Brian Kelly, Curtis Erickson and Jerremy Newsome will all be guests on this shortened week of Benzinga's #PreMarket Prep broadcast, sponsored by Nadex.
Be sure to tune in at 8:00 am EST Monday-Friday here to tune in to the exciting show.
Don’t miss our #FedForecast2015 event either!
You can learn more about that here.
Jonathan Corpina (@JonathanCorpina), Senior Managing Partner at Meridian Equity Partners
Jonathan Corpina manages trading and sales on the Meridian NYSE trading desk. A NYSE member since 2001, Corpina is an elected executive floor governor, president of the Organization of Independent Floor Brokers and a board member of the Floor Members Emergency Fund.
Dan Cook (@Nadex_US), Director of Business Development at Nadex
Dan Cook started trading equities in the 1990s before moving into futures and currencies in the 2000s. He’s worked with hundreds of individuals as a coach and mentor utilizing a technical approach to the markets with an absolute focus on risk management.
Rev. Emmanuel Lemelson (@Lemelson), Chief Investment Officer of Lemelson Capital Management
Rev. Emmanuel Lemelson is the founder and president of the Lantern Foundation and also the Chief Investment Officer of Lemelson Capital Management. He writes extensively on the psychology of investment policy as well as on the ethics of contemporary legal and economic issues and has been quoted in USA Today, TheStreet, ValueWalk, Seeking Alpha and countless other places.
Nic Chahine (@racernic), Creating income with options spreads
Nic Chahine joins the show every Tuesday to discuss the week's options outlook.
Jerremy Newsome (@newsomenuggets), CEO of RealLifeTrading.com
Jerremy Newsome is a 26-year-old trader and CEO of Real Life Trading. He used to have a college radio show called The Crockpot, and has done stand-up comedy and Brazilian jiu jitsu since he was 16.
Curtis Erickson (@CurtisErickson), CEO of Erickson Wealth & Tax Management
Since 1986, Curtis has been working with Seattle area clients, real estate and small businesses on how to improve their financial future. He is simultaneously a CPA certified tax coach and a no commission Registered Investment Advisor. Curtis is a co-advisor with Mark Matson of Matson Money. Matson Money has approximately 400 billion in assets under management using globally diversified structured index funds.
Fari Hamzei (@HamzeiAnalytics), Founder of Hamzei Analytics
Fari Hamzei joins the show every Wednesday, bringing his wealth of knowledge on aggressive equity options and index futures trends.
Shailesh Kumar (@arohan), Author of the Value Stock Guide
Shailesh Kumar is a long-term value investor specializing in smaller undervalued companies with a possible catalyst in the future. He runs the site Value Stock Guide and manages a real money portfolio that reflects the picks and ideas recommended to the members.
Nate Tobik (@oddballstocks), Investor and Founder of CompleteBankData.com
CompleteBankData is a place for information on banks, banking institutions and bank-holding companies. Nate Tobik also runs oddballstocks.com, an investment blog that uses research from CompleteBankData.com.
Ezra Rapoport (@HFBondsTrader), Trader and Head of Automated Strategy & Development for Flammarion Capital
Ezra Rapoport is a high-frequency trader in futures and U.S. Treasury markets. He has traded for some of world's largest sell-side institutions in addition to several well-respected hedge funds. In addition to being a full-time trader, he is an active proponent of increased automation in markets and promoting the availability of automation to all market participants large, small, and retail.
Brian Kelly (@BKBrianKelly), Founder and Managing Member of Brian Kelly Capital
Brian Kelly Capital LLC is a global macro investment firm catering to high net worth individuals, family offices and institutions. Brian Kelly has more than 19 years of investment experience trading U.S. and international equities, foreign currency, options, futures, metals and commodities. He has traded for many of the largest hedge funds, pension funds and mutual funds.
Sean Udall (@UdallTechStrat), the Tech Stock Strategist
After nearly doubling his money on NVLS Systems in the early 1990s, Sean Udall has been hooked on tech stocks ever since. He has more than 20 years of experience working for some of the biggest firms in the country (Morgan Stanley, Salomon Smith Barney), managing over $350 million in client assets, and writing prolific content on the tech sector.
Image credit: Curtis Kennington, Flickr
Apple Inc. (NASDAQ: AAPL) could sell 20 million iPads during the December quarter.
Apple also halted sales in Russia after enduring one too many currency fluctuations.
Microsoft Corporation (NASDAQ: MSFT), meanwhile, is rumored to be working on a VR headset -- again.
BlackBerry Ltd (NASDAQ: BBRY) endured another decline, but analysts don't think investors have much to worry about.
And last but not least, analysts discuss whether Amazon.com, Inc. (NASDAQ: AMZN) will actually split up.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this slideshow.
