Jim O’Shaughnessy: The Dynamic Portfolio Creation
ValueWalk's Raul Panganiban interviews Jim O’Shaughnessy, Chairman, Co-chief Investment Officer, and Portfolio Manager at O’Shaughnessy Asset Management. In this part, Jim discusses "dynamic portfolio creation', the next version of what works on Wall Street. Q1 2020 hedge fund letters, conferences and more Makes complete sense. Now, getting back to the factor, can you walk me Read More
- US: Dow: 12943.30 (0.27%), S&P 500: 1376.51 (0.27%), NASDAQ: 2965.90 (0.79%)
- Europe: CAC: 3263.64 (0.87%), DAX: 6758.39 (1.09%), FTSE: 5714.19 (0.50%).
- Asia-Pacific: Australia: 4206.70 (2.02%), China: 2184.84 (0.72%), Hong Kong: 19559.05 (1.63%), India: 5242.70 (0.51%), Japan: 8795.55 (0.78%).
- Metals: Gold: 1580.40 (0.61%), Silver: 27.22 (0.45%), Copper: 3.53 (1.74%)
- Energy: Crude Oil: 92.66 (3.10%), Natural Gas: 3.00 (0.87%)
- Commodities: Corn: 7.78 (-0.73%), Soya Bean: 16.52 (1.99%), Wheat: 9.34 (2.41%)
- Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2279 (0.02%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5723 (-0.43%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 78.5850 (-0.28%)
- 10 year US Treasury: 1.508% (0.014)
Market and Economy News Update
U.S. markets end higher: U.S. markets closed higher, amid some strong corporate results, and investor optimism that disappointing economic data will convince the Fed to adopt more stimulus measures. The Dow Jones Industrial Average (INDEXDJX:.DJI) rose 34.66 points, or 0.27 percent, to finish at 12,943.36. The S&P 500 (INDEXSP:.INX) added 3.73 points, or 0.27 percent, to finish at 1,376.51, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) climbed 23.30 points, or 0.79 percent, to end at 2,965.90.
Oil prices rally: Oil prices increased for the seventh consecutive day, to reach an eight week high after tensions in the Middle East reinforced concerns about supply disruptions. Crude oil for August delivery increased 3.1 percent, to settle at $92.66 a barrel on the New York Mercantile Exchange. Brent oil for September settlement climbed 2.4 percent to $107.64 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
- Google Inc (NASDAQ:GOOG) reported second-quarter earnings, excluding certain items of, $10.12 per share, that beat the average analysts’ estimate of $10.04 a share. Revenue increased 21 percent to $8.36 billion, but trailed estimates of $8.41 billion.
- Microsoft Corporation (NASDAQ:MSFT) posted fiscal fourth quarter earnings, excluding items of 67 cents per share, on revenue of $18.06 billion. Analysts were expecting the company to report earnings excluding items of 62 cents per share on $18.12 billion in revenue.
- Advanced Micro Devices, Inc. (NYSE:AMD) reported second quarter adjusted profit of $46 million, or 6 cents per share, on revenues of $1.41 billion, an 11 percent dip from the same period last year, amid weaker demand for its processors in China and Europe.
- SanDisk Corporation (NASDAQ:SNDK) reported second quarter profit, excluding some items, of 21 cents a share, 3 cents above estimates. The stock jumped 8 percent in late trading.
- E Trade Financial Corporation (NASDAQ:ETFC) said second-quarter net income fell to $39.5 million, or 14 cents a share, from $47.1 million, or 16 cents a share in the year ago period, amid lower revenue from commissions and fees.
- Chipotle Mexican Grill, Inc. (NYSE:CMG) reported a 61 percent jump in second quarter profit to $81.7 million, or $2.56 a share, from $50.7 million, or $1.59 a share, a year ago. Revenue increased 21 percent to $690.9 million, but missed estimates.
- Intuitive Surgical, Inc. (NASDAQ:ISRG) reported better than expected second quarter profit and revenue amid strong growth in sales of its da Vinci surgical robots. Gross margin remained flat at 72 percent.
- People’s United Financial, Inc. (NASDAQ:PBCT) reported a 27 percent rise in second quarter net income to $64.8 million, or 19 cents a share, from $51.2 million, or 15 cents a share, a year earlier. However, the lender’s net interest margin fell to 3.97 percent, from 4.13 percent in the year ago quarter.
- Chipmaker Freescale Semiconductor Ltd (NYSE:FSL) posted second quarter earnings of 7 cents a share on sales of $1.03 billion, beating estimates of earnings of 2 cents a share on revenue of $1 billion. The company, however, provided a disappointing current quarter revenue outlook.
- NVR, Inc. (NYSE:NVR), one of the nation’s largest homebuilders, reported second quarter earnings per share of $8.97, topping estimates, but revenue growth came in below expectations.
- Supermarket chain Safeway Inc. (NYSE:SWY) reported forecast beating second quarter earnings and revenue, but gross margin fell due to higher costs.
- Textron Inc. (NYSE:TXT) posted second-quarter earnings that easily beat Street estimates, while revenue jumped 11 percent to $3.02 billion, due to strong demand for its Bell helicopters and Cessna planes
- Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) reported second quarter earnings per share of 74 cents, on revenue of $4.47 billion. Analysts were expecting earnings of 79 cents per share on $4.48 billion in revenue.
- Data-storage company Mellanox Technologies, Ltd. (NASDAQ:MLNX) soared in trade today after reporting better than expected second quarter earnings on record breaking revenue.
- Paint maker PPG Industries, Inc. (NYSE:PPG) has agreed to merge its commodity chemicals unit with Georgia Gulf Corporation (NYSE:GGC) in a $2.1 billion cash-and-stock deal.
