- Pras Subramanian at Breakout1 hr ago
Say one thing about this bull market, it’s resilient. A tough start to the year has almost been forgotten, with stocks fighting to push higher. In fact, the Dow Transports (^DJT), a leading indicator of sorts for many in the market, just hit a new all-time high today.
Even with this resilience, veteran stockpicker and friend of Breakout Hugh Johnson of HJ Advisors isn’t taking anything to chance, as he’s seeing some other patterns forming that aren’t completely bullish.
“Look at the performance of the market recently,” he says in the attached clip, “the market’s themselves have become defensive, the best performing sector is utilities, you see large cap outperforming small cap stocks, we see value stocks outperforming growth stocks.”
Whipping out his playbook, here are his top plays to stay defensive, as well as a couple stable offensive trades, for investors to stay on top of this market
- Breakout Staff at Breakout2 hrs ago
Today's Trending Tickers based on your Yahoo Finance searches are:
American aircraft manufacturer Boeing (BA) is lifting higher on it's earnings. The stock was up about 2% during it's 10:30 earnings call this morning where management discussed their 14% higher adjusted profit which beat estimates, and their positive outlook for 2014 due to rising jet production.
Household product makers Proctor & Gamble (PG) are also generating interest after reporting earnings this morning. Unlike Boeing, this company didn't fair so well...Shares were falling into the red after P&G reported flat net sales in its third-quarter earnings, though the company beat estimates on the bottom line by 3 cents. P&G reported earnings per share of $1.01.
- Jeff Macke at Breakout3 hrs ago
In a letter to investors in his fund, hot-shot hedge fund manager David Einhorn claims "we are witnessing our second tech bubble in 15 years.” To support his case Einhorn cites examples like the rejection of “conventional valuation methods,” short sellers being forced to cover positions and big first-day pops for IPOs.
In the attached clip Mark Luschini of Janney urges investors not to paint the tech market with quite so broad a brush. “The tech sector is about 19% of the S&P 500 (^GSPC) so a lot of companies get rolled up into that space,” Luschini notes, “While I agree that particularly some of the social media companies that were trading at 20, 50, 100 times earnings or sometimes ‘priced to hope’ earnings ratios are indicative of bubble-like characteristics, I can’t say that for the tech industry in the aggregate.”
- Jeff Macke at Breakout4 hrs ago
This week a very rich man made about a billion dollars trading on material, non-public information.
The investor is Bill Ackman and what he knew was that Valeant Pharmaceuticals would be making an unsolicited bid for botox-maker Allergan. Ackman knew about the bid because he and his Pershing Square Capital Management were partners with Valeant in the bid.
In anticipation of this deal Ackman purchased 4.99% of Allergan stock over several weeks. Once that stake was built Ackman let the market settle for a few days before going for the kill. In what he called a "rapid accumulation program" of Allergan stock. (In English Ackman bought call options and "forward contracts" giving him the right to buy another 4.7% of the company at a set price and date to be named later).
- Jeff Macke at Breakout7 hrs ago
April has been the cruelest of months for traders. Unless you count last February which was pretty horrible as well. In fact, anyone active in the market has had more than enough opportunity to get themselves flipped in and out of the market with the worst imaginable timing.
No one has had a worse run of it than the well-respected Dennis Gartman who got whip-sawed out of stocks on April 7th, reiterated the call on the 10th, and suddenly showed up long yesterday morning, right in time for a rally back from where the market was at its heights.
Which isn’t to pick on Gartman in particular. This is a very difficult stock market and trading via pundit is all but impossible under the best of circumstances. If anything Gartman at least has the grace to change his mind about the call rather than sticking to disastrous, multi-year bear calls or emerging annually to shout “Crash” into any open mic a la Marc Faber in 2012, 2013 and earlier this month.
- Breakout Staff at Breakout1 day ago
Controversial hedge fund manager Bill Ackman has come up with a new way to generate alpha. The man who’s spent the the better part of the last year leading an openly self-interested battle to prove Herbalife (HLF) is a pyramid scheme has combined forces with health care giant Valeant (VRX) to put together a $50b bid for Allergan (AGN).
