Archive for June, 2014

• It’s Offical: The Nicholas Financial-Prospect Capital Deal Is Dead
  Eddy Elfenbein, June 12th, 2014 at 2:13 pm

  Remember what I said earlier today? The opposite just happened. NICK has killed the deal:

  CLEARWATER, Fla., June 12, 2014 (GLOBE NEWSWIRE) — Nicholas Financial, Inc. (the “Company”) (NICK) is filing this Current Report on Form 8-K to report that, on June 11, 2014, the Company’s Board of Directors (the “Board”) held a special meeting to consider the status of the Company’s proposed transaction with Prospect Capital Corporation (“Prospect”) in light of the pending June 12, 2014 termination deadline. As previously disclosed, on December 17, 2013, the Company entered into an arrangement agreement (the “Arrangement Agreement”) whereby the Company agreed to sell all of its issued and outstanding Common Shares to an indirect wholly-owned subsidiary of Prospect, pursuant to a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia). Prospect (PSEC) (www.prospectstreet.com) is a closed-end investment company that has filed an election to be treated as a business development company under the Investment Company Act of 1940. It focuses on lending to and investing in private businesses. Prospect’s investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

  The termination deadline for completion of the Arrangement pursuant to the Arrangement Agreement is June 12, 2014. At its June 11, 2014 meeting, the Company’s Board of Directors determined to terminate the Arrangement Agreement on the basis that certain conditions requisite to consummation of the Arrangement could not be satisfied by the termination deadline. The Board of Directors further determined to continue to retain Janney Montgomery Scott LLC as its independent financial advisor to assist the Board in evaluating strategic alternatives for the Company, including, but not limited to, the possible sale of the Company to Prospect or another third party, potential acquisition and expansion opportunities, and/or a possible debt or equity financing.

• Microsoft’s Strategy Is Paying Off
  Eddy Elfenbein, June 12th, 2014 at 10:35 am

  Here’s some good news about Microsoft ($MSFT). We’ve been hearing for a long time how the company is unable to reform itself, but Satya Nadella seems to be shaking things up:

  Microsoft’s strategy for moving customers to its cloud email and productivity software is resonating with many corporate customers. Microsoft says the number of commercial seats for Office 365, its flagship productivity and email cloud service, more than doubled over the 12 months ending March 2014. It hopes its moves will lead to sales of a broader array of services to existing customers, including more complex business applications and cloud infrastructure services. But it remains to be seen whether it can convince customers who don’t see the need to switch to cloud-based computing just yet.

  Although Microsoft has been selling cloud software, in which it rents email and other applications to customers, for the last several years, that strategy has accelerated under current CEO Satya Nadella, who called for a “mobile first, cloud first” approach to selling software when he assumed the job in February.

  Many chief information officers have decided to swap their existing portfolios of productivity software, which includes Microsoft Office and email, to Microsoft’s cloud-based Office 365 service, because they believe making Microsoft the custodian of their email and productivity software enables them to redeploy IT staff to more innovative projects. Microsoft has also made Office 365 more attractive to customers by changing its licensing terms. Now, employees can use the software on up to five devices for the cost of a single license. That option, made available in February 2013, has become increasingly attractive as greater numbers of employees do their work from home, on personal devices, and on the road.

• Nicholas Financial Merger Possibly Back On
  Eddy Elfenbein, June 12th, 2014 at 10:15 am

  We took Nicholas Financial ($NICK) off this year’s Buy List, and I’m glad we did. NICK and Prospect Capital ($PSEC) have been trying to close out their merger deal and it hasn’t gone well.

  The SEC told PSEC that they had to restate their past earnings, and that hurt both stocks. Now, however, the SEC has apparently reversed that decision (although they’ll need to restate future earnings). Both NICK and PSEC rallied yesterday.

  NICK said it would give PSEC until June 12th, which is today, to close the deal. After that, it would make a call about their relationship and that could include walking away from the deal. I assume that now the deal is back on.

• Morning News: June 12, 2014
  Eddy Elfenbein, June 12th, 2014 at 6:51 am

  Growing Iran Oil Exports Challenge U.S. Nuclear Sanctions

  Crude Tops $111 on Iraq Unrest

  New Zealand Central Bank Guidance Surprises Market

  Indonesia Prolongs Halt in Rate Increases as Expansion Slows

  Brazil Needs More Than a World Cup Win

  Uber Protests Snarl Paris Traffic as London Cabs Gather

  Why Amazon Loves Local — and Why It Absolutely Shouldn’t

  Goldman Sachs Misses Out on Big Alibaba Payoff

  France Still Talking With GE to Improve Bid for Alstom’s Power-Equipment Unit

  BNP Paribas Bank Says Chief Operating Officer Georges Chodron de Courcel to Quit Amid US Probe

  Change of Guard at Infosys: Can New CEO Vishal Sikka Lift Embattled Company?

  Lululemon Reduces Forecast Even as Earnings Exceed Estimates

  TCP Capital Corp. Prices $100 Million Of 5.25% Convertible Senior Notes Due 2019

  Jeff Carter: Should You Quit Your Corporate Job?

  Cullen Roche: How Much Longer Will the Dollar Remain the Reserve Currency of the World?

