Pre-Market News (12/30/11): Banks Prepare For Facebook IPO


Every morning the Street of Walls team puts out an update on market levels, today’s top stories, and active M&A deals.

Today’s Top Stories:

  • Lowe’s Buys Online Retailer: UBS thinks the acquisition of online retailer ATG is a nice bolt-on in the right strategic direction.  Profit contribution expected to be minimal in the short term, not a lot of financial details disclosed
  • Pending Home Sales Soar: “The pending home sales index increased by a more than expected 7.3%m/m (cons: 1.5, UBS 3.0%) in Nov after jumping 10.4% in October. The last time the index was higher was in April 2010 when the homebuyer tax credit was in effect. A sale is considered pending when the contract has been signed but the transaction hasn’t closed”
  • IMF Warned Greece on Debt Levels: The International Monetary Fund recently told the Greek government that a worsening economic outlook suggests the beleaguered nation may be unable to reduce its debt to sustainable levels even with a planned 50% write down in privately-held Greek government bonds, according to two officials familiar with the conversations
  • 2012 Top Investment Themes: The world is facing 4 structural supply shocks
  • Banks Prepare for Facebook IPO: Goldman Sachs, Morgan Stanley Are Considered Front-Runners for Top Job in Handling 2012?s Trophy IPO
  • 4-week jobless claims lowest since June 2008: “Although initial jobless claims rose for the first time in the month of December to 381k (cons 372k, UBSe 375k) from a revised 366k (was 364k), the four-week average, at 375 k, was down roughly 20k from a month earlier and roughly 30k from two months earlier. New jobless claims have been falling, on balance, in 2011. The latest four-week average of 375 k compares with an average of over 400k in the first three quarters of 2011” (UBS)
  • Sears closing 100-120 Kmart & Sears Stores: “Among the public REITs, Sears/Kmart closings should be a bigger threat to the class B or C malls, in addition to strip center REITs as fundamentals for retailers in these properties are taking longer to recover than those occupying class A malls” (Goldman Research)

M&A Watch:

Khrom Capital killed it during the first quarter, continuing its strong track record; here are their favorite stocks

Khrom Capital was up 32.5% gross and 24.5% net for the first quarter, outperforming the Russell 2000's 21.2% gain and the S&P 500's 6.2% increase. The fund has an annualized return of 21.6% gross and 16.5% net since inception. The total gross return since inception is 1,194%. Q1 2021 hedge fund letters, conferences and more Read More

  • Weekly M&A Trends: Completed M&A volumes doubled from last week to $49.5 billion. 4Q11 volumes are averaging 11% below the 3Q11 average. Expect precedent transactions to be comp’ing down double digits for 2011
  • LOW announced its acquisition of Allied Trade Group (ATG Stores), a WA-based operator of 500+ specialty online stores with over 3.5 million products from more than 3,000 name brand manufacturers
Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.
Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

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