Long Setup in Herbalife Still Attractive; Stock Breaks Out as New Auditor Hired
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Few stocks have attracted more news over the last six months than nutritional supplement maker Herbalife (NYSE: HLF).
Even casual market observers are aware of the circumstances surrounding the the initial bout of extreme volatility in the name back in December 2012. The shares went into free-fall at the end of the year after hedge fund manager Bill Ackman revealed in typical sanctimonious fashion that his firm Pershing Square Capital Management was short around $1 billion worth of the stock.
Amid much pomp and circumstance, Ackman laid out his short thesis at a New York investment conference and immediately made the rounds in the financial media. The noted investor called the multi-level marketing company’s business model a “pyramid scheme” and boldly proclaimed that his price target for the stock was “$0.”
The way that the Pershing Square founder went about attacking Herbalife sure made it seem like he was trying to inflict maximum damage to the company in a very short period of time.
While Ackman’s strategy was initially brutally effective, it quickly backfired on him. Herbalife shares swan-dived from above $42 on December 18, the day before the hedge fund manager’s presentation, to a low of roughly $26 by Christmas Eve.
The news caused the heaviest high-volume selling in Herbalife’s history as a publicly traded company. The stock bounced back nearly as quickly as it plunged, however, as numerous other investors and market observers came out in support of the company. Herbalife itself also aggressively refuted Ackman’s allegations.
When two of the world’s top hedge fund managers, Dan Loeb and Carl Icahn, revealed that their firms had bought large stakes in the Cayman Islands-based company the short-squeeze of Pershing Square was on.
It did not take long before the stock was trading back above levels seen pre-Ackman. While Loeb subsequently flipped the stock for a quick profit, Icahn appears to be in the trade for the long-term and he is applying the screws to his old nemesis Bill Ackman, with whom he had previously been involved in an acrimonious lawsuit.
Icahn was able to get two of his representatives elected to Herbalife’s board and…
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Benzinga’s M&A Chatter for Monday May 20, 2013
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
The following are the M&A deals, rumors and chatter circulating on Wall Street for Monday May 20, 2013:
Actavis to Acquire Warner Chilcott for $8.5B or $20.08/Share in Stock Deal
The Deal:
Actavis (NYSE: ACT) and Warner Chilcott (NASDAQ: WCRX) announced Monday an agreement under which Actavis will acquire Warner Chilcott. Under the terms of agreement, Warner Chilcott shareholders will receive 0.160 shares of New Actavis for each Warner Chilcott share they own, which equals $20.08 per Warner Chilcott share based on Actavis’ closing share price of $125.50 on May 17, 2013.
Actavis closed at $127.15 Monday, a gain of 1%, while Warner Chilcott gained 2%, closing at $19.60.
Dell Special Committee Seeks Additional Information from Carl Icahn and Southeastern Asset Management
The Letter:
The Special Committee of the Board of Directors of Dell Inc. (NASDAQ: DELL) sent a letter to Carl Icahn and Southeastern Asset Management on Monday, asking for additional information regarding the proposed leveraged recapitalization transaction submitted to the Board on May 9, 2013.
The letter stated: “Unless the Board of Directors of Dell determines that your proposal could reasonably be expected to result in a “Superior Proposal” as defined in the Company’s existing merger agreement with affiliates of Silver Lake and Michael Dell, we are not permitted to provide you with information or engage in discussions concerning your proposal.”
Dell closed at $13.41 Monday, a gain of $0.01 on lower than average volume.
Yahoo to Acquire Tumblr for $1.1B
The Deal:
Yahoo! (NASDAQ: YHOO) and Tumblr announced Monday that they have reached a definitive agreement for Yahoo! to acquire Tumblr, which allows users to post text, photos, quotes, links, music, and videos, for $1.1 billion in cash.
The transaction is expected to close in the second half of the year.
Yahoo closed at $26.58 Monday, a gain of $0.06 on 1.5 times average volume.
