MARKET CURRENTS
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MARKET CURRENTS
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Today - Monday, May 20
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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. Comment!
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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. 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) Comment!
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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." 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. Comment!
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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. 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. 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. 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. 1 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. 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. 6 Comments
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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. Comment!
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