MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Monday, May 20
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10:25 PM Shares of Industrial & Commercial Bank of China fall nearly 2% in Hong Kong following Goldman's sale of its remaining stake in the bank. (previous) [Financials] Comment!
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10:18 PM "It would no doubt come as some surprise to many … that S&P's repeated assurances that its ratings were objective … were entitled to no more weight than an infomercial hawker's claim that his knife will outlast any other," the Justice Department says, referencing S&P's (MHFI) assertion that because statements about the independence of its ratings were described as "mere puffery" in a previous judgement, they can't form the basis for a lawsuit. The Justice Department asked a federal judge to allow a suit against the ratings agency to move forward Monday, after S&P filed for dismissal last month. Comment!
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7:53 PM TiVo (TIVO): Q1 beats across the board on narrower losses as the TV set-top box maker continues to boost its subscriber rolls and rack up stronger revenue. The company has now posted subscriber increases for seven straight quarters, following a four-year streak of declining subscriber numbers. In the latest period, TiVo added a net 255K subscribers, compared with the 206K subscribers gained in the prior year period. Shares +1.1% AH. [Earnings, On the Move, Tech] Comment!
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7:36 PM More on Urban Outfitters (URBN): Q1 beats on a per share basis but comes up short on revenue. Net profit rose 39% Y/Y as the clothing retailer posted record revenue and margins widened to 36.8% from 35.6% on fewer markdowns at Anthropologie. Comp retail sales, including catalog and online businesses, rose 9%, including 6% growth at its namesake brand, 8% at Anthropologie and 44% at Free People. Direct-to-consumer comp net sales were 14% higher, while sales at the company's wholesale business jumped 16%. Shares -4.1% AH. [Consumer, Earnings, On the Move] Comment!
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7:07 PM Loopholes allowed Apple (AAPL) to avoid $44B in U.S. taxes from 2009-2012, claims a Senate report released shortly after Apple's official statement. Though peers have also been accused of using offshore havens, the report argues Apple went further by creating a subsidiary (responsible for ~1/3 of profits from 2009-11) that used differences in U.S. and Irish law to have no residence whatsoever. Sen. Carl Levin calls this "the Holy Grail of tax avoidance." Also, while Apple claims $6B in FY12 federal tax payments, the report claims the real number is $2.4B if one backs out deferred payments on foreign cash (only paid if/when the cash is repatriated) [Tech] 49 Comments
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6:55 PM Rockwood Holdings' (ROC) pigments businesses have attracted offers from buyout firms including Blackstone (BX) and Advent International, Reuters reports. ROC is packaging its Sachtleben titanium dioxide unit with its color additives units and is hoping to sell or spin off the businesses by the end of the year for as much as $2B. [Commodities, M&A] 1 Comment
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6:50 PM Google (GOOG) roundup: 1) YouTube's video upload rate has passed 100 hours per minute. That's up from 72 hours last year, and 48 the year before. The milestone comes as YouTube expands live streaming support, and announces plans to unify its design across devices/platforms. 2) In July, Dell (DELL) will begin selling Project Ophelia, a $100 USB flash drive-shaped device that allows any monitor with an HDMI port to be turned into an Android PC. Dell is also working on "a keyboard-like technology for users to type when Ophelia is docked to a screen." [Tech] 6 Comments
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6:47 PM Enbridge Energy Partners (EEP), which had threatened to close an oil rail loading terminal in North Dakota unless the content of potentially deadly sulfide gas in Bakken crude shipments was reduced below 5 ppm, now says it will accept shipments if it is notified in advance but may seek reimbursement for damages caused by any unauthorized delivery. [Energy] Comment!
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6:29 PM Southern Co. (SO) replaces the head of its Mississippi utility amid growing concern about the cost of its Kemper coal power plant whose estimated price tag has ballooned to $4.3B. General counsel Ed Holland is named CEO of Mississippi Power following the sudden retirement of Ed Day, who had headed the utility since 2010. SO took $540M in charges against earnings related to Kemper in Q1. [Energy] 1 Comment
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6:19 PM Intuit (INTU) unveils a big restructuring a day before its FQ3 report arrives. Starting Aug.1 (the beginning of FY14), Intuit will be split into 6 units: Small Business Financial Solutions (QuickBooks, Intuit Payments), Small Business Management Solutions (employee management, Demandforce), Consumer Tax (TurboTax), Consumer Ecosystem (Quicken), Accounting Professionals, and Financial Services (online banking). Kiran Patel and Alex Lintner, currently the respective chiefs of Intuit's Small Business and Global Business units, will be leaving. (tax season results) [Tech] Comment!
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6:06 PM With its stock offering complete, Tesla (TSLA) will likely pay back its DOE loan on Wednesday, tweets Elon Musk. He adds Tesla's supercharger network announcement (previous) will be pushed back to next week as a result. Shares -0.6% AH. [Consumer] 2 Comments
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6:00 PM On the hour: S&P -0.03%. 10-yr -0.01%. Euro 0.% vs. dollar. Crude -0.07% to $96.87. Gold -0.02% to $1392.65. Comment!
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5:58 PM Cabot Oil & Gas (COG) says it is using natural gas to fracture wells in the Marcellus shale via dual-fuel technology in a process that can displace as much as 70% of the diesel fuel traditionally used to operate fracking equipment, a first for the area. COG says the goals of its dual-fuel projects are to reduce air emissions and truck traffic, as well as cut costs. [Energy] 2 Comments
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5:55 PM Yahoo (YHOO) shows off a big overhaul for Flickr on a day when Tumblr is dominating headlines. The new Flickr site dedicates a lot more real estate to images at the expense of white space, and (echoing Yahoo's home page revamp) features a Facebook-like activity feed. Yahoo is also now giving Flickr users a whopping 1TB of free storage (easily more than most rivals), and allowing 3-minute-or-shorter 1080p video uploads. Will it be enough to reverse the fortunes of a service that has become an also-ran in a very competitive online photo-sharing space? (previous) [Tech] Comment!
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5:49 PM Alcoa (AA) fills in more of the details on the 460K metric tons of smelting capacity it wants to remove, saying it will postpone construction of a potline at its Baie-Comeau smelter in Quebec and prepare for the upgrade by investing $100M during the next three years, as well as permanently shutting the plant’s two Soderberg potlines. AA says related charges will remove $0.11-$0.13 from EPS in 2013. [Commodities] 1 Comment
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5:38 PM Carnival (CCL) -4.5% AH after warning it expects 2013 EPS of $1.45-$1.65, below prior guidance of $1.80-$2.10 and a consensus of $1.97. The cruise line operator says its net revenue yield will be down 2%-3% in 2013, worse than prior guidance for flat growth, thanks to soft ticket pricing, higher-than-expected trip cancellations, and higher sales/admin costs. It looks as if Hedgeye was right. RCL -1.5% in sympathy. NCLH could also end up falling. [Consumer, Earnings, On the Move] Comment!
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5:35 PM Deutsche Bank remains bullish on oil service stocks (OIH), seeing favorable underlying trends in Q1 as North American margins improved Q/Q despite a decline in the rig count, suggesting significant operating leverage as activity levels recover. DB's four top stocks to buy, all with price targets well in excess of Wall Street consensus: BHI, HAL, NBR, HERO. [Energy, Quick Ideas] Comment!
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5:24 PM Universal Display (PANL +2.4%) finished higher after a couple of pieces of OLED-related news arrived: 1) A Taiwanese paper reports Apple is testing 1.5" OLEDs for use in the long-rumored iWatch. 2) LG Display (LPL) is showing off a 55" OLED TV and (more intriguingly) a 5" flexible OLED panel for mobile devices at this week's Display Week 2013 conference. Samsung's upcoming Galaxy Note 3 has been expected to sport a flexible OLED, but a recent report stated this won't happen due to mass-production challenges. [Tech] 1 Comment
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5:23 PM Pfizer (PFE) says it's discontinuing Phase 3 studies on its investigational compound inotuzumab ozogamicin in combination with rituximab, a treatment for patients with non-Hodgkin lymphoma who are not candidates for intensive high-dose chemotherapy, after the study failed to meet its primary objective of improving overall survival. No new or unexpected safety issues were identified, and PFE says it's continuing to review the the drug for potential subset applications. Shares -0.3% AH. [Healthcare] Comment!
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5:10 PM U.S. regulators indefinitely delay a decision on a proposed restart of the San Onofre nuclear power plant in California, raising new questions about whether the twin reactors will produce electricity again. The NRC has delayed several earlier target dates for a restart decision on the Edison (EIX) plant, but its website now lists only “to be determined" after last week's call for a more lengthy review. [Energy] Comment!
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5:09 PM Wausau Paper (WPP) sells its specialty paper business to a new company sponsored by KPS Capital Partners, a New York-based private equity firm with significant experience in the paper industry. The new company will be known as Expera Specialty Solutions. Shares +1% AH. [On the Move] Comment!
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5:05 PM More on BMO's downgrade of Red Hat (RHT -4.3%): Analyst Karl Keirstead says recent checks - discussions at a Linux Foundation event, and a talk with the CIO of OpenStack adopter HubSpot - were "a little more cautious than expected about the growth of the Linux OS market." Moreover, BMO isn't seeing clear signs of an IT spending pickup. While considering the popularity of Amazon Web Services and OpenStack a long-term positive for Red Hat (since many deployments involve Linux), Keirstead notes OpenStack is still in its early stages, and that many adopters will go for free Linux distributions. [Tech] Comment!
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5:00 PM On the hour: S&P -0.03%. 10-yr -0.01%. Euro -0.01% vs. dollar. Crude +0.01% to $96.94. Gold -0.11% to $1391.35. Comment!
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4:54 PM Tesoro Logistics (TLLP) says it will buy Chevron’s (CVX) 760-mile Northwest Products pipeline system for $355M, less than the $400M previously expected, citing a March diesel fuel spill involving the system. CVX will retain liabilities and responsibility for the cleanup of the site near Willard, Utah, for two years. [Energy] 1 Comment
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4:53 PM TCP Capital (TCPC) commences a 4M share public offering, with a 30-day option to purchase up to an additional 15% of the shares to cover overallotments, if any. The offering of the shares will be made under the company's existing shelf registration. The company intends to use the proceeds to repay amounts outstanding under its $116M revolving credit facility. Deutsche Bank, Keefe, Bruyette and Raymond James are acting as joint book-runners. Shares -45 AH. [Financials, On the Move] Comment!
