MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Wednesday, May 22, 2013
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7:13 PM Lender Processing Services (LPS) is the subject of acquisition talks with Fidelity National (FNF) and buyout shop Thomas H. Lee, with a price tag of about $2.9B, the WSJ reports. Fidelity National was LPS' parent until a 2008 spinoff; a deal would not only bring the service provider back into FNF's umbrella, but mark the latest of many deals Fidelity's made with Thomas H. Lee. The deal values LPS at about $33/share; it closed Wednesday at $29.11. Comment!
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6:00 PM AvalonBay Communities (AVB) announces a 7.9M share at-the-market secondary public stock offering by Jupiter Enterprise, an indirect subsidiary of Lehman Brothers Holding. 14.9M shares were issued to Jupiter in connection with the company's acquisition of a portion of the Archstone apartment community portfolio in February 2013. The seller stockholder will receive all of the proceeds. Shares -0.8% AH. Comment!
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3:33 PM Flagstar Bancorp (FBC) becomes the lastest bank to consider selling mortgage servicing rights, reportedly interviewing banks to manage the sale of more than $70B in MSRs. The business is lucrative once a certain scale is reached, but new rules force banks to hold more capital against MSRs, so lenders from BofA on down have been sellers. Specialty servicers like OCN, NSM, WAC, and NRZ aren't bound by such rules and have been happy buyers. Comment!
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3:04 PM Don't look for immediate changes to JPMorgan's (JPM +1.6%) board, according to bank sources, following lead director Lee Raymond's hint to "stay tuned" at yesterday's annual meeting. Three of the bank's 4 risk committee members squeaked by with less than 60% of the vote. The stock hits a 52-week high today as investors applaud shareholders backing away from the ledge by not coming anywhere near separating the Chairman and CEO roles. Comment!
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2:58 PM National Bank of Greece (NBG -4.6%) will raise €1.17B of a necessary €9.75B capital hole with a 2.2:1 rights issue at €4.29/share (adjusted for a 1:10 reverse split). The rights will trade in Athens from May 30-June 7 and NBG's current common shares will be suspended from May 24 to allow the reverse split to clear - trading to resume on May 30. After more than doubling in a month, shares are off 43% over the past few sessions. 1 Comment
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12:18 PM Morgan Stanley (MS) joins a big group raising money to invest in global infrastructure, reports Bloomberg, with plans to soon begin raising $4B for a fund. The new fund from MS Infrastructure Partners would be the same size as a 2008 fund, though the team there doesn't bear a ton of resemblance to what it looked like back then. Comment!
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12:00 PM After more than tripling since its (unloved) IPO 14 months ago, Nationstar Mortgage (NSM) is the subject of a glowing writeup in Forbes - "A jewel in Fortress' (FIG) portfolio." Mortgage servicing is recognized as a great business now and Nationstar - along with Fortress-owned Newcastle (NCT, NRZ) - Ocwen (OCN) and Walter (WAC) are currently the favorites of the mortgage gorillas, Fannie and Freddie. 1 Comment
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11:41 AM Neither Lloyds (LYG +1.9%) not Royal Bank of Scotland (RBS +1.5%) will need to sell shares or accept more government aid as the U.K.'s banking regulator signs off on using future earnings and asset sales to fill capital holes. The banks "have advanced their plans to a position where disclosure is appropriate," says the Prudential Regulation Authority. Comment!
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10:16 AM New Residential (NRZ) is initiated a Buy with $7.50 price target at Credit Suisse following its spinoff from Newcastle (NCT -1.4%). Earlier, Newcastle was downgraded to Hold at KBW. Comment!