Royalty Increases bid for Elan to $12.50/Share in Cash
The Offer:
Royalty Pharma announced Monday its intention to increase its offer for Elan Corporation (NYSE: ELN) to $12.50 per share in cash. Elan’s Board said it will assess the Royalty Pharma announcement and will advise…
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U.S. Steel, Genomic Health and Other Stocks Insiders Are Buying
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Insiders may sell shares for any number of reasons, but conventional wisdom is that insiders really only buy shares of a company for one reason — they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
ACADIA Pharmaceuticals
One director, Felix Baker, bought more than 1.9 million shares last week. That was worth more than $24.9 million. This San Diego-based biopharmaceutical company has been discussed as a possible takeover target and it last week announced a secondary offering.
The market capitalization is about $1 billion and the long-term earnings per share (EPS) growth forecast is about 20 percent. Shares of ACADIA Pharmaceuticals (NASDAQ: ACAD) are up more than 180% year-to-date. Over the past six months, the stock has outperformed larger competitors AstraZeneca (NYSE: AZN) and Eli Lilly (NYSE: LLY).
Genomic Health
A director, Felix Baker again, last week bought more than 311,000 shares, which was worth more than $10.8 million, of this health care company. A novel genetic test by Genomic Health (NASDAQ: GHDX) to gauge the aggressiveness of prostate cancer became available on the market last week.
The diagnostics company has a market cap near $1.1 billion. While the long-term EPS growth forecast is about 33 percent, the return on equity is less than six percent. The share price is up more than 37 percent year-to-date and just shy of a new 52-week high. The stock has outperformed the broader markets over the past six months.
Murphy Oil
One director scooped up 30,000 Murphy Oil (NYSE: MUR) shares recently, at a price of more than $1.9 million, while other directors and executives were selling shares. This same director also bought 100,000 shares back in February.
This El Dorado, Arkansas-based oil and gas producer is in the process of spinning off its retail gas stations into a separate, publicly traded company. It has a market cap more than $12 billion and a dividend yield near…
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AdCare Health Systems Issues Employment Inducement Grant to New Chief Financial Officer
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
AdCare Health Systems (NYSE: ADK) (NYSE: ADK.PRA) announced today that it has issued to Ronald W. Fleming, who commenced serving as AdCare’s Chief Financial Officer on May 15, 2013, a ten-year warrant to purchase 70,000 shares of AdCare’s common stock with an exercise price of $5.90 per share. One-third of the shares underlying the warrant shall vest ratably on each of May 15, 2014, May 15, 2015 and May 15, 2016. The vesting of the underlying shares shall accelerate upon a change in control of AdCare. The warrant is exercisable for cash or by cashless exercise. The issuance of the warrant was approved by the Compensation Committee of AdCare’s Board of Directors.
About AdCare Health Systems, Inc. AdCare Health Systems, Inc. is a recognized provider of senior living and health care facility management. AdCare owns and manages long-term care facilities and retirement communities, and since the company’s inception in 1988, its mission has been to provide the highest quality of healthcare services to the elderly through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services. For more information about AdCare, visit www.adcarehealth.com.
Important Cautions Regarding Forward-Looking Statements This press release includes statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including with regard to the Company’s future expectations and prospects. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. Factors that can affect future results are discussed in the documents filed by the Company from time to time with the Securities and Exchange Commission. Except where required by law, the Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of this press release.
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Benzinga Market Primer: Wednesday, May 15
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Futures Lower on Weak European Growth Data
U.S. equity futures traded lower in early pre-market trade following a weaker than expected GDP report from the eurozone for the first quarter. GDP growth rose to -0.2 percent on a quarterly basis from -0.6 percent but missed forecasts of a 0.1 percent contraction. Weakness was notably seen in Germany, France, and Italy in the report, with the annualized rate of growth for Germany dropping to -1.4 percent vs. 0.2 percent growth forecast.
