Breakout

  • Will we ever see another big bank merger?

    Michael Santoli at Breakout 2 yrs ago

    Corporate America is again splurging on mergers, as swelling CEO confidence, frisky financial markets and a friendlier global economy have energized the acquisitive urge.

    Yet banks and other financial companies – usually among the most avid shoppers for deals – have been conspicuously subdued amid the corporate coupling. In prior merger-and-acquisition cycles, bank mergers have produced increasingly gargantuan institutions and progressively more byzantine financial conglomerates. A popular infographic illustrates how the components of the largest four U.S. banks were 35 separate companies in 1990.

    Smaller deals

    Very small institutions have had an easier time joining forces, and have been rather busy doing so. Their shares trade at substantial valuation premiums to larger banks’ stocks for this exact reason; the chance of being taken over is seen to apply almost exclusively to little institutions. The largest banks can offer investors little more than a broad play on a healing economy, boring net-interest income fattening capital levels and the hope to one day to raise dividends.

  • Passive money management strategy actively crushing stock pickers

    Jeff Macke at Breakout 2 yrs ago

    The stock market is beating the tar out of professional stock pickers again this year. According to this morning’s Wall Street Journal more than 74% of actively managed mutual funds are lagging the S&P 500 (^GSPC) so far in 2014. Even when the numbers are tweaked so that funds are compared to their sometimes arbitrary benchmarks it’s the worst year for active managers since 2011.

    It’s a disheartening reversal from 2013 when 50% of actively managed funds were able to keep up with the S&P but it should hardly come as a surprise. Over the long-term very few funds beat their benchmarks or the market as a whole.

    Luschini says that caution is warranted, even if it’s been costly so far. He’s got a roughly 2,000 price target on the S&P 500 by year end, a mere 2% higher than current levels. Against that potential reward he sees a fairly large amount of risk.

  • Apple's amazing quarter, MannKind rebounds, Zillow zipping higher

    Breakout Staff at Breakout 2 yrs ago

    Time for your daily dose of trending tickers, the stocks that you're tracking as measured by Yahoo Finance ticker searches:

    After getting mashed on Friday, MannKind (MNKD) shares soaring today after the FDA finally approved its inhaled insulin drug Affreza. The drug is a powder that is inhaled through the lungs and is reportedly faster acting than injected insulin treatments. It's been a long road for Affrezza, after eight years of trials and obstacles, and two prior FDA rejections. Affreza will be used to treat type one and type two diabetes, but will carry the strongest advisory on its box warning due to pulmonary risks.

    More from Breakout:

    'Common sense' says look out for a market drop

    American Apparel deadline looms

    Stocks, bonds, cash and...wine?

  • Welcome back Charney? American Apparel saga gets weirder

    Jeff Macke at Breakout 2 yrs ago

    Shares of American Apparel (APP) spiked 27% in less than half an hour on Friday after word leaked out that former CEO Dov Charney had found a sugar daddy backer to help him regain control of the company. The backer, a firm called Standard General, was set to buy more than 10% of outstanding American Apparel shares then sell them to Charney who already owns more than 27% of the company.

    Over the weekend American Apparel's board adopted a poison pill that was filed as an 8-K this morning. This new so-called "modification to rights" says Charney's deal with Standard General won't increase his voting rights, effectively defeating the purpose of the agreement.

    All of this is in the context of American Apparel's default on a $10 million loan from Lion's Capital. The default was triggered when the board ousted Charney on June 18th. In a darkly ironic twist British Based Lion's Capital has given American Apparel until July 4th to refinance the loan or, and this is where it gets weird, possibly bring back Dov Charney.

  • 'Common sense' says look out for a market drop

    Jeff Macke at Breakout 2 yrs ago

    What if stocks hit record highs and no one really cared?

    That’s been the story of 2014 thus far and it seems unlikely to change during this holiday shortened week. For the record the mark didn’t close at all time highs on Friday, having sold off for several days while America’s attention was focused on the World Cup. Regardless, with better than 7% gains on the S&P 500 (^GSPC) (including dividends) already in the books this year Hugh Johnson of HJ Advisors says it’s time to play some defense.

    “After the kind of move we had to the upside in 2013 and for that matter even a pretty strong since early April just common sense alone says we might be a little bit pricey or overvalued. It’s going to be tough to make new commitments to the market” Johnson comments in the attached clip.

    That said Johnson is looking at the near term and sees plenty of reasons for caution. The situation in Iraq continues to erode, economic growth has been non-existant, inflation is perking up and, again, there’s that nagging sense that stocks are simply due for a pullback if not outright correction.

