Today - Friday, March 7, 2014
- "The investor community is very aware of our brand," says ING. U.S. (VOYA +0.8%) CEO Ewout Steenbergen in a WSJ interview. " Now we need to fully make that transition with distributors, plan sponsors and individual customers. The transformation will take two years. It’s a large exercise."
- In a few weeks, the ING spinoff will change its name and logo to Voya Financial.
- ROE of 10.3% in 2013 grew from 8.3% in 2012, and the company has set a goal for 12-13% by 2016. "The other message is we have strengthened the balance sheet and capital position of our company. Our focus on retirement is a very big topic in the market. We are one of the largest players in the retirement space in the U.S."
- Why rebrand when ING is so well known, particularly in Europe? "There is confusion if you have two companies with the same name and different businesses ... One thing brand experts says is you have to keep your current brand strong before you make a change ... We will spend additional money on advertising, but the amount has not been set."
- Analyst Kevin Reynolds takes some chips off the table on Pinnacle Financial Partners (PNFP +0.5%) after a big run for the stock, with a downgrade from Buy to Hold. Calling it the premier commercial bank with a market-share-moving strategy supporting above-average organic growth, he notes the stock is up 33% over the last six months vs. 23% for an index of Southern banks and 16% for the Nasdaq.
- "PNFP’s performance suggests a premium valuation is warranted; however, the current 10% to 15% premium on 2015E EPS appears reasonable, limiting potential upside in the near-term."
- There's a time to sow and a time to reap, said Apollo Global founder Leon Black last year, and it's reaping time for many P-E insiders.
- The most recent sellers are insiders at Carlyle Group (CG -0.5%), including co-founders William Conway and Daniel D'Aniello who each sold about $40M-$50M of stock this week (the sales were part of a secondary offering by the company on Tuesday).
- The Carlyle sales are smallish compared to the amounts unloaded by Apollo's top executives in 2013. All of the sellers still hold major stakes in their firms and the moves seem simply aimed taking advantage of recent IPOs to whittle down holdings. In the past, P-E partnership shares could be sold to incoming executives, but the amounts involved these days have become too large to continue that practice.
- Another reason for selling: Some of the money will be churned back as investment's in the P-E firms' investment funds.
- Also selling this week are executives at Oaktree (OAK -0.5%) which had a secondary of its own to cash out certain insiders.
- Originally inked in 2010, the agreement gives Schwab (SCHW) customers access to JPMorgan's new issue and secondary municipal and corporate bonds. Since the deal started, Schwab clients have had access to over 800 corporate deals and total orders for these grew 70% Y/Y in 2013.
- "Retail demand for access to this traditionally institutional product has exceeded our expectations," says Schwab SVP Peter Crawford. "We believe this agreement has been an important step on the road to changing a market that previously was the near-exclusive domain of institutional investors."
- Press release
- The life insurers open strongly in the green as interest rates shoot higher following this mornings jobs report. Up the most is Prudential (PRU +3%) after BAML upgrades to Buy and boosts the price target to $103 from $94.
- The team views PRU's valuation as attractive after its sluggish start to the year - off 6% vs. a 1% increase in the median life name. There's also increased confidence the company can sustain an ROE above 14%, and a rising equity market means a lower cost of capital for the industry.
- Noting PRU's status as a SIFI, BAML takes a conservative view towards buybacks, assuming just $500M over the next five quarters. "However, we would not be surprised if PRU continued its current $1B a year pace of buyback, which we believe would help support the ROE."
- Others: MetLife (MET +2.1%), Lincoln National (LNC +2.2%), ING U.S. (VOYA +1.1%), Protective Life (PL +1.3%).
- "We view shares of New Media (NEWM) as an opportunity to invest in a viable business strategy with a clean balance sheet at a price that appropriately reflects well known industry challenges," says analyst Jason Stewart, starting the Newcastle (NCT) spinoff with a Buy and $18 price target. "At a high level, NEWM’s business strategy is simple: implement technological improvements and make strategic acquisitions. The company has several levers to pull for growth, and unlike some of its peers, a clean fair value balance sheet and minimal leverage."
- Stewart's earnings estimates already account for declining circulation volumes and lower advertising per publication, and he notes the stock trades at a EV/2015 EBITDA ratio of 5.7x vs peers at 7.5x, despite better growth prospects and a cleaner balance sheet for New Media.
- Core earnings of $0.70 per share fell from $0.83 in Q3.