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4:46 PM DeVry's (DV) Harold T. Shapiro, Ph.D., a board member since 2001 and chairman since 2008, has notified DeVry that he at tdoesn't intend to stand for re-electionhe next annual meeting of shareholders on November 6. The board doesn't plan to immediately fill the vacancy, therefore the board's size will be reduced from 12 to 11 directors following the meeting. Additionally, it appoints Connie Curran, Ed.D. to replace Dr. Shapiro as board chair effective on that day, and at which time Dr. Shapiro will be named director emeritus. [Consumer] Comment!
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4:40 PM Steven Cohen is considering shutting down his hedge fund and going to a "family office," reports Bloomberg as CNBC reports settlement talks between SAC Capital and the feds have broken down. The break came as Cohen was issued a subpoena by prosecutors which would forced him in front of a grand jury to testify against his firm. 2 Comments
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4:39 PM Tellabs (TLAB -6.9%) dove yet again after disclosing CFO Andrew Szafran has resigned for "personal reasons." Chief accounting officer Tom Minichiello will serve as interim CFO. The struggling telecom equipment vendor is already dealing with chairman and CEO transitions. (PR) [Tech, On the Move] Comment!
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4:35 PM Resolute Energy (REN) +2.2% AH after Sageview Capital discloses a 6.3% active stake and says it has engaged in discussions with company management and may make suggestions concerning its operations, prospects and financial strategies. [Energy, On the Move] Comment!
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4:28 PM Marketing and customer service software/services firm SoundBite (SDBT +4.2%) is getting acquired for $5/share by private Genesys (now a unit of P-E firm Permira). The price represents a 67% premium to SoundBite's close today. Shares +52% AH to $4.55. (PR) [Tech, M&A, On the Move] Comment!
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4:27 PM More on hhgreg (HGG) FQ4 earnings: Comparable store sales off 9.8% Y/Y. FY2014 EPS guidance of $0.75-$0.90, comparable store sales of flat to negative 2.5%, net sales growth of 1-3.5%, 5 new stores to open. CC at 5:30 ET. Shares -8.1% AH. An SA Pro article set to come off embargo at dawn tomorrow says the company's decision to expand rapidly will prove a mistake thanks to cutthroat competition from e-commerce and other bricks-and-mortar stores (Sears, Best Buy) now in survival mode. (PR) [Consumer, On the Move] Comment!
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4:27 PM Kosmos Energy (KOS) -16.1% AH after announcing its Sipo-1 exploration well on the Ndian River block in Cameroon failed to encounter commercial reservoirs. Due to the well results, KOS will record ~$75M against exploration expenses in its Q2 earnings. [Energy, On the Move] 2 Comments
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4:17 PM The Fresh Market (TFM) names Jeffrey Ackerman, most recently the CFO of mattress maker Sealy, its new CFO, effective June 3. Former CFO Lisa Klinger resigned last November to become the CFO of private apparel firm Kellwood. COO Sean Crane has been serving as interim CFO since then. (PR) [Consumer, Breaking News] Comment!
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4:15 PM Market recap: Stocks pulled back after the Dow and S&P hit new all-time highs, as comments from the Fed's usually-dovish Charles Evans on the improving economy added to views that he would support tapering QE bond purchases. Energy issues posted strong gains, balanced by lagging consumer staples. Gold and silver each rose more than 2% after big early losses, likely due to short covering. [Top Stories] Comment!
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4:14 PM Ironwood Pharmaceuticals (IRWD) announces a 10.5M share public offering, with a 30-day option to purchase up to an additional 1,575,000 shares. All of the shares are being offered by the company, which plans to use the proceeds to support the commercial launch of Linzess in the U.S. and to fund linaclotide development opportunities to strengthen the clinical profile of the drug and expand the product label for additional populations and indications. Shares +0.7% AH. [Healthcare] 1 Comment
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4:11 PM Dish (DISH -0.7%) has made a $2B bid for bankrupt Lightsquared's spectrum even though the FCC hasn't yet approved its use due to GPS interference concerns, Bloomberg reports. The report comes with Sprint (S) and Clearwire (CLWR) continuing to play hard-to-get in the wake of Dish's offers for the companies, and a day before Clearwire shareholders vote on a Sprint offer many think will get shot down, at least if it isn't raised from a current $2.97/share. [Tech, Consumer, M&A] Comment!
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4:10 PM Permian Basin Royalty Trust (PBT +4.4%) gained after upping the monthly distribution to $0.088/share from $0.06 previously, as higher oil production and prices offset more than offset lower gas prices. Gas production numbers continue to be affected by prior period adjustments, but the underlying level of output is about flat month-to-month. (PR) [On the Move] Comment!
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4:09 PM Affymetrix (AFFX +1.4%) finishes higher after earlier appointing Gavin Wood to the position of Chief Financial Officer. Mr. Wood joined AFFX in 2006, having served most recently as VP Finance, International Controller based in the United Kingdom. Tim Barabe, the current CFO, is expected to retire effective June 28, 2013. [Healthcare, On the Move] Comment!
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4:08 PM Urban Outfitters (URBN): Q1 EPS of $0.32 beats by $0.03. Revenue of $648M misses by $7.08M. (PR) [Earnings, Breaking News] Comment!
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4:05 PM hhgregg (HGG): FQ4 EPS of $0.31 beats by $0.01. Revenue of $597.6M misses by $25.M. Shares -3.9% AH. (PR) [Earnings, Breaking News, On the Move] Comment!
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4:03 PM TiVo (TIVO): Q1 EPS of -$0.13 beats by $0.02. Revenue of $82.5M beats by $20.62M. (PR) [Earnings, Breaking News] 3 Comments
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4:03 PM Apple (AAPL) releases Tim Cook's official statement (.pdf) to the Senate ahead of his Tuesday appearance at a hearing on corporate tax payments. Among other things, Apple claims it paid ~$6B in federal taxes in FY12 and a 30.5% effective federal tax rate, and that its foreign units don't engage in the practices the hearing focuses on (the shifting of IP to offshore havens, revolving loans from subsidiaries, etc). The company proposes a tax system that's "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings." (previous) [Tech] 37 Comments
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4:00 PM At the close: Dow -0.13% to 15336. S&P +0.02% to 1666. Nasdaq -0.04% to 3498.
Treasurys: 30-year -0.1%. 10-yr -0.02%. 5-yr -0.02%.
Commodities: Crude +0.63% to $96.9. Gold +2.27% to $1395.65.
Currencies: Euro +0.43% vs. dollar. Yen -0.9%. Pound -0.58%. Comment! -
3:59 PM EV Energy (EVEP +3.2%) is initiated with a Buy rating and $46 price target at Ladenburg Thalmann. Although there have been delays and any potential Utica Shale acreage monetizations this year are likely to be significantly lower than originally expected, the firm still believes EVEP is likely to sell at least 20K net operated acres in the wet gas window of the play in 2013. [Energy, Quick Ideas, On the Move] Comment!
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3:48 PM Competing articles on the JPMorgan (JPM) vote: The WSJ reports analysts saying the vote to split the Chairman CEO roles is too close to call, but Marketwatch has analysts saying Dimon is likely to keep both jobs. The vote is set to be tallied at the annual meeting tomorrow. Last year, the break-up proposal received 40% of the votes. [Financials] 2 Comments
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3:43 PM Hershey (HSY -1.5%) aims to take a piece of the world's biggest candy market when it debuts new condensed milk products in China. The initiative falls in line with a broad company plan to grow international sales to 25% of total sales by 2017 with China a key growth driver. What to watch: Hershey won't be the only foreign candy seller in the region with both Kraft Food Group and Nestle active. [Consumer] Comment!
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3:43 PM Talisman Energy (TLM +2.6%) says it produced its first oil from the Hai Su Trang and Hai Su Den development offshore Vietnam, where gross production is expected to reach 15K bbl/day once facilities are fully commissioned. TLM says the debut came in ahead of schedule and under budget, less than 18 months after the project was sanctioned. [Energy, On the Move] Comment!
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3:40 PM Intercept Pharmaceuticals (ICPT +2.3%) gains after presenting positive results from ongoing Phase 2a trials of its treatment for primary bile acid diarrhea with obeticholic acid at the Digestive Diseases Week Conference. The initial results demonstrate that treatment with the acid is associated with statistically significant increased levels of fibroblast growth factor 19 and improvement in clinical symptoms in patients with PBAD. [Healthcare, On the Move] Comment!
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3:37 PM Cubist Pharmaceuticals (CBST +11.3%) spikes to session highs. The move appears relates to an apparent Markman ruling on Hospira (HSP +0.7%, which has a generic version of Cubist's drug Cubicin. Seeking Alpha contributor PropThink noted last week that the ruling would likely be a 'clearing event' for the company. [Healthcare, On the Move] Comment!
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3:28 PM Shares of Colombian state oil company Ecopetrol (EC -1.8%), whose earnings continue to disappoint as it struggles to make new discoveries, hit a new 52-week low and fall below 4K pesos for the first time in 18 months. EC has ~2B boe in proven reserves and a $97B market cap, which makes its ratio of market value to reserves much more expensive than neighboring Brazil's Petrobras (PBR). [Energy, On the Move] Comment!
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3:24 PM Home Depot vs. Lowe's: The home improvement giants are in focus this week with both companies set to report earnings after a quarter which saw more snowfall than normal and a late start to the spring home and garden buying season. Though analysts expect superstorm Sandy boosted sales, the late tax refund syndrome which hit Wal-Mart could also be a factor. Tiburon Research Group is picking a favorite of the pair, forecasting the revenue and EPS growth at Home Depot (HD -0.1%) will outpace Lowe's (LOW -0.5%) for Q1, Q2, and Q3. (earnings model) [Consumer] Comment!
