Post Market Update
Vanguard’s move into PE may change the landscape forever
Private equity has been growing in popularity in recent years as more and more big-name funds and institutional investors dive in. Now even indexing giant Vanguard is out to take a piece of the PE pie. During a panel at the Morningstar Investment Conference this year, Fran Kinniry of Vanguard, John Rekenthaler of Morningstar and Read More
• US: Dow: 13077.30 (-0.19%), S&P 500: 1408.75 (-0.31%), NASDAQ: 2981.70 (-0.29%)
• Europe: CAC: 3426.49 (0.58%), DAX: 7192.85 (0.27%), FTSE: 5804.78 (0.12%).
• Asia-Pacific: Australia: 4505.80 (-0.82%), China: 2115.99 (0.07%), Hong Kong: 21763.78 (0.30%), India: 5691.40 (0.00%), Japan: 8954.30 (-0.67%).
• Metals: Gold: 1702.60 (-0.40%), Silver: 31.75 (-0.14%), Copper: 3.57 (0.14%)
• Energy: Crude Oil: 85.64 (-1.19%), Natural Gas: 3.43 (-2.83%)
• Commodities: Corn: 7.54 (-0.20%), Soya Bean: 15.72 (1.06%), Wheat: 8.84 (1.76%)
• Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2970 (-0.03%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.6042 (0.02%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 79.8100 (0.01%)
• 10 year US Treasury: 1.789% (0.032)
Market and Economy News Update
U.S. markets end lower: U.S. markets gave up gains made earlier in the day to close lower on Wednesday as investors remained cautious following some mixed corporate earnings reports. The Dow Jones Industrial Average (INDEXDJX:.DJI) dropped 25.19 points, or 0.19 percent, to close at 13,077.34. The S&P 500 (INDEXSP:.INX) lost 4.36 points, or 0.31 percent, to finish at 1,408.75, while the NASDAQComposite (INDEXNASDAQ:.IXIC) declined 8.76 points, or 0.29 percent, to end at 2,981.70.
Oil prices slide: Crude prices fell on Wednesday for the fifth straight session amid rising U.S. crude inventories and weak data from the euro zone. Crude oil stocks increased 5.9 million barrels last week, the U.S. Energy Information Administration said on Wednesday, against analysts’ expectations for an increase of 1.9 million barrels. Crude oil for December delivery lost 1.2 percent, to settle at $85.64 a barrel on the New York Mercantile Exchange. Brent oil for December settlement slid 0.4 percent to $107.83 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
• Zynga Inc (NASDAQ:ZNGA) reported a third quarter net loss of $52 million, but excluding the compensation costs, broke even, in line with Street expectations. Sales gained 3.2 percent to $316.6 million, topping estimates of $291.5 million. The social-gaming provider announced a share repurchase program of $200 million.
• Federal prosecutors sued Bank of America Corp (NYSE:BAC) on Wednesday, accusing it of causing taxpayers more than $1 billion of losses by selling thousands of toxic home loans to state-controlled mortgage financers Fannie Mae and Freddie Mac.
• Marathon Oil Corporation (NYSE:MRO) is in talks to sell a portion of its 20 percent stake in the Athabasca Oil Sands Project in Alberta, Canada, Reuters reported.
• Akamai Technologies, Inc. (NASDAQ:AKAM) posted third quarter earnings excluding one-time items of 27 cents a share, on sales of $345 million. Analysts had projected earnings of 41 cents a share on revenue of $338 million.
• Rene Obermann, chief executive of Deutsche Telekom AG (ETR:DTE) (FRA:DTE) is confident a deal to merge its unit, T-Mobile USA, with MetroPCS Communications Inc (NYSE:PCS) will go through, according to a Reuters report.
• Symantec Corporation (NASDAQ:SYMC) reported second quarter adjusted profit of 45 cents a share on revenue of $1.7 billion. Analysts had expected earnings of 38 cents a share on revenue of $1.66 billion. The security software company handed in current-quarter revenue outlook that topped estimates.
• Wynn Resorts, Limited (NASDAQ:WYNN) reported third quarter earnings excluding items of $1.48 a share that beat the consensus estimate of $1.34 a share. Revenue came in at $1.3 billion, trailing projections of $1.31 billion.
• Network appliances company F5 Networks, Inc. (NASDAQ:FFIV) posted fourth quarter earnings of $1.12 a share on revenue of $363 million, trailing estimates for $1.18 a share on sales of $366 million.
• Citrix Systems, Inc. (NASDAQ:CTXS) reported third quarter earnings excluding one-time items of 68 cents a share, on revenue of $641 million. Analysts were looking for earnings of 65 cents a share on revenue of $650 million. The tech company provided current-quarter revenue estimates that were below expectations.
• Molina Healthcare, Inc. (NYSE:MOH) rallied 14 percent after reporting better than expected third quarter net earnings of 7 cents per share.
• Visa Inc (NYSE:V) said its board has elected Charles Scharf, a former head of JPMorgan Chase & Co’s retail financial services division, as its chief executive officer, effective November 1. The company also announced a 50 percent hike in quarterly dividend to 33 cents per share from 22 cents per share.
