Thursday, December 12, 2013
6:03 PMAnadarko -12.5% AH as Kerr-McGee unit held liable in Tronox spinoff
- Anadarko Petroleum (APC) -12.5% AH after a bankruptcy judge rules its Kerr-McGee unit acted improperly in the 2005 spinoff of Tronox (TROX) and should pay for environmental cleanup and to compensate people who claim damage from toxins.
- The U.S. government had sought to recover $25B to clean ~2,700 polluted sites and compensate about ~8,100 tort claimants; a trust set up to pay plaintiffs calls for 88% of the judgment to go to trusts for cleanup, according to court papers, with the remainder going to toxin claimants.
- The judge says APC and Kerr-McGee intended to “hinder and delay" when they transferred out and spun off oil and gas assets.
5:57 PMTwitter makes new highs again as ad product barrage continues
- Following today's gains, Twitter (TWTR +5.7%) is up 23% on the week, and 113% from its $26 IPO price.
- The microblogging service continues to unleash a torrent of new ad products. After launching its Tailored Audiences ad retargeting solution last week and a new TV ad product shortly before that, Twitter has launched Broad Match, an ad product that allows a keyword purchase to cover similar words.
- In addition, the company's MoPub mobile ad network unit has added support for in-stream ads similar to Twitter's Promoted Tweets and Facebook's sponsored news feed ads. The products aims to profit from a general boom in demand for native advertising formats.
- Short-covering could be contributing to this week's gains. As of Nov. 29, 17.8M Twitter shares were shorted; the company sold only 70M through its IPO.
5:35 PMUnited Tech -1.9% AH after guiding 2014 below expectations
- United Technologies (UTX) -1.9% AH after an investor day presentation forecasts FY 2013 EPS of ~$6.15, narrowed from an earlier $6.10-$6.15 and in-line with $6.15 analyst consensus estimate, and reaffirms revenue guidance of ~$63B vs. $63.05B consensus.
- For 2014, UTX sees EPS of $6.55-$6.85 vs. $6.84 consensus and revenue of ~$64B vs. $66.2B consensus.
- Reiterates restructuring expense of ~$500M.
4:34 PMRestoration Hardware -10.4% AH on beat and raise Q3, co-CEO departure
- Shares of Restoration Hardware (RH) are taking a 10.4% drubbing AH after the company's Q3 report beat expectations and a raised Q4 outlook meets analyst expectations. However, co-CEO Carlos Alberini will step down at the end of Jan. to become CEO of Lucky Brand. The company will initiate a search for a replacement.
- Management raises Q4 guidance to revenue of $490M-$500M (vs. analyst consensus of $497.2M) and EPS of $0.82-$0.85 (vs. $0.85).
- Revenue grew 39% Y/Y to $395.8M, accelerating from a 22% increase in Q3 2012. Direct revenue grew 47% on top of a 24% increase in the same period last year.
- Comparable store sales rose 29% Y/Y, an identical clip to Q3 2012.
- Operating income skyrocketed 299% to $23.9M as the company leveraged SG&A, which decreased 570 bp Y/Y to 29.5% of revenue.
- Conference call at 5pm ET, PR
3:43 PMAmTrust tumbles after GeoTeam takes aim
- "AmTrust's (AFSI -11.5%) financial position has never been stronger," says CEO Barry Zyskind, responding to The GeoTeam - in a Seeking Alpha article - suggesting the company is a house of cards.
- "The Company has addressed issues in its quarterly earnings calls and public filings that have been raised regarding its investment in life settlements, clarifying the accounting of the life settlement portfolio."
- SA contributor Brian Grosso - who just a few days ago called the stock a potential double with little downside - is shaken up enough by the GeoTeam essay to quickly exit his position (see the comment thread in the GeoTeam piece).
3:43 PMFCC panel votes 3-2 in favor lifting ban on in-flight phone calls, Gogo spikes 3.5%
- An FCC panel votes 3-2 in favor of a proposal to end the ban on in-flight phone calls.
- Shares of in-flight WiFi provider Gogo spiked 3.5% on the news and are now in the green (GOGO +0.6%).
- Another federal agency may have a different view, however. Department of Transportation Secretary Anthony Foxx said in a statement earlier that given the department's role in consumer protection, his agency wants to determine if a lifting of the ban "is fair to consumers." Foxx noted "consternation among travelers, airlines and airline workers."
3:19 PMJim Rogers hedges gold holdings
- I'd rather buy silver (SLV -3.8%) says Jim Rogers, when asked to choose between precious metals. Gold (GLD -2.1%), he says, is off about 30-35% from its highs while silver is down more like 60%. Rogers is an owner of both, but not adding just yet, and while he's hedged his gold holdings, he hasn't done so for silver because it's already down so far.