Image credit: Edward, Wikimedia
Online real estate listing portals Zillow Inc (NASDAQ: Z) and Trulia Inc (NYSE: TRLA) shareholders voted to approve the merger of the two largest internet real estate services websites on December 18.
The Dow was up 421 points, NASDAQ 104 points and the S&P rose 48 points -- each index powering up over 2 percent on the same day.
There should have been champagne flowing, balloons dropping and fireworks galore. However, there was one spoiler: Shares of Zillow and Trulia did not participate in the overall market rally.
That seems to be a question that can't be answered with any degree of certainty. Here are a few of the usual suspects:
• The two companies have yet to demonstrate that they have a sustainably profitable business model.
• The stocks trade at nosebleed Price to Sales ratios. It remains to be seen if actual growth will justify such lofty valuations. Zillow trades at a P/S of ~15x.
• Zillow monthly unique visitor metric peaked in July 2014 at 88.8 million. This coincided with the price of Z shares peaking at $164.90. Zillow shares closed at $107.35, or almost 35 percent lower than its 52-week high.
• Trulia shares peaked in July as well reaching $67.50, and are now off more than 30 percent from that high point.
• Insiders at both Zillow and Trulia continue to exercise low priced options and sell shares at the market price. There has been no history of insiders buying shares at market prices.
This combination, which would create a "Godzulia" online real estate powerhouse, still requires approval by the FTC prior to culmination.
Competitor Move, Inc., which operates the realtor.com website, was recently acquired by Rupert Murdoch's media giant News Corp. (NASDAQ: NWS) (NASDAQ: NWSA). News Corp. owns the Wall Street Journal, Barrons and other media outlets.
There are at least two reasons this could be a game-changer moving forward in the battle for listings, real estate agents and advertising:
1. Listings are the life-blood of the real estate brokerage business. Move, Inc. owns the two largest multiple listing services portals, which provide Zillow with ~85 percent of its property listings.
2. On December 17, it was announced by News Corp. that one of its own executives, Ryan O'Hara, will be taking over the reins from CEO Steve Berkowitz on Jan. 5, 2015.
"Ryan will begin at Move in the first week of January, when we will also be rolling out a broad-based marketing campaign across The Wall Street Journal Digital Network to drive quality traffic to realtor.com,” according to News Corp. CEO Robert Thomson.
“He also looks forward to working closely with the National Association of Realtors, a key and crucial partner of Move, knowing that Realtors are at the heart of American real estate transactions."
Realtor.com was the first major Internet real estate portal. Unfortunately, it had squandered its first-mover advantage, and never was able to fully harness the horsepower of its relationship with the National Association of Realtors.
The stark reality for Zillow and Trulia is that they will now be up against a formidable media competitor that has direct access to accurate listing information from almost 100 percent of the 800-plus MLSs across the U.S.
On December 16, the Wall Street Journal reported that American Realty Capital Properties Inc (NASDAQ: ARCP) had been cut by Moody's to "junk" (Ba1) with a negative outlook. The rating agency cited concerns over the recent accounting irregularities, cover-up, executive shake-up and ongoing investigations.
Can it get worse? Potentially.
Just ask shareholders of RCS Capital Corp (NYSE: RCAP), whose shares were crushed Thursday, December 18, following a news report that reflected negatively on current Executive Chairman Nicholas Schorsch.
On December 18, the Wall Street Journal broke the news that former ARCP Chief Accounting Officer (CAO) Lisa McAllister had filed a lawsuit alleging defamation against ARCP, former CEO and Chairman Nick Schorsch and former CEO David Kay.
According to the WSJ report, "Lisa P. McAlister, alleges Mr. Schorsch instructed her and former Chief Financial Officer Brian Block to shift numbers in the company's second-quarter results to cover up errors from the first quarter.
"Ms. McAlister repeatedly expressed concern about the directive to fellow executives and others, including an email to Grant Thornton LLP, the real-estate-investment trust's audit firm, but her concerns were ignored, according to the complaint," the report added.
Worth noting, RCS Capital management has been meeting with investment bank analysts, and explaining why the company is well positioned to be successful in 2015 and beyond.
On December 16, Citigroup upgraded RCAP from Neutral to Buy, raising its price target from $13 to $19 -- an 80-plus percent premium to current trading prices.
On December 18, the same day as the McAllister lawsuit news broke, Barclay's reinstated RCS Capital at Overweight with a PT of $20.
This represented a 70 percent upside.
The ARCP-related crisis of confidence is dragging down RCAP shares despite the favorable views from Wall Street sell-side analysts.
As for whether or not the controversy has reached a tipping point, only time will tell.
