Today - Saturday, April 25, 2015
- Taubman Centers (NYSE:TCO) trades at a whopping 25% discount to estimated NAV, according to Green Street Advisors, versus General Growth Properties (NYSE:GGP) at just a 3% discount, and Macerich (NYSE:MAC) and SImon Property Group (NYSE:SPG) at small premiums.
- At least partly behind the discount is worry over Taubman's capital allocation - particularly the development of two Chinese malls whose expected returns are sizably less than what the company could earn on domestic redevelopment projects (or maybe on buybacks). And what if Taubman - which still sees itself as a family company (the Taubman's own 29% of it and haven't sold a share since the 1992 IPO) - isn't satisfied with just two Chinese malls?
- “Anybody who can put on blinders and blot out the chatter should do well,” says Green Street's Mike Kirby, arguing the Chinese fears are overblown. Taubman's a money-maker: Since the 1992 IPO, the company has generated a 15%-plus annual total return - six hundred basis points better than the S&P 500 - and dividends have grown at a 4% annual rate. The stock's sizable underperformance against its peers over the last year - add disappointing 2015 guidance to the China fears - offers investors a chance to get in relatively cheaply.
- Source: Barron's Andrew Bary
Friday, April 24, 2015
- SunTrust (NYSE:STI), Apollo Global Management (NYSE:APO) and Ares Management (NYSE:ARES) are weighing offers for a GE unit in the U.S. that lends to P-E firms, in a deal that could fetch more than $10B, Bloomberg reports.
- The division is among the $200B of assets put up for sale this month at GE Capital as Jeffrey Immelt accelerates efforts to focus on GE’s industrial operations.
- GE also is said to be working on a separate sale process for its European P-E lending arm, which has ~$6B in loans.
3:38 PM| Comment!
- Investors have rushed $13B into WisdomTree's (NASDAQ:WETF) Europe Hedged Equity ETF (NYSEARCA:HEDJ) this year, bringing AUM to $20B, and making it 2015's most popular ETF, the largest Europe ETF out there, and the largest currency-hedged ETF, according to Ned Davis Research.
- The fund is also ahead 30% YTD - not too shabby. However, says NDR, all of the gains have come from the euro's depreciation. A strategy of buying the MSCI EMU Index (NYSEARCA:EZU) and shorting the euro would have returned 70% over the same period. In other words - amid a nice bull move in Europe - HEDJ's strategy of owning exporters, which should theoretically gain as the euro slides, hasn't worked (the fund must own mega-cap stocks deriving more than 50% of revenue from outside Europe).
- What gives? First, Europe's exporters have been hit by exposure to struggling LatAm countries. Second, the companies in the HEDJ already hedge currency exposure, booking it as an expense. Finally, the valuation of stocks in HEDJ trade at a 52% premium to a broad MSCI eurozone index.
- Source: Barron's
- Previously: WisdomTree stumbles as GMO questions value of currency-hedged ETFs (April 14)
- Previously: WisdomTree hedged small-cap Europe ETF opens for business (March 4)
- ETFs: VGK, FEZ, HEDJ, IEV, EPV, EZU, FEU, EURL, FEP, UPV, DBEU, ADRU, HEZU, FEEU, IEUR, FIEU, DBEZ, FEUZ, SBEU
- Asset managers are under pressure from regulators to "stress test" their portfolios against a bond market rout, says State Street (STT -2.5%) CEO Jay Hooley, speaking after his company reported earnings this morning. As a result, those asset managers are building up excess deposits at the bank - and that's money State Street can't earn a whole lot on.
- Excess deposits at State Street rose to $54B at the end of Q1 vs. $52B three months earlier, even as the bank tried to discourage growth by introducing some fees. “The irony is that an asset manager’s excess liquidity ends up being our excess deposits,” says Hooley.
- “It is early days and the stress testing process is maturing,” says Hooley. “The more sophisticated the process, the more refined the outcomes.” In other words, Hooley is hopeful managers will find a different way to cut risk other than moving to cash.
- Source: FT
- Previously: Margins squeezed, but fee revenue gains at State Street (April 24)
- The service launched in early March, and is adding hundreds of accounts each day, says Schwab (NYSE:SCHW) CEO Walt Bettinger, and total AUM have reached just over $1.5B across 23K-24K accounts.
- The average account size is about $80K and roughly 1-in-5 are new Schwab clients. Also noted by Bettinger: Two-thirds of those coming into the program are under the age of 45 vs. the company's existing client base where two-thirds are above that age.
- Schwab doesn't charge advisory fees, commissions, or other service fees on the accounts, but instead funnels between 6-30% of the money into cash and profits on the deposits (something Schwab has come under criticism for).
- Source: Barron's
- Previously: Schwab joins robo-advisor business, defends high cash levels (March 10)
- Questions for GNW management: 1) Does the team believe regulators would allow the full amount of the proceeds from a sale of GLAIC to the holding company, or would some be trapped at the subsidiary level?
- 2) The stock of Genworth's Australian mortgage insurance unit (GNW owns 66% of it) plunged in February after Westpac said it would terminate its contract with the company. How comfortable is the company that agreements with Commonwealth Bank and National Australia Bank remain in place?
- 3) The downgrades to Genworth's credit ratings to junk by S&P and Moody's was expected to negatively impact fixed annuity sales, among other products. What is the company seeing in this regard so far?
- 4) The FHFA has released the final version of the PMIERs. What effect on Genworth's capital position does management expect?
- Genworth reports Q1 on Tuesday after the close.
11:43 AM| Comment!
10:43 AM| Comment!
- KBW cuts Huntington Bancshares (HBAN -1.1%) to Market Perform from Outperform. Details aren't available, but Huntington reported Q1 two days ago, and - like the rest of the regional banks - showed slimming net interest margins and sluggish loan growth.
- In the past, sizable share repurchases or industry consolidation might have been solutions to a slow growth environment, but the D.C. regulatory regime has kind of put a lid on both.
- Previously: Slimming margins at Huntington Bancshares (April 22)
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