Relying On Old-Fashioned Stock Picking, Lee Ainslie Reports His “Strongest Quarter” Ever
Lee Ainslie's Maverick Fund USA enjoyed its "strongest quarter in the fund's history" during the three months to the end of June. According to a copy of the firm's second-quarter letter to investors, which ValueWalk has been able to review, Maverick Fund USA gained 18% in the second quarter. Following this performance, the fund was Read More
Every afternoon we provide an update on global market levels, company news, economic news, and hedge fund news. In focus today; FB, AMZN, SBUX, NG, MHP, LO, MCO, GR, UTX, ABX
Post Market Update
- US: Dow: 12887.90 (1.67%), S&P 500: 1360.02 (1.65%), NASDAQ: 2893.25 (1.37%)
- Europe: CAC: 3207.12 (3.97%), DAX: 6582.96 (2.68%), FTSE: 5573.16 (1.34%).
- Asia-Pacific: Australia: 4147.70 (0.58%), China: 2126.00 (-0.48%), Hong Kong: 18892.79 (0.08%), India: 5043.00 (-1.30%), Japan: 8443.10 (0.91%).
- Metals: Gold: 1615.10 (0.44%), Silver: 27.45 (-0.07%), Copper: 3.39 (0.56%)
- Energy: Crude Oil: 89.39 (0.47%), Natural Gas: 3.10 (1.14%)
- Commodities: Corn: 7.76 (-1.49%), Soya Bean: 15.67 (-2.97%), Wheat: 8.97 (-1.94%)
- Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2280 (-1.05%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5687 (-1.21%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 78.1950 (0.08%)
- 10 year US Treasury: 1.438% (0.040)
Market and Economy News Update
U.S. markets soar: US markets rallied on Thursday amid better than expected economic reports and positive comments from European Central Bank President Mario Draghi. The Dow Jones Industrial Average (INDEXDJX:.DJI) surged 211.88 points, or 1.67 percent, to close at 12,887.93. The S&P 500 (INDEXSP:.INX) jumped 22.13 points, or 1.65 percent, to finish at 1,360.02, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) soared 39.01 points, or 1.37 percent, to end at 2,893.25.
Oil prices rise: Oil prices increased for the third consecutive day amid investor optimism over ECB president Mario Draghi’s statement that the central bank would do everything possible to protect the euro zone from collapse. Crude oil for August delivery gained 0.5 percent, to settle at $89.39 a barrel on the New York Mercantile Exchange. Brent oil for September settlement increased 1 percent to $105.48 a barrel on the London-based ICE Futures Europe exchange. Stocks in Focus Facebook Inc (NASDAQ:FB) reported second-quarter earnings excluding items of 12 cents per share, in line with estimates, while revenue for the quarter stood at $1.18 billion, topping Street expectations of $1.15 billion.
Amazon.com, Inc. (NASDAQ:AMZN) said second-quarter net income plunged more than 90 percent to $7 million, or 1 cent per share, compared to $191 million, or 41 cents per share, in the year-ago period. Revenue for the quarter came in at $12.83 billion. Analysts were expecting earnings of 2 cents per share on revenue of $12.88 billion. The Internet retailer also forecast third quarter revenue below Street estimates.
·Starbucks Corporation (NASDAQ:SBUX) reported fiscal third-quarter earnings excluding items of 43 cents per share, 2 cents below the average analysts’ estimate. Revenue came in at $3.33 billion, in line with expectations.
- Expedia Inc (NASDAQ:EXPE) reported second quarter earnings excluding special items of 89 cents per share, on $1.04 billion in revenue that beat Street estimates of earnings of 71 cents per share, with revenue of $990 million. The online travel agent also increased its quarterly dividend by 44 percent to 13 cents per share.
- Amgen, Inc. (NASDAQ:AMGN) posted second quarter earnings excluding items of $1.83 per share on revenue of $4.48 billion that easily beat Street expectations for $1.54 a share on revenue of $4.08 billion. The company also boosted its full-year outlook.
- McKesson Corporation (NYSE:MCK) reported fiscal first-quarter earnings excluding special items of $1.55 per share, 7 cents above the average analysts’ estimate. Revenue increased 3 percent to $30.8 billion, but trailed Street expectations of $31.1 billion.
- Biotechnology company Gilead Sciences, Inc. (NASDAQ:GILD) posted earnings excluding one-time items of 99 cents a share, on revenue of $2.41 billion that beat consensus estimates of 95 cents a share on $2.29 billion in revenue.
- Coinstar, Inc. (NASDAQ:CSTR) posted second quarter earnings of $1.11 a share on revenue of $532 million, trailing the average analysts’ estimate of $1.16 a share on $545 million in revenue.
- Dunkin Brands Group Inc (NASDAQ:DNKN) closed 3 percent lower after reporting a second quarter same store sales growth of 4 percent that trailed analysts’ expectations of a 5.2 percent rise.
- The McGraw-Hill Companies, Inc. (NYSE:MHP) reported second quarter earnings excluding one-time items of 85 cents a share that easily beat the average analysts’ estimate of 76 cents per share. Revenue came in at $1.55 billion that trailed expectations of $1.59 billion. The New York-based company also raised its full-year earnings forecast.
