013 is $2.74.
Foolish takeaway
It will likely be a few months before SandRidge Mississippian Trust II is officially on the books, as paperwork takes time. Interested investors can monitor the Trust's progress by adding SandRidge Energy to My Watchlist.
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The oil exporter is moving quickly to ramp up sales to Asia

TransCanada s (NYSE:TRP) stalled Keystone XL pipeline took another interesting twist this weekend when Speaker John Boehner said Republican lawmakers will include an approval of the pipeline in a new highway bill. The Obama Administration denied the pipeline builder a permit due to various environmental concerns and put off making a decision on the project until 2013.

A provision in the payroll-tax bill forced President Obama to make an early verdict on the project, which led to its cancellation. While the pipeline may ultimately be built, investors shouldn t focus on the politics. The real winner in this drama is the nation that is exporting the oil: Canada.

While the U.S. bickers about the fate of Keystone, Canada has made the smart decision to move forward. Canada, which accounts for over 90% of all proven energy reserves outside of the Organization of Petroleum Exporting Countries, has put out an  open for business  sign.

Canadian Prime Minister Steven Harper is working hard to reduce his nation s dependency on the U.S. Currently, around 99% of Canada s crude oil exports go south, and U.S. and many Canadian officials want to shrink that share. Harper has stressed that his country’s capacity to export energy is a national priority, and he has pledged to speed regulatory approval of energy projects. In a phone call to President Obama, the Prime Minster said that  Canada will continue to work to diversify its energy exports.

In order to diversify those exports, Canada has begun to look toward Asia as major buyer. According to a University of Calgary study, accessing emerging markets in Asia would help Canadian E&P companies realize a $13.60 a-barrel price gain by 2030. Harper will meet next month with Chinese President Hu Jintao to discuss energy export options.

Public support for Enbridge s (NYSE:ENB) Northern Gateway pipeline has surged since the Keystone denia! l. The 6 50-mile pipeline would move oil from Alberta s rich oil sands to British Columbia s coast, where it would be exported to Asian markets via a new port. Overall, Canadian commodity exports to Asian-Pacific nations rose nearly 60% during 2011 and should continue to rise as the nation makes emerging Asia a priority.
Focusing On the Energy Superpower

With Prime Minister Harper and host of other officials focused on moving crude oil and natural gas to Asia, the time could be right to add some Canadian energy companies to your portfolio. Most U.S. investors are heavily underweighted in Canada despite its proximity and global standing. Both Enbridge and the broad-based Guggenheim Canadian Energy Income ETF (NYSE:ENY) could be good bets. Odds are that the Northern Gateway pipeline will be built and start exporting to Asia. The Guggenheim fund tracks 34 different firms, including Penn West Petroleum (NYSE:PWE), and it provides a great overall play in Canadian oil-sands E&P producers. The ETF yields roughly 2.8% and charges 0.65% in expenses.

Another value in the Canadian energy sector might be giant EnCana (NYSE:ECA). After spinning off its oil assets as Cenovus Energy (NYSE:CVE), the now pure natural gas player has seen its share price dwindle in the face of record low natural gas prices. However, the company has already begun construction near Kitimat, British Columbia, of an?LNG export facility.

Given Canada s new fondness for Asia and Asia s growing appetite for LNG, EnCana could be in a great future position to provide those exports. Shares currently yield over 4%. Similarly, oil-sands-focused producer Suncor (NYSE:SU) could be a great buy. Shares of Suncor have been punished due to a writedown in the value of some of its Libyan assets and the abandonment of a $1.2 billion gas project in Syria. However, no matter which pipeline is built (Keystone or Northern Gateway), Suncor should see increased demand for it! s bitume n crude.

Teledyne Awarded $595 Million Missile Defense Agency Objective Simulation Framework Contract

 THOUSAND OAKS, Calif.–(CRWENEWSWIRE)– Teledyne Technologies Incorporated (NYSE:TDY) announced today that its subsidiary, Teledyne Brown Engineering, Inc., in Huntsville, Ala., was awarded by the Missile Defense Agency (MDA) its Objective Simulation Framework (OSF), an IDIQ contract with a potential value of $595 million over five years beginning September 1, 2011.

Under the contract, Teledyne will design, develop, test, implement and maintain the OSF. It will be the centerpiece test and simulation framework for all elements of the missile defense system. The OSF will be capable of supporting full scale simulations, ground tests and live fire events. For the first time, it will tie together the Digital Simulation Architecture with the Single Stimulation Framework.

 Winning this significant contract reflects well on our capabilities for designing and developing test systems for complex applications such as missile defense,  said Robert Mehrabian, chairman, president, and chief executive officer of Teledyne Technologies.  We expect similar test technologies will have use in other markets we serve including energy, marine, aviation, space and environmental applications.