QLogic Corp (Nasdaq: QLGC), a leading supplier of high performance network infrastructure solutions, today announced that on December 10, 2014, the Compensation Committee of the Board of Directors of QLogic Corporation approved a grant of an equity-based award to an individual in connection with his commencing employment with the company and its subsidiaries and as an inducement material to his accepting such employment. The grant consisted of an award of 30,000 restricted stock units to a newly-hired non-executive employee that will vest based on the achievement of certain pre-established performance and service requirements. The grant was not individually negotiated and was made in accordance with Nasdaq Listing Rule 5635(c)(4).
Bank of America reiterated its Underperform rating on Advanced Micro Devices, Inc. (NYSE: AMD) Friday and cut its price target from $3.25 to $2.25.
Analysts led by Vivek Arya believed “AMD faces structural challenges from Intel in PC and data center, and from Nvidia in discrete graphics. Management has done a good job of controlling costs and de-risking the balance sheet and game console wins at Sony and Microsoft (and potentially Nintendo for next-gen Wii) can help support cash-flow for the next few years."
Arya also believed “the declines in legacy segments will continue to weigh on financials. We lower 2015/16E sales and pro-forma (ex-options) EPS to 22c/27c from 31c/38c, and PO to $2.25 from $3.25, based on 0.6x 2015 EV/S which is below its 5-year average of 0.8x and reflects our caution on future EPS growth prospects and structural competitive risks.”
The analyst noted indicated that the new price target “implies 10x 2015 PE, which is at low-end of semis sector, again reflecting our caution.”
Advanced Micro Devices closed at $2.57, up 0.78 percent.
Walgreen Co. (NYSE: WAG) (Nasdaq: WAG) announced today that it intends to apply to list the shares of Walgreens Boots Alliance, Inc. common stock on The Nasdaq Stock Market LLC under the ticker symbol “WBA” following the closing of the previously announced reorganization of Walgreens into a holding company structure pursuant to a merger of a wholly owned subsidiary of Walgreens with and into Walgreens (the “Reorg Merger”), in which issued and outstanding shares of Walgreens common stock, par value $0.078125 per share, will be converted automatically into the right to receive shares of Walgreens Boots Alliance common stock, par value $0.01 per share, on a one-for-one basis, and the acquisition of the remaining 55 percent of Alliance Boots GmbH that it does not currently own. Listing will be subject to the closing of the Reorg Merger and to Walgreens Boots Alliance fulfilling all of the listing requirements of the Nasdaq Stock Market.
Walgreens also announced today that it has notified the New York Stock Exchange (NYSE) and the Chicago Stock Exchange (CHX) of its intention to voluntarily withdraw its common stock from listing on both the NYSE and the CHX and from registration under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in respect of such exchanges upon the closing of the Reorg Merger. Walgreens proposed delisting is contingent upon the closing of the Reorg Merger, which is subject to, among other conditions, the receipt of shareholder approval. To effect the delisting, Walgreens expects to file a Form 25 in respect of such exchanges with the Securities and Exchange Commission. Walgreens reserves the right to delay the filing of the Form 25 or to withdraw such filing for any reason prior to its effectiveness, including, without limitation, in the event that the Reorg Merger is delayed or is not completed for any reason.
Walgreens decision to withdraw its common stock from listing on the NYSE and the CHX and from registration under the Exchange Act in respect of such exchanges and to list shares of Walgreens Boots Alliance common stock solely on The Nasdaq Stock Market LLC was based on its determination that, following the completion of the Reorg Merger, shares of Walgreens Boots Alliance common stock should trade on a single national securities exchange in order to, among other things, reduce the administrative costs and burdens associated with maintaining the listing on multiple national securities exchanges.
S&W Seed Company (Nasdaq: SANW), the largest 'non-dormant' alfalfa seed company in the world, and DuPont Pioneer, the world's leading developer and supplier of advanced plant genetics today announced the acquisition by S&W of all of DuPont Pioneer's alfalfa production and research facility assets, as well as all conventional (non-GMO) alfalfa germplasm, for a purchase price of up to $42 million. The purchase price consists of $27 million in cash (payable at closing), a promissory note payable by S&W to DuPont Pioneer in the principal amount of $10 million and a potential earn-out payment of up to $5 million based on sales of the acquired germplasm in the three-year period following the closing. The promissory note bears interest at 3% per annum (paid annually) and is payable on December 31, 2017. The sale is expected to be completed on December 31, 2014, and is conditioned on S&W obtaining sufficient additional financing (on terms and conditions acceptable to it) to consummate the purchase and other customary closing conditions. There can be no assurances that S&W will be successful in securing financing.
