Seeking Alpha
  • Saturday, March 28, 2015

  • 4:33 PM
    • Barron's notes shares of JPMorgan (NYSE:JPM) trade at just 10x earnings, one of the lowest P/E ratios among big U.S. banks.
    • At just 12x 2016 estimated earnings, shares could approach $80 next year - a 30% gain, still a steep discount to the S&Ps 500's P/E ratio of 16x.
    • The stock yields 3%, tops among its peers.
    • Barron's says investors haven't yet recognized that JPM has built several market-leading companies, including the country's No. 1 credit-card company; the No. 1 investment bank; the top private bank; and the third-largest asset manager. CLSA analyst Mike Mayo, a onetime skeptic who turned bullish in late 2014, carries a Buy rating and $70 price target. "In addition to a discounted valuation, JPMorgan has adapted to the changing landscape, grown its market share, and reinvested back in the business," another analyst says.
    • Previously: JPMorgan holds on to top investment banking spot,  (Mar. 27)
    • Previously: Gasparino: Sizable cuts coming at JPMorgan investment and commercial banks (Mar. 19)
    • Previously: JPMorgan formally authorizes $6.4B buyback, boosted dividend next quarter (Mar. 17)
  • 8:52 AM
    • The rush by the casino industry into REIT conversions could have a damaging long-term impact, warn casino industry analysts.
    • The "quick-buck" mentality to eliminate debt through the REIT play sets aside the difficulty down the road to get separate companies with different objectives to agree on needed capital expenditures on properties.
    • Buy-and-hold investors could get burned if REIT-touched casino properties lag peers due to the dueling C-suites.
    • A REIT cloud hangs over Pinnacle Entertainment (NYSE:PNK), Boyd Gaming (NYSE:BYD), MGM Resorts (NYSE:MGM), and Caesars Entertainment (NASDAQ:CZR) - while Gaming and Leisure Properties (NASDAQ:GLPI) already pulled the trigger.
  • 8:25 AM
    • The number of companies with the worst below-investment grade debt ratings has jumped to a two-year high of 184 firms, with the oil price rout pushing a record 25 U.S. energy producers onto this month's list at Moody’s.
    • The oil-and-gas and oil services companies listed account for a record 13.6% of the total of stressed companies rated B3 - six notches into junk territory - with a negative outlook for future ratings changes or lower; historically, oil firms have averaged ~8% of the firms on the list.
    • During Q1, a dozen oil companies including Energy XXI (NASDAQ:EXXI), Midstates Petroleum (NYSE:MPO) and Halcon Resources (NYSE:HK), were added.
    • If oil firms’ liquidity issues do not get fixed and they keep getting downgraded, the industry likely will see more debt defaults, Moody’s analyst Julia Chursin says.
    • The total of 184 financially stressed companies is up 16% Y/Y but still far short of the 290 borrowers at the peak of the financial crisis in Q1 2009.
  • Friday, March 27, 2015

  • 10:03 PM
    • Thinly-traded nano cap Adamis Pharmaceuticals (NASDAQ:ADMP) craters 35% after hours on robust volume in response to its announcement that it received a Complete Response Letter (CRL) from the FDA regarding its New Drug Application (NDA) for its lead product candidate, Epinephrine Pre-filled Syringe (PFS), for the emergency treatment of acute anaphylaxis (severe allergic reaction).
    • The FDA's questions relate to the general area of Chemistry, Manufacturing and Controls (CMC) and specifically to the volume of dose delivered by the syringe, including the ability to deliver volume within the levels contained in the labeling claim.
    • President and CEO Dr. Dennis J. Carlo says, "We are reviewing the CRL and plan to request a meeting with the FDA to discuss the letter, including clarifying the product delivery volume specifications. Although we expect to have more clarity with respect to timing, we believe we can satisfy all of the requests in the CRL and will work closely with the FDA to address the items raised in the CRL and finalize its review of our NDA. Adamis remains committed to bringing the epinephrine PFS to market."