Were it not for the a overwhelming market penetration of Allergan’s Botox, Ackman’s proposal would be raising eyebrows all over Wall Street and in the financial media. As it is, Ackman’s brilliant merger of activism, corporate raiding, and front-running his own book is sure to be a model for the next wave of hedge fund activism.
Hedge funds now control some $2.7 trillion, a record total and more than twice what they had under management in 2008. As discussed in this space less than a week ago, activist hedge funds are seeing more than their fair share of that booty.
- Breakout Staff at Breakout1 day ago
Making the list today as measured by your yahoo (FS 1) finance ticker searches are:
Harley-Davidson (HOG): The ride of choice for tweakers and baby boomers revving higher today, as much as 7%. The Milwaukee-based motorcycle builder reported a 19% jump in Q1 profit, as a boom in overseas sales, particularly Asia, compensated for lower sales in the U.S. With the addition of two new models, the Low Rider and the SuperLow 1200T, Harley hopes investors will likely be riding (HOG) shares for a long time.
Speaking of tweaking, Netflix (NFLX) shares are over 6% higher today. Now that America has become addicted to binge-watching series like Breaking Bad and House of Cards, Netflix is planning on raising prices. CEO Reed Hastings announced that he would raise monthly subscription prices by a dollar or two but that doesn't seem to be bothering investors who are clearly piling into the stock.
- Kevin Chupka at Breakout1 day ago
It’s a big week for the future of “television.” Popular TV streaming company, Aereo, is arguing for its life in front of the Supreme Court today and yesterday Netflix (NFLX) announced it would increase its subscription price by one or two dollars for new subscribers to help cover the fees they are paying Comcast (CMCSA) for the right to higher streaming speeds.
In short the war over how you receive and consume content is heating up. Technology that didn’t exist ten or even two years ago is now center stage and “old media” giants don’t like them playing on their turf.
What’s at stake?
What many forget is that the broadcast networks (like NBC, the one Comcast owns, for example) were essentially given life by the U.S. government in exchange for programming that benefited the public. As the medium evolved networks figured out how to make massive sums of money from the gift given to them. Powerful lobbyists were able to get laws tweaked to give the networks latitude to make even more cash.
- Jeff Macke at Breakout1 day ago
Hank Smith of Haverford told us all McDonalds (MCD) wasn’t an earnings story. In February Smith came on Breakout and said Micky-Ds was a “Yield of Dreams” story; a company able to issue you debt at such low yields that it had the ability to the generate yield and conduct buybacks almost regardless of performance.
Sure enough McDonalds reported a disappointing first quarter this morning as the company continues to wrestle with any number of social, cultural and dietary headwinds. For the quarter ending March 31st the real burger kings reported EPS of $1.21 per on $6.7 billion ins revenue. Wall Street analysts had been expecting earnings of $1.24 on slightly higher revenues.
Not that estimates and operational performance matter all that much at McDonalds anymore. After an initial drop shares were up pre-market. Here’s a screengrab of the company’s press release. See if you can guess what investors are focusing on:
- Breakout Staff at Breakout1 day ago
On the surface corporate earnings seem just fine. Some 63% of the companies reporting so far have exceeded expectations on the bottom line. To lay people that sounds impressive. To those who’ve spent a few years on Wall Street anything lower than tow thirds of corporate America destroying estimates is a yellow flag.
“It’s well below averages we’ve seen,” says Hugh Johnson of the earnings season to date. Johnson notes that 72 or 73% of companies typically beat expectations during a given quarter. More concerning still is the fact that the current period will be the first time we’ve seen negative growth on the bottom-line since 2012.
When a company like IBM is willing to spend more than $8 billion trying to drive up earnings per share only to see the number fall short anyway it’s hard to argue all is well. Perhaps a better tell regarding the economy is what’s happening on the top line. Revenues can be booked aggressively but faking them outright is difficult. By that measure Q1 was a rebuilding period with barely half of the companies reporting so far beating expectations.