Post Market Update
Stocks that traded actively in U.S. markets on Friday include: The Boeing Company (NYSE:BA), Dell Inc. (NASDAQ:DELL), United Parcel Service, Inc. (NYSE:UPS), Yelp Inc (NYSE:YELP), Edwards Lifesciences Corp (NYSE:EW), Medtronic, Inc. (NYSE:MDT), US Airways Group Inc (NYSE:LCC), AMR Corporation (OTCMKTS:AAMRQ), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Cloud Peak Energy Inc. (NYSE:CLD).
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
US: Dow: 15464.30 (0.02%), S&P 500: 1680.17 (0.31%), NASDAQ: 3600.08 (0.61%)
Europe: CAC: 3855.09 (-0.36%), DAX: 8212.77 (0.66%), FTSE: 6544.94 (0.02%)
Asia-Pacific: Australia: 4973.90 (0.17%), China: 2039.49 (-1.64%), Hong Kong: 21277.28 (-0.75%), Japan: 14506.25 (0.23%).
Metals: Gold: 1277.60 (-0.18%), Silver: 19.79 (-0.82%), Copper: 3.16 (-0.71%)
Energy: Crude Oil: 105.95 (0.99%), Natural Gas: 3.64 (0.86%)
Commodities: Corn: 5.09 (-3.37%), Soya Bean: 12.57 (-2.60%), Wheat: 6.81 (-0.29%)
Currency: EUR/USD: 1.3066 (-0.24%), GBP/USD: 1.5105 (-0.52%), USD/JPY: 99.3400 (0.38%)
10-year US Treasury: 2.582% (0.010)
U.S. markets rally: Stocks squeezed out a small gain in a choppy session of trade, with the Dow Jones Industrial Average (INDEXDJX:.DJI) and the S&P 500 (INDEXSP:.INX) recording their second best weekly gains this year. On the economic front, Federal Reserve Bank of Philadelphia President Charles Plosser said the Fed should wind down quantitative easing by the end of 2013. In other economic news, Thomson Reuters/University of Michigan’s preliminary July consumer sentiment index fell to 83.9 from the final June reading of 84.1. Economists were expecting a figure of 85.0. The Dow Jones Industrial Average (INDEXDJX:.DJI) added 3.38 points to 15,464.30, while the S&P 500 (INDEXSP:.INX) climbed 5.17 points, or 0.3 percent, to 1,680.19. The NASDAQ (INDEXNASDAQ:.IXIC) gained 21.78 points, or 0.6 percent, to 3,600.08.
Oil prices soar: Oil prices jumped on Friday after a number of refinery outages raised concerns about fuel supplies. Crude oil for August delivery rallied 1 percent, to settle at $105.95 a barrel on the New York Mercantile Exchange. Brent oil for August settlement also added a percent to $108.85 a barrel on the London-based ICE Futures Europe exchange.
Stocks in News:
The Boeing Company (NYSE:BA)
Boeing shares suffered their worst one-day drop in nearly two years after London’s Heathrow Airport closed both its runways following a fire aboard an Ethiopian Airlines 787 Dreamliner jet. In a separate incident, a Florida-bound 787 aircraft operated by Britain’s Thomson Airways, was grounded due to “technical issues,” a spokesman for the airline said.
Dell Inc. (NASDAQ:DELL)
Activist investor Carl Icahn and Southeastern Asset Management Inc sweetened their bid for the computer maker by adding warrants to their offer which would increase the value of the offer to a range of $15.50 to $18.00 per share from $14 per share. The revised bid is Icahn’s latest effort to block the $13.65 a share go-private offer from founder Michael Dell and Silver Lake Partners. Dell shareholders are scheduled to vote on the offer on July 18. https://www.valuewalk.com/2013/07/icahns-sweetened-dell-deal/
United Parcel Service, Inc. (NYSE:UPS)
The package delivery company forecast second-quarter profit below analysts’ expectations, hurt by global air freight overcapacity and weak US industrial activity. UPS said it now expects second quarter profit of $1.13 per share, compared to analysts’ projections of $1.20 per share. In addition, the company slashed its 2013 earnings forecast to $4.65-$4.85 per share from $4.80-$5.06 per share. https://www.valuewalk.com/2013/07/ups-cuts-profit-due-to-weakening-economy/
The Walt Disney Company (NYSE:DIS), Comcast Corporation (NASDAQ:CMCSA), Twenty-First Century Fox Inc (NASDAQ:FOX)
Hulu LLC owners The Walt Disney Company (NYSE:DIS), Comcast Corporation (NASDAQ:CMCSA)’s NBCUniversal and Twenty-First Century Fox Inc (NASDAQ:FOX), called off their sale of the video-streaming site, opting instead to invest $750 million in the company. The decision brings to an end the auction process that attracted bids from suitors including DIRECTV (NASDAQ:DTV), Time Warner Cable Inc (NYSE:TWC) and AT&T Inc. (NYSE:T).
Yelp Inc (NYSE:YELP)
The online review company’s stock climbed to an all-time high after Needham & Co. initiated coverage of the stock with a “buy” rating and $45 a share price target. Analyst Kerry Rice said Yelp Inc (NYSE:YELP) “is taking strides in becoming a necessary advertising medium for local businesses worldwide,” and its overseas growth opportunities have likely not been accounted for in Street’s consensus estimates.
athenahealth, Inc (NASDAQ:ATHN)
The healthcare technology company rallied 17 percent after Ascension Health Alliance, a large U.S. healthcare system, agreed to use Athenahealth’s Internet-based software to manage its revenue, patients and referrals. Financial details of the contract weren’t disclosed. Analysts said the deal with Ascension boosts athenahealth, Inc (NASDAQ:ATHN)’s 2014 growth outlook.
Edwards Lifesciences Corp (NYSE:EW), Medtronic, Inc. (NYSE:MDT)
Shares of Edwards Lifesciences Corp (NYSE:EW) soared in trade after a German court ruled that Medtronic, Inc. (NYSE:MDT)’s transcatheter heart valve technology infringed on a patent owned by Edwards Lifesciences. The court barred German sales of the CoreValve and CoreValve Evolut systems, and directed Medtronic to recall the products and pay damages.
US Airways Group Inc (NYSE:LCC), AMR Corporation (OTCMKTS:AAMRQ)
Shareholders of US Airways Group Inc (NYSE:LCC) approved the carrier’s proposed merger with AMR Corporation (OTCMKTS:AAMRQ)’s American Airlines. The two companies expect the $11 billion merger that would create the world’s largest carrier to be completed by the end of September. Shares of US Airways and AMR closed higher in Friday trading. https://www.valuewalk.com/2013/07/us-airways-investors-vote-on-american-airlines-merger/
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) shares soared 13 percent after Bloomberg reported that Swiss drug maker Roche Holding AG is seeking financing for a potential takeover of the company. Officials at Roche and Alexion declined to comment on the report. Alexion, with a market value of about $20 billion, has one drug on the market called Soliris, which is used to treat a rare blood disease known as paroxysmal nocturnal hemoglobinuria.
Cloud Peak Energy Inc. (NYSE:CLD)
Shares of Cloud Peak Energy Inc. (NYSE:CLD) fell in trade after the company reported lower second quarter coal shipments amid weather interruptions and maintenance downtime, and lowered its full-year earnings outlook. The coal producer now expects full-year adjusted EBDITA of between $210 million and $250 million.