• IAC/InterActiveCorp (NASDAQ:IACI) reported third quarter earnings excluding items of 71 cents per share, on revenue of $714.5 million. Analysts were looking for earnings of 66 cents per share on revenue of $692.8 million. Shares, however, slumped in trading, which the company attributed to a misinterpretation of its forecast by FactSet Research Systems.
• American Electric Power Company, Inc. (NYSE:AEP) posted third quarter earnings excluding one-time items of $1.02 a share, on revenue of $4.2 billion that trailed estimates of earnings of $1.03 a share on $4.6 billion in revenue.
• Honeywell International Inc. (NYSE:HON) agreed to buy Saia Burgess Control from Hong Kong-based Johnson Electric Holdings Limited (HKG:0179) for $130 million.
• Hudson City Bancorp, Inc. (NASDAQ:HCBK) reported third quarter earnings excluding items of 12 cents a share, 2 cents below the average analysts’ estimate. Net interest income fell 17 percent to $203.3 million, also trailing estimates of $218 million.
• Canadian insurance company Sun Life Financial Inc. (USA) (NYSE:SLF) (TSE:SLF) is seeking a buyer for a U.S. annuities business that is expected to fetch more than $1 billion, according to a Bloomberg report.
• Theme-park operator Six Flags Entertainment Corp (NYSE:SIX) reported a 31 percent rise I third quarter profit to $253 million, or $4.46 a share, from $192.9 million, or $3.43 a share, in the year-ago quarter. Revenue gained 2 percent to $485.1 million. The company raised its quarterly dividend by 50 percent to 90 cents a share.
• Specialty metals company Allegheny Technologies Incorporated (NYSE:ATI) said third quarter net income tumbled 43 percent to $35.3 million, or 32 cents per share, from $62.3 million, or 56 cents per share, a year earlier. Revenue dropped 10 percent to $1.22 billion. Analysts had projected a profit of 38 cents per share on revenue of $1.31 billion.
• Oil and gas drilling contractor Nabors Industries Ltd. (NYSE:NBR) is planning $1 billion more in asset sales next year to meet a target of cutting net debt to 25 percent of total capital, according to a Reuters report.
• Hardwood floor retailer Lumber Liquidators Holdings Inc (NYSE:LL) reported a 91 percent surge in third quarter profit to $12.9 million, or 46 cents a share, from $6.7 million, or 24 cents a share, in the same period last year. Sales jumped 19 percent to $204.3 million. Analysts had forecast earnings of 34 cents a share earnings on revenue of $190 million.
• InvenSense Inc (NYSE:INVN) closed 7 percent lower after the company said its founder and Chief Executive Steven Nasiri is stepping down.
• United Therapeutics Corporation (NASDAQ:UTHR) plunged 16 percent after the U.S. Food and Drug Administration declined to approve its oral drug to treat high blood pressure.
• Independent energy company Newfield Exploration Co. (NYSE:NFX) shed 18 percent after swinging to a third quarter loss of 24 cents a share from a profit of $1.99 a share in the year-ago quarter.
• Medical device maker NuVasive, Inc. (NASDAQ:NUVA) reported third quarter earnings excluding items of 23 cents a share, 2 cents above consensus estimate. Revenue increased 11.7 percent to $148.4 million from a year earlier, but trailed estimates of $154.4 million. The company lowered its full-year earnings outlook.
Hedge Fund News Update
• David Tepper’s Appaloosa Management LP was up 25 percent through Friday, partly from a bet that Europe will avoid a meltdown, The Wall Street Journal reported. The average hedge fund was up 4.7 percent through September, according to industry tracker HFR, while the S&P 500 (INDEXSP:.INX) recorded gains of 14 percent through Friday.
• Blackstone Group LP (NYSE:BX) is set to launch a multibillion-dollar fund that will buy stakes in hedge fund managers in the secondary market, according to a Reuters report.
• Herb Wagner, co-portfolio manager at Baupost Group LLC will leave the Boston-based hedge fund at the end of 2012 to start his own investment company, according to a Bloomberg report.
• Hedge funds with assets of less than $100 million have outperformed funds with over $500 million in assets in 13 out of the last 16 years according to hedge fund incubation platform IMQubator.
Brokerage Upgrades and Downgrades on Wednesday, October 24, 2012
• American Campus Communities, Inc. (NYSE:ACC) was lifted to “buy” from “neutral” by analysts at UBS AG.
• Bank of America Corp (NYSE:BAC) was upgraded to “overweight” from “neutral” by analysts at Atlantic Securities.
• Check Point Software Technologies Ltd. (NASDAQ:CHKP) was raised to a “buy” rating from a “hold” rating by analysts at Bank of America.
• Dollar Tree, Inc. (NASDAQ:DLTR) was lifted to “buy” from “neutral” by analysts at Goldman Sachs.
• Eagle Bancorp, Inc. (NASDAQ:EGBN) was upgraded to “outperform” from “market perform” by analysts at FBR Capital with a target price of $21.
• First Industrial Realty Trust, Inc. (NYSE:FR) was raised to “neutral” from “underweight” by analysts at JPMorgan Chase.