As part of the acquisition, S&W will acquire:
Over 15 DuPont Pioneer alfalfa seed varieties in the market today, including varieties designed for high yields, forage quality, leafhopper resistance, and stem nematode resistance;
More than 60 varieties that are currently in DuPont Pioneer's development pipeline;
A seed cleaning and production facility located in Nampa, Idaho and research facilities in Arlington, Wisconsin; and
31 employees from the alfalfa group at DuPont Pioneer.
With the acquisition, S&W Seed Company will be the global leader in alfalfa seed, with unrivaled research and development, production and distribution capabilities. S&W will span the world's alfalfa seed production regions with operations in the San Joaquin and Imperial Valleys of California, five other US states, Australia, and three provinces in Canada, and will sell its seed products in more than 25 countries around the globe.
Mark Grewal, chief executive officer of S&W Seed Company commented, "The acquisition of DuPont Pioneer's alfalfa seed operation will create an unparalleled leader in the alfalfa seed industry. We will benefit from one of the most compelling growth opportunities in agriculture, the desire for increased protein in a growing global population. The combination of operations brings together the largest 'non-dormant' alfalfa seed company in the world and one of the leaders in the 'dormant' alfalfa seed market. This acquisition provides us with diversified worldwide production and distribution capabilities, industry-leading research and development capabilities, along with a strong grower base and dedicated customers. Incorporating dormant varieties into our production base and sales channels is a natural fit and progression for our business, and this acquisition gives us the personnel and expertise to accelerate our growth in all dormancies going forward."
Possible Future Acquisition of GMO Germplasm
S&W has also agreed, subject to the satisfaction of certain conditions, to purchase DuPont Pioneer's GMO alfalfa germplasm and related assets for an additional $7 million in cash. The closing for the second acquisition, if all conditions to closing are satisfied, will occur on December 29, 2017. If the second acquisition is completed, the total purchase price for both acquisitions would be up to $49 million.
Exclusive Distribution Agreement
Concurrently with the closing of the acquisition, S&W and DuPont Pioneer are entering into exclusive alfalfa seed distribution and production agreements under which, subject to certain exceptions, S&W will be DuPont Pioneer's sole supplier of alfalfa seed through 2024.
Under the agreement, DuPont Pioneer will continue to sell S&W-supplied, proprietary Pioneer® brand alfalfa varieties to customers for at least the next 10 years, through Pioneer's extensive network of exclusive sales representatives. The agreement provides S&W with a strong and reliable customer for a large portion of the new S&W seed production, and provides DuPont Pioneer customers with the same leading alfalfa seed varieties that they have relied on for years.
Alfalfa is primarily used as a high protein "forage" for livestock, including dairy and beef cattle, and is also used in certain fuel applications. The market for alfalfa hay and haylage in the United States is approximately $11.3 billion annually, and has grown at approximately a 4.8% CAGR over the last 10 years.
The newly acquired alfalfa business is expected to contribute approximately $26 million of incremental annual revenues in FY '15 and approximately $40 million of incremental annual revenues in FY '16.
The graph below was produced by Capital Market Labs.
As the markets approach the end of the year, some end-of-year review examinations are in order. Let's focus this piece on the top dividend-payers.
The chart below displays all North American companies with market caps larger than $2 billion and dividend yields greater than or equal to 5 percent in the last twelve months (y-axis).
Free cash flow yield is plotted on the x-axis.
Sixty four such companies exist.
Interestingly, 26 of those 64 have negative free cash flow yields.
In other words, of the largest dividend payers this year, 26 are paying out cash while free cash flow is shrinking.
Ophir Gottlieb can be found on Twitter @ophirgottlieb.
Bank of America reiterated its Buy rating on Intel Corporation (NASDAQ: INTC) Friday and maintained a $43 price target while naming it a Top Pick.
Analysts led by Vivek Arya continued “to like Intel on a stabilizing PC market, underappreciated growth in data center/internet-of-things, and a gradual reduction in losses in mobile.”
Arya saw “2016E EPS power of $3/share, and our projected double digit earnings growth trajectory has historically driven 15x-20x forward PE multiple vs. 15x currently.”
The $43 price target reflected a 15.3x PE applied to the firm’s 2016 EPS estimate. The choice of PE is a 10-15 percent premium to the broader market but in line with the 15x-20x forward PE range Intel achieved when its EPS was growing at the same 10 percent CAGR that the analysts projectfor the next 2-3 years.
Arya cited potential downsides: “1) Weaker than expected trends in mature PC market, which is largest revenue generator for Intel,2) Competition from ARM and other architectures in profitable data center market, 3) Inability to drive profitable growth in new mobile and foundry markets, 4) Increasing cost and complexity of semiconductor manufacturing that pressures capex and gross margins, and 5) Semiconductor and macro cycle risks.”
Intel closed Friday at $36.37, down 1.76 percent.