A Possible Early Sign of a Market Rebound

Last week, stocks fell sharply. The S&P 500 ended the week down 5.16% in price. The Lark Research Homebuilder Stock Price Index fell 6.02%, underperforming