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ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
• US: Dow: 12788.50 (-0.06%), S&P 500: 1387.88 (0.07%), NASDAQ: 2916.68 (0.02%)
• Europe: CAC: 3462.06 (0.65%), DAX: 7172.99 (0.69%), FTSE: 5748.10 (0.18%).
• Asia-Pacific: Australia: 4385.70 (0.56%), China: 2008.92 (-0.40%), Hong Kong: 21228.28 (-0.16%), India: 5571.55 (0.00%), Japan: 9142.64 (-0.12%).
• Metals: Gold: 1723.60 (-0.62%), Silver: 32.93 (-0.78%), Copper: 3.52 (-0.31%)
• Energy: Crude Oil: 86.75 (-2.83%), Natural Gas: 3.83 (3.04%)
• Commodities: Corn: 7.46 (0.57%), Soya Bean: 14.12 (1.29%), Wheat: 8.60 (0.32%)
• Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2819 (-0.29%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5925 (-0.11%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 81.6750 (0.43%)
• 10 year US Treasury: 1.666% (0.051)
Market and Economy News Update
U.S. markets end largely unchanged: U.S. markets ended flat in a choppy session of trading on Tuesday as Federal Reserve Chairman Ben Bernanke urged lawmakers to end the uncertainty over the so-called fiscal cliff. The Dow Jones Industrial Average (INDEXDJX:.DJI) erased 7.45 points, or 0.06 percent, to close at 12,788.51. The S&P 500 (INDEXSP:.INX) eked out a gain of 0.92 points, or 0.07 percent, to end at 1,387.81. The NASDAQComposite (INDEXNASDAQ:.IXIC) slipped 0.61 points, or 0.02 percent, to finish at 2,916.68.
Oil prices fall: Oil prices declined on Tuesday amid hopes that an imminent cease-fire on the Gaza Strip would ease concerns over supply risks in the Middle East. Crude oil for December delivery lost 2.8 percent, to settle at $86.75 a barrel on the New York Mercantile Exchange. Brent oil for December settlement slid 1.4 percent to $110.17 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
• salesforce.com, inc. (NYSE:CRM) reported third quarter adjusted earnings of 33 cents a share, on revenue of $788 million, compared to Street expectations for earnings of 32 cents per share on revenue of $776.5 million.
• Advertising company Interpublic Group of Companies, Inc. (NYSE:IPG) fell 0.1 percent after it sold its remaining investment in Facebook Inc (NASDAQ:FB) for proceeds of $95 million in cash.
• Homebuilders, PulteGroup, Inc. (NYSE:PHM), Lennar Corporation (NYSE:LEN), Hovnanian Enterprises, Inc. (NYSE:HOV), Toll Brothers Inc (NYSE:TOL) and D.R. Horton, Inc. (NYSE:DHI) all ended higher as October housing starts rose to their highest rate in four years.
• Teavana Holdings, Inc. (NYSE:TEA) fell 4.5 percent amid investor concerns that Starbucks Corporation (NASDAQ:SBUX) could walk away from buying the Atlanta-based tea seller following a report that pesticides in its tea leaves exceeded government regulations.
• Caterpillar Inc. (NYSE:CAT) said global sales of its construction and mining equipment grew 8 percent in the three months to the end of October.
• Cooper Tire & Rubber Company (NYSE:CTB) lost 0.3 percent on reports that India’s Apollo Tyres Limited (NSE:APOLLOTYRE) (BOM:500877) has “put on hold” its plans to acquire the company.
• Medtronic, Inc. (NYSE:MDR), the world’s largest medical device maker, rose 2 percent amid signs that its key heart and spine markets were stabilizing. The company reported second-quarter earnings in line with analysts’ expectations.
• Rupert Murdoch’s News Corp (NASDAQ:NWSA) (NASDAQ:NWS) has agreed to acquire a 49 stake in New York-based sports channel YES Network in a deal that values the entire network at about $3 billion.
• Schiff Nutrition International Inc (NYSE:SHF) tumbled 5.2 percent after Bayer AG (ETR:BAYN) (FRA:BAYN) decided not to top Reckitt Benckiser Group Plc (LON:RB)’s $42 a share bid for the vitamin maker.
• Patterson Companies, Inc. (NASDAQ:PDCO) closed 8.4 percent lower after the company said second-quarter earnings declined 7 percent on weak sales growth. The medical supply firm also lowered its full-year earnings outlook.
• Daktronics, Inc. (NASDAQ:DAKT) jumped 15 percent after posting better than expected second quarter earnings and revenue.
• Shoe Carnival, Inc. (NASDAQ:SCVL) plunged 11 percent after the footwear retailer offered current quarter earnings guidance below Street forecasts.
• Sunshine Heart Inc (NASDAQ:SSH) said it received unconditional approval from the U.S. Food and Drug Administration to begin an important trial for its implantable heart device, C-Pulse Heart Assist System.
• Energy company Inergy, L.P. (NYSE:NRGY) swung to a fourth-quarter profit of $540 million, or $4.10 a unit, compared to a loss of $50.2 million, or 42 cents a unit, in the year-ago period. Revenue dropped 32 percent to $304.2 million. Analysts had forecast a loss of six cents a share on revenue of $288 million.
• Chinese solar panel maker Trina Solar Limited (ADR) (NYSE:TSL) reported a bigger than expected third-quarter net loss and lowered its full-year shipment outlook for the second time in four months.
• Brown Shoe Company, Inc. (NYSE:BWS) posted third quarter earnings excluding items of 60 cents a share, on revenue of $732.2 million. Analysts were expecting the footwear retailer to earn 46 cents a share on revenue of $703 million.
