Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
- US: Dow: 13333.30 (0.07%), S&P 500: 1436.56 (0.21%), NASDAQ: 3114.31 (0.32%)
- Europe: CAC: 3543.79 (0.18%), DAX: 7343.53 (0.46%), FTSE: 5782.08 (-0.17%).
- Asia-Pacific: Australia: 4361.30 (0.82%), China: 2126.55 (0.28%), Hong Kong: 20075.39 (1.08%) India: 5431.00 (0.76%), Japan: 8959.96 (1.70%).
- Metals: Gold: 1733.70 (-0.07%), Silver: 33.29 (-0.82%), Copper: 3.69 (-0.12%)
- Energy: Crude Oil: 97.01 (-0.16%), Natural Gas: 3.06 (2.37%)
- Commodities: Corn: 7.69 (-1.06%), Soya Bean: 17.45 (2.60%), Wheat: 8.90 (0.71%)
- Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2900 (-0.37%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.6107 (-0.24%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 77.8450 (0.06%)
- 10 year US Treasury: 1.758% (0.057)
Market and Economy News Update
U.S. markets end higher: U.S. markets ended the day modestly higher ahead of the Federal Reserve’s policy announcement. Earlier in the session, the Dow and the S&P 500 touched fresh multi-year intraday highs. The Dow Jones Industrial Average (INDEXDJX:.DJI) eked out a gain of 9.99 points, or 0.07 percent, to close at 13,333.35. The S&P 500 (INDEXSP:.INX) rose 3.00 points, or 0.21 percent, to end at 1,436.5, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) gained 9.78 points, or 0.32 percent, to finish at 3,114.31.
Oil prices fall: Oil prices declined in a choppy session on Wednesday after the Energy Information Administration said U.S. crude inventories rose 1.99 million barrels last week. Crude oil for October delivery slid 0.2 percent, to settle at $97.01 a barrel on the New York Mercantile Exchange. Brent oil for October settlement gained 0.2 percent to $115.58 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
- Apple Inc. (NASDAQ:AAPL) ended 1.4 percent higher after unveiling a thinner and lighter iPhone 5 that has a bigger screen and a new processor based on the next-generation ARM chips.
- Philip Morris International Inc. (NYSE:PM) raised its quarterly dividend by 10 percent to 85 cents a share from 77 cents a share.
- MetLife Inc (NYSE:MET) closed 2.1 percent lower after the Wall Street Journal reported that the Federal Deposit Insurance Corporation has not approved the sale of its banking business to General Electric Company (NYSE:GE).
- Abercrombie & Fitch Co. (NYSE:ANF) has retained Goldman Sachs Group, Inc. (NYSE:GS) as an advisor amid continued pressure from activist fund Relational Investors LLC, which reported an increased stake of 3.8 percent as of the second quarter.
- McDonald’s Corporation (NYSE:MCD) said it will begin posting calorie information, both on the menu board inside the restaurant as well as on the drive-through menu, at its U.S. stores next week.
- Yahoo! Inc. (NASDAQ:YHOO) is likely to announce next Wednesday the multibillion-dollar sale of half its assets in Chinese Internet giant Alibaba, All Things D reported.
- American Eagle Outfitters (NYSE:AEO) soared to its highest level in more than four years after the teen retailer declared a special dividend of $1.50 a share, in addition to its regular quarterly dividend of 11 cents a share.
- Footwear retailer DSW Inc. (NYSE:DSW) declared a special dividend of $2 a share
- Japanese trading company Itochu Corp (TYO:8001) is planning to acquire Dole Food Company, Inc. (NYSE:DOLE)’s packaged-foods business and its fruit and vegetable unit in Asia, for an estimated $1.7 billion, the Nikkei business daily reported.
- Oncolytics Biotech, Inc. (USA) (NASDAQ:ONCY) tanked 15 percent after the company announced changes to its study of its head and neck cancer drug, Reolysin
- The Boeing Company (NYSE:BA) fell 0.4 percent following news that British defense contractor BAE Systems plc (LON:BA) is in advanced merger talks with Airbus-owner EADS NV (EPA:EAD).
- Private equity firms KKR & Co. L.P. (NYSE:KKR), Apollo Global Management LLC (NYSE:APO) and Clayton Dubilier & Rice LLC are all considering a buyout of vehicle auction company, KAR Auction Services Inc (NYSE:KAR), in a deal that could be worth close to $4 billion, according to a Reuters report.
- Real estate investment trust Two Harbors Investment Corp (NYSE:TWO) slashed its quarterly dividend by 10 percent to 36 cents a share from 40 cents a share.
