Outstanding Performance Article RewardsWe're excited to announce our latest two Outstanding Performance award winners. Each author receives $2,500. Read more about our Outstanding Performance award winners here.
Winner #1: Long idea on RENFF (Rock Energy) by Value Digger, published December 12, 2012. Return to date: +72%
Winner #2: Short idea on EROC (Eagle Rock Energy) by Albert Alfonso, published June 24, 2013. Return to date: +70%
Note: The EROC article was part of the SA PRO equity research archiveavailable exclusively to SA PRO subscribers. In honor of the awards, the article will be available for 48 hours before returning into the archive. The RENFF article will join the archive after 48 hours.
Economy
Chinese stocks led falls across Asia today, after the latest gauge of China's factory sector activity raised concerns about the world's second-largest economy. The HSBC manufacturing purchasing managers index inched up to 49.7 for January, compared with 49.6 in December, but still remained below the 50 level which separates contraction from expansion. The measure comes just one day after the Chinese government’s official PMI dipped to 49.8 for January, the first reading below 50 in nearly 2-1/2 years.
About 3,800 employees represented by the United Steelworkers union went on strike at plants accounting for 10% of U.S. refining capacity for a second day on Monday, after failing to agree on new labor contracts. "If the strike escalates, that would be detrimental to the oil price," said David Lennox, a resource analyst at Fat Prophets. "It will put high U.S. production out on the market and there is nowhere for it to go." After dropping almost 3% overnight, WTI is now down 0.7% at $47.93.
Playing hardball with Greece's new leftist government, Germany's Angela Merkel ruled out a debt writedown for Greece on Saturday, while an ECB policymaker threatened to cut off funding to Greek banks if Athens doesn't agree to renew its bailout package. Europe's bailout program for Greece, part of a €240B rescue package also involving the IMF, expires on Feb. 28.
Russia’s GDP is expected to shrink by 3% in 2015 with oil prices at $50/bbl and an estimated capital outflow at $115B, said Alexei Ulyukayev, the country's economy minister, over the weekend. Inflation in 2015 is now forecast to stand at 12%, up from the previous estimate of 7.5%, he added. The announcement comes just days after the Russian central bank unexpectedly lowered its key interest rate by two percentage points to 15%, and almost a week after the country's credit rating was cut to "junk status" at Standard & Poor's.
Stocks
FCC Commissioner Ajit Pai plans to ask Chairman Tom Wheeler to investigate Dish Network's (NASDAQ:DISH) recent claim of more than $3B in discounts following $13.3B in winning bids in last week's FCC spectrum auction (AWS-3). Dish qualified for the discounts by bidding via a pair of partnerships that reported having less than $15M in annual revenue, but Pai says giving such a lucrative break to a company as large as Dish "makes a mockery" of the small-business discount program.
FCC Commissioner Ajit Pai plans to ask Chairman Tom Wheeler to investigate Dish Network's (NASDAQ:DISH) recent claim of more than $3B in discounts following $13.3B in winning bids in last week's FCC spectrum auction (AWS-3). Dish qualified for the discounts by bidding via a pair of partnerships that reported having less than $15M in annual revenue, but Pai says giving such a lucrative break to a company as large as Dish "makes a mockery" of the small-business discount program.
IBM has approved a 2015 compensation package for CEO Ginni Rometty that includes a $1.6M base salary (up from 2014's $1.5M), $13.3M in restricted stock units (up from 2014's $12.75M), and a potential $5M bonus (up from 2014's $4M, of which $3.6M was earned). The pay hike follows a year in which IBM's (NYSE:IBM) dividend-adjusted stock price fell 12%, and its EPS and free cash flow respectively declined 1% and 18% amid top-line pressures that cut across hardware, software, and services. After factoring in dividends, Big Blue's shares are down 11% since Rometty became CEO at the beginning of 2012.