    • The company submitted its NDA in May of last year.
    • Previously: Adamis submits NDA for adrenaline product (May 29, 2014)
  • 9:41 PM
    • Medifocus (OTCQX:MDFZF) commences a private placement of 40,454,546 shares of common stock at $0.055 per share. Closing date is April 2. Net proceeds will be used for general working capital.
    | 1 Comment
  • 8:58 PM
    • Glenn Lurie, CEO of AT&T Mobility (NYSE:T), says he's not worried about the outcome if Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) -- third and fourth in the U.S. wireless market behind AT&T and Verizon (NYSE:VZ) -- decide to merge.
    • "We are a very, very different company than the other three," he tells FierceWireless. "So whatever happens with them, I'm not really that concerned. I'm concerned about how we execute and how we operate."
    • His No. 1 goal, Lurie says, is to reduce churn and preserve the company's current subscribers in order to upsell other services.
    • Chatter continues to suggest that Sprint and T-Mobile may have to think about combining to achieve competitive scale, and in the meantime they're firing salvos in a price war that Lurie says AT&T won't join: "This industry is not commoditized at all."
    • Previously: Goldman upgrades T-Mobile; DT reiterates merger wish (Jan. 20 2015)
  • 8:16 PM
    • More from the increasingly contentious battle over Vivendi's (OTCPK:VIVHY) future: The company has written to hedge fund P. Schoenfeld Asset Management saying that if PSAM joins forces with other shareholders, it could violate French law by coordinating with other investors in excess of a 20% limit for foreign nationals outside the EU.
    • Schoenfeld just responded with a statement noting its disappointment and saying "We have received a letter whose purpose seems to be to intimidate us. We consider this behavior totally unacceptable."
    • PSAM requested in its newest letter that Vivendi publicly disclose its information relating to its monitoring of the 20% threshold.
    • Earlier, PSAM agitated for Vivendi to sell Universal Music and to issue nearly $10B in special dividends. The fund will clash with management at the April 17 annual meeting.
    • Vivendi Chairman Vincent Bolloré this week poured €632M in to boost his stake in the company to 10.2%. PSAM owns less than 1% but plans to gather support for a proxy fight.
    • Vivendi finished -1.2% in Euronext Paris; ADRs down 0.2% in the U.S.
    • Previously: Vivendi downgraded; Bolloré adds to stake amid activist threat (Mar. 27 2015)
    • Previously: Hedge fund calls for $10B in special dividends from Vivendi (Mar. 23 2015)
    | 1 Comment
  • 7:34 PM
    • Companies made key bets on India's wireless phone industry this week -- and Idea Cellular made the biggest of all -- in a spectrum auction that drew $17.6B overall.
    • Idea -- India's No. 3 wireless carrier -- spent the most among carriers, with 300B rupees ($4.8B) in bids across three different bands (900 MHz, 1800 MHz and 2.1 GHz).
    • Bharti Airtel (291B rupees, or $4.65B) and Vodafone (VOD; 259.6B rupees, or $4.15B) spent nearly as much. The three dominated the auction bidding due to license renewals they had to accomplish before a December expiration. Overall, bidders focused on 4G bandwidth in order to grow more high-speed services.
    • The size of the auction raised eyebrows, and Idea said it would take advantage of a government-offered deferred payment.
    • In a reflection of the recent U.S. wireless auction, Bharti Airtel complained about the auction format: "We hope that in future auctions, the government will make available adequate spectrum by securing it from agencies and operators who are underutilizing this vital resource," said the company's regional CEO Gopal Vittal.
    • Profitability is on the rise among Indian carriers, with 120M smartphone users in country and sliding handset prices expected to fuel further subscriber growth.
    | Comment!
  • 7:09 PM
    • Yahoo (NASDAQ:YHOO) "offers an attractive way to buy BABA at a 20% discount to current levels, or 21x [estimated 2016] EPS," writes Morgan Stanley's Brian Nowak (formerly with Susquehanna), who has launched coverage on Yahoo with a Buy rating and $55 target.