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• CR Bard Raises Dividend
  Eddy Elfenbein, June 11th, 2014 at 4:52 pm

  After today’s close, CR Bard ($BCR) raised its quarterly dividend from 21 to 22 cents per share. That may not sound like a lot–it’s an increase of just 4.76%–but bear in mind that Bard has increased its dividend every year since 1972.

  The dividend is payable on August 1, 2014 to shareholders of record at the close of business on July 21, 2014.

  Shares of Bard have gotten dinged the last two days. Bard lost 4.7% on Tuesday and another 3.1% today. Given the new dividend, Bard now yields 0.64%.

• Morning News: June 11, 2014
  Eddy Elfenbein, June 11th, 2014 at 6:43 am

  EU to Investigate Apple’s Tax Affairs

  Yen Rises Versus Euro on Monetary Policy Split With ECB

  U.K. Unemployment Rate Tumbles in April, Wage Growth Slows

  Spain’s Retailer Inditex Q1 Net Profit Falls 7.3%, Beats Expectations

  South Africa’s Economic Growth Forecast Cut to 2%

  Oil Hits $110 Per Barrel on Iraq Supply Disruption Fears

  Alibaba Buys Remaining Stake in UC Web

  Alibaba Launches U.S. Shopping Site 11 Main

  Amazon Chases Local Services, The New E-Commerce Battleground

  Bid for Allergan Puts Valeant’s Research and Development Cuts Under Scrutiny

  Best Buy Boosts Dividend for the First Time in Two Years

  Lufthansa Warns on Profit, Shares Plunge

  United’s Frequent Flyer Program Changes Have One Interesting Aspect

  Roger Nusbaum: Why The Glass Must Be Half Empty In Financial Planning

  Jeff Carter: The Current Immigration Bill is Dead

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• The Nasdaq Recovers
  Eddy Elfenbein, June 10th, 2014 at 12:45 pm

  The Nasdaq Composite has been as high as 4,338.87 today. The index is now within striking distance of the intra-day high from March 6 of 4,371.71. The correction in March and April was pretty sharp.

  

  The Nasdaq’s all-time intra-day high came more than 14 years ago, on March 10, 2000, when it hit 5,132.52. (Wow!)

• Job Openings Hit Seven-Year High
  Eddy Elfenbein, June 10th, 2014 at 12:02 pm

  At noon, the stock market is down but not by much. There’s been a lot of talk recently about the ultra low VIX level. The VIX is currently at 11.23, which is quite low, but remember that the VIX only looks one month ahead while stock prices are theoretically supposed to discount to eternity.

  I’ve looked at the numbers and found that the VIX isn’t that strongly correlated with a good or bad market. The closest I’ve found is that a low VIX, below 13, is somewhat good for the market. Since 1990, the S&P 500 has gained 11.79% annualized when the VIX is below 13, and 6.36% annualized when it’s 13 or more.

  What I think low volatility means is that the market has settled on a trend, whatever it may be, and sees it playing out for a while.

  There’s not much in the way of economic news today. One report we got was on job openings. The number of job openings nearly hit a seven-year high in April. There are now 4.46 million jobs waiting to be filled which is the highest since September 2007.

  Another report said that small businesses are the most optimistic they’ve been since 2007. It’s interesting how many data series have been making seven-year highs. Last week, non-farm payrolls finally took out its pre-recession high.

  On our Buy List, most stocks are quiet but CR Bard ($BCR) and Cognizant Technology Solutions ($CTSH) are both down more than 3% today. CTSH was downgraded by Susquehanna to neutral from positive.

  Facebook ($FB) is up on the news that PayPal’s president is jumping ship to FB. PayPal, of course, is a subsidiary of eBay ($EBAY). I don’t think this means much for eBay but its shares are down about 2% today.

• Morning News: June 10, 2014
  Eddy Elfenbein, June 10th, 2014 at 6:43 am

  European Commission: ICAP May Have Broken EU Antitrust Rules

  Why Troubled Euro Zone Bonds Are Outperforming Treasurys

  Euronext Value Could Reach About $2.4 Billion in I.P.O.

  China Now Has More Millionaires Than Any Country but the U.S.

  Natural Gas Slips From One-Month High on Milder Weather

  3 Reasons Why the Dow Doesn’t Deserve to Be at 17,000

  Merck Bids $3.8 Billion for an Edge in Hepatitis

  MetLife Announces Share Repurchase

  What Apple’s Stock Split Means for You

  Family Dollar Thwarts Icahn With ‘Poison Pill’

  GoDaddy Files for IPO

  Eyeing PayPal, Amazon Makes Online Payment Push

  Time Inc. Goes Solo

  Howard Lindzon: The Joe DiMaggio Stock Market

  Joshua Brown: Turn Down For What!

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• The Venezuelan Economy
  Eddy Elfenbein, June 9th, 2014 at 10:21 am

  From Bloomberg:

  Prostitutes more than double their earnings by moonlighting as currency traders in Puerto Cabello. They are the foreign exchange counter for sailors in a country where buying and selling dollars in the streets is a crime — and prostitution isn’t. Greenbacks in the black market are worth 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes.

  “The dollar is king these days, but having them comes at a price,” Elena, who uses an alias to protect her identity, said late last month in a room she rents in a Puerto Cabello brothel. “Yes, we got dollars to afford the things our families need, but we have to sell our bodies for it.”