- Book value per share of $15.27 fell from $16.81, but the decline includes the payout of $2.35 (cash and stock) in dividends. The stock portion of the dividend boosted the share count to 26.85M shares from 24.3M.
- Net interest spread of 2.15% falls 13 basis points from Q3. CPR of 5% dips from 5.3%. Leverage drops to 6.4x (6.9x when adjusted for TBA position) from 8.1x (9x when adjusted for TBA position).
- Company continues to move portfolio more into non-agency holdings which account for 15% of exposure at year's end vs. 8% at the end of Q3.
- WMC -0.9% premarket to $16.19.
- CC at 11 ET
- Press release, Q4 results
8:32 AM| Comment!
7:59 AM| Comment!
- "We expect Ladder Capital (LADR) to generate attractive returns given the improved operating environment and the supply-demand imbalance for CRE debt," says analyst Stephen Laws, starting the stock with a Buy and $22.25 price target.
- "We believe LADR is well-positioned for a range of different market conditions given the three complementary business lines: 1) loan origination and securitization, 2) CMBS investments, and 3) net lease and other real estate assets. Our target of $22.25 per share is based on a 50% premium to our post-IPO adjusted BVPS estimate."
- It's a valuation call for analyst Stephen Laws, noting the stock price about matches his price target of $17.50, a 15% premium to NAV.
- He's also lowering his 2014 NII estimates to reflect lower yields on new investments, but an increase in leverage should help boost portfolio income.
- TCPC no trades premarket.
- Keep an eye on the hot mortgage REIT sector today as Deutsche cashes in its chips on three bullish calls.
- New York Mortgage Trust's (NYMT) cut to Hold is a valuation call, with analyst Stephen Laws acknowledging solid Q4 results and good prospects going forward, but noting the stock price is already near his raised price target of $7.75 (from $7). NYMT is the rare mREIT at the moment trading above book value.
- Neither CYS Investments (CYS), nor American Capital Mortgage (MTGE) are at book, but both have moved a lot closer to it this year, and Laws cuts both to Hold, believing dividends, not capital appreciation will drive any returns from current levels. "Given investor concerns of higher interest rates, we believe it is unlikely that shares of agency MBS managers will trade at or above book value in 2014."
- Deutsche, he says, currently forecasts the 10-year Treasury yield to hit 4% before year-end, likely keeping a lid on price-to-book ratios for the agency players.
- Related ETFs: MORT, MORL, REM
- Bill Gross has accused departing Pimco (BOND) CEO Mohamed El-Erian of "trying to undermine" him, telling Reuters that he has evidence that El-Erian "wrote" a recent WSJ article that described the breakdown in the men's relationship and didn't portray Gross in a particularly flattering light.
- When asked what the evidence was, Gross replied: "You're on his side. Great, he's got you, too, wrapped around his charming right finger."
- Gross also indicated that he has monitored El-Erian's phone calls.
- A Pimco spokesman later denied that Gross made the comments that Reuters attributes to him, while the WSJ hotly refuted that El-Erian "wrote" the article.
- Pimco's parent company is Allianz (AZSEY).
- Pimco funds: AUD, BABZ, BUND, CAD, CORP, DI, FIVZ, FORX, GOVY
Thursday, March 6, 2014
- There's more management turnover at Citigroup (C +0.6%) where longtime exec Cece Stewart is retiring as president of the U.S. Consumer & Commercial Banking business. Current head of residential mortgage lending Jane Fraser will have her role expanded as CEO of U.S. Consumer & Commercial Banking.
- Also stepping down is Gene McQuade from the CEO spot at Citibank, N.A. He will head to board and be replaced in the CEO's job by Citibank, N.A. COO Barbara Desoer.
- After giving a AAA rating to a portion of the first bonds backed by home rental payments to come to market late last year, Moody's is requesting comments on its proposed methodology. Moody's decision on the first deal was based on the liquidation value of the homes under a "heavily-stressed scenario."
- Competitor S&P, as well as Fitch say the paper doesn't yet meet the criteria for them to assign top ratings. In Moody's request for comment, it says when grading the deals it's focused on two sources of cash flow: Rental income and proceeds from the sale of the underlying properties.
- American Homes 4 Rent (AMH +0.3%) is prepping a rental bond of its own, and others in the sector like Silver Bay Realty (SBY +1.4%), American Residential Properties (ARPI -1.9%), and Starwood Waypoint (SWAY +1.2%) no doubt have their own plans. Last year's pioneer Blackstone (BX +0.1%) is surely eyeing up a 2nd offering as well.