    • MS/Nowak sees Alibaba's earnings growth accelerating to 37% in 2016 after totaling just 9% in 2015 (due to near-term margin pressures caused by aggressive spending). On that basis, he backs Morgan Stanley's $102.30 Alibaba target (set by fellow analyst Robert Lin), and values Yahoo's Alibaba stake, due to be spun off tax-free this year, at $38/share. Based on today's close of $84.58, the stake would be valued at ~$31.40/share.
    • After factoring the Yahoo Japan stake, net cash, and core Yahoo, Nowak reaches a $55 sum-of-the-parts valuation. He expects core Yahoo to continue losing display and search ad share, but notes it's worth $5/share even if valued at just 4.5x estimated 2016 EBITDA.
    • Thanks to yesterday afternoon's buyback announcement, Yahoo rose 1.4% today to $45.10. After the close, Yahoo disclosed it has extended the deadline for renegotiating its Microsoft search deal by 30 days. The deal lasts until 2020, but gives Yahoo the right to terminate if (among other things) its trailing 12-month U.S. revenue per search (RPS) falls below a % of Google's estimated trailing 12-month U.S. RPS (excluding mobile).
  • 6:33 PM
    • Realty Income (NYSE:O) is up 3.3% in after-hours trade as it's set to join the S&P 500, replacing Windstream Holdings (NASDAQ:WIN), itself down 5.1% today and -0.5% after hours.
    • Windstream -- spinning off assets into a REIT -- will head to the S&P MidCap 400 to replace International Game Technology (NYSE:IGT), which is being acquired by GTECH. Meanwhile, Douglas Emmett (DEI, up 2.1% after hours) will replace Realty Income in the MidCap 400 after trading on April 6.
    • In other moves, Gentherm (THRM, +1.8% late) replaces buyout target Aviv REIT (NYSE:AVIV) in the S&P SmallCap 600 after trading on April 1; and Echo Global Logistics (ECHO, +1.9% late) will replace C&J Energy Services (NYSE:CJES) in the SmallCap 600 after trading April 1, as C&J is merging with part of Nabors.
  • 6:28 PM
    • Vale (NYSE:VALE) should consider selling as much as a 20% stake in its crown jewels - the Northern System operations, which includes Carajas, the world's largest iron ore mine - to "regain control of its destiny" amid the huge drop in iron ore prices, says Deutsche Bank analyst Wilfredo Ortiz.
    • Vale's balance sheet is "precarious," Ortiz says in estimating the miner's funding gap could climb to $10B under a distressed pricing scenario for iron ore of $45/ton through the end of 2017.
    • The analyst estimates selling a 15%-20% stake in Carajas could fetch $8B-$10B, which would be enough to cover most of the outstanding capital investment for the mine's expansion and would shore up Vale's balance sheet "to weather pretty much any storm in the iron ore market."
  • 6:22 PM
    • Keith Rabois, an early PayPal exec (and member of the PayPal Mafia), the former COO of mobile payments giant Square, and currently a partner at VC firm Khosla Ventures, is resigning from XOOM's board following its May 28 annual meeting.
    • Joining the board today is Tom Killalea, a 16-year Amazon vet and currently an advisor to several private tech companies. Killalea's roles at Amazon included leading its infrastructure/distributed systems teams and its Kindle content product development/engineering teams.
    | Comment!
  • 6:17 PM
    • Natuzzi S.p.A. (NYSE:NTZ): Q4 EPS of -$0.35 vs. -$0.68 in 4Q13
    • Revenue of $173.1M (+12.5% Y/Y).
    • Press Release
    | Comment!
  • 6:13 PM
    • SM Energy (NYSE:SM) declares $0.05/share semi-annual dividend, in line with previous.
    • Forward yield 0.2%
    • Payable May 6; for shareholders of record April 24; ex-div April 22.
    | Comment!