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9:58 AM Newcastle Investment (NCT -2.5%) continues a bit of a post NRZ-spinoff tumble as KBW downgrades from Buy to Hold with price target of $5.50. The combined value of the two now stands at $12.44, roughly the level just ahead of the spinoff. 3 Comments
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9:51 AM Leon Black's strategy of "selling everything not nailed down" while at the same time raising new investment funds seems to be working as Apollo Global (APO) is the best-performing (on a Y/Y basis) of the alternative-asset stocks. "Apollo has aggressively entered harvesting mode and you're seeing shareholders reap the benefits," says CS's Howard Chen, who has a Buy rating. Also in the top 5 were FIG, BX, and KKR, while CG and BAM scraped the bottom. In between are relative newcomers OAK and OZM. Comment!
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9:40 AM A favorite of value investors, Symetra Financial (SYA) just repurchased about 5% of its float - buying 6.1M shares from an affiliate of Vestar Capital Partners (director Sandy Levy) at $13.43 each. The board boosted the 10M share buyback program by 6M to accommodate the purchase. Book value as of March 31 was $18.32/share. Comment!
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9:22 AM Allstate (ALL) makes some balance sheet moves, announcing a plan to retire $3B of outstanding senior and subordinated debt with a combination of preferred stock, subordinated "hybrid" debt, and cash. The repurchase of outstanding debt will be done at a premium, forcing a charge to earnings in Q2. (PR) Comment!
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9:02 AM Carlyle Group (CG) takes advantage of the change in sentiment regarding Japan, planning to raise $2B for a Japan fund to succeed its previous fund started 7 years ago. The previous fund initially raised about the same amount, but was reduced due to a lack of deals. One thinks things may turn out differently this time. Comment!
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7:27 AM BNY Mellon (BK) is on a revenue push, planning to increase its Wealth Management sales force by 50% over the next 3 years. Along with that will be hires in private and mortgage banking, portfolio management, wealth strategists, and additional sales support staff. The moves comes as near-invisible interest rates have squashed growth in BNY's other businesses (revenue fell 1% in Q1). (PR) Comment!
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Tuesday, May 21, 2013
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6:12 PM Four companies ignoring their shareholders' votes, according to Theo Francis: Impax Labs (IPXL), where three directors were retained despite failing to reach 50% approval; Occidental Petro (OXY), which counted 55M non-voting shares as voting against a proposal; Hecla Mining (HL), which left open a say-on-pay vote for an extra month; and NYSE Euronext (NXY), which continues to thwart the right to call special shareholder meetings. 1 Comment
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3:55 PM WisdomTree (WETF) plans a Wednesday launch for its U.S. Dividend Growth Fund (DGRW) - tracking a fundamentally-weighted index of about 300 dividend payers with annual cost of 0.28%. Among the eligibility requirements: Regular dividends for 12 consecutive months and market cap of at least $2B. Individual security weighting is capped at 5%, with sector allocation capped at 20%. Among the large selection of other dividend funds: VIG, PFM, DHS, DTN. More here. Comment!
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2:56 PM A good deal of MetLife's (MET -0.9%) investor day presentation (webcast) (slides) focuses on limiting risk in variable annuities. The insurer's biggest lever to lower cost of equity capital, says CEO Steve Kandarian is addressing VA risk - among the steps is reducing VA sales ($28B in 2011 to $10B-$11B expected in 2013). The company also plans to merge 3 life insurance subsidiaries and one foreign reinsurer into a larger, well-capitalized, more transparent company that also satisfies Dodd-Frank rules. 1 Comment
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1:32 PM CME Group plans additional cuts to its giant board, according to Executive Chairman Terry Duffy, speaking ahead of the annual meeting. At 30 members, the board is more than twice as large as those at ICE (11 now, but 15 after NYSE merger), and Nasdaq OMX (11). The large size reflects the CME's long history as a member-owned operation as opposed to today's public company. Comment!
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12:24 PM Low rates and sluggish loan growth will continue to pressure profits of the big banks in 2013, writes Credit Suisse. At the top of the list of those best-positioned to grow revenue, manage expenses, and deploy capital: Citigroup (C), JPMorgan (JPM), and U.S. Bancorp (USB). JPMorgan has already tipped that trading results are looking good in Q2. Look to upcoming investor conferences for more pre-earnings clues. Comment!
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