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3:11 PM The Russell 2000 (IWM) cracked 1,000 for the first time this morning, but the small cap sector is far from over-loved by the fund managers who invest in it, according to Credit Suisse's Lori Calvasina - they ended Q1 with cash holdings at a near 10-year high. Indexing (IJR, IWO, IWN XSLV are some others) beats most active management, but Calvasina screened for stocks owned by fewer than 50 small-cap funds with $500M-$1.5B market cap, and with favorable investment ratings. No surprise the answer is heavy on mREITs - MTGE, AMTG, PMT. Also coming up: OMX and WFR. Comment!
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3:10 PM The two-day rally in James River Coal (JRCC +14.3%) reaches 25% after Friday's news that it would exchange $243M of existing debt for $123M in new debt, pushing back the maturity of some of the debt by three years. Sterne Agee reiterates its Buy rating, saying the move buys time for JRCC and increase its financial flexibility. Iberia Capital upgrades shares to Outperform with a $5 price target. [Energy, On the Move] Comment!
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3:08 PM Taylor Morrison Home (TMHC +2.5%) gets a lift from a number of companies initiating coverage today. Credit Suisse starts the shares with an Outperform rating and $30 price target, citing a couple of significant factors; above-average growth driven by U.S. margin expansion and volume growth supported by land position and community count growth. Separately, Wells Fargo also initiates coverage with an Outperform, Citi starts it with a Buy, and JPMorgan with an Overweight. [On the Move] Comment!
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3:00 PM On the hour: Dow -0.11%. 10-yr -0.02%. Euro +0.49% vs. dollar. Crude +0.69% to $96.96. Gold +1.59% to $1386.35. Comment!
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2:58 PM PennyMac Financial Services (PFSI +8%) flies after Lee Cooperman's Omega Advisors discloses a 21.6% stake in the just-IPOed mortgager company founded by former Countrywide exec (and PMT CEO) Stan Kurland. [Financials, On the Move] 1 Comment
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2:56 PM Sprint (S) acquires app developer/distributor Handmark, which has been around since the pre-iPhone era. Handmark runs an app store and (through its OneLouder unit) has developed a slew of iOS/Android apps, many of which have strong social media components. Sprint says the deal will strengthen its Pinsight Media+ targeted mobile ad platform; it comes a few months after Sprint struck a mobile ad partnership with Telefonica, and a couple weeks after a mobile content/ad deal was reached with Time. [Tech] 1 Comment
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2:54 PM Tesoro (TSO +4.6%) seems to be benefiting from several favorable analyst notes today, including Barclays' big target price boost to $120 from $92, which the firm says may prove conservative since its calculations did not include any target synergy benefit. UBS and Macquarie also hike their price targets, the latter saying it sees no other U.S. independent refiner posting an equivalent execution track record. [Energy, Quick Ideas, On the Move] 1 Comment
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2:47 PM Lockheed Martin (LMT +0.2%) says its UK unit has expanded its range of cloud computing services available to government customers to include IT service integration and management, known as SIAM in the UK. SIAM enables UK government departments to deliver seamless, end-to-end IT services in a multi-vendor sourcing model. No financials behind the announcement were mentioned. [Global & FX] 1 Comment
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2:44 PM Coinstar (CSTR +1%) offers to let consumers watch The Hobbit: An Unexpected Journey for free as long they sign up for a Redbox Instant account, give up their credit card information, and take to Twitter to spread the word. The promotion could boost quarterly subscriber numbers for the streaming service as it runs into a soft patch for its movie release schedule and with Netflix breathing down its neck. [Consumer] Comment!
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2:40 PM Real estate site owner Move (MOVE +9.9%) jumps after Citron Research uses less than 140 characters to disclose it's long, argue shares should trade at $17 given the valuations assigned to Zillow (Z) and Trulia (TRLA), and predicts Zillow or InterActiveCorp (IACI) will bid for the company. One big difference between Move and Zillow/Trulia: Move's revenue grew 14% Y/Y in Q1, whereas Zillow and Trulia's respectively grew 71% and 97%. [Tech, On the Move, Quick Ideas] Comment!
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2:35 PM NanoString files for an $86.25M IPO. The company, which focuses on the development of genomic information from minute amounts of tissue for cancer research, plans to list on the Nasdaq Global Market under the ticker, "NSTG." The offering is being made through JP Morgan, Morgan Stanley, Leerink Swann, and Baird. [Healthcare] Comment!
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2:34 PM Enbridge Energy Partners (ENB -0.4%) says an oil spill at its Cushing, Okla., terminal Saturday has not affected other terminal and pipeline operations. ENB says the leaking line was quickly isolated, and the oil that was released was held within the terminal's containment structures; ~2,400 barrels have been recovered as cleanup work continues. [Energy] 2 Comments
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2:33 PM STMicroelectronics (STM +2.1%) makes new 52-week highs after JPMorgan starts coverage with an Overweight. Investors have been encouraged by the margin gains posted by the European chipmaker as it winds down its money-losing ST-Ericsson JV, and also by relatively healthy set-top/TV and microcontroller chip sales. [Tech] Comment!
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2:26 PM Pitney Bowes (PBI +2.6%) looks like the one of the five most interesting ideas out there to value-seeking SA contributor Ulfberht Capital. The take focuses on the premise Pitney Bowes can deleverage its balance sheet and will benefit incrementally from an improving U.S. economy. Though the dividend payout rate could be at risk, a 4.94% yield on PBI shares is also enticing. [Consumer] 4 Comments
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2:25 PM Splunk's (SPLK +2.5%) addressable market is growing and its results should beat estimates, says Pac Crest in a bullish note that's giving shares a lift. The machine data software leader, which has been touting the ability of its products to analyze Web data in addition to corporate data, is now up 60% YTD. Its FQ1 report arrives on May 30. [Tech, On the Move] Comment!
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2:19 PM Dairy stock Lifeway Foods (LWAY -3.5%) cools off after last week's post-earnings rip sent shares to new highs. A lot of enthusiasm over the company is focused on the new distribution channels it's setting up in the U.S. Comment!
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2:17 PM Covidien (COV -0.1%) says its Nellcor pulse oximetry portfolio has received FDA 501(k) clearance for motion claims. COV is the first company of its kind to receive the FDA stamp of approval for a motion-tolerant bedside device that's also compliant with the International Organization for Standardization standards for pulse oximetry. [Healthcare] Comment!
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2:16 PM Plains Exploration (PXP +7.5%) shareholders vote to approve Freeport McMoRan’s (FCX -0.2%) acquisition of PXP at today's special meeting. The transaction is expected to close on May 31. Following completion of the transaction, there are expected to be ~1B shares of FCX outstanding. Earlier today, PXP declared a $3/share special dividend conditioned upon the completed merger. [Energy, Commodities, On the Move] Comment!
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2:10 PM MicroStrategy (MSTR -1.7%) trades lower in response to a downgrade to Market Perform from JMP. The downgrade comes 3 weeks after shares were clobbered thanks to a giant Q1 miss headlined by a 24% Y/Y drop in license revenue at a time when most rivals are growing. [Tech] 2 Comments
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2:07 PM The U.S. Supreme Court rules that utility companies paying a windfall tax in the U.K. can claim a foreign tax credit on their U.S. tax returns, a win for PPL Corp. (PPL), which sought a U.S. credit after the U.K. assessed a windfall tax on a utility PPL partially owned. At least two other U.S. utilities - Entergy (ETR) and American Electric Power (AEP) - are in a similar position. [Energy] Comment!
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2:04 PM Natus Medical (BABY -1.1%) slips after its Q1 beats estimates, but the the company forecast the current quarter to come in at the low end of expectations. For Q2, it now expects to report revenue of $86M to $90M and and an EPS of $0.17 to $0.20. The Street is looking for $90M in revenue and $0.19 per share, respectively. For the full year, the company anticipates revenue of $362M to $367M and an EPS of $0.85 to $0.88. [Healthcare, Earnings, On the Move] Comment!
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2:03 PM Apple (AAPL +1.9%) roundup: 1) Brian White cites Chinese 3G growth as a reason for his $888 PT: he points out China's 3G sub base rose 83% Y/Y in April to 293.1M, and is expected to hit 375M-400M by year's end. China Mobile (CHL - previous) had 120M 3G subs; China Unicom (CHU) had 92M, and China Telecom (CHA) 81M. 2) Taiwan's Economic Times reports Apple is testing 1.5" OLED displays for an iWatch, and that "market rumors" indicate Foxconn has received iWatch trial production orders. 3) Digitimes reports MacBook orders are expected to grow 20% Q/Q in Q2, as Apple launches new systems sporting Intel Haswell CPUs at June's WWDC conference. [Tech] 13 Comments
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2:00 PM On the hour: Dow -0.08%. 10-yr 0%. Euro +0.33% vs. dollar. Crude +0.79% to $97.05. Gold +1.26% to $1381.95. Comment!
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1:54 PM The latest batch of data on gambling revenue from Macau looks promising with the average daily rate over a 7-day tracking period ending yesterday coming in ahead of expectations. If the MTD trend holds, May could be Macau's second best month and help boost the bottom lines for Melco Crown (MPEL +2.4%), Wynn Resorts (WYNN +1.4%), MGM Resorts (MGM +1.5%), and Las Vegas Sands (LVS +0.3%) during the quarter. [Consumer] Comment!
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1:44 PM In addition to Qihoo's strong numbers, NetEase (NTES +5.5%) is benefiting from an upgrade to Buy from Citi, and an upgrade to Overweight from HSBC. The upgrades come a few days after the Chinese online game developer posted a Q1 beat and promised to pay out 20%-25% of annual net income via dividends. [Tech, On the Move] Comment!
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1:42 PM Elan's (ELN +3.3%) board responds in boilerplate fashion to Royalty Pharma's sweetened offer to acquire the company, saying it will, as before, in line with its obligations under Irish Takeover law, assess the bid and advise its shareholders accordingly. In the meantime, ELN shareholders are strongly advised to take no action. [Global & FX, Healthcare, On the Move, M&A] Comment!
