Posts by Michael Santoli
- Michael Santoli at Yahoo Finance2 days ago
America is nearing “peak dollar store.”
A bidding war for Family Dollar Stores Inc. (FDO) burst into the open Monday, with Dollar General Corp. (DG) offering $9.7 billion in cashto best Dollar Tree Inc.’s (DLTR) $9.2 billion cash-and-stock offer.
Wall Street is exultant over the billions being slung among downmarket retailers, pushing Dollar General shares up by 10% and sending Family Dollar stock above the latest $78.50 offer price, with a session high so far of $80.90. First suitor Dollar Tree was down around 2% in afternoon trade.
The deal frenzy has plenty of room to carry on a bit further, for sure. The fact that Family Dollar shares have surpassed the Dollar General bid price means traders assign a pretty high probability that Dollar Tree will attempt to best it; or Dollar General will go higher in a negotiated deal; or perhaps another player such as Walmart Inc. (WMT) will become involved.
- Michael Santoli at Yahoo Finance4 days ago
When a new CEO arrives at a financially strapped American manufacturer in the thick of a nasty recession, paying factory workers better is usually not one of the boss’s first priorities.
But it was one of the first things Ron Kaplan did after taking over Trex Co. (TREX), the big maker of composite decking, in early 2008, as the company struggled with a brutal economic downturn and self-inflicted financial difficulties.
In June of that year, Kaplan and the management team he recruited met with production employees and handed out special cash bonuses worth a few hundred dollars each, and told them it could become a regular monthly occurrence under a new incentive-bonus program based on production goals.
In addition to competitive hourly wages, which were maintained, the company set monthly targets for producing its wood-and-plastic decking materials at lower cost per pound while maintaining quality and safety standards. Since 2008, Trex has paid bonuses “the vast majority of months,” says chief financial officer James Cline. The average payout has been $325 per employee per month.
Regular payouts, strong bottom line
- Michael Santoli at Yahoo Finance6 days ago
It turns out it’s not the best idea to buy everything the smart money is selling.
The 32% plunge in SeaWorld Entertainment Inc. (SEAS) shares Wednesday — after a disappointing earnings report and fears of a lasting backlash against its treatment of animal performers — was an extreme dousing for a once-coveted stock.
Yet the fact that SeaWorld was controlled by buyout firm Blackstone Group LP (BX) until its April 2013 initial stock offering offers a good excuse to note that the recent crop of IPOs from private-equity-backed companies has performed appreciably worse than all newly public companies as a group.
IPOs of companies that had previously been acquired by buyout shops have been a prominent element of the strong new-issue market over the past couple of years. The 20 largest private-equity-backed IPOs since January 2013 raised $21 billion in aggregate. Shares of those IPOs since January 2013 have appreciated by 25.3%, on average, from their offer price (which, of course, only institutions and plugged-in wealthy individuals can typically access.)
- Michael Santoli at Yahoo Finance7 days ago
Here’s a good rule about plumbing: If you become aware of it, then that means there’s a problem.
So it’s probably not a good thing that the condition and performance of the plumbing of the financial markets has become a big issue on Wall Street.
The Federal Reserve Bank of New York is holding a conference today on challenges facing the repo market – a huge, vital and currently pressured arena where banks and investment funds finance their operations. Repo is slang for “repurchase agreement,” a kind of short-term trade in which cash is exchanged for high-quality collateral such as Treasury bonds. It’s the basic day-to-day mechanism for hedge funds, banks and money market funds to lend and borrow cash used to invest and trade.
Related: How to trade the banks
- Michael Santoli at Yahoo Finance8 days ago
Bob Evans Farms Inc. (BOBE) is a chain of family restaurants built around midcentury rural nostalgia and homey comfort foods including “sweet & stacked hotcakes” and “Broasted chicken.”Since last year, though, executives of the New Albany, Ohio, company have been made uncomfortable by an aggressive New York activist investor demanding it step to the pace of today’s Wall Street. The activist, Sandell Asset Management, charges the company has become fat and lazy, treating shareholders to subpar profitability, weak stock performance and an inefficient corporate structure.
- Michael Santoli at Yahoo Finance12 days ago
It was barely a month ago that the only thing Wall Street worriers could find to complain about was the eerie market calm. Volatility was too low, they said, investors were content sitting on risky assets and the Standard & Poor’s 500 hadn’t had a one percent daily move in months. Fed Chair Janet Yellen was even moved to weigh in on investor overconfidence and under-pricing of risk in a few market segments.
Flash to now to find global markets in a slow-motion freak-out. German stocks have corrected by 10%, US small caps (^RUT) are almost there, the Japanese market (^N225) dumped by 3% overnight and the volatility index (^VIX) has popped from 11 to nearly 17 in 16 days. And in the past week alone American investors have yanked a record $7.1 billion from junk-bond funds – spurning, for the moment, one of their most beloved asset plays of the past few years.