Top News
In other news around the markets:
- The U.K. had fewer people claim unemployment benefits in April than expected, a positive sign for the labor market as the unemployment rate fell. The Claimant Count Change in the U.K. was released at -7.3 thousand people vs. a forecast of -3.0 thousand as the unemployment rate unexpectedly declined 0.1 percent to 7.8 percent. However, most of the drop was due to people leaving the labor force.
- The Bank of England issued an upbeat forecast for the U.K. economy in its latest Inflation Report, the last of Governor Mervyn King’s tenure at the BoE. The Bank forecasts that the U.K. will grow 0.5 percent in the second quarter with growth accelerating to 1.7 percent in the second quarter of 2014 and 2.2 percent in the same period of 2015. Notably, the Bank mentioned that it sees the effects of the financial crisis easing, finally.
- Wal-Mart (NYSE: WMT) has refused to sign a new safety pact for its suppliers in Bangladesh but has announced that it will increase inspections in the country in the wake of the disaster that left numerous workers dead and more injured.
- S&P 500 futures fell 3.7 points to 1,644.30.
- The EUR/USD was lower at 1.2887.
- Spanish 10-year government bond yields rose 2 basis points to 4.37 percent.
- Italian 10-year government bond yields rose 5 basis points to 4.06 percent.
- Gold fell 0.95 percent to $1,410.90 per ounce.
Asian Markets
Asian shares were mostly higher overnight save for Australia following mixed trading on Wall Street as the Nikkei crossed the 15,000 level for the first time since 2008 as the yen continued…
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Benzinga Market Primer: Tuesday, May 14
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Futures Slightly Lower on Mixed European Data
U.S. equity futures traded slightly lower in early pre-market trade following mixed economic data out of the eurozone. The moves follow basically flat trading on Wall Street from Monday after futures rallied into the open following weaker than expected Chinese data.
Top News
In other news around the markets:
- The German ZEW Economic Sentiment Index rose to 36.4 in May from 36.3 in April but missed expectations of a gain to 38.3. The current conditions index was also weak and over 77 percent of respondents said they do not expect another rate cut in the next six months.
- Industrial Production across the eurozone rose faster than expected in March as IP rose 1.0 percent vs. a 0.4 percent forecast gain.February’s reading was revised downwards to 0.3 percent from 0.4 percent.
- Australia’s just released budget for the next fiscal year sees growth at 3 percent, alleviating some fears of a more protracted slowdown in the resource-rich nation.
- S&P 500 futures fell 2.8 points to 1,628.00.
- The EUR/USD was higher at 1.3006.
- Spanish 10-year government bond yields rose 3 basis points to 4.32 percent.
- Italian 10-year government bond yields rose 3 basis points to 4.01 percent.
- Gold rose 0.05 percent to $1,435.00 per ounce.
Asian Markets
Asian shares were mostly lower overnight as the yen retreated from recent lows against the dollar. The Japanese Nikkei Index fell 0.16 percent and the Shanghai Composite Index fell 1.11 percent while the Hang Seng Index lost 0.26 percent. Also, the Korean Kospi gained 1.03 percent and Australian shares rose 0.2 percent.
European Markets
European shares were mostly lower following the mixed economic data. The Spanish Ibex Index fell 0.6 percent and the Italian FTSE MIB Index declined 0.22 percent. Meanwhile, the German DAX declined 0.21 percent and the French CAC 40 lost 0.43 percent while U.K. shares fell 0.1 percent.
Commodities
Commodities were mixed overnight in quiet moves as the dollar gave back some of its recent gains, boosting commodity prices. WTI Crude futures rose 0.02 percent to $95.19 per barrel and Brent Crude futures rose 0.07 percent to $102.89 per barrel. Copper futures…
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Benzinga’s M&A Chatter for Friday May 10, 2013
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
The following are the M&A deals, rumors and chatter circulating on Wall Street for Friday May 10, 2013:
Illumina Shares Soar on Rumor of Roche $88/Share Bid
The Rumor:
Shares of Illumina (NASDAQ: ILMN) surged higher Friday, after Swiss publication L’Agefi reported Swiss pharma giant Roche (OTC: RHHBY) had offered $88 per share to acquire the San Diego, CA-based genetic technology company. Illumina shares rose as high as $77.11 during the session.
