Today - Thursday, February 11, 2016
- Q4 economic net income of $71M or $0.08 per share vs. $46M and $0.05 one year ago. Full-year ENI of $1.21 per share vs. $1.84 in 2014.
- Q4 after-tax cash earnings per share of $0.21 vs. $0.44 a year ago; full-year of $1.78 vs. $2.47 in 2014.
- Book value per adjusted unit of $11.78 slips from $12.07 a year ago.
- 17.5M shares bought back during quarter for $270M, and another 1.7M stock awards were canceled for a total of 19.2 shares retired - nearly 5% of the float.
- Conference call at 10 ET
- Previously: KKR misses by $0.19, beats on revenue (Feb. 11)
- KKR -4.2% in very thin premarket action.
- Q4 core earnings of $4.5M or $0.49 per share vs. $6.3M and $0.69 one year ago. Excluding "catch-up premium amortization adjustments," core earnings of $0.61 per share vs. $0.59 in Q3. The dividend is $0.45.
- Book value per share fell to $15.86 from $16.20 three months earlier. Last night's close of $10.92 is a 31% discount to book. Subtracting the fall in book value from the dividend yields a positive return of $0.15 for the quarter.
- Net interest margin of 1.67% down from 2.19% in Q3. Excluding "catch-up premium amortization adjustments," NIM of 2.01% vs. 1.93% in Q3.
- CPR rises to 7.5% from 7.1%.
- Buybacks weren't material.
- CEO Larry Penn: "We believe that given recent significant weakness in the credit markets, it may soon be appropriate to increase our allocation to non-Agency RMBS."
- Conference call at 11 ET
- Previously: Ellington Residential Mortgage REIT reports Q4 results (Feb. 10)
- EARN flat premarket
- Q4 adjusted EPS of $0.05 was up from $0.01 a year ago, and beat estimates for $0.04.
- Full-year 2016 revenue guidance is boosted to $740M from $730M, and adjusted EBITDA guidance to $145M from $130M.
- A buyback of up to $150M of company stock is launched.
- Source: Press Release
- The conference call is at 8:30 ET.
- LC +3.5% premarket
- Amid the rout in stocks, another buyback hits the wires. This time it's Nationstar Mortgage (NYSE:NSM) with a modified Dutch auction self-tender for up to $100M of stock at prices between $8.20 and $9.40 each. Last night's closing price was $8.61.
- This is in addition to the already authorized (in Dec.) $150M buyback. As of Feb. 8, about $66M has been repurchased under this program.
- The stock's lower by about 70% Y/Y, including 35% just in 2016.
- Source: Press Release
- HSBC has dropped plans to freeze pay this year while remaining cautious on the outlook for its revenues.
- "We have listened to feedback and as a result decided to change the way these cost savings are to be achieved," CEO Stuart Gulliver said in a memo.
- The announcement comes days before HSBC's board meets to discuss whether the bank should move its headquarters to Hong Kong or stay in London.
- HSBC -3.7% premarket
- Deutsche Bank (NYSE:DB) plans to write down the value of Postbank by about a third, ahead of a planned sale of the retail unit as part of a strategic overhaul, Reuters reports.
- The institution's book value will be cut to €2.8B ($3.15B) because its current worth of €4.5B is seen as unachievable in either an IPO or a sale.
- Deutsche Bank shares are down around 35% since the start of the year, leading a slump across the European financial sector.
Wednesday, February 10, 2016
- Sabra Health Care REIT (SBRA +2.3%) has a deal to sell its Forest Park Medical Center Frisco Hospital to a unit of HCA, closing a chapter on a bankruptcy filing.
- The deal is for $96.25M in cash, less assumption of capital lease obligations of about $7.3M. Columbia Medical Center of Plano, a subsidiary of HCA Holdings (HCA +1.2%), is taking on the Frisco Hospital pending a bankruptcy court hearing Feb. 18 to approve the sale.
- Sabra's expecting to see net proceeds of $89.1M-$94.1M, and thus take a loss in Q1 of $30M-$35M on its intersts in Frisco Hospital and a debtor-in-possession loan issued to the Frisco operators.