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1:37 PM AIG announces an investment of about $92.5M - in accordance with its pro rata share - in a rights offering of Hong Kong's PICC Property & Casualty Company. The participation will hold AIG's stake in the company at 9.9%. (PR) [Financials, Breaking News] Comment!
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1:37 PM More on Royalty Pharma/ Elan (ELN +3.3%): Royalty says ELN "dramatically overpaid" for its 21% participation interest in future royalty payments from Theravance's (THRX -5.9%) respiratory collaborations with GlaxoSmithKline (GSK +0.2%). The deal was made in a "hasty" fashion Royalty claims, and says the same might well be said of ELN's purchases of AOP Oprhan Pharmaceuticals and a 48% stake in NewBridge Pharmaceuticals (for a combined cost of $380M). The new offer ($12.50/share) is contingent upon shareholders voting against the THRX deal. [Healthcare, M&A] Comment!
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1:34 PM T-Mobile USA (TMUS +2.2%) hits new post-merger highs after catching an upgrade to Buy from Deutsche: the firm thinks the carrier's operating momentum "looks sustainable," and considers its valuation discount relative to peers "too wide" even if adjusting for "accounting differences and some strategic uncertainty." UBS upgraded shares a week ago - they're up 25% since T-Mobile and MetroPCS began trading as a combined entity on May 1. [Tech, On the Move] Comment!
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1:28 PM Dovish Chicago Fed chief Charles Evans sounds constructive on the economy saying it's performing quite well and that Fed policy should hit "escape velocity" in 2014. Stocks give up their small gains, SPY now flat and the QQQs -0.4%, even with a 1.8% gain from Apple. 30 Comments
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1:25 PM The sell-side is dueling over Pandora (P +3.4%) ahead of Thursday's FQ1 report: Just one trading day after Maxim cut shares to Hold and MKM started coverage with a Sell, Barclays is upgrading the Web radio leader to Equalweight and raising its PT to $17 from $10. Shares now +81% YTD; 33.4% of the float was shorted as of April 30. (Piper) [Tech, On the Move] Comment!
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1:20 PM Cavium (CAVM -2.7%) slides thanks to a downgrade to Market Perform from JMP. The network processor vendor has been rallying since delivering a Q1 beat and better-than-feared Q2 guidance on April 30. [Tech, On the Move] Comment!
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1:12 PM Tableau (DATA +14%) and Marketo (MKTO +11.5%) are both adding very nicely to Friday's giant post-IPO pops (I, II). Tableau now +85% from its IPO price of $31, Marketo +98% from its IPO price of $13. Tableau is now trading at 25x 2012 sales, and Marketo at 15x 2012 sales. [Tech, On the Move] Comment!
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1:10 PM With borrowers racing to market before demand dries up or interest rates rise, corporate bond (LQD) sales this month are on pace for their busiest May ever, according to Bloomberg. The previous record of $162.6B was hit in 2008. Warnings from Buffett and Gross about the likelihood of higher rates are ignored as "investors have cash to spend yet fewer alternatives to buy," writes a Morgan Stanley team. Comment!
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1:07 PM Nomura downgrades SanDisk (SNDK -2.3%) to hold on valuation grounds, leading shares to take a breather following a 38% YTD gain. Though granting SanDisk is benefiting from "disciplined" NAND flash supply growth and improving product mix, Nomura still sees potential risks, such as capacity additions from rivals, high capex due to technology transitions, and the potential for Samsung (SSNLF.PK) to gain an edge down the line from its lead in developing 3D NAND chips. [Tech, On the Move] 1 Comment
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1:06 PM LMC Automotive thinks demand for automobiles in China will return to a double-digit pace next year and stay stable for the four to five years. It's a common enough forecast in the industry with IHS Automotive going so far as to say there is "no chance" for a negative growth environment in China due to the less than 7% of the population that owns a car. Rough forward-looking China capacity counts: General Motors (GM +1.4%) 5M vehicles a year; Hyundai and Kia (HYMLF.PK) combined 1.8M; Ford (F +0.4%) 1.2M by 2015; Volkswagen (VLKAY.PK) 4M by 2018. [Consumer] Comment!
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1:00 PM On the hour: Dow +0.08%. 10-yr +0.03%. Euro +0.32% vs. dollar. Crude +0.97% to $97.22. Gold +1.39% to $1383.65. Comment!
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1:00 PM Themis Trading's Joe Saluzzi says SEC rules designed to head off so-called "flash crashes" might have failed to arrest Anadarko's (APC +1.6%) plunge from over $90 per share to just a penny Friday afternoon because during the first phase of the rules' implementation, restrictions "don't apply after 3:30 p.m." Saluzzi also notes that the APC experience shows that "limit orders are mostly placed by short term, hyper speed 'liquidity providers' who quickly cancel at the [first] sign of trouble." Comment!
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12:57 PM As precious metals prices turn around, share prices of gold (GDX +4.7%) and silver miners (SIL +3.1%) surge: ABX +5.9%, GG +4.5%, KGC +6.4%, NEM +4.7%, SLW +4%. Even South African producers turn mixed, despite the call from the country's mine workers union for big pay increases: AU -0.8%, GFI +1.5%, HMY -0.5%. [Commodities, On the Move] 2 Comments
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12:55 PM Kellogg (K -0.9%) has seen its Special K brand be a star performer for the company for years as it continues to peck away more market share due to low-calorie products which have been decidedly on-trend. The next step from the brand is a wave of new products which will feature additional nutritional benefits on top of the low calorie counts. Kellogg has also developed a loyal following from its online weight management program which claims over 2M members. [Consumer] Comment!
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12:50 PM JP Morgan puts out a bullish note on M/I Homes (MHO -0.3%) today, initiating the shares with an Overweight and a $34 price target. The firm says the stock has had an impressive performance in 2012, up 176% versus the universe average of 94%, but has lagged its peers YTD, up only 2% the universe average of 24%. JP thinks that near industry leading order growth of 41% and 33% in 2013 and 2014, respectively, combined with strong operating margin expansion, should give the shares some upside over the near term. [Quick Ideas] Comment!
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12:49 PM Baird's Jayson Noland downgrades NetApp (NTAP -1.8%) to Underperform ahead of tomorrow's FQ4 report, citing share losses to EMC and others. Noland: "We are not advocating a short position ... due to the possibility of a positive investor reaction to opex rationalization or shareholder friendly use of cash ... We do recommend investors take profits." EMC has "outperformed NetApp" in Baird's reseller checks since Q3 '11, something Nolan attributes to the launch of EMC's VNX mid-range systems, more innovative products, and "increased channel friendliness." He also notes NetApp has been slow to roll out all-flash storage systems. [Tech, On the Move, Quick Ideas] Comment!
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12:40 PM Wall Street cheers Chesapeake's (CHK +4%) appointment of Doug Lawler as CEO as a vote of confidence in CHK after building a strong reputation at Anadarko (APC). While hopeful the move will improve capital discipline and allocation decisions, Tudor Pickering cautions it will be a steep wall to climb "given the balance sheet leverage and need to materially sell assets into a weak [acquisitions] market." [Energy, On the Move] 3 Comments
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12:40 PM This just in. Precious metals (GLD +2.2%), (SLV +2.6%) are sharply higher on the session after a panicky Sunday evening plunge brought both to multi-year lows. Other than dollar weakness (UUP -0.5%) across the board, there's no news in particular - perhaps some satiated bears decided to cover and a trend took hold. [Commodities, On the Move] 31 Comments
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12:39 PM Where's the love for Wal-Mart (WMT -0.3%)? Despite projections the retail giant will grow earnings at a double-digit rate, the stock trades with a lower multiple than defensive-oriented peers such as Hershey, Kellogg, and Procter & Gamble, observes Stephen Leeb. The company is also gobbling up market share in the grocery category and its e-commerce sales growth beat Amazon's (30% vs. 22%) during the last quarter. [Consumer] 4 Comments
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12:38 PM Jefferies raises its price target on Zumiez (ZUMZ +1.8%) to $28 from $22 saying the specialty retail group has likely moved past "the noise in Q1" and faces easier compares going forward. [Consumer, On the Move] Comment!
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12:34 PM AbbVie (ABBV -1%) says it's initiated a Phase 3 clinical study of diabetic nephropathy with Atrasentan, which is designed to assess the effects of the investigational compound on progression of kidney disease as part of standard of care for patients with stage 2 to 4 chronic kidney disease and type 2 diabetes. The study will evaluate the drug's impact on renal outcomes, such as the onset of end-stage renal disease, as defined by need for chronic dialysis, transplant or death due to renal failure progression. [Healthcare] Comment!
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12:31 PM Acorda Therapeutics (ACOR -1%) is issued a patent for Amprya entitled "Methods of Using Sustained Release Aminopyridine Compositions." This patent covers a range of dosage strengths, and is separate from 2 method of use patents issued in 2011 and 2013 that are set to expire in 2027 and 2026, respectively. The drug is approved in the United States as a treatment to improve walking in patients with multiple sclerosis. [Healthcare, On the Move] Comment!
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12:30 PM The hot market for corporate junk (HYG, JNK) has pushed the yield on high-yield corporates (4.88%) well below that of high-yield municipals (5.22% nominally, over 8% on a tax-equivalent basis). The nominal spread of 34 bps is down from 56 bps a week ago as investors take notice of the anomaly. High-yield muni ETFs: HYD, HYMB, XMPT. 3 Comments
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12:29 PM Priceline (PCLN +3%) is the "clear global winner" in the online travel agency space, writes Deutche's Ross Sandler, who is upgrading shares to Buy and raising his PT to $900. Sandler touts Priceline's "unique supply footprint, industry-high growth rates and margins, and over-exposure to ... international hotel bookings." He thinks margins (recently pressured by heavy search ad spend) will begin stabilizing in 2H, sees upside to consensus forecasts, and predicts earnings will "grow at a 20% CAGR over the next 3 years." Sandler is also raising his PTs for Expedia (EXPE unchanged) and TripAdvisor (TRIP +3.8%), while reiterating Buys. [Tech, Consumer, On the Move] Comment!