• Golar LNG Limited (USA) (NASDAQ:GLNG) was lifted to “outperform” from “market perform” by analysts at Wells Fargo & Co.
• Interactive Intelligence Group Inc (NASDAQ:ININ) was upgraded to “outperform” from “market perform” by analysts at Northland Securities.
• Myriad Genetics, Inc. (NASDAQ:MYGN) was raised to “buy” from “neutral” by analysts at Bank of America.
• RF Micro Device, Inc. (NASDAQ:RFMD) was lifted to “outperform” from “market perform” by analysts at Northland Securities.
• RTI Biologics Inc. (NASDAQ:RTIX) was upgraded to “market perform” from “underperform” by analysts at Raymond James.
• Spectra Energy Partners, LP (NYSE:SEP) was raised to “outperform” from “underperform” by analysts at Credit Suisse.
• Sensata Technologies Holdings N.V. (NYSE:ST) was lifted to “buy” from “neutral” by analysts at Janney Montgomery Scott.
• Whirlpool Corporation (NYSE:WHR) was upgraded to “strong buy” from “outperform” by analysts at Raymond James.
• Air Products & Chemicals, Inc. (NYSE:APD) was downgraded to “hold” from “buy” by analysts at KeyBanc Capital Markets.
• Atmel Corporation (NASDAQ:ATML) was lowered to “neutral” from “buy” by analysts at Nomura.
• Avista Corp (NYSE:AVA) was cut to “underperform” from “market perform” by analysts at BMO Capital Markets.
• Celestica Inc. (USA) (NYSE:CLS) was downgraded to “hold” from “buy” by analysts at Canaccord Genuity.
• Donaldson Company, Inc. (NYSE:DCI) was lowered by analysts at Jefferies Group from a “buy” rating to a “hold” rating.
• Illumina, Inc. (NASDAQ:ILMN) was cut to “underperform” from “outperform” by analysts at Credit Agricole.
• NetApp Inc. (NASDAQ:NTAP) was downgraded to “market perform” from “outperform” by analysts at BMO Capital Markets.
• Norfolk Southern Corp. (NYSE:NSC) was lowered by analysts at Citigroup from a “buy” rating to a “neutral” rating.
• Rare Element Resources Ltd (NYSEAMEX:REE) was cut to “hold” from “buy” by analysts at Dahlman Rose.
• United Therapeutics Corporation (NASDAQ:UTHR) was downgraded to “underweight” from “neutral” by analysts at JPMorgan Chase.
• Willis Group Holdings PLC (NYSE:WSH) was lowered by analysts at Miller Tabak from a “hold” rating to a “sell” rating with a target price of $31.63.
Earnings Calendar for Thursday, October 25, 2012
Before Market Open:
• Aetna Inc. (NYSE:AET)
• AutoNation, Inc. (NYSE:AN)
• Biogen Idec Inc. (NASDAQ:BIIB)
• Ball Corporation (NYSE:BLL)
• Bemis Company, Inc. (NYSE:BMS)
• Coca-Cola Enterprises Inc (NYSE:CCE)
• Celgene Corporation (NASDAQ:CELG)
• Colgate-Palmolive Company (NYSE:CL)
• CME Group Inc (NASDAQ:CME)
• CMS Energy Corporation (NYSE:CMS)
• FLIR Systems, Inc. (NASDAQ:FLIR)
• Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT)
• The Hershey Company (NYSE:HSY)
• International Paper Company (NYSE:IP)
• Mead Johnson Nutrition CO (NYSE:MJN)
• Mylan Inc. (NASDAQ:MYL)
• National-Oilwell Varco, Inc. (NYSE:NOV)
• Occidental Petroleum Corporation (NYSE:OXY)
• PACCAR Inc (NASDAQ:PCAR)
• Precision Castparts Corp. (NYSE:PCP)
• PulteGroup, Inc. (NYSE:PHM)
• Roper Industries, Inc. (NYSE:ROP)
• Raytheon Company (NYSE:RTN)
• Sprint Nextel Corporation (NYSE:S)
• Sherwin-Williams Company (NYSE:SHW)
• Simon Property Group, Inc (NYSE:SPG)
• Xcel Energy Inc (NYSE:XEL)
After Market Close:
• CA, Inc. (NASDAQ:CA)
• The Chubb Corporation (NYSE:CB)
• Cerner Corporation (NASDAQ:CERN)
• Cincinnati Financial Corporation (NASDAQ:CINF)
• Eastman Chemical Company (NYSE:EMN)
• Federated Investors Inc (NYSE:FII)
• Principal Financial Group Inc (NYSE:PFG)
• PerkinElmer, Inc. (NYSE:PKI)
• Varian Medical Systems, Inc. (NYSE:VAR)
• Verisign, Inc. (NASDAQ:VRSN)
Time not specified:
• Apple Inc. (NASDAQ:AAPL)
• Cabot Oil & Gas Corporation (NYSE:COG)
• ConocoPhillips (NYSE:COP)
• The Dow Chemical Company (NYSE:DOW)
• KLA-Tencor Corporation (NASDAQ:KLAC)
• The Procter & Gamble Company (NYSE:PG)