JPMorgan has agreed to pay $99.5M to settle its portion of an antitrust lawsuit in which investors (including hedge funds, pension funds and the city of Philadelphia) accused 12 major banks of rigging prices in the $5.3T-a-day foreign exchange market. The settlement follows JPMorgan's (NYSE:JPM) agreement last November to pay about $1B in civil penalties to resolve related claims by U.S. and European regulators.
Holcim and Lafarge have moved a step closer toward obtaining regulatory approval for their merger after the two confirmed plans to sell assets to Irish building supplies group CRH (NYSE:CRH) for $7.34B. CRH was a finalist in an auction for the assets, battling in the past few days with a consortium led by Blackstone (NYSE:BX). The new company created from Holcim (OTCPK:HCMLY) and Lafarge's (OTCPK:LFRGY) merger will become the world's biggest cement maker with $44B in annual sales.
Despite a last minute rush in claims, the cost of General Motors’ (NYSE:GM) victims-compensation fund isn’t expected to exceed the $400M-$600M the auto maker set aside to pay for those killed or injured on account of its faulty ignition switches, WSJ reports. GM stopped taking new claims this weekend, after receiving more than 3,350 claims (and confirming 50 deaths and 75 serious injuries so far). The company also faces class-action lawsuits related to alleged safety lapses, and continuing probes by the DOJ and others.
Morgan Stanley is shopping its oil-trading and storage business again after an earlier deal with Rosneft (OTC:RNFTF), valued at several hundred million dollars, fell through last month. Morgan Stanley (NYSE:MS) is still seeking a similar price to that of its first offer, as oil storage prices soar due to the recent collapse of crude prices. Macquarie Group (OTC:MCQEF) and KKR (NYSE:KKR) have emerged as early contenders to acquire the unit.
The DOJ is investigating Moody's Investors Services (NYSE:MCO) over the inflated ratings it gave to shoddy mortgage bonds in the lead-up to the financial crisis, sources tell the WSJ. It isn’t yet clear whether the probe will result in a lawsuit, however, as Justice Department lawyers are still in the early stages of their investigation.
Meanwhile, Standard & Poor’s, which is nearing a $1.37B settlement for similar alleged conduct, has backed away from its claim that the DOJ sued it in retaliation for its decision to cut the credit rating of the United States in the summer of 2011. The concession will appear as one element in a broader statement of facts that S&P (NYSE:MHFI) negotiated with state and federal authorities.
Standard General is in talks to serve as the lead bidder at a bankruptcy auction for RadioShack (NYSE:RSH), which has reported losses in each of its last 11 quarters and is aiming to file for Chapter 11 protection as early as today. The hedge fund became the company’s largest shareholder last year, financing the struggling electronics retailer through the holidays.
Top Ideas
Sizmek (NASDAQ:SZMK) - new article by Sabra Capital Partners »
Vectrus (NYSE:VEC) - new article by Dane Capital Management, LLC »
Key Tronic (NASDAQ:KTCC) +14.7% since Jan. 8 Simple Insights article »
World Energy Solutions (NASDAQ:XWES) +25.6% since Sep. 29 Signal Search article »
SA PRO subscribers get an early look at Top Ideas and access to the SA PRO research library. Learn about SA PRO »
Today's Markets:
In Asia, Japan -0.7% to 17558. Hong Kong -0.1% to 24485. China -2.5% to 3129. India -0.2% to 29122.
In Europe, at midday, London +0.3%. Paris +0.1%. Frankfurt +0.5%.
Futures at 6:20: Dow +0.3%. S&P +0.4%. Nasdaq +0.2%. Crude -0.7% to $47.93. Gold -0.1% to $1278.40.
Ten-year Treasury Yield -7 bps to 1.68%
Today's economic calendar:
8:30 Gallup US Consumer Spending Measure
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
11:00 Global Manufacturing PMI
8:30 Gallup US Consumer Spending Measure
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
11:00 Global Manufacturing PMI
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