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12:25 PM As the last NATO troops leave Afghanistan in 2014, PepsiCo (PEP -0.9%) plans to be opening its first plant in the nation. Despite ongoing turmoil, more multinational firms have been tiptoeing back into Afghanistan due to the lure of wide open markets. 2 Comments
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12:15 PM Facebook (FB -2.1%) slides after Yahoo (YHOO +1.3%) confirms it's buying social blogging leader Tumblr, which (like Twitter) is arguably a threat to Facebook's engagement levels. In spite of its focus on personal networks, Facebook has been trying to encroach on Tumblr's turf via its support for "public" posts that can be followed by anyone. However, uptake has largely been driven by media figures, rather than regular users. In paying $1.1B for Tumblr, Yahoo is betting the platform's social features and network effects will let it become the Twitter of longer-form material. If this happens, and Tumblr isn't simply viewed as another blogging platform, the price tag could look cheap. (previous) [Tech, On the Move, M&A] Comment!
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12:12 PM Warren Resources (WRES -0.6%) says it is increasing its planned 2013 capex budget to $73M from $58M due to a decision to drill 25 new coalbed methane wells in the Spyglass Hill unit in Wyoming's Washakie Basin. Since the additional wells are expected to be placed into sales in late 2013, WRES is not updating its full-year gas production guidance. [Energy] Comment!
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12:07 PM Caterpillar (CAT +1.2%) says its global machinery retail sales fell 9% in April, with a 20% drop in its Asia/Pacific segment and 18% drop in North America. Latin America was a bright spot in April, rising 28%. The surge in LatAm is encouraging, says Wells Fargo's Andrew Casey, especially when compared to last Aprils 12% increase. But, with demand in the other regions still contracting as heavily as they are, near-term hopes for CAT look dim regardless of how gangbusters the company is doing in South America. [Global & FX, On the Move] 3 Comments
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12:05 PM Royalty Pharma raises its offer for Elan (ELN +2.4%) to $12.50/share. [Healthcare, M&A] 2 Comments
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12:03 PM Range Resources (RRC +1%) and Rex Energy (REXX +3.5%) are both downgraded (I, II) to Hold from Buy at Stifel Nicolaus on valuation and a more cautious outlook on near-term natural gas markets. On RRC, while the firm says the strong set of Marcellus drilling locations, solid execution, and improving financial position warrant its highest premium valuation, it would not be aggressive buyers now. [Energy, Quick Ideas, On the Move] 1 Comment
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12:00 PM On the hour: Dow +0.18%. 10-yr -0.08%. Euro +0.24% vs. dollar. Crude +0.91% to $97.17. Gold +0.08% to $1365.75. Comment!
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11:54 AM Maybe the best synthetic way to play the dramatic changes in Japan (yen down, stocks up) is U.S. ETF provider WisdomTree (WETF). It's up 2.5% today - pushing its YTD gain to nearly 125% - as its Japan Hedged Equity Fund (DXJ) moves past $10B in AUM. The once-tiny fund has received about $7B in inflows this year and now threatens EWJ ($12.26B AUM) for dominance in the Japan ETF space. [Financials, On the Move] 2 Comments
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11:54 AM Leap Wireless (LEAP -2%) slumps after Deutsche cuts shares to Sell while reiterating its $4 PT. The firm is worried about tougher prepaid competition from T-Mobile (via MetroPCS) and AT&T (via its new Aio prepaid brand), and a relatively high valuation (7.4x 2014E EV/EBITDA vs. 4.7x-7x for peers) in spite of "inferior growth prospects." Barclays launched coverage with an Underweight last Friday. [Tech, On the Move, Quick Ideas] Comment!
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11:49 AM Focus will shift to its Bakken assets after proposed changes at Hess (HES), but Raymond James analysts say any breakup value is priced in, and Occidental (OXY) offers a better opportunity for "future multiple re-rating via breakup." OXY, for a while embroiled in a tug of war for leadership, is talking about potential spinoffs now that CEO Steve Chazen has a firmer grip on the company. [Energy] Comment!
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11:48 AM Edap (EDAP +5.3%) posts solid gains after saying minimally invasive, high-intensity focused ultrasound (HIFU) therapy demonstrates "encouraging cancer-specific survival rates in patients with localized prostate cancer." The company cites data culled from a large, long-term study of "mobility and oncologic outcomes" conducted by two doctors at Edouard Herriot Hospital in France. (PR) [Healthcare, On the Move] Comment!
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11:33 AM Petrobras (PBR -0.5%) reportedly is finding it hard to pump oil at one of Brazil’s largest prospects, signaling its venture with BG Group and Galp Energia may have higher costs or slower development than at other offshore fields. The Iara field is one of Brazil's five largest discoveries, but single deepwater wells there are said to have already cost more than $100M apiece. [Energy] 1 Comment
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11:27 AM Silver's (SLV -0.6%) 9% plunge in the first minutes of trading overnight is being linked to hawkish talk from Japanese Economy Minister Akira Amari who warned the yen's (FXY +0.7%) fast decline may be hurting the economy. One fails to see the connection but dollar/yen did dive along with silver and Andrew Wilkinson suggests hedge funds short the yen were forced to raise cash by bailing on stale silver longs. [Commodities, On the Move] 10 Comments
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11:23 AM Yahoo/Tumblr (YHOO +0.7%) roundup: 1) Yahoo promises Tumblr will "enhance EBITDA and revenue" next year. Marissa Mayer states Yahoo could introduce ads on Tumblr's blog feed, and also on individual blogs (with a blogger's permission). 2) Some Tumblr users aren't happy with the deal, and rival WordPress reports taking in some defectors. 3) Yahoo claims Tumblr gets 75M new blog posts each day, and that over half its mobile users are using its apps. 4) In criticizing the deal, John Saroff argues traditional display ads don't suit Tumblr well. John Batelle thinks that's fine, since Tumblr is great for native ads. (previous) [Tech] Comment!
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11:22 AM Shares of WPX Energy (WPX +6.8%) surge after hedge fund Taconic Capital discloses a 6.39% stake in the company and says it "may engage in communications with relevant parties [on] ways to enhance shareholder value." WPX has been strong in recent weeks after being cleared by Pennsylvania regulators, which said it was not responsible for water contamination in the state. [Energy, On the Move] Comment!
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11:21 AM Senator Charles Schumer wants airlines to reverse their steep increase on flight change fees after Delta Air Lines (DAL -0.5%), United Airlines (UAL -1.1%), American Airlines (AAMRQ.PK), and U.S. Airways (LCC -0.6%) all bumped off their charge to $200 from $150. Last year, the top airlines collected $2.6B in reservation change fees which accounted for a decent portion of the overall growth in the industry. [Consumer] 3 Comments
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11:21 AM "I haven't seen anything this scummy since the worst of the subprime mortgage lenders," Whitney Tilson says of World Acceptance (WRLD +0.3%). In a letter sent out Sunday evening, Tilson (who is short the stock) applauds Pultizer prize-winning ProPublica's lengthy piece on the company and its installment loans which ProPublica says sometimes end up carrying annual rates of up to 200%. The piece also flags what it calls "useless" credit insurance products from which Citron Research (long-time WRLD detractor) claims the company derives more than half its profits. WRLD (which is heavily shorted) denies the charges and says it provides a valuable service. [Financials] 1 Comment
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11:19 AM Raven Industries (RAVN -9.4%) takes a hit this morning after its Q1 misses estimates. The company reported an EPS of $0.38 per share, versus estimates of $0.44, missing by $0.06 and down 27% Y/Y. Revenue came in at $103.7M versus expectations of $112.64M. Sales were down 12% from the same period last year. Looking forward, the company warns that "delivering year-over-year sales and earnings growth in the second quarter of fiscal 2014 will be challenging." [Earnings, On the Move] Comment!
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11:15 AM Pinterest says it's in partnership with several retail brands including Target (TGT -0.8%), Netflix (NFLX +0.3%), and Sony (SNE +2.8%) to include more detailed information on product pins. The photo-sharing website is starting to draw more interest from retailers due to its higher signal-to-noise ratio and average user income than other social networking sites. [Consumer] Comment!
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11:04 AM Sangamo BioSciences (SGMO -4.5%) takes a bit of a hit this morning, despite the presentation of new data demonstrating the successful application of its In Vivo Protein Replacement Platform in a mouse model. The company, in partnership with Shire (SHPG +1.8%), is developing ZFP Therapeutics for both hemophilia A and B using this approach. The data was presented late last week at the 16th Annual Meeting of the American Society of Gene and Cell Therapy in Salt Lake City. [Healthcare, On the Move] 2 Comments
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11:03 AM OCZ (OCZ +7.2%) bounces after announcing NetGear (NTGR +0.1%) has qualified its relatively costly Deneva 2 enterprise SSDs for use on NetGear's ReadyDATA 516 NAS storage systems for SMBs. Shares still -34% YTD thanks to investor frustration with SEC filing delays. (PR) [Tech, On the Move] Comment!
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11:02 AM McCraith Beverages filed a federal lawsuit in New York against Anheuser-Busch InBev (BUD -0.6%) over old distribution rights to brands acquired by the company. A-B says its believes the law supports it granting new brand rights for equity wholesalers. [Consumer, Global & FX] Comment!
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11:00 AM On the hour: Dow -0.01%. 10-yr 0%. Euro +0.18% vs. dollar. Crude +0.89% to $97.15. Gold -0.5% to $1357.85. Comment!
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10:59 AM Valero Energy (VLO +2.4%) pushes higher as a Friday story makes the rounds discussing the possible timing of a potential MLP for VLO's logistics assets. VLO has said it was evaluating an MLP, but the article seems more focused on the when rather than the if an MLP would happen. VLO has not yet made a commitment, but a spokesman says it is “leaning toward a positive decision." [Energy, On the Move] 3 Comments
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10:53 AM Plug Power (PLUG +6.2%) gains saying earlier that the preferred stock investment made by Air Liquide closed on May 16. The company issued 10,431 shares of 8% convertible Series C Preferred Stock to Air Liquide, garnering $2.6M from the sale as part of a $6.5M strategic investment that PLUG says is a significant part of its strategy to grow its hydrogen fuel cell business for forklift trucks and other horizontal markets. [On the Move] 1 Comment
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10:47 AM Abu Dhabi’s state oil company is under pressure to take a quick decision on which foreign companies will get concessions in one of the few major oil producing areas in the Persian Gulf where international companies are still allowed to hold an equity interest. Prequalified companies are BP, XOM, RDS.A, TOT, STO,OXY, E, PTR, OJSCY.OB, Inpex, Korea National Oil. [Energy, Global & FX] Comment!