- "If it goes down more, I hope I'm smart enough to buy."
- PM ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, USLV, ZSL, SGOL, UGL, DGP, GLL, DZZ, UGLD, DBS, DGL, DSLV, DGZ, AGOL, GLDI, DGLD, SLVO, TBAR, USV, UBG
3:00 PMLyondellBasell upgraded to Top Pick at RBC
- LyondellBasell (LYB +1.6%) is upgraded to Top Pick from Outperform with a $110 price target, up from $90, at RBC Capital, which cites strong organic and market driven growth potential and an under-levered balance sheet which should lead to $12B-$14B of potential cash for capital returns over the next three years.
- Following 12%-16% EPS growth in 2012-13 mainly from higher U.S. ethylene margins (offset by weak refinery margins), the firm believes a pase of accelerated EPS growth of 25%-plus will begin in 2014 via three levers: low-risk, high-return capacity de-bottlenecks with staggered start-ups; share repurchases, assuming ~10% each year; and margin expansion and cost reductions.
2:14 PMStates ask FDA to reconsider approval of Zogenix painkiller
- More than two dozen state prosecutors send a letter to the FDA asking the agency to reconsider its approval of the new Zogenix (ZGNX +3%) painkiller Zohydro, saying the narcotic pill could add to the national epidemic of prescription drug abuse.
- The FDA approved Zohydro in October, making it the first single-ingredient hydrocodone drug ever cleared for U.S. patients; the pill uses an extended release formulation reportedly 5x-10x more potent than currently available hydrocodone combination pills such as Vicodin.
- ZGNX has said it is working on a version of the drug that is more difficult to abuse.
1:30 PMMiMedx up 7% on expanding EpiFix Medicare coverage
- MiMedx Group (MDXG +7%) charges ahead after its wound care allograft EpiFix receives coverage from Medicare contractor CGS. The move brings coverage from Medicare Administrative Contractors to six of eight, and 86% of Medicare beneficiaries will now be eligible for coverage for EpiFix products.
- Press release
1:07 PMAIG reportedly in ILFC sale talks with AerCap
- Moving nicely ahead in a bright red market is AIG (AIG +2.2%) which is now in talks to sell ILFC to AerCap Holdings (AER +4%), according to a Bloomberg report. "We never comment on rumors," says AerCap CEO Aengus Kelly when reached by telephone.
- Based in the Netherlands, AerCap - a former holding of Cerberus Capital - is the largest independent aircraft lessor with $15B in assets, and - recently reporting a debt/equity ratio of 2.5x - said it could increase the load to 3.5x-4x "if extremely attractive opportunities are found."
- Of course, AIG's effort to sell ILFC to a Chinese consortium for about $4.2B isn't formally dead, but the insurer is free to pursue other sales avenues.
12:57 PMZion granted oil exploration license, shares +34.5%
- Zion Oil & Gas (ZN +34.5%) is soaring today after the company confirmed Israel awarded a petroleum exploration license for its 98,842 acre Megiddo-Jezreel License.
- Under the license terms, ZN is to identify and submit a drilling prospect in the license area by July 1, 2015; enter into a drilling contract by Oct. 1, 2015; and spud a well to a minimum proposed total depth of ~4K meters by Dec. 1, 2015.
12:41 PMCIBC: Thompson Creek needs 30% higher metal prices to avoid restructure
- Thompson Creek (TC -3.6%) needs metal prices to rise ~30% to avoid some form of restructuring, CIBC warns, but the miner "has time in its favor."
- However, the firm says TC is making positive progress at the Mt. Milligan copper and gold project, does not foresee near-term liquidity issues and considers the recent share price pullback as a buying opportunity for risk-tolerant investors.
- The firm notes that molybdenum currently accounts for 100% of TC sales but is forecast to fall to 40% next year.
12:08 PMGiddy days for airline stocks
- Airline stocks shoot higher as the sector continues to see the pieces fall into place for higher profits (Previous: IATA forecast).
- Lower fuel costs and higher fares are lining up just as the industry looks settled for a period of tight capacity discipline. It's already been a banner year for a number of airline stocks which have put in audacious gains.
- Advancers: JetBlue (JBLU) +3.8%, Southwest Airlines (LUV) +3.5%, Republic Airways (RJET) +2.1%, United Continental (UAL) +1.9%, Delta Air Lines (DAL) +1.8%. Spirit Airlines (SAVE) +1.7%, Hawaiian Holdings (HA) +1.6%.