- HCA is up 1.6% after hours.
- Q4 adjusted FFO of $159.4M or $0.81 per share vs. $92.9M and $0.72 one year ago. Full-year AFFO of $564.4M or $3.13 per share vs. $363.1M and $2.85 in 2014.
- Full-year 2016 AFFO per share guidance of $3.25-$3.30.
- Conference call tomorrow at 10 ET
- Previously: Omega Healthcare Investors pop 1.9% on earnings beat (Feb. 10)
- OHI +2% after hours in very thin action
- Q4 after-tax adjusted operating income of $891M or $1.94 per share down from $2.12 one year ago. Charges cut $0.13 per share from this year's result. Full-year after-tax adjusted operating income of $4.469B or $10.04 per share vs. $9.21 in 2014.
- 3.1M shares bought back during quarter at average price of $80.78 each (today's close was $64.06). For all 2015, 65M shares repurchased at average price of $67.75 each. Book value per share (ex. AOCI) of $73.59 up $8.84 from a year ago after payment of $2.44 in dividends.
- U.S. Retirement Solutions and Investment Management adjusted operating income of $776M vs. $823M a year ago. Individual annuities adjusted operating income of $410M up $13M from a year ago after factoring out various charges and benefits. Retirement adjusted operating income of $168M fell $126M after excluding items. Investment results contributed $105M less this year. Asset management adjusted operating income of $198M vs. $192M.
- U.S. Individual Life and Group Insurance adjusted operating income of $126M vs. $162M a year ago.
- Previously: Prudential Financial misses by $0.36, beats on revenue (Feb. 10)
- PRU -2.7% after hours
- Q4 adjusted FFO of $170M and $0.68 per share vs. $145.4M and $0.65 one year ago. Full-year AFFO of $647M or $2.74 per share vs. $561.7M and $2.57 in 2014.
- Portfolio consists of 4,538 properties in 49 states and Puerto Rico leased to 240 tenants doing business in 47 industries. The weighted average remaining lease term is about 10 years.
- Same-store rents on 3,636 properties up 1.3% Y/Y to $200.3M.
- Company invested $204.2M in 104 new properties and properties under development during the quarter. Sold were 16 properties for $13.9M, with a gain on sale of $5.1M.
- Full-year 2016 AFFO guidance of $2.85-$2.90 per share, representing an increase of 4-5.8% from 2015.
- Conference call tomorrow at 2:30 ET
- Previously: Realty Income beats by $0.02, misses on revenue (Feb. 10)
- O flat after hours
- Q4 core earnings plus drop income of $44.5M or $0.29 per share vs. $42.6M and $0.27 in Q3. Dividend is $0.26.
- Book value per share of $9.36 slips from $9.59 three months earlier. Today's close of $6.89 is a 26% discount to book.
- Subtracting the decline in book value from the dividend yields a barely-visible positive return of $0.03 for the quarter.
- Interest rate spread of 1.43% falls 13 basis points from last quarter. CPR of 8.1% vs. 10.2%.
- 3.056M shares bought back during quarter at an average price of $7.54 each (2.067M shares repurchased in Q3). For the full year, buybacks totaled 10.6M shares at average price of $8.28 each.
- Conference call tomorrow at 9 ET
- Previously: CYS Investments reports Q4 results (Feb. 10)
- CYS +1.6% after hours
- Trevor Bond has stepped down from the CEO spot at W.P. Carey (NYSE:WPC) "to pursue other interests."
- He's being replaced, effective immediately, by former CFO and current board member Mark DeCesaris.
- DeCaris has been on the board since 2012, and was CFO from 2005-2013.
- Bond's exit suggests the company's strategic review isn't going how he would like.
- The company reaffirms previously-announced 2015 AFFO guidance. Q4 results are due on Feb. 25.
- Source: Press Release
- Another part of the Dodd-Frank law today went under the judicial microscope as a federal judge began hearing MetLife's (MET -0.4%) lawsuit questioning its systemically important designation. A victory for the insurer could signal would undermine what many consider to be the most important part of Dodd-Frank.