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10:47 AM "High Beta" is hot with the PowerShares S&P 500 High Beta Portfolio (SPHB) pulling ahead of the Low Volatility Portfolio (SPLV) YTD after notably underperforming in Q1 and early Q2. Markets make opinions, and Sam Stovall thinks the momentum in high beta is set to continue as yield-starved investors look to capital gains instead of dividends. 1 Comment
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10:45 AM JA Solar (JASO +34.4%) is now skying higher following its Q1 beat and full-year shipment guidance reiteration, and is providing fresh fuel for the colossal solar stock rally that started last fall (TAN +4.4%). TSL +13.3%. DQ +20%. LDK +9.9%. JKS +10.3%. SCTY +11.6%. SOL +9.4%. CSUN +8.9%. SPWR +4.9%. ASTI +9.4%. YGE +8.4%. CSIQ +6.6%. The fact 38% of JA's Q1 module shipments went to Japan (a market with higher ASPs/margins than China) is likely going over well with investors. [Tech, On the Move, Earnings] 6 Comments
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10:44 AM Indonesian stocks (IDX +1.3%) get a lift Monday, rising 1.4% in Jakarta after the country names Investment Coordinating Board chairman Chatib Basri (who has strong ties to the private sector) as new finance minister. Elsewhere in the region, Thai equities (THD +1.4%) once again get a boost from rate cut speculation as the SET jumps 0.95%. The Bank of Thailand may use a lower-than-expected read on Q1 GDP (5.3% expansion versus a consensus of 6%) to justify cutting the policy rate at its May 29 meeting (Nomura has the odds at 60%). [Global & FX] Comment!
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10:41 AM Disney (DIS -0.5%) says Lucasfilm started production on the next animated Star Wars TV series with a fall 2014 release scheduled. The launch of the series will mark the first time the mighty Disney marketing machine is behind the show and is expected to have some tie-ins to the company's studio, theme park, and consumer products segments as well as the intriguing Disney Interactive - viewed as an earnings wildcard in the Disney mix. [Consumer] Comment!
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10:40 AM OSI Systems (OSIS -8.2%) slips after saying its security division, Rapiscan Systems - which makes body scanning machines used in U.S. airports - expects to receive a proposed debarment notice from the Department of Homeland Security in connection with a Show Cause letter issued by agency regarding the termination of their software deal several months ago. The notice opens the first phase of formal proceedings that will allow Rapiscan to provide information and communicate directly with DHS officials. [On the Move, Tech] Comment!
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10:27 AM A number of auto supplier stocks trade higher again as enthusiasm from last week on global demand spills over to early trading this week. A Goldman Sachs upgrade on Meritor (MTOR +6.7%) to a Buy rating is also helping to lift sentiment. Advancers: Federal-Mogul (FDML) +1.9%, Oshkosk (OSK) +1.4%, Icahn Enterprises (IEP) +2.8%, Stoneridge (SRI) +3.8%. [Consumer, On the Move] Comment!
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10:25 AM UniPixel (UNXL +4.8%) announces the receipt of a $5M milestone payment related to its deal with an unnamed "major touchscreen ecosystem partner;" the payment will be recognized as deferred revenue in Q2. The company adds the installation of equipment for touchscreen film printing lines at its new Kodak facility will start this quarter, and equipment for 6 plating lines will arrive at its Kodak and Lufkin, TX facilities in June/July. Shares are recouping a portion of Friday's huge losses. [Tech, On the Move] 7 Comments
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10:22 AM Northrop Grumman (NOC -0.3%) gets upgrades from Drexel Hamilton (Buy from Hold) and CRT Capital (Fairly Valued from Sell) to go with Friday's modest price target hike from JPMorgan. The company said last week it plans to reduce the number of outstanding shares by 25% by 2015. Price targets: Drexel, $90 from $70; CRT, $52 target removed; JPMorgan (last week), $70 from $68. Comment!
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10:20 AM Stillwater Mining (SWC +1.2%) says Brian Schweitzer, the former governor of Montana, is elected chairman, replacing CEO Frank McAllister, who will continue to lead SWC until it finds a replacement. Schweitzer is one of four Clinton Group nominees voted onto the board on May 2. [Commodities] Comment!
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10:19 AM Ford (F +0.5%) thinks the percentage of U.S. vehicles sold with four-cylinder engines will rise to over two-thirds by the end of the decade, an estimate that looks like a "stretch" to some industry insiders. Though the automaker sees making more headway with its four-cylinder models in many segments, it fell short of saying the smaller engine would take off in the large SUV or pickup segment. [Consumer] Comment!
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10:16 AM First Potomac Realty Trust (FPO) continues a repositioning to focus on D.C.-area office properties, agreeing to sell 23 industrial properties to Blackstone (BX) for $241.5M. In a separate deal, FPO sells a Haymarket, VA industrial property to Corporate Office Properties Trust (OFC) for $17.5M. (PR) [Financials] Comment!
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10:07 AM Paulson & Co., whose funds own ~9.9% of the outstanding shares (12.8M) of Plains Exploration (PXP +7%), says it will vote in favor of Freeport McMoRan's (FCX -0.9%) proposed takeover of PXP and McMoRan Exploration (MMR) as it "adds another avenue for growth, diversifies its cash flows, and increases the proportion of earnings from the United States." [Energy, M&A, On the Move] Comment!
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10:04 AM A downgrade to Market Perform from BMO takes a toll on Red Hat (RHT -4.1%). Shares had been rallying this month after a rough start to the year, thanks to weak top-line numbers from both the company and enterprise software peers. [Tech, On the Move] Comment!
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10:00 AM On the hour: Dow -0.15%. 10-yr +0.09%. Euro +0.11% vs. dollar. Crude -0.48% to $95.83. Gold -0.88% to $1352.75. Comment!
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9:52 AM 3D Systems (DDD +4.2%) jumps out of the gate after Needham and Maxim raise their PTs in bullish notes. Needham thinks "the industry environment for DDD's products and services remains healthy," and that recent software acquisitions Rapidform and Geomagic provide a new high-margin revenue stream. The firm also sees "upside earnings potential driven by increased operating leverage in the model over the next year." (previous) [Tech, On the Move] Comment!
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9:48 AM The U.S. approval of LNG exports wasn’t just a domestic political decision; many U.S. allies are eager for exports to go ahead, particularly the U.K. With dwindling North Sea gas reserves, the U.K. has become more dependent on LNG imports from Qatar, which sent the U.K. its 300th LNG cargo over the weekend. Qatar's dominance could shrink if a utility such as Centrica is able to import U.S. LNG as it hopes. [Energy, Global & FX] Comment!
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9:47 AM UBS' 5 "suspected" asset bubbles: 1) Risk-free rates - specifically Treasurys (TLT), Bunds (BUND, BUNL), JGBs (JGBL, JGBT, JGBD, JGBS) 2) Credit (HYG, JNK) 3) Real estate in Asia (WPS) 4) Certain EM equity markets (EIDO, IDXJ, EPHE, THD, EWW) 5) Australian banks (WBK, NABZY.PK, ANZBY.PK, CMWAY.PK). Comment!
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9:41 AM Qihoo (QIHU +8.1%) shoots to new highs following its Q1 beat. A big reason: Q2 guidance is for revenue of $142M-$144M, far above a $121.5M consensus and evidence search monetization is ramping. Ad revenue +40% Y/Y (+49% in Q4) to $63.4M, value-added services (largely games) +119% to $45.8M (+105% prior). Monthly active users +11% Y/Y, to 457M, but up just 1M Q/Q (high penetration). Browser MAUs +7% Q/Q and +22% Y/Y to 332M. Mobile security users +33% Q/Q and +272% Y/Y to 275M. Home page daily visitors +3% Q/Q and +22% Y/Y to 94M. Home page daily clicks +9% Q/Q and +66% Y/Y to 489M. Opex +89% Y/Y due to search investments. CC at 10:30AM ET (webcast). (PR) [Tech, Earnings, On the Move] Comment!
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9:40 AM Shares of Rite Aid (RAD +4.7%) are up again after setting new 52-week highs on Friday. The company is not just a turnaround story but also a deleveraging story, according to SA contributor Matthew Smith. [Consumer] 2 Comments
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9:34 AM Red-hot mortgage insurers (RND, MTG, GNW) become hedge-fund hotels as analysis of March 31 filings showed a number of well-known funds starting or adding to big stakes. The group is as leveraged to the improvement of the housing market and mortgage credit as anything else out there, says KBW's Bose George. MTG over $5/share (it's over $6 now) is a wager on the government's ability to transform the U.S. housing finance market," says a contrary Jason Stewart. "Historically, this wager has been met with outcomes most ... would classify as massively disappointing." [Financials] Comment!
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9:32 AM At the open: Dow -0.09% to 15341. S&P -0.03% to 1666. Nasdaq -0.08% to 3,496.09.
Treasurys: 30-year +0.3%. 10-yr +0.14%. 5-yr +0.06%.
Commodities: Crude -0.38% to $95.92. Gold -0.8% to $1353.75.
Currencies: Euro +0.12% vs. dollar. Yen -0.68%. Pound -0.26%. Comment! -
9:29 AM Plains All America (PAA) says it is constructing a 95-mile extension of its existing Oklahoma crude oil pipeline system to service increasing production from the Granite Wash, Hogshooter and Cleveland Sands producing areas in western Oklahoma and the Texas panhandle. The new pipeline will provide up to 75K bbl/day of new takeaway capacity. [Energy] Comment!