  • What fast food workers can learn from Ikea's wage hike

    Jeff Macke at Breakout 2 yrs ago

    The first rule of free market capitalism is that it works at its own pace. The second rule of capitalism is that it does not take kindly to those who try to subvert the first rule.

    Consider the plights of retail workers and fast food servers. Start with Ikea. The makers of Tyler Durden's favorite furniture this week announced that they will be raising the minimum wage for thousands of its retail workers. On January first Ikea's base pay will rise to $10.76 an hour on average. With Scandinavian pragmatism, the exact rate will be pegged to how much it costs to live in the area surrounding the store. In other words, the company is looking to pay a base line living wage.

    Contrast these efforts with the Service Employees International Union and its efforts to get $15 an hour for fast food workers. By starting with an unreasonable demand and picking a fight with the forces of capitalism the fast food unions aren't just failing in their mission. They're also losing workers jobs and generally serving as exhibit A of the rules of capitalism.

  • Nike dominates, Michaels begins trading, GoPro soars again

    Jeff Macke at Breakout 2 yrs ago

    Time for your daily dose of trending tickers, the stocks that you're tracking as measured by Yahoo Finance ticker searches:

    Score one for the winged Goddess of Victory! Nike (NKE) shares are up 2% after the company opened a can of whoop butt on earnings estimates. The shoe and apparel maker's printed 78-cents of EPS on $7.43 billion in revenue, 3-cents and 100-million better than analysts had expected. The company obviously spent like crazy on that little soccer tournament thing going on in Brazil but it clearly paid off for investors. Nike shares are more than twenty-five percent higher over the last twelve months.

    More from Breakout:

    What’s weighing on gold prices?

    What fast food workers can learn from Ikea's wage hike

  • What’s weighing on gold prices?

    Deirdre Hughes at Breakout 2 yrs ago

    Gold prices could be headed lower, at least in the short term. Sam Stovall of S&P Capital IQ believes gold has to retest recent lows, before it can continue the rally it’s seen so far this year.

    “[Gold] prices did break through its zone of resistance at 1,275 to about 1,300 and now it’s coming back and I think it needs to go through a re-testing process,” said Stovall. “Our belief is that it is on an upward trajectory, but it does have to go through this re-test and we would look to about $1,260 for gold prices to be an important level of consideration.”

    Stovall also points out that investors have had an atypical reaction to the recent geopolitical tensions rising between Iraq and Syria. “Gold also is a safe haven and so increased tensions usually help gold,” he said. “You would have thought that with Syria bombing Iraq, killing 50 people on Tuesday that that would have been a concern, but oil prices actually headed lower on that day, so I think the markets were sort of casting that aside… as being the start of a much bigger concern.”

     

  • Stocks, bonds, cash and...wine

    Kevin Chupka at Breakout 2 yrs ago

    Stocks, bonds, cash and...wine? There are plenty of alternative investments out there but perhaps few are as enjoyable as collecting wine. Chris Adams of New York's Sherry-Lehmann wine store joined us to look closer at this asset class. Wine collecting is often seen as the playground of the uber rich but that may not be the case, at least not entirely Adams says, though he warns you do need a fair amount of capital to get started. "It is for people who can start with maybe $10,000, maybe $15,000. Below that I'm not sure the return is worth the investment."

    That's a lot of money, true, but compared to other alternative investments -- like say fine art -- wine collecting is at least a little closer to reality. "It costs money to buy the best," Adams says. "You have to be informed about buying the best, it's an agricultural product so you need to know about the vintages but then you have to store the wine properly - and there's a cost associated with that."

  • Slowing ebook sales may embolden publishers in Amazon spat

    Aaron Pressman at Breakout 2 yrs ago

    With Amazon.com (AMZN) CEO Jeff Bezos battling major publishers to divvy up the economic spoils of the book market, both sides could point to seemingly good news in the latest industry statistics.

    U.S. publishers collected about $3 billion in trade ebook sales last year, virtually unchanged from 2012, according to the new report from the Bookstats Project, jointly produced by the Association of American Publishers and the Book Industry Study Group. Total revenue from print and digital books in the trade category, which excludes textbooks and journals, declined 2% to $14.6 billion. The figures are based on how much publishers collected, not how much retailers charged and consumers paid, but they still give a snapshot into trends in the business.

    The slowdown, after years of exponential growth, could help explain why major publisher Hachette, owned by French media company Lagardere, has been holding out against Amazon, according to Robert Picard, director of research at the University of Oxford's Reuters Institute and an expert on media economics.

    Anomalies in the data