  • 6:13 PM
    • Digital Power (NYSEMKT:DPW): Q4 Non GAAP loss of $0.238M vs. $0.10M in 4Q13
    • Revenue of $2.11M (-6.6% Y/Y).
    • Press Release
    | Comment!
  • 6:08 PM
    • Two days after getting crushed on news the company lost a breach of contract and trade secret suit against Diablo Technologies, Netlist (NASDAQ:NLST) fell more moderately after posting a Q4 EPS miss (there was only one analyst estimate) to go with roughly in-line revenue.
    • Margin pressures weighed on EPS: Gross margin was -4.5% vs. 24.6% a year ago. A 70% Y/Y increase in operating expenses to $5.3M also weighed - legal fees totaled $2.4M (up ~3x Y/Y), SG&A spend $1.6M, and R&D $1.3M.
    • Netlist ended Q4 with $11.7M in cash, $7.9M in working capital, and $5.8M in debt. The company has since raised $9M in net proceeds through a stock/warrant offering.
    • Since the Diablo verdict, Netlist has stated it plans to continue pursuing its (separate) infringement suit against Diablo and SanDisk, and that it "intends to request that the Court correct the verdict as to the breach of contract count, and to pursue all available appeals."
    • Shares fell to $0.64 today. They dropped as low as $0.52 following the Diablo verdict before bouncing a bit.
    • Q4 results, PR
    | Comment!
  • 6:05 PM
    • Russia is preparing for the possibility that Exxon Mobil (NYSE:XOM) will file an arbitration claim over as much as $500M in taxes as a statute of limitation for part of a disputed payment at its offshore project expires this week, Bloomberg reports.
    • XOM is believed to be seeking a reduced profit tax for the 30%-owned Sakhalin-1 oil venture it operates in Russia Far East, and wants to get back tax it paid above the reduced rate for the past seven years.
    • XOM CEO Rex Tillerson, who expanded drilling rights in Russia fivefold in 2014, traveled to Moscow last week but is said to have left without a deal on the tax dispute.
    • The statute of limitation over payments for 2008, the first year in dispute, apparently expires March 28; XOM probably would demand taxes for seven years, not just 2008, if it files a claim.
  • 6:03 PM
    • If America Movil (NYSE:AMX) doesn't sell off assets -- as it said it planned to, to address competitive concerns -- it may not necessarily face tougher regulation after all, Mexico's chief telecom regulator says.
    • The Federal Telecommunications Institute plans a March 2016 rule revision -- and after Mexico's congress passed telecom reform last summer to reduce the dominance of Carlos Slim's telecom giant, the company has planned asset sales to comply.
    • But "The problem of the market is not the size of the operator; this is a market with economies of scale, it's capital intensive; the problem is having that power and abusing it," says IFT President Gabriel Contreras.
    • AT&T and SoftBank were said to be looking at AMX's assets, which should draw more than $10B and maybe more than $15B in a sale.
    | Comment!
  • 6:00 PM
    • S&P +0.17%.
    • 10-yr +0.15%.
    • Euro +0.05% vs. dollar.
    • Crude -5.69% to $48.51.
    • Gold -0.59% to $1,197.70.
    | Comment!
  • 5:52 PM
    • It's just a matter of time before U.S. steel companies such as Nucor (NYSE:NUE), U.S. Steel (NYSE:X) and Steel Dynamics (NASDAQ:STLD) seek tariffs on imports, Credit Suisse analysts say.
    • Recent plant closures by U.S. Steel and this week’s State of Steel meetings in D.C. "look like a convenient prelude to the filing of a steel trade case," the firm says, adding that one of the first steps is the demonstration of injury.
    • Steel businesses which are most vulnerable to imports will be those most active in trade cases, Credit Suisse says; U.S. Steel is a high fixed-cost business, for which pricing losses translate almost directly into earnings loss.
    • For investors, the firm prefers X for “the longer term potential of its asset base under a revised operating regime,” and worries about NUE due to its valuation premium relative to STLD.
    | 1 Comment
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