- A victory for the Financial Stability Oversight Council, on the other hand, would enshrine D.C.'s power over major financial firms - power which didn't exist in anywhere close to its present form prior to the financial crisis.
- No matter the decision, it will surely be appealed by the losing side.
- Reporting on today's two-hour hearing, CTFN's Ed Roberts says Judge Rosemary Collyer appeared to be sympathetic to MetLife's arguments.
- These MOUs are paid to take their capital and reap big returns doing deals, not try and support the stock price with share repurchases. “It doesn’t make much sense, obviously,” says UMass economics professor William Lazonick.
- Yet The Carlyle Group (CG +3.3%) today joined Apollo Global (APO -0.9%), KKR (KKR -5.2%), and Fortress Investment (FIG -1.7%) in launching sizable share repurchase programs, with Carlyle CEO David Rubenstein saying (earnings call transcript) none of his company's owners finds the current stock price "satisfactory or acceptable."
- Don't look for Blackstone (BX +1.9%) to join the crowd. “Limited partners believe that if you don’t invest in your own funds, you don’t show confidence or alignment,” said Stephen Schwarzman on his recent earnings call (transcript). "We always want to have a lot of money around." Just to be clear, Schwarzman has also been very vocal about how cheap he believes Blackstone shares are.
- The last word goes to Lazonick: “At least they’re not buying high, but that’s not relevant ... They should be trying to figure out how to invest better.”
- ETFs: PSP, PEX
- Q4 earnings of $0.32 per share beat consensus by $0.06, but First Data (FDC -10.2%) is sharply lower, says BTIG's Mark Palmer, because of slower-than-hoped revenue growth and the failure to provide 2016 guidance.
- The factors that kept Palmer on the sidelines - modest revenue growth and the burden of high leverage - are still in play, but today's plunge makes the valuation compelling, says Palmer, upgrading to Buy with $13 price target (vs. the current $10).
- Previously: First Data net income of $299M (Feb. 10)
- You can't eat relative performance, but nevertheless the FTSE/NAREIT All REIT Index fell 3.5% in January vs. the S&P 500's 5% decline. The end-of-month dividend yield of the REIT index is 4.47% vs. the S&P's 2.34%.
- Among the leading REIT subsectors in January were the shopping center names with a 3% gain. Self-storage added 2.7%. Data center REITs gained 3.8%.
- ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, SRS, ICF, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, DRA, FTY, PSR, FREL, LRET, WREI, IARAX, XLRE
- Net asset value per share fell to $10.01 in Q4 from $11 three months earlier, and, effective Jan. 1, the management base fee is cut to 1.50% on gross assets above $1B. Also MCC Advisors lowered its incentive fee from 20% on NII over an 8% hurdle to 17.5% on NII over a 6% hurdle.
- 143K shares were bought back during the quarter at an average price of $7.68 each, brining buybacks up to 2.5M shares.
- Non-accruals represented about 4.2% of the fair value of the company portfolio and consists of seven positions. Added to non-accrual in Q4 were AAR (energy name), as well as Essex Crane, Lydel, and URT.
- Earnings call transcript
- Downgrading today are Citigroup to Neutral from Buy, and FBR to Market Perform from Outperform.
- MCC lower by 3.4% to $5.76. It's off 24% YTD and 40% Y/Y.
- It's day two of post-earnings losses for Fifth Street Finance (FSC -7.8%) as JPMorgan throws in the towel on its Overweight rating, downgrading to Neutral.
- Net asset value fell to $8.41 per share from $9.
- Noted during the conference call (transcript) was the company's decision not to buy back any of this discounted stock in Q4 after repurchasing $20M worth in Q3. Things were busy and volatile, says management, which was instead focused on maintaining appropriate leverage levels. Repurchases are expected to resume this quarter and next.
- Net asset value fell 3.4% in Q4 to $7.56 per share thanks to "dislocation" in the credit markets amid the energy crash.