- Union Pacific Corporation (NYSE:UNP), the largest North American railroad, posted second quarter earnings that beat Street estimates, boosted by an improvement in margins on lower fuel costs.
- Chipmaker Skyworks Solutions Inc (NASDAQ:SWKS) reported better than expected third quarter earnings, and said revenue jumped 9 percent, also topping estimates.
- Laboratory-testing providers, Quest Diagnostics Inc (NYSE:DGX) and Laboratory Corp. of America Holdings (NYSE:LH), reported second-quarter profits, in line with analysts’ estimates, but lowered their full-year revenue forecasts.
- Anadarko Petroleum Corporation (NYSE:APC) has failed to settle a $25 billion lawsuit concerning environmental liabilities, brought by Tronox Incorporated (PINK:TROX), and a trial will resume on July 24, Bloomberg reported.
- Yahoo! Inc. (NASDAQ:YHOO) new chief executive Marissa Mayer will receive a base salary of $1 million, with an additional $15 million if she stays as chief for five years, according to a filing.
Hedge Fund News Update
- Hedge fund managers Whitney Tilson and Glenn Tongue of T2 Partners LLC have decided to part ways, according to a letter sent to investors on June 22.
- Hedge funds saw net inflows of $4.1 billion in the second quarter of 2012, but hedge fund capital dropped 1.3 percent to $2.1 trillion from $2.13 trillion in the first quarter, data from Hedge Fund Research showed.
- Newly-launched hedge funds in Asia have managed to raise $2 billion in the first half of the year, a 50 percent over the previous six months, according to a survey conducted by industry tracker AsiaHedge, which is a part of Britain-based HedgeFund Intelligence.
- Hong Kong-based, Asia-focused event-driven hedge fund, Senrigan Capital, slumped close to 15 percent in the first six months of this year, Bloomberg reported. The Senrigan Master Fund saw assets drop to about $754 million at the end of June, after crossing the $1 billion mark at the start of the year.
- According to the HFRX Global Hedge Fund Index, the average hedge fund edged 0.56 percent higher in the first couple of weeks of July.
- Hong Kong-based hedge fund Expedition Advisors has hired former chief executive of Mizuho Securities Asia Ltd, John Paul Armenio, as a managing partner.
Earnings Calendar for Friday, July 20, 2012
The following companies will report earnings before market open:
American Electric Power Company, Inc. (NYSE:AEP), Baker Hughes Incorporated (NYSE:BHI), First Horizon National Corporation (NYSE:FHN), General Electric Company (NYSE:GE), Schlumberger Limited. (NYSE:SLB), SunTrust Banks, Inc. (NYSE:STI), Xerox Corporation (NYSE:XRX).
11:00 A.M. ET: Ingersoll-Rand PLC (NYSE:IR).
Brokerage Upgrades and Downgrades on Thursday, July 19, 2012
- athenahealth, Inc (NASDAQ:ATHN) was raised to “buy” from “neutral” by analysts at Citigroup with a target price of $110.
- Dominion Resources, Inc. (NYSE:D) was lifted to “neutral” from “underweight” by analysts at JPMorgan Chase.
- Diamond Offshore Drilling, Inc. (NYSE:DO) was raised to “neutral” from by analysts at Capital One.
- Dover Corporation (NYSE:DOV) was upgraded to “outperform” from “market perform” by analysts at William Blair.
- FirstEnergy Corp. (NYSE:FE) was lifted to “hold” from “underperform” by analysts at Jefferies Group.
- Hyatt Hotels Corporation (NYSE:H) was raised to “positive” from “neutral” by analysts at Susquehanna.
- MarketAxess Holdings Inc. (NASDAQ:MKTX) was upgraded to “strong buy” from “outperform” by analysts at Raymond James.
- Sally Beauty Holdings, Inc. (NYSE:SBH) was lifted to “buy” from “above average” at by analysts at Caris & Co. with a target price of $31.
- Susser Holdings Corporation (NASDAQ:SUSS) was raised to “outperform” from “market perform” by analysts at RBC Capital.
- Skyworks Solutions Inc (NASDAQ:SWKS) was upgraded to “buy” from “neutral” by analysts at Sterne Agee with a target price of $31.
- Air Methods Corporation (NASDAQ:AIRM) was downgraded to “equal weight” from “overweight” by analysts at Stephens.
- A.O. Smith Corporation (NYSE:AOS) was cut to “neutral” from “buy” by analysts at Sterne Agee. A.O. Smith Corporation (NYSE:AOS) was also lowered to “hold” from “buy” at KeyBanc.
- Arris Group, Inc. (NASDAQ:ARRS) was downgraded to “outperform” from “strong buy” at Raymond James.
- Ceradyne, Inc. (NASDAQ:CRDN) was lowered to “hold” from “buy” by analysts at Benchmark Co. with a target price of $25.
- 3D Systems Corporation (NYSE:DDD) was cut to “underweight” from “neutral” by analysts at JPMorgan Chase.
- East West Bancorp, Inc. (NASDAQ:EWBC) was downgraded to “neutral” from “buy” by analysts at Sterne Agee.
- ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) was downgraded by analysts at Barrington Research from “buy” to “underperform.”
- KBR, Inc. (NYSE:KBR) was cut by analysts at Goldman Sachs from “conviction buy” to “buy.”
- Public Service Enterprise Group Inc. (NYSE:PEG) was lowered to “neutral” from “buy” by analysts at Citigroup.
- Quanta Services Inc (NYSE:PWR) was cut to “sell” from “neutral” by analysts at Goldman Sachs.
- ResMed Inc. (NYSE:RMD) was downgraded by analysts at Feltl & Co. from “buy” to “hold” with a target price of $35.75.
- Theravance Inc (NASDAQ:THRX) was lowered to “market perform” from “outperform” by analysts at Sanford C. Bernstein.