After initially declining comment on the rumor, Roche said a deal for Illumina was “off the table”. Roche had previously made offers of $44.50 and $51 per share for Illumina, both of which were rejected by Illumina’s board. A rumored $60 offer never materialized.
Illumina closed at $69.98 Friday, a gain of 4% on 5.5 times average volume.
Actavis Confirms Merger Talks with Warner Chilcott
The Talks:
Shares of generic drug maker Actavis (NYSE: ACT) and Irish specialty pharmaceutical company Warner Chilcott (NASDAQ: WCRX) moved sharply higher Friday on a Bloomberg report that Actavis was in talks to acquire Warner Chilcott. Acatvis had reportedly been in merger talks with Valeant Pharmaceuticals (NYSE: VRX).
Both companies later confirmed that they were in early stage discussions regarding a potential merger, though no agreement had been reached.
Actavis shares gained 12% Friday, closing at $119.86 Friday. Warner Chilcott gained 20%, closing at $18.01.
True Religion to be Acquired by TowerBrook Capital Partners for $32/Share in Cash
The Deal:
After months of speculation, True Religion Apparel (NASDAQ: TRLG) announced Friday that it had entered into an agreement to be acquired by TowerBrook Capital Partners for $32.00 per share in cash, for a total of $835 million. The transaction is expected to close in Q3 2013.
True Religion Apparel closed at $31.82 Friday, a gain of 8% on 27 times average volume.
Hearing Unconfirmed Chatter of Icahn $25/Share Bid for Nuance
The Rumor:
There was vague market chatter Friday that investor Carl Icahn might bid as much as $25 per share for Nuance Communications. The chatter resulted most likely from a report that Icahn would be appearing mid-day on CNBC. Icahn currently has approximately…
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Starbucks, Huntington Bancshares and Other Stocks Insiders Are Buying
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Insiders may sell shares for any number of reasons, but conventional wisdom is that insiders really only buy shares of a company for one reason — they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
Huntington Bancshares
The CEO and two directors bought more than 112,000 shares in the past two weeks. Altogether, that was worth more than $797,000. This commercial and consumer banking services provider recently boosted its dividend and last week named a new head of its treasury management division.
This Columbus, Ohio-based regional bank has a market capitalization of about $6.1 billion and a dividend yield near 2.8 percent. The price-to-earnings (P/E) ratio is lower than the industry average and the return on equity is less than 12 percent.
Shares of Huntington Bancshares (NASDAQ: HBAN) pulled back about eight percent in mid-April but have begun to recover. But over the past six months, the stock has underperformed competitors Fifth Third Bancorp (NASDAQ: FITB) and Keycorp (NYSE: KEY).
Key Energy Services
The CEO, COO, controller and two directors last week bought a combined 112,500 shares, which was worth more than $613,000, of this Houston-based onshore rig-based well servicing contractor. First-quarter EPS fell more than expected due to a falling inland rig count.
Key Energy Services (NYSE: KEG) has a market cap near $948 million. While the long-term EPS growth forecast is about nine percent, the return on equity is less than nine percent. The share price is down more than 12 percent year-to-date and hit a multiyear low last week. Over the past six months, the stock has underperformed the Dow Jones Industrial Average.
NuStar Energy
Three directors recently purchased 61,000 shares altogether of this San Antonio-based master limited partnership (MLP). That was worth more than $3.1 million. The company saw an analyst downgrade after posting first-quarter earnings that fell short of expectations.
NuStar Energy (NYSE: NS) has a market cap of…
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George Soros Takes a 7.9 Percent in J.C. Penney, Ackman Vindicated?
