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Are Hedge Funds Behind J.C. Penney Company (JCP)’s Fourth Quarter Gains?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September […]
Peloton Falls After Citron Sets $5 Target on Rising Competition
(Bloomberg) -- Peloton shares declined as much a 7.6% after Citron Research said it sees the stock falling to $5 per share in 2020, down from its price above $30 currently.Citron cited increasing competition, and notes the company’s hardware hasn’t meaningfully changed since its exercise bike was introduced in 2014, while newer players have had added unique screen optionsThe report also says the subscription strategy allows users to take advantage of Peloton’s class network without buying their branded bike, while its exclusive leaderboard rankings are used by a limited number of riders“While Peloton has enjoyed a first mover advantage, the lack of differentiation of its bike has finally caught up to it as the competition is not only making virtually identical exercise bikes but ones that are both more affordable and functional,” Citron said in the report.Peloton has 19 buys, 1 hold no sells, average price target $33: Bloomberg dataThe stock has gained 11% since its September IPOTo contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.netTo contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Will DaleyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Boeing deliveries halved in first eleven months of 2019
Boeing Co delivered less than half as many planes in the first eleven months of 2019 as in the same period a year earlier, the planemaker said on Tuesday, as it continued to struggle with the grounding of its best-selling 737 MAX jets. After an accounting adjustment, Boeing's net total for orders this year improved marginally to -84 airplanes from -95 a month earlier. The orders included what Boeing called a "conversion" by China Aircraft Leasing Group of 8 MAX orders into two 787 Dreamliners.
Billionaire David Tepper Loaded Up These 3 FANG Stocks; Should You?
Wall Street pays attention when David Tepper makes an investment move. Tepper started out his career as a credit analyst with Goldman Sachs in the 1980s, diving right away into risky bonds and other distressed debt assets. Older financial hands noticed that Tepper was right more than he was wrong with this gutsy strategy, and brought in high returns for the firm.Tepper earned a reputation as a go-getter who was not afraid to take hair-raising chances. When he parted ways with Goldman Sachs in 1992, he took that attitude with him when hefounded Appaloosa Management the next year.Starting with $57 million in available capital, Tepper has since built Appaloosa into a behemoth – the fund now has over $17 billion in assets under management. With Appaloosa, Tepper has maintained his preference for high-risk, high-yield distressed debt investments, but among the firm’s assets are $3.4 billion in 13F securities. And the list of stocks that Tepper’s fund has bought into is most interesting.Even though Tepper’s reputation was built on taking risks, Appaloosa’s three biggest investments, comprising 44% of the holdings in the Q3 13F filing, were Alphabet, Facebook, and Amazon – three of the four FANG stocks. Collectively, these companies hold the third, fourth, and fifth spots among the largest publicly traded companies in the world, and none of them are considered “high-risk.” Tepper has put over $1.5 billion dollars into these three companies – with large increases in his holdings of them in Q3.Remember, of course, that Tepper still must ensure that investors receive the returns they were sold on. The FANG stocks, all giants in the high-return tech sector, are one way of doing just that.We’ve opened the TipRanks database to get the lowdown on Tepper’s big FANG investments. A brief look at the TipRanks Stock Screener tool shows that all three have a clear positive upside potential for the near future, and ‘very positive’ investor sentiment – a sign that these stocks are attracting and holding new investors. More importantly, all three have the coveted ‘Strong Buy’ consensus rating from the Wall Street analysts. Let’s dive deeper, to find out what those analysts have to say.Amazon (AMZN)Amazon is the world’s third largest publicly traded company, with a market cap of $872 billion, and has absolutely dominated online retail since the 2000s. The company is a known innovator in warehousing techniques and processes, and has developed a ruthless reputation for improving cost efficiencies.Large capital expenditures in the past year depressed EPS according to the most recent quarterly earnings report. The key metric was down by 9%, at $4.23 against the $4.62 estimate, even though top-line revenues gained 24% and reached $70 billion for the quarter. The company has spent over $1.6 billion in 2019 on promoting and expanding its one-day delivery. Even though management acknowledged that the capex pushed down earnings, they also announced a further $1.5 billion spend in Q4, on expansions of the warehouse network and product lines. Not many companies can react to a bottom line hit from high capex by announcing even higher future capex. Amazon gets away with it due to its size, its economies of scale, and its strong cash flows.Tepper bought up 80,000 shares of AMZN in Q3, an increase of 44% in his stake in the company. Appaloosa’s holding of AMZN shares is now 265,000 and is worth over $460 million at current prices.Of the stocks in this list, Amazon shows the highest potential upside. Youssef Squali, writing for SunTrust Robinson, explains why: “We're incrementally positive on AMZN going into what should be a robust holiday season, given the company's outsized growth within US ecommerce, of which we estimate AMZN will claim ~37% of total GMV this holiday season…”Squali puts a $2,350 price target on the stock, showing his confidence in an impressive 34% upside potential for the stock. (To watch Squali’s track record, click here)Let’s face it, Wall Street agrees with him on this. AMZN shares