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9:26 AM Rosetta Genomics (ROSG) jumps 11.76% before the bell after executing a credentialing agreement with managed care company Prime Health Services under which the company's miRview mets2 test "will be included in Prime's covered products and services." The agreement is ROSG's first with a U.S. PPO. (PR) [On the Move] Comment!
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9:20 AM Meade Instruments (MEAD) rises a cool 99.4% premarket to $3.33. The company said Friday Jinghua Optics & Electronics will acquire all of the outstanding shares for $3.45 each, subject to shareholder approval. (PR) [M&A, On the Move] Comment!
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9:16 AM Stifel Nicolaus downgrades Kansas City Southern (KSU) to a Sell rating after shares went on a M&A-fueled rally to push valuation high for a railroad concern. KSU +40% YTD, -0.6% premarket. [Consumer] 3 Comments
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9:15 AM Market preview: Stock futures suggest small losses at the open after Friday's surge catapulted the Dow and S&P 500 to all-time highs. The big corporate news over the weekend was Yahoo's $1.1B deal to buy Tumblr, but shares only +0.6%. Precious metals are in focus after spot silver prices plunged as much as 9% in Asian trading and gold fell 2%. No major economic data today. Comment!
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9:12 AM General Motors (GM) CFO Dan Ammann says the automaker is "reasonably" on its way to realizing cost savings by streamlining its business across divisions and operations. The automaker's reorganization involves breaking down long-standing fiefdoms within GM and banking on its ability to bring many tech and engineering functions in-house. [Consumer] Comment!
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9:09 AM Jefferies downgrades Bed Bath & Beyond (BBBY) to Hold from Buy (price target to $71 from $76) citing valuation. "The company has all the potential to become an omni-channel leader in the home furnishings retail vertical in several years' time," notes analyst John Marrin. Up until then however, it will be "a pretty bumpy ride," he says. [Consumer] Comment!
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9:08 AM Oppenheimer takes a more cautious view of Lowe's (LOW) in front of its Q1 earnings report with a downgrade to Perform and a $46 price target. LOW -0.5% premarket to $42.45. (earnings preview) [Consumer] Comment!
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9:06 AM Texas on Friday became the latest state to sue BP, Halliburton (HAL) and others tied to the 2010 Gulf of Mexico oil spill, alleging the parties "engaged in willful and wanton misconduct." The Texas lawsuit asks for money for various reasons including sales and hotel occupancy taxes the state says it didn't receive because visitors didn't go to its Gulf Coast communities due to the spill. [Energy] 9 Comments
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9:00 AM On the hour: S&P -0.15%. 10-yr +0.17%. Euro +0.13% vs. dollar. Crude -0.57% to $95.74. Gold -0.89% to $1352.55. Comment!
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8:57 AM In deals divesting itself of the majority of its inland fleet, Hercules Offshore (HERO) sells 11 of its inland barge rigs to an undisclosed buyer for $45M and sells its inland barge rig Hercules 27 to another unrelated buyer for $10M. HERO expects to book a non-cash impairment charge of ~$40M in Q2. [Energy] Comment!
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8:55 AM Peregrine Pharmaceuticals (PPHM) and the FDA agree on a Phase III trial design for Bavituximab. "We will now focus on starting the Phase III trial while continuing ongoing partnering discussions," says CEO Steven King. Shares halted. (PR) [Healthcare, On the Move, Breaking News] Comment!
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8:54 AM Barnes & Noble (BKS) is up 3.8% premarket after a weekend Barron's article pitches that the stock is an undervalued sum-of-the-parts story set to pop. Admittedly, the Microsoft-buying-Nook factor is a huge wildcard with B&N, but the valuation on the company's bookstore business looks appealing at current levels despite what happens with Nook Media. [Consumer] Comment!
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8:50 AM Given Imaging (GIVN) rises 2.34% premarket after saying several studies presented at Digestive Disease Week highlight the value of the company's SmartPill for the "evaluation and diagnosis of different motility conditions." The studies suggest "an expanded role" for the device, the company says. (PR) [Healthcare, On the Move] Comment!
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8:47 AM Tesoro's (TSO) price target is raised to a Street-high $120 at Barclays, reflecting the inclusion of the BP Carson, Calif., refinery and associated retail and logistics assets into its 2013-14 earnings estimates. The firm is "impressed by management's well-executed strategy and approach given the difficult regulatory approval process in California." TSO +1.1% premarket. [Energy, Quick Ideas] 1 Comment
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8:39 AM Rescuers uncover six more bodies from the collapsed Freeport Indonesia mine (FCX), bringing the total number of fatalities to 14 while the same number remain trapped. Indonesia's president calls on FCX to step up rescue efforts at the world’s second-largest copper mine, and demands for government investigations are rising. [Commodities] Comment!
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8:38 AM Hyundai (HYMLF.PK) and Kia (KIMTF.PK) continue to lose market share in South Korea to foreign brands as sharply lower tariffs make exports cheaper for local buyers. Foreign automakers now account for 41% of the market, up from 28% just two years ago. The trend is most pronounced in the luxury market where BMW (BAMXY.PK), Audi (VLKAY.PK), and Mercedes-Benz (DDAIF.PK) are all picking up market share steadily. [Consumer, Global & FX] Comment!
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8:31 AM E-Commerce China Dangdang (DANG) is upgraded by Morgan Stanley to an Overweight rating and assigned a price target of $6.50. DANG +5.1% premarket to $6.00. [Global & FX, Consumer] 3 Comments
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8:29 AM Sweetening the pot ahead of today's shareholder vote deciding the fate of Freeport McMoRan's (FCX) proposed takeover of Plains Exploration (PXP), PXP declares a special $3/share dividend and FCX announces a $1/share supplemental dividend to be paid upon closing the acquisition. With a close vote expected, the moves may well tip support in favor of the deal. PXP +6.2%, FCX +0.8% premarket. [Energy, On the Move] 5 Comments
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8:29 AM The flood of tourists into Hong Kong from Mainland China looks promising to global retailers setting up shop in the region, although the tilt towards more bargain shopping could be a trend to watch for high-end sellers. Outlet malls have seen the biggest gains in traffic and sales in Hong Kong which sets up nicely for retailers that planned a strategy which pivots on squeezing profits from the channel. Hong-Kong watching: Nike (NKE), Limited Brands (LTD), Gucci (GUCG.PK), Prada, Louis Vuitton (LVMUY.PK), Coach (COH), Ralph Lauren (RL), Michael Kors (KORS), Swatch (SWGAY.PK), Burberry (BURBY.PK), and Tiffany (TIF). [Consumer, Global & FX] Comment!
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8:28 AM Umpqua Holdings (UMPQ) declares $0.15/share quarterly dividend, 50% increase from prior dividend of $0.10. Forward yield 4.44%. For shareholders of record June 28. Payable July 15. Ex-div date June 26. The board approved special dividend of $0.05/share payable on June 14, to shareholders on record of May 31. (PR) [Dividends] Comment!
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8:27 AM Synovus Financial (SNV) slides 3.2% premarket after Goldman downgrades to Sell with $2.50 price target. The stock is pricing in M&A speculation, says analyst Ryan Nash, but standing alone, earnings don't justify such a level. [Financials, On the Move] Comment!
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8:22 AM Guggenheim announces the closing of its Chinese Yuan bond ETF (RMB), effective June 14 as the fund failed to generate significant investor interest since its 2011 launch. The fund’s May dividend distribution will be suspended which should maximize the amount shareholders will receive at liquidation on or about June 21st. Comment!
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8:13 AM More on Websense (WBSN)-Vista Equity Partners (previous): Websense shareholders will receive $24.75 in cash for each of their shares to mark a 29% premium over Friday's closing price. The company says it talked to several potential suitors before settling on the offer from the P-E firm. The transaction is slated to close during Q3 of 2013. (PR) [Tech, M&A] Comment!
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8:13 AM Yahoo (YHOO) confirms its deal to acquire Tumblr for $1.1B in cash. "Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO." Yahoo expects the combination to grow its audience by 50% and grow traffic by 20%. Up earlier, Yahoo now off 1% premarket. (PR) [Breaking News, Tech, M&A] 4 Comments
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8:12 AM Shares of South African miners sink as the country's mine workers union calls for a 60% pay increase on gold and coal producers. The union says it is seeking an entry-level minimum monthly wage of 7K rand ($750) for surface workers and 8K rand for underground workers vs. respective current minimum wages of 4.7K and 5K rand. AU -3.7%, GFI -3.4%, HMY -1.9% premarket. [Commodities] 2 Comments
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8:07 AM It's shaping up as a big day for ING U.S. (VOYA) as a bullish Barron's piece on the undervalued and misunderstood insurer/asset manager combines with BTIG's Mark Palmer initiating with a Buy and $31 price target. "We believe there is a very good reason why ING management expressed dismay" at being forced to sell the unit. Shares +4.3% premarket. [Financials, On the Move, Quick Ideas] Comment!
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8:04 AM Xenoport (XNPT) plummets 19.26% premarket after saying data from a Phase 3 clinical trial of arbaclofen placarbil did not demonstrate that the treatment provides statistically significant improvement versus a placebo in patients with spasticity due to multiple sclerosis. The company will "terminate further investment in the program." (PR) [Healthcare, On the Move] Comment!
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8:00 AM On the hour: S&P 0%. 10-yr +0.05%. Euro +0.22% vs. dollar. Crude -0.4% to $95.91. Gold -0.6% to $1356.55. Comment!
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7:59 AM J.C. Penney (JCP) receives a stinging price target cut from BMO Capital to $7 on the firm's take that it would take a miraculous "massive increase" in sales to return the retailer to profitability. A more likely scenario could be tangible equity turning negative in FY15, warns the firm. JCP -0.2% premarket. [Consumer] 5 Comments
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7:57 AM Yahoo (YHOO) +1.4% premarket following its reported deal to buy Tumblr for $1.1B in cash. It's hard to justify at the current price, opinies Jefferies, noting Tumblr barely generates any revenue. Meanwhile, WordPress CEO Matt Mullenweg says defections from Tumblr to his site have soared, maybe thanks to Yahoo's history of shutting down past acquisitions like Geocities, Broadcast.com, and Del.icio.us. [Tech, M&A, On the Move] Comment!
