Today - Monday, March 17, 2014
- "We maintain our contention that as the tailwind of credit improvement subsides, banks must renew their focus on core profitability to compensate for the persistent low interest rate environment, increased regulations and modest loan growth," writes RBC Capital, trying to say the easy money's been made for banks and now those with the strongest managements will be the ones to prosper going forward.
- No surprise, an RBC survey finds Wells Fargo (WFC +1%) and U.S. Bancorp (USB +0.8%) as the best-managed banks (defining this by ROA and ROTCE), with Capital One (COF +1.4%) ranking high as well. The team comes up with a list of seven "up and comers" perhaps poised to join the ranks of "best managed":
- BB&T (BBT +0.5%), Huntington Bancshares (HBAN +0.9%), Fifth Third (FITB +0.7%), JPMorgan (JPM +0.9%), M&T Bank (MTB), PNC Financial (PNC +1%), and SunTrust (STI +0.7%).
- NorthStar Realty Finance (NRF -0.4%) agrees to buy a healthcare real estate portfolio consisting of 43 private-pay senior housing facilities and 37 skilled nursing facilities from two private groups for $1.05B. The deal had been talked about during Northstar's Q4 earnings call last month, and - when closed - will grow the company's healthcare property portfolio value by about 65%.
- CEO David Hamamoto: "Since joining our healthcare real estate team only two months ago, Jay Flaherty has sourced an investment pipeline through his relationships in the industry that is adding significant value to the NorthStar franchise."
- From January: Ousted HCP chief Jay Flaherty joins Northstar to build healthcare real estate operation.
- The Schwab (SCHW) Emerging Markets Equity ETF (SCHE) expense ratio is lowered to 14 basis points from 15. This compares to 15 bps at Vanguard's FTSE Emerging Markets ETF (VWO). The expense ratio for the Schwab International Small Cap Equity ETF (SCHC) is cut to 19 bps from 20.
- "We're not going to stop there," said Schwab CEO Walt Bettinger last September, when his company cut fees on a number of ETFs (including the 2 above).
- Who knows where it stops, but analysts expect (and Schwab management hasn't disagreed) this is about attracting more clients and wealth managers to the overall company platform in the hopes they make use of other more expensive services.
- American Realty Capital Properties (ARCP) is off 1% premarket as Ladenburg Thalmann cashes in its chips, downgrading to Neutral from Buy. The stock's had a nice run this year - up 12.8% - but nothing out of line with the rest of the REIT sector. Reaction to last week's plan to spin off ARCP's multi-tenant shopping center unit has been muted thus far.
- Downgraded to Neutral from Outperform are Sovran Self Storage (SSS) and Extra Space Storage (EXR), and boosted to Outperform from Neutral is Public Storage (PSA).
- It looks like a valuation call as Public Storage is the notable underperformer in the group over the last year, up 13.4% vs. 20.2% for Sovran and 29% for Extra Storage.
- CME has been having constant meetings with brokers upset over the boosted transaction fees and new market data fees announced late last year (they took effect immediately for new users, but could be delayed until 2015 for some others).
- CEO Terrence Duffy at an industry conference last week: "If we're missing something that we didn't see, we're listening to it. That's yet to be completely analyzed."
- RJ O'Brien CEO Gerald Corcoran whose customers will pay a lot more: "We built our systems on the understanding, belief and agreement with the CME that we wouldn't be charged market-data fees for providing our customers access to the market, and they've pulled the rug on us."
- CME, of course, is banking on the higher and new fees to help boost revenue.
6:56 AM| Comment!
- Howell "Mac" McCullough comes over from U.S. Bank where he's been chief strategy officer for the last seven years. At Huntington (HBAN), he replaces David Anderson who has held the position on an interim basis since last May when previous CFO Don Kimble exited to take the same role at KeyCorp.
- Press release
Sunday, March 16, 2014
- Authorities raided Credit Suisse's (CS) headquarters in Germany last month as part of a probe into insider trading in shares of German solar maker Roth & Rau, which was bought by Swiss firm Meyer-Burger in 2011.