- Since the start of the buyback program in August, the company has repurchased 4.5% of the float, though at prices considerably higher than the current level.
- Citigroup downgrades to Sell from Neutral.
- AINV's lower by 9% this year and 36% Y/Y. It's off 4.4% today.
- Previously: Apollo Investment NII in-line, misses on total investment income (Feb. 9)
- With the stock trading at just 0.47x book value (ex. AOCI), any buybacks done under the new $700M plan will be highly accretive, says BTIG's Mark Palmer, reiterating his Buy rating and $50 price target.
- The fast pace of repurchases, says Palmer, is a key leg to the Voya (VOYA +1.3%) bull story - highlighting the consistent generation of excess capital and the company's willingness to return that money to owners.
- Voya has been hit particularly hard in the market selloff due to its perceived interest-rate sensitivity, but, says Palmer, the actual impact of lower rates is more than reflected in the stock price.
- Previously: Voya Financial boosts buyback by $700M (Feb. 10)
- Most assume central bank benchmark deposit rates can't get that far below zero before lenders find it cheaper to actually hoard physical cash rather than depositing it. A Bank of England study, for instance, suggests a floor of about minus 0.5%.
- A new report from JPMorgan, however, says England could go to negative 2.5%, the EU -4.5%, Japan -3.45%, and the U.S. -1.3%.
- It's good news for banks, whose earnings (and balance sheet strength) are thought to be at risk as policy rates head into negative territory.
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
- Q4 net income of $20.4M or $0.67 per share up 26% from a year ago. Full-year net income of $82.1M or $2.65 per share up 60% from 2014.
- Q4 total transaction volume of $4.7B up 10% Y/Y; full-year volume of $17.8B up 56%.
- The company sets the buyback of up to $75M of its formerly high-flying shares (down about one-third in the last 3 months). At yesterday's close of $21.64, it would be enough to repurchase nearly 12% of the float.
- Conference call at 8:30 ET
- Previously: Walker & Dunlop beats by $0.03, misses on revenue (Feb. 10)
- WD flat premarket
- Q4 operating earnings of $196M or $0.91 per share vs. $245M and $0.99 one year ago. Excluding items, operating earnings this year of $0.82 per share beat estimates by $0.03.
- Retirement operating earnings of $137M down 9% Y/Y; Annuities of $63M down 3%; Individual life of $103M flat; Investment management of $42M down 11%. Employee benefits of $24M down 58%.
- Employee benefits loss ratio for Group Life was 78.7% vs. 72.2% a year ago. Loss ratio for Stop Loss of 75.9% vs. 61.9%. The expected annual loss ratio for both is in the 75-80% range.
- 6.26M shares bought back during quarter at average price of $39.97 each. 34.3M shares repurchased during 2015 at average price of $43.39 each. Company lifts authorization by $700M today. Book value per share (excl. AOCI) of $57.44.
- Previously: Voya Financial beats by $0.12, beats on revenue (Feb. 10)
- VOYA flat premarket
- The Carlyle Group (NASDAQ:CG) joins Apollo Investment and Fortress Investment in beginning to buy back their thoroughly roughed-up stock. In Carlyle's case, it will repurchase up to $200M in company shares.
- CG is lower by about 60% since peaking in May of 2015.
- Co-CEO David Rubenstein: "Despite our history of strong results and significant future growth opportunities, the equity market currently ascribes little value to our diversified investment platform."
- Previously: Carlyle misses by $0.07, misses on revenue (Feb. 10)
- HSBC has been sued by the families of U.S. citizens murdered by drug gangs in Mexico, claiming the bank let cartels launder billions of dollars to operate their business.
- HSBC already paid nearly $2B in penalties in December 2012 to resolve charges that it failed to stop hundreds of millions of dollars in drug money from flowing through the bank from Mexico, and promised to fix the problems.
- UBS has reacted to the global financial market turbulence and sharp falls in bank share prices by freezing salaries for its investment bankers until at least mid year.
- Like several of its peers, UBS's investment banking operations have been hit by trading conditions which CFO Kirt Gardner described last week as "treacherous."
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