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7:54 AM The FDA grants Synageva BioPharma (GEVA) Breakthrough Therapy designation for sebelipase alfa, a treatment for early onset acid lipase deficiency. Earlier this month, JPMorgan expressed some skepticism based on what the bank says is a fairly low level of disease awareness (even among specialists). (PR) [Healthcare] Comment!
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7:49 AM More on Campbell Soup's (CPB) FQ3: Organic sales rose 4% during the period, led by a strong showing from the U.S. Simple Meals segment. Total sales benefited 5 percentage points from volume and mix while the acquisition of Bolthouse Farms added eleven percentage points. The company acknowledges some weakness with its U.S. Beverages segment as it faced increased competition in the juice category. FY13 EPS guidance is revised to $2.58-$2.62. (PR) [Consumer, Earnings] Comment!
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7:48 AM More on JA Solar's (JASO) Q1 results: Lower prices for PV panels led to an eighth straight quarterly loss, although less than expected. Total shipments were 442.7 MW, -11.5% Q/Q and +20.9% Y/Y, vs. 410-430 MW company guidance. Full-year guidance of 1.7-1.9 GW unchanged. Gross margin +6% in Q1 vs. -4.6% in Q4 2012 and +2.1% in the year-ago quarter. Shares +5.5% premarket. [Earnings, Tech, Energy, On the Move] Comment!
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7:41 AM Blackstone's (BX) a buyer of single-family property, but plans a wave of other real estate sales, and its Brixmor Property Group could be among the first. Blackstone is considering an IPO of the unit - the 2nd largest owner of U.S. community and neighborhood shopping centers - reports Bloomberg. The biggest clue is the hiring of Mike Pappagallo from Kimco as President and CFO, a job he starts today. [Financials] Comment!
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7:40 AM Best Buy's (BBY) store-within-a-store strategy is starting to pay off as wasted (no profits) space for DVD and CD products is converted into creative floor space that can produce profits, according to Janney Montgomery Scott's David Strasser. The analyst sees positive same-store sales for the current quarter. [Consumer] 1 Comment
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7:38 AM The 787 Dreamliner is back in the air in the U.S. as the CEOs of Boeing (BA) and United Airlines (UAL) fly with 250 other passengers from Houston to Chicago aboard the jet. 3 Comments
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7:30 AM DELL's board sends another letter to Carl Icahn and Southeastern Asset Management, reiterating its need for more details on their purchase proposal, i.e. how they plan to finance it. "Unless we receive information that is responsive to our May 13 letter, we are not in a position to evaluate whether your proposal (is superior to Dell and Sliver Lake's). [M&A, Tech] Comment!
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7:25 AM If Scotland were an independent state, its banking sector would have assets totaling 1250% of GDP, a U.K. government report says, throwing the financial risks inherent in a 2014 referendum on Scottish independence into stark relief. By contrast, Cyprus' banks had assets equivalent to 700% of economic output before the crisis. Such an "exceptionally large banking sector," centered around two large players in Royal Bank of Scotland (RBS) and Bank of Scotland would be vulnerable to financial shocks, the U.K. Treasury notes. Scotland's Finance Secretary called the report "a feeble attempt to undermine confidence" in an independent Scotland. [Global & FX, Financials] Comment!
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7:23 AM Danone (DANOY.PK) says it will invest €325M ($417M) in separate deals with China Mengniu Dairy in an effort to return to the Chinese liquid milk and yogurt market. The French company will have an indirect interest of about 4% in China Mengniu Dairy through a joint venture with a goal of increasing its stake in the future. [Global & FX] Comment!
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7:23 AM Charles Schwab (SCHW) is downgraded to Sell at KBW with price target unchanged at $16.50. The stock has had a big run (+35%) this year (what hasn't) even as the the company continues to deal with sluggish trading and ZIRP. [Financials] 2 Comments
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7:16 AM Stopping asset purchases at once would be too disruptive, says Dallas Fed chief Richard Fisher, appearing on CNBC. The hawk instead calls for the program to be tapered, beginning imminently. "We've made people richer ... the question is what have we done for working men and women in this country." [Breaking News, U.S. Economy] 3 Comments
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7:15 AM Actavis (ACT) confirms it will buy Warner Chilcott (WCRX) for $8.5B in a stock for stock transaction. The deal will see Warner Chilcott shareholders receive 0.160 shares of the "new" Actavis for each Warner Chilcott share they own. The combined company will become the third-largest specialty pharmaceutical player in the U.S. [Healthcare, M&A] 1 Comment
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7:07 AM Silver (SLV) plunged to its lowest level in nearly 3 years overnight before a bounce brought it to its current price of $21.60, -3.3%. As with gold, silver ETP holdings have dropped to the lowest levels this year, and speculative short positions are on the rise, according to CFTC data. Gold (GLD) took out its April lows earlier - dropping as low as $1,338. A bounce has brought the metal back to $1,351, -1%. [Commodities, On the Move] 17 Comments
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7:01 AM Natus Medical (BABY): Q1 EPS of $0.15 beats by $0.04. Revenue of $85.8M. (PR) [Earnings, Breaking News, Healthcare] Comment!
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7:00 AM On the hour: S&P -0.02%. 10-yr -0.02%. Euro +0.22% vs. dollar. Crude -0.41% to $95.9. Gold -1.01% to $1350.95. Comment!
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6:57 AM The National Development and Reform Commission in China reports that prices for imported cards fell 3.4% Y/Y in April in contrast to a minor gain on prices for domestically-produced vehicles. It's one of the first solid indications that a government mandate to cut back on lavish spending in the nation is having an impact on automakers (GM, DDAIF.PK, BAMXY.PK). [Consumer] 4 Comments
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6:56 AM Canaccord Genuity initiates coverage on Michael Kors (KORS) with a Buy rating and a lush price target of $82. The investment firm sees strong earnings potential for the retailer in new channels. [Consumer] Comment!
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6:54 AM Morgan Stanley (MS) finally unloads its Indian wealth-management unit, inking a deal to sell the business to Standard Chartered (SCBFF.PK) for an undisclosed amount. Morgan started the unit amid an economic and stock market boom in India in 2008, but things haven't panned out as hoped. [Financials] Comment!
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6:47 AM GE Capital will pay a $6.5B in dividends to parent company GE in 2013, consistent with previously stated goals on capital allocation. Overall, GE plans to return $18B in cash to its shareholders in 2013. [Financials] 6 Comments
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6:43 AM The impact of rebuilding on the East Coast after superstorm Sandy could help lift the results of Home Depot (HD) and Lowe's (LOW) for their FQ1 reporting periods, according to analysts. FEMA has approved $1.38B in assistance for Sandy victims and the pace of construction on new houses picked up over the last few months. [Consumer] Comment!
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6:14 AM Goldman Sachs (GS) plans to sell the remainder of its stake in Industrial and Commercial Bank of China at between HK$5.47-5.50 per Hong Kong-listed share (~3% below Monday's closing price) for proceeds of around $1.1B. GS has divested its stake over three separate sales (counting the current offering), with the first coming in April of 2012 and the second earlier this year. GS has held a stake in the bank since 2006. [Financials] Comment!
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6:03 AM A report out of Italy showing industrial orders rose 1.6% in March (handily beating estimates and reversing a 2.5% decline in February) helped push the spread between 10-year German bunds (BUND) and comparable Italian government debt (ITLY) to its narrowest level (250bps) since January at one point on Monday, as investors pared safe haven bets. Meanwhile, yields on Slovenian 10-year bonds fell slightly early on, defying Fitch's downgrade. Of course, the ratings agency is still "far behind the market's assessment of Slovenia's creditworthiness," one economist says, adding that as long as S&P maintains its A- rating, Slovenian banks can still pledge their government bonds as collateral in ECB liquidity ops. [Global & FX] Comment!
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6:00 AM Overseas: Japan +1.47%. Hong Kong +1.78%. China +0.75%. India -0.25%. London +0.03%. Paris +0.26%. Frankfurt +0.54%. Comment!
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5:38 AM The deal may be far from done, but that hasn't stopped analysts from spending (in their heads anyway) the theoretical $100B+ cash hoard Vodaphone (VOD) would be sitting on in the event Verizon (VZ) buys out VOD's 45% Verizon Wireless stake. "What they should do is a dramatic rethink of the business," a Bernstein analyst tells Bloomberg. One possibility: acquisitions, such as Kabel Deutschland Holding and/or Liberty Global, KBC asset management says. Even if the company returned half of the cash from a potential deal to shareholders, it would still be left with $62B, including what it currently has on its books. [M&A] 3 Comments
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5:15 AM Directors at Chesapeake Energy (CHK) recruit Anadarko (APC) senior VP of international and deep-water operations Robert Douglas Lawler to succeed Aubrey McClendon as CEO, WSJ says. Lawler, a seasoned industry veteran, will join CHK on June 17 and says he "looks forward to generating value for shareholders in the years ahead." Besides plugging a multi-billion dollar gap between the company's spending and cash flow, Lawler's greatest challenge might be dealing with McClendon, whose contractual well investment rights mean he will likely be a part of the picture at CHK even if he isn't at the helm. [Energy, Top Stories] 4 Comments
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4:57 AM The Japanese economy is slowly improving, the government says, pointing to evidence that exports and factory output are beginning to show signs of life. The upgraded economic assessment is the first upbeat report in two months. Additionally, Reuters Tankan survey showed a sixth consecutive month of improving manufacturer sentiment in Japan, as exporters cheer the weak yen. The index printed at 7, the first positive read in more than a year. The country's Economics Minister says the stage is set for a "V-shaped recovery." The rosy outlook was enough to boost the Nikkei (EWJ, DXJ)) 1.47% on the session. Comment!
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4:33 AM Goldman upgrades Abbott Laboratories (ABT) to Buy from Neutral saying H2 business pressures have "resolved into a more positive trajectory" and valuation has become relatively more compelling thanks to the rally in the S&P and increased peer multiples. Price target: $44 from $38. [Healthcare] Comment!
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