- Credit Suisse was Roth & Rau's adviser at the time, and while the Swiss bank is not one of the accused, one of its employees is reportedly under investigation for insider trading in connection with the deal. The worker has been suspended.
- Hartford Financial Services Group (HIG) is reportedly close to an agreement to sell its Japan operations to Orix Corp for $875M.
- The sale would be part of Hartford's efforts to limit liabilities connected to life and retirement plans that were issued in the past.
- Sterne Agee & Leach analyst John Nadel expects any sale to free up at least $600M that was supporting Hartford's Japanese obligations.
Friday, March 14, 2014
- Anworth Mortgage (ANH +1.9%) has its tail in the air after the company boosts its buyback program by 10M shares. Thus far in Q1, the company has bought back 4.023M shares at an average price of $4.93 each. For the year ended Dec. 31, Anworth repurchased 7.646M shares at an average price of $4.95 each.
- Anworth is also expanding its investment horizons, forming Anworth Properties to invest in other sorts of mortgage assets and real estate rental properties.
- Company book value per share as of Dec. 31 was $5.98 putting the current price of $5.34 at a 10.7% discount to book.
- Press release
3:07 PM| 27 Comments
- "The removal of the ratings from CreditWatch reflects Puerto Rico's successful sale this week of $3.5 billion of GO term bonds with an 8.0% coupon and an effective yield of 8.73%," says S&P's David Hitchcock. "In our opinion, the sale will relieve near-term liquidity pressure on the commonwealth."
- The agency affirms the island's BB+ rating with negative outlook.
- Muni ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, XMPT, BABS, SUB, PRB, NYF, PZT, SMB, CXA, SHYD, PWZ, PVI, SMMU, INY, MUAF, MUAE, MUAD, MUAC, VRD, MUAG, GMMB, MUAH, RVNU
- After a 4.69% gain in February, the FTSE NAREIT All REIT Index is higher by 8.22% in the year's first two months, with equity REITs up 8.13% and Mortgage REITs up 10.52%. The S&P 500 is up 0.96% through the end of February.
- The top-performing REIT sector is Free Standing Retail with a 16.37% total return. Self-Storage is up 12.94%, Apartments up 12.23%, Home Financing up 12.14%. Industrial up 11.02%, Office up 10.03%.
- Even after the nice run, the All REITs Index still offers a 4.04% dividend yield, about double that of the S&P 500.
- Related ETFs: IYR, VNQ, REM, MORL, MORT, DRN, REZ, URE, SRS, RWR, ICF, SCHH, DRV, ROOF, KBWY, RTL, REK, FRI, FTY, FNIO, PSR, IFNA, WREI
- Unsurprisingly, the Berkshire Hathaway (BRK.A, BRK.B) board is recommending shareholders vote against a proposal requesting the institution of a substantial dividend. "Whereas the corporation has more money than it needs, and since the owners unlike Warren Buffett are not multibillionaires, the board shall consider paying a meaningful annual dividend on the shares."
- "Our shareholders are far wealthier today than they would be if the funds we used for acquisitions had instead been devoted to share repurchases or dividends," responds the board.
- Warren Buffett has previously said he would consider a payout only when he runs of places to invest, which, according to his annual letter, he's not close to.
- In other news, Warren Buffett's compensation rose 15% to $485,606 in 2013, though his salary remained at $100K. More importantly, what was The Oracle's tax rate?
- World Acceptance Corp. (WRLD +3.9%) is bouncing from yesterday's plunge on its receipt of a civil investigative demand (CID) from the CFPB, but today it's the turn of Springleaf Financial (LEAF -4.8%) and Santander Consumer (SC -1.3%) to head south.
- World's "sleazy" marketing tactics have been talked about for some time from Citron Research to Whitney Tilson to Herb Greenberg. Shorting the stock is a favored play of the hedge fund crowd which has been pushing D.C. to move against the company for several months.
- Also moving: CSH, EZPW, DLLR, ATLC