- MetroPCS Communications Inc (NYSE:PCS) reported better than expected second-quarter net income of $148.8 million, or 41 cents per share, compared to $84.3 million, or 23 cents per share, a year ago. Revenue for the quarter increased 6 percent to $1.28 billion, also above analyst expectations of $1.26 billion.
- United Technologies Corporation (NYSE:UTX) has completed the $16.5 billion acquisition of aircraft equipment maker Goodrich Corporation (NYSE:GR).
- Energy company Valero Energy Corporation (NYSE:VLO) increased its quarterly dividend by 16.7 percent to $0.175 per share from $0.15 per share.
- Cliffs Natural Resources Inc (NYSE:CLF) reported second quarter net profit of $258 million, or $1.81 per share, compared with $409 million, or $2.92 per share, in the year ago quarter. Revenue fell 10 percent to $1.6 billion, and the Cleveland-based miner also cut its production outlook at its Canadian unit.
- Moody’s Corporation (NYSE:MCO) posted second quarter earnings per share of 76 cents, 5 cents above the consensus estimate. Revenue for the quarter also increased 6 percent for the year ago period.
- Terex Corporation (NYSE:TEX) closed 29 percent higher after reporting strong second quarter profit and sales, and forecasting better than expected earnings for the rest of the year.
Hedge Fund News Update
- John Paulson’s New York-based Paulson & Co., which holds a 13 percent stake in NovaGold Resources Inc. (USA) (NYSEAMEX:NG), may have lost as much as $64 million, after the stock slumped following the cancellation of a joint venture with Barrick Gold Corporation (USA) (NYSE:ABX), Bloomberg reported.
- The 1.1 billion pound ($1.7 billion) Church of England’s pension fund has hired hedge fund managers, Bridgewater Associates, BlackRock Advisors and Winton Capital to boost returns, as well as provide diversification.
- Christopher Mikosh, the former Goldman Sachs managing director in Hong Kong, is planning to launch a credit hedge fund by the fourth quarter of this year or early next year.
- According to Canadian hedge fund manager, Albert Friedberg, the country’s banks are overvalued and ripe for a fall.
- The number of hedge funds in Israel has jumped 162 percent since 2006, according to a survey by New York-based fund administrator Tzur Management.
Brokerage Upgrades and Downgrades on Thursday, July 26, 2012
- AllianceBernstein Holding LP (NYSE:AB) was raised to “neutral” from “underperform” by analysts at Bank of America.
- Agnico-Eagle Mines Limited (USA) (NYSE:AEM) was raised to “outperform” from “sector perform” by analysts at Scotia Capital.
- Basic Energy Services, Inc. (NYSE:BAS) was lifted to “buy” from “sell” by analysts at Goldman Sachs.
- Christopher & Banks Corporation (NYSE:CBK) was upgraded to “overweight” from “neutral” by analysts at Piper Jaffray.
- Flushing Financial Corporation (NASDAQ:FFIC) was lifted to “outperform” from “market perform” by analysts at Raymond James.
- LSI Corporation (NYSE:LSI) was raised to “outperform” from “underperform” by analysts at Credit Agricole.
- Magellan Midstream Partners, L.P. (NYSE:MMP) was upgraded to “outperform” from “neutral” by analysts at Credit Suisse.
- Pioneer Drilling Co (NYSE:PDC) was lifted to “buy” from “neutral” by analysts at Goldman Sachs.
- Spreadtrum Communications, Inc (ADR) (NASDAQ: SPRD) was raised to “overweight” from “equal weight” by analysts at Morgan Stanley.
- Tractor Supply Company (NASDAQ:TSCO) was upgraded to “overweight” from “neutral” by analysts at JPMorgan Chase.
- Arch Coal Inc (NYSE:ACI) was downgraded to “hold” from “buy” by analysts at Stifel Nicolaus.
- Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) was cut to “neutral” from “buy” by analysts at Goldman Sachs with a target price of $108.
- Chico’s FAS, Inc. (NYSE:CHS) was downgraded to “underweight” from “equal weight” at Morgan Stanley.
- International Game Technology (NYSE:IGT) was lowered to “equal weight” from “overweight” by analysts at Morgan Stanley.
- General Moly, Inc. (NYSEAMEX:GMO) was cut to “underperform” from “neutral” by analysts at Bank of America.
- Lorillard Inc. (NYSE:LO) was downgraded to “neutral” from “buy” by analysts at Citigroup.
- Noble Corporation (NYSE:NE) was downgraded by analysts at Goldman Sachs from “buy” to “neutral.”
- Ross Stores, Inc. (NASDAQ:ROST) was cut by analysts at Nomura from “buy” to “neutral.”
- Weatherford International Ltd (NYSE:WFT) was lowered to “neutral” from “buy” by analysts at Goldman Sachs.
Earnings Calendar for Friday, July 27, 2012
Before market open:
Aon PLC (NYSE:AON)
Coventry Health Care, Inc. (NYSE:CVH)
Chevron Corporation (NYSE:CVX)
D.R. Horton, Inc. (NYSE:DHI)
DTE Energy Company (NYSE:DTE)
Helmerich & Payne, Inc. (NYSE:HP)
Legg Mason, Inc. (NYSE:LM)
Merck & Co., Inc. (NYSE:MRK)
Newmont Mining Corp (NYSE:NEM)
Newell Rubbermaid Inc. (NYSE:NWL)
Weyerhaeuser Company (NYSE:WY)