have a single Hold rating, but a whopping 38 Buys – giving the stock a Strong Buy consensus rating. Amazon shares are famously expensive, at $1,761, and the average price target of $2,151 shows that Wall Street anticipates 22% upside growth. (See Amazon's stock analysis on TipRanks)Facebook (FB)We’ve all heard the ugly details of Facebook’s recent troubles. User privacy breaches, a $5 billion FCC fine, accusations of political censorship, and Mark Zuckerberg’s bungled efforts at PR damage control all took a toll on the stock. And so, despite hitting an all-time high share price back in July of 2018 and giving the impression that the sky was the limit, the company fell hard and fast through 2H18 and has had difficulty regaining traction in 2019.A look at the price chart shows that FB’s troubles may be in the rearview mirror as the stock has been rising through the fourth quarter of this year. Revenues and earnings both beat the forecasts in Q3, with the top line at $17.65 billion and EPS at $2.12. Usage metrics across the company’s apps remain high, with Monthly Average Users meeting expectations at 2.45 billion and Daily Active Users edging over the estimates at 1.62 billion.The sheer size of those numbers opens a window to Facebook’s underlying strength, and the reason the social media giant was able to weather its recent storms: the company is simply huge. With 2.45 billion monthly active users, Facebook is reaching up to one-third of the world’s total population – and a higher proportion of those with internet access. Advertisers will pay handsomely for that kind of reach, and Facebook shares show the result: the stock is up 54% in 2019, more than double the S&P 500’s year-to-date gain.Tepper was impressed enough with Facebook to boost his fund’s holding by 53%. Appaloosa added 975,000 shares of FB to its portfolio in Q3, bringing the total holding to 2.825 million. That’s worth over $503 million today, and makes up 15.9% of Appaloosa’s total 13F portfolio.The view from Wall Street is bullish on Facebook as well. Ronald Josey, of JMP Securities, puts forth the bull case bluntly: “We continue to be impressed with Facebook’s execution both on the engagement and monetization fronts and we do not foresee these trends changing dramatically. On the contrary, usage is improving, and we believe more advertisers are devoting greater budgets to Facebook.”Along with the Outperform rating, Josey’s $250 price target implies a steady upside of 24% to the stock. (To watch Josey’s track record, click here)Also optimistic is Piper Jaffray analyst Michael Olsen. In a December 3 note, Olsen initiated coverage of the stock, saying, “Following a turbulent few years for Facebook, we believe the company has emerged well positioned… Ad spend continues to shift online and Facebook is a beneficiary… We are modeling FCF/shr growth to average >20% over the next three years.”Olsen sees continued regulatory issues as a source of risk, but believes the company has the resources to meet the challenge. He puts a Buy rating on the stock, and his $230 price target indicates room for 14% growth on the upside. (To watch Olsen’s track record, click here)Overall, FB shares have a Strong Buy consensus rating, based on an impressive 30 Buy ratings given in the past three months. There are still 2 Holds and 2 Sells on the stock, left over from the company’s difficulties. The average price target, $234.70, suggests an upside of 17% from the current share price. (See Facebook stock analysis on TipRanks)Alphabet (GOOG)GOOG looks like a compelling investment. The stock has outperformed the S&P 500 this year, up 31%. Shares have dipped slightly at the end of October, after the company missed the earnings forecast by 19%. EPS was reported at $10.12 against an estimate of $12.42. Revenues were strong, at $40.5 billion beating the estimate by a half-percent, and the stock has since recouped its loss and then some.Tepper has bought up 229,900 Class C GOOG shares in Q3. Clearly, he’s not interested in controlling the company but is simply seeking a steady return. His purchase of GOOG more than doubled his stake in Alphabet, making the total holding 444,900 shares currently valued at $542 million.Alphabet gets plenty of love from the Street’s analysts, too. Citi’s Jason Bazinet took over his firm’s coverage of GOOG shares last week, and promptly bumped his price target up by 3% to $1,500. He wrote, “We expect Alphabet's growth to slow to mid-teens over next three years. Nonetheless, we believe the company's operating leverage may improve and are not concerned by regulatory headwinds.” Bazinet’s price target suggests a 11% upside to GOOGL. (To watch Bazinet’s track record, click here)Michael Olsen, quoted above on FB, was impressed with GOOG shares. He initiates coverage of the stock for Piper Jaffray with a Buy rating and another $1,500 price target. In his initiation note, he points out, “While there's no question that the company will face ongoing regulatory scrutiny, which could lead to some headline risk, the investor community has, to some degree, become numb to this and we believe the positives of the underlying business will outweigh negative news flow.” (To watch Olsen’s track record, click here)With 32 "buy" ratings against just 3 "holds," GOOGL shares have earned their Strong Buy consensus rating. The stock is not cheap, selling for a hefty $1,353, and the average price target of $1466 implies that there is room for 8% upside growth. (See Alphabet's stock analysis on TipRanks)
Ryanair says Europe delays may mean no MAX jets next summer
Ryanair may not receive any 737 Max aircraft from Boeing by next summer over European delays in testing the grounded jets, Chief Executive Michael O'Leary said, estimating the issue is costing it at least 100 million euros a year. Ryanair trimmed its passenger traffic forecast last week but that was still based on 10 MAX deliveries by June. O'Leary told Reuters on Tuesday that testing in Europe was running behind the United States and planes were likely to remain grounded until April or May.