- Coffee roaster Coffee Holding Co., Inc. (NASDAQ:JVA) jumped 19 percent after the company said third quarter net income increased to $1.2 million, or 19 cents per share, from $168,236 million, or 3 cents per share, in the year ago quarter. Revenue for the quarter increased 24 percent to $44.5 million from $35.8 million, a year earlier.
- TheStreet, Inc. (NASDAQ:TST), owner of the financial website TheStreet.com, bought mergers and acquisition publication, The Deal from private equity firm Wasserstein & Co for $5.8 million in cash, according to a regulatory filing.
- Cruise company Royal Caribbean Cruises Ltd. (NYSE:RCL) raised its quarterly dividend by 20 percent to 12 cents a share from 10 cents a share.
- Energy-technology firm PMFG Inc (NASDAQ:PMFG) plunged 15 percent after reporting a fourth-quarter net loss, amid falling revenue that also trailed estimates.
Hedge Fund News Update
- Vancouver-based telecommunications provider Telus Corporation (USA) (NYSE:TU) (TSE:T) said a court has rejected a call by a New York hedge fund, and largest shareholder, Mason Capital Management LLC to hold a meeting of Telus shareholders on October 17 to consider a proposal to block its share consolidation plan.
- A U.S. judge has dismissed a six-year-old lawsuit in which Canadian insurer Fairfax Financial Holdings Limited (TSE:FFH) sought billions of dollars from hedge funds it claimed spread false rumors to drive down its stock price, according to a Reuters report.
- London-based hedge fund Capula Investment Management has hired Angelo Gordon & Co. distressed debt specialist, Steven Heanly, as a senior portfolio manager.
- Hong Kong-based hedge fund Pivotal Investments is planning to shut-down, and is returning capital to investors.
Brokerage Upgrades and Downgrades on Wednesday, September 12, 2012
- Agrium Inc. (USA) (NYSE:AGU) was raised to “buy” from “neutral” by analysts at Citigroup with a target price of $118.
- Black Hills Corp (NYSE:BKH) was lifted to “overweight” from “neutral” by analysts at JPMorgan Chase with a target price of $41.
- Federated Investors Inc (NYSE:FII) was upgraded to “neutral” from “sell” by analysts at Goldman Sachs with a target price of $20.
- Group 1 Automotive, Inc. (NYSE:GPI) was raised to “overweight” from “underweight” by analysts at Morgan Stanley.
- J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) was lifted to “buy” from “neutral” by analysts at Bank of America with a target price of $60.
- Kinder Morgan Inc (NYSE:KMI) was upgraded to “neutral” from “underperform” by analysts at Bank of America.
- Kohl’s Corporation (NYSE:KSS) was raised to “buy” from “hold” by analysts at Deutsche Bank with a target price of $62.
- PulteGroup, Inc. (NYSE:PHM) was lifted to a “buy” rating by analysts at Williams Financial Group.
- Rogers Communications Inc. (USA) (NYSE:RCI) was upgraded to “buy” from “neutral” by analysts at Bank of America.
- SkyWest, Inc. (NASDAQ:SKYW) was raised to “hold” from “sell” by analysts at Dahlman Rose.
- Amgen, Inc. (NASDAQ:AMGN) was downgraded to “neutral” from “outperform” by analysts at Robert W. Baird with a target price of $84.
- Cohen & Steers, Inc. (NYSE:CNS) was cut to “sell” from “neutral” by analysts at Goldman Sachs with a target price of $26.50.
- Exelon Corporation (NYSE:EXC) was downgraded to “sell” from “neutral” by analysts at UBS AG.
- Finish Line Inc (NASDAQ:FINL) was lowered to “underperform” from “neutral” by analysts at Sterne Agee with a target price of $20.
- Holly Energy Partners, L.P. (NYSE:HEP) was cut by analysts at Bank of America from a “neutral” rating to a “underperform” rating with a target price of $68.
- Mecom Group plc (LON:MEC) was downgraded to “underweight” from “neutral” by analysts at JPMorgan Chase with a target price of $1.68.
- Potash Corp./ Saskatchewan (USA) (NYSE:POT) was lowered to “neutral” from “buy” by analysts at Citigroup with a target price of $47.
- Sunoco, Inc. (NYSE:SUN) was cut to “equal weight” from “overweight” by analysts at Morgan Stanley.
- Standard Pacific Corp. (NYSE:SPF) was downgraded to “neutral” from “buy” by analysts at UBS AG with a target price of $7.
- Synaptics, Incorporated (NASDAQ:SYNA) was lowered to “hold” from “buy” by analysts at Needham & Company with a target price of $31.