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Famed currency investor George Soros, famous for “breaking the sterling” in the 1980′s, has taken a large 7.9 percent stake in struggling retailer J.C. Penney (NYSE: JCP). Soros now is long the stock along with Pershing Square’s Bill Ackman and now is opposed by Carl Icahn.
Although he has taken a large stake, Soros’ SEC filing disclosed that the stake was a passive one, meaning that unlike Ackman, he will not try to exert influence on the company. The move comes so soon after J.C. Penney has seen earnings plummet, has seen the departure of its Chief Executive, and the departure of no less than 5 other key employees in the past few months.
Ackman’s Pershing Square owns approximately 17.8 percent of the stock and now has a key ally in the potential turn around of the company. Combined, the two investors own more than a quarter of the company, a very large position which should give the two power in the company should they choose to force shareholder votes for more changes.
The news came with a grain of salt however, as Chief of Construction Michael Kock became the latest executive to leave the company. The move can be seen as a stop-gap measure by the company, as reducing construction of new stores could save on Capital Expenditures, known as CapEx, and boost the bottom-line.
The bottom-line has been a serious problem as J.C. Penney lost $552 million in the fourth quarter, or $1.95 per share, much worse than the expected $0.18 per share loss. Revenue was also slightly weak in the quarter.
J.C. Penney is set to hold its annual meeting on May 13 and this event could be key to the company’s survival. New Chief Executive Myron Ullman could announce new measures as a stop-gap to halt losses and boost earnings while Ackman and Soros could express confidence in the company.
Analysts have been turning slightly more positive on the stock recently, as Gilford Securities has upgraded the stock twice in April, first from a sell to neutral and then from a neutral to a buy. Buckingham Research upgraded the stock on April 15 to buy from neutral and raised…
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Benzinga Market Primer: Friday, April 26
by Insider Scoop - May 25th, 2013 12:00 am
Courtesy of Benzinga.
Futures Lower Ahead of GDP
U.S. equity futures traded lower in early pre-market trade ahead of the key U.S. first quarter GDP report due out at 8:30 am eastern. Economists surveyed by Bloomberg are expecting a growth rate of 3.1 percent in the first quarter with the range of estimates between 2.3-3.3 percent. This would be a staunch improvement from the fourth quarter’s 0.4 percent growth.
Top News
In other news around the markets:
- The Bank of Japan released its updated economic forecasts at its interest rate meeting overnight, estimating 2.9 percent growth for fiscal year 2013 and 2014 vs. 2.3 percent previously and sees the BoJ achieving 1.9 percent inflation by 2015 or 2016.
- The China MNI Business Sentiment Index rose to 58.6 in April from 58.2 in March, showing that businesses and managers are still rather optimistic about the Chinese economy despite recent weak data.
- Archer Daniels Midland (NYSE: ADM) increased its bid for Australian company Graincorp to $4.3 billion, making the deal a near certainty to go through according to analysts.
- S&P 500 futures slid 5.5 points to 1,576.20.
- The EUR/USD was flat at 1.3011.
- Spanish 10-year government bond yields rose 5 basis points to 4.34 percent.
- Italian 10-year government bond yields rose 7 basis points to 4.13 percent.
- Gold rose 0.03 percent to $1,462.50 per ounce, retracing nearly 50 percent of its losses since its recent slide from above $1,600 per ounce to below $1,400.
Asian Markets
Asian shares were mostly lower overnight on disappointing forecasts from the Bank of Japan as well as no increase in its easing policy while inflation data showed that policy in Japan has had no impact as of yet. The Japanese Nikkei Index fell 0.3 percent and the Shanghai Composite Index fell 0.97 percent while the Hang Seng Index rose 0.65 percent. Also, the Korean Kospi fell 0.36 percent while Australian shares declined 0.1 percent.
European Markets
European shares gave back gains from earlier this week but peripheral shares were still up more than 4 percent on the week. The Spanish Ibex Index fell 0.94 percent while the Italian FTSE MIB Index fell…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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