• Becton, Dickinson and Co. (NYSE:BDX) raised its quarterly dividend 10 percent to 49.5 cents per share.
• Boston-based money manager Eaton Vance Corp (NYSE:EV) reported fourth quarter earnings excluding items of 53 cents per share, 5 cents above the average analysts’ estimate. Assets under management rose to $199.5 billion, compared with $188.2 billion a year earlier and $192.9 billion as of July 31.
Hedge Fund News Update
• Carl Ichan has raised his stake in embattled natural gas producer Chesapeake Energy Corporation (NYSE:CHK) to 8.9 percent from 7.56 percent, according to a regulatory filing. https://www.valuewalk.com/2012/11/carl-icahn-owns-9-of-chesapeake-energy-corporation-chk/
• Federal authorities have charged a former portfolio manager at SAC Capital in connection with an insider trading scheme that prosecutors are calling the most lucrative case of its kind. https://www.valuewalk.com/2012/11/insider-trading-lawsuit-lobbed-against-former-sac-capital-pm/
• Chris Cooper-Hohn, the founder of The Children’s Investment Fund, said Italian automaker Fiat SpA (BIT:F) was a good stock to short as he believed its debt levels were higher than what the market anticipates.
• The $9.7 billion Chicago Public School Teachers’ Pension and Retirement Fund might drop K2 Advisors and Mesirow Advanced Strategies, and could get out of the hedge fund asset class entirely amid liquidity concerns.
• London-based Matterhorn Investment Management will launch a South-east Asia focused emerging-markets hedge fund early next year, according to a report in The Wall Street Journal.
Brokerage Upgrades and Downgrades on Tuesday, November 20, 2012
• Archer Daniels Midland Company (NYSE:ADM) was lifted to “outperform” from “market perform” by analysts at BMO Capital Markets with a target price of $32.
• AK Steel Holding Corporation (NYSE:AKS) was upgraded to “neutral” from “sell” by analysts at Goldman Sachs with a target price of $3.50.
• American Axle & Manufact. Holdings, Inc. (NYSE:AXL) was raised to a “hold” rating from an “underperform” rating by analysts at Jefferies Group with a target price of $9.
• Boardwalk Pipeline Partners, LP (NYSE:BWP) was lifted to “outperform” from “neutral” by analysts at Credit Suisse with a target price of $29.
• Citi Trends, Inc. (NASDAQ:CTRN) was upgraded to “buy” from “neutral” by analysts at Citigroup with a target price of $18.
• Expedia Inc (NASDAQ:EXPE) was raised to “equal weight” from “underweight” by analysts at Barclays Capital with a target price of $60.
• Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) was lifted to “outperform” from “perform” by analysts at Williams Capital with a target price of $40.
• Joy Global Inc. (NYSE:JOY) was upgraded to “market perform” from “underperform” by analysts at BMO Capital Markets with a target price of $64.
• Nuvista Energy Ltd. (TSE:NVA) was raised to “buy” from “sell” by analysts at Canaccord Genuity with a target price of $5.75.
• Peoples Bancorp Inc. (NASDAQ:PEBO) was lifted to “outperform” from “market perform” by analysts at Raymond James with a target price of $21.
• Penn National Gaming, Inc (NASDAQ:PENN) was upgraded to a “neutral” from “sell” by analysts at Goldman Sachs with a target price of $49.
• Pentair, Ltd. (NYSE:PNR) was raised to “outperform” from “neutral” by analysts at Robert W. Baird with a target price of $60.
• SVB Financial Group (NASDAQ:SIVB) was lifted to “buy” from “neutral” by analysts at Citigroup with a target price of $63.
• Vantiv Inc (NYSE:VNTV) was upgraded to “buy” from “neutral” by analysts at Citigroup.
• Whole Foods Market, Inc. (NASDAQ:WFM) was raised to “buy” from “neutral” by analysts at Goldman Sachs with a target price of $106.
• Zipcar Inc (NASDAQ:ZIP) was lifted to “buy” from “neutral” by analysts at Goldman Sachs with a target price of $8.75.
• AMC Networks Inc (NASDAQ:AMCX) was downgraded to “below average” from “average” by analysts at Caris & Co.
• ARM Holdings plc (ADR) (NASDAQ:ARMH) was lowered to “outperform” from “strong buy” by analysts at Raymond James with a target price of $38.
• America’s Car-Mart, Inc. (NASDAQ:CRMT) was cut to “neutral” from “buy” by analysts at CL King.
• CSX Corporation (NYSE:CSX) was downgraded to “market perform” from “outperform” by analysts at Avondale Partners.
• Emerson Electric Co. (NYSE:EMR) was lowered by analysts at Oppenheimer from an “outperform” rating to a “perform” rating with a target price of $53.
• Ford Motor Company (NYSE:F) was cut to “hold” from “buy” by analysts at Standpoint Research.
• Greif, Inc. (NYSE:GEF) was downgraded to “market perform” from “outperform” by analysts at Wells Fargo & Co.
• Laredo Petroleum Holdings Inc (NYSE:LPI) was lowered by analysts at BMO Capital Markets from an “outperform” rating to a “market perform” rating with a target price of $22.
• Shoe Carnival, Inc. (NASDAQ:SCVL) was cut to “market perform” from “outperform” by analysts at Avondale Partners.
• Tech Data Corp (NASDAQ:TECD) was downgraded to “outperform” from “buy” by analysts at Credit Agricole.
• Yangarra Resources Ltd. (CVE:YGR) was lowered by analysts at Raymond James from an “outperform” rating to a “market perform” rating with a target price of $0.50.