- Breakout Staff at Breakout17 hrs 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 Breakout18 hrs 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 Breakout19 hrs 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 Breakout19 hrs 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 Breakout22 hrs 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.
- Pras Subramanian at Breakout1 day ago
Take a look at the Nasdaq Biotech ETF (IBB) chart from the end of February until now and you’ll see a visual depiction of the word ‘agita.’ Traders playing this high-flying stock have been hitting the Pepto-Bismol heavy and hard, and the question is whether there’s relief in sight.
Legendary chartist Louise Yamada of LY Research Advisors has seen some of these “parabolic” formations before, and when high-flying stocks do come down, they come down pretty hard.
In the attached video, Yamada does note that most stocks, even the high-flyers of the world, will give you some technical clue as to where they might be headed next.
- Breakout Staff at Breakout1 day ago
Today's Trending Tickers based on your Yahoo Finance searches are:
Hasbro (HAS) - The toy maker is up more than a percent today on solid earnings. The company says toys like My Little Pony helped them with the earnings beat. Hasbro's competitor Mattel missed last week blaming softness in Barbie sales. Chalk it up as a win for the body image and self-esteem of young girls and chunky horses across America.
Walter Energy (WLT) - The coal producer's stock is down close to (FS 5) 10% after Goldman Sachs downgraded the company to sell from neutral. Goldman says lower coal prices will lead Walter to (OC) "burn 39% of it's market cap this year". Goldman says the company may be forced to raise money at some point this year.
Sarepta Therapeutics (SRPT) - The drug maker surging higher by as much as 50% earlier today on news that it would soon submit a new application to the FDA for a drug that treats a fatal form of muscular dystrophy that impacts as many as 1 in every 3,500 children. Sarepta has no other products on the market and has been at odds with the government who last year asked for a more in-depth study of the drug before considering a stamp of approval.
- Jeff Macke at Breakout1 day ago
Is the next big thing dead before it even got here? In an Easter weekend bloodbath Nike (NKE) announced heavy layoffs in its hardware group. Though the company is lightly denying the news it would seem the FuelBand is dead. The move could mark the beginning of the post-peak era for wearable devices just days (or weeks or even months) before Apple (AAPL) announces its endlessly discussed smart watch.
As it turns out even the most self-absorbed generation of Americans in history eventually get sick of looking at their own data.
- Breakout Staff at Breakout1 day ago
“Inflation is coming!” We’ve heard it for what seems to be forever. Then came the report of the March leading economic index for March. It increased by 0.8% after rising 0.5% in February. It’s just the latest data point in a series of indicators that Hugh Johnson of Hugh Johnson Advisors says is evidence that this time inflation really is coming.
“We’re not talking about 3% or even 4% inflation,” Johnson told Breakout, “but we are talking about inflation rates as measured by the consumer price index of say 2.1% in 2014 and 2.3% in 2015. That’s stronger than the consensus and certainly stronger than Janet Yellen thinks is on the way.”
So what does that mean for Yellen and a Fed who have kept rates effectively at zero for as long as many young investors can recall?
- Jeff Macke at Breakout1 day ago
Here are the names and numbers to keep an eye on as we roll in to the last full week of April:
Four: That's the number of days in a row both the S&P 500 (^GSPC) and the Nasdaq (^IXIC) have managed to post gains. After sputtering along to start last week, some decent earnings and old-fashioned seller's fatigue led to a nearly 3% gain for the S&P 500. It was the strongest weekly performance since last July, and it pushed the senior market index back into the green for 2014.