Teledyne Brown developed the first digital and Hardware-in-the-Loop (HWIL) test and assessment capabilities for missile defense. Through the years, Teledyne Brown developed and supported advancements in test frameworks that established ground test standards for missile defense systems. The company also developed an OSF prototype that incorporates legacy digital and HWIL capabilities to support Ballistic Missile Defense System (BMDS) test and assessment activities. Teledyne Brown has executed BMDS tests and assessments at its headquarters in Huntsville, Ala. and at other locations.

About Teledyne Technologies Incorporated

Teled yne Technologies is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems. Teledyne Technologies  operations are primarily located in the United States, Canada, the United Kingdom and Mexico. For more information, visit Teledyne Technologies  website at www.teledyne.com

Forward-Looking Statements Cautionary Notice

This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, relating to a contract award. Actual results could differ materially from these forward-looking statements. Many factors, including funding, continuation and award of government programs, and cuts to defense spending resulting from future deficit reduction measures, including potential automatic cuts to defense spending that may be triggered by the Budget Control Act of 2011, could change the anticipated results. Various risks, including risks associated with government contracts, are identified in Teledyne s 2010 Annual Report on Form 10-K.

Introducing the 24/7 Wall St. Wire

from BioHealth Investor

The upcoming week will be a big one for Hollis Eden Pharmaceuticals (HEPH), a company I've written about previously. The company was founded in 1992 and they've not advanced a single drug to a Phase 3 clinical trial.

Their lead compound, called Neumune, prevents loss of white blood cells (neutropenia), loss of platelets (thrombocytopenia), and loss of red blood cells (anemia). This drug has been demonstrated safe in several Phase 1 clinical trials. The biggest indication for Neumune is protection against acute radiation syndrome (ARS).

Project Bioshield, a response to potential terrorist attacks, was signed into law in July 2004. One of the purviews of Project Bioshield is to develop and stockpile drugs to protect Americans from biological, chemical, and nuclear attacks. The anthrax scares in Washington DC are a chilling reminder of why this may be important: I'll leave comments about feasibility aside.

Sensing opportunity, Hollis Eden has been seeking to provide the Government (specifically the Department of Health and Human Services, HHS) with Neumune to protect against a radiation attack. At first glance, this was a smart strategy. Implementation, however, has not been so easy.

HEPH has been trading wildly (according to Yahoo Finance beta = 5.42) over the past few years, due in large part to their attempts to secure a contract for Project Bioshield. In my opinion Hollis Eden has an extremely weak pipeline, and this procurement is their last hope. Trouble is, much like Lucy pulling the football away before Charlie Brown can ever kick it, HHS keeps moving the deadline back. Initially a target date of September 30th 2006 was set, which was pushed back to November 30th, which was pushed back to January 31st next Wednesday.

So, while I would never recommend HEPH as an investment, I think it will be a fun stock next week for day traders (take a look at Friday afternoon's minute-by-minute chart) and those looking to speculate next week. If HHS! awards a contract to Hollis Eden the stock will take a nice spike. If they don't deliver on a contract, or delay it a third time, I think the stock will take a substantial dive.

There are a couple of ways to play this. A good volatility play is a straddle with March $5 options: open interest on February options is very low, and March options, while still illiquid have a higher open interest.

Now, Project Bioshield has hit some hiccups. A debacle in which a $1B contract was cancelled sent Vaxgen's stock (VXGN.PK) to the Pink Sheets. There have also been calls, by Senators Collins and Lieberman, for a congressional investigation into Project Bioshield.

But here's another twist. A week after announcing the November delay in the HHS procurement, Hollis Eden announced it was selling $26M worth of shares at $6.50, a substantial discount then. The company had $48M in cash at the end of Q3, and were burning on average $6M per quarter: there certainly was danger of running out before the January 31st tentative date set by HHS. Waiting until after a contract award would have meant a higher share price, and a bigger infusion of cash.

One can speculate endlessly about what the secondary offering of stock means about management's confidence in obtaining the contract. To be clear, according to a November press release, Hollis Eden is "not aware of any other company that remains in the competitive range for this contract award".

Whether or not HEPH gets a contract next week is pure speculation. The stock is trading near $6, so shorting it can be risky shorts I recommended on Avanir Pharmaceuticals (AVNR) and Encysive Pharmaceuticals (ENCY) were both in this range, and both paid off very well! This is a situation where I like to buy puts, and I have purchased some. To be clear, this is highly speculative, but I like the odds of betting on government inaction. Should be a fun week!