Brooklyn Nets Owner Joe Tsai Buys $10 Million Stake in Esports Team
(Bloomberg) -- Alibaba Group Holding Ltd. co-founder Joe Tsai is expanding his sports empire, buying a minority stake in competitive gaming franchise G2 Esports.The owner of the Brooklyn Nets and Barclays Center is investing $10 million, valuing the Berlin-based franchise at around $100 million, according to two people familiar with the transaction. G2 is hoping to use the investment from J Tsai Sports — and Tsai’s expertise — to expand in Asia, more specifically China, where esports are incredibly popular but Western teams have yet to fully penetrate.There are more gamers in China than there are people in the U.S. It’s also the biggest market for gaming revenue, according to research firm Newzoo. The hope is that Tsai’s experience building an e-commerce business in China will help give G2 an edge.“The biggest challenge for Western teams is to properly play to Chinese culture, to understand the true thinking and mentality of the Chinese audience,” said Jens Hilgers, co-founder and chairman of G2. “That’s something that we will pay a lot of attention to, but with the support of a Chinese owner in our group, hopefully it goes a bit easier.” Tsai, who has a net worth of $11.9 billion, was born in Taiwan and moved to the U.S. as a teenager. In October, when Houston Rockets General Manager Daryl Morey tweeted his support for protesters in Hong Kong — creating an international crisis for the NBA — Tsai was the league’s most vocal defender of mainland China’s position. He wrote an open letter to NBA fans explaining why many Chinese considered Morey’s tweet so offensive. G2 isn’t looking to build gaming teams in China, but it is working to attract followers through video and social media. The franchise is hiring Mandarin speakers, writers and videographers to help it cross the cultural divide. “We want to be, from a talent perspective, a Western team,” Hilgers said. “But we want to build fans so that when it comes to international competition, these fans can look to G2 Esports and say, ‘I’ve heard about these guys, I follow these guys, and that’s my favorite team when I don’t see my home favorite.’”One of the world’s most valuable esports franchises, G2 has 10 teams that play a number of different games, including Fortnite, Counter-Strike: Global Offensive and Rocket League. It also has a franchised slot in Europe’s main League of Legends circuit, operated by publisher Riot Games Inc.G2 raised $17.3 million earlier this year from a group that included Seal Rock Partners and Everblue Management. Representatives for the team and J Tsai Sports declined to comment on G2’s valuation following this most recent investment. It’s the latest sports for Tsai, who first acquired a stake in the Nets in 2018. Earlier this year, he bought the rest of the team, and its arena, paying a total of $3.5 billion, including debt. He also owns the San Diego Seals, an indoor lacrosse team, and the New York Liberty, a franchise in the WNBA, plus investments in the Premier Lacrosse League and MLS franchise LAFC. Tsai is just the latest billionaire sports owner to invest in esports. Others with video-game franchises include Stan Kroenke, owner of the St. Louis Rams, Denver Nuggets and Colorado Avalanche; Cleveland Cavaliers owner Dan Gilbert; and Dallas Cowboys owner Jerry Jones.G2 is also planning to open an office in New York City early next year. That will give the franchise a direct presence in the country’s largest media market, and position it in the same city as the Nets, opening the possibility for increased collaboration with the NBA team and its arena. For more on G2 Esports, here’s co-founder and CEO Carlos Rodriguez on the Bloomberg Business of Sports Podcast last year.To contact the author of this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.netTo contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Exclusive: Malaysia's Mahathir hopeful of 1MDB settlement with Goldman soon
Malaysian Prime Minister Mahathir Mohamad is hopeful of reaching an out-of-court settlement with Goldman Sachs over the 1MDB scandal soon, but that compensation of "one point something billion" dollars offered by the bank was too small. The Southeast Asian nation has charged Goldman and 17 current and former directors of its units for allegedly misleading investors over bond sales totalling $6.5 billion that the U.S. bank helped raise for sovereign wealth fund 1Malaysia Development Bhd (1MDB). Mahathir said they have demanded $7.5 billion from Goldman and negotiations were ongoing.
UPDATE 1-S.Africa mining companies cut production due to power shortages
South African mining companies Harmony Gold, Impala Platinum, and Sibanye-Stillwater have been forced to cut production since Monday due to power shortages, they said on Tuesday. "There are very few underground mines that operated overnight and will be operating normally today," said a spokesman for the Minerals Council, an industry body. Harmony Gold called off its underground shifts, saying it would resume as soon as state power company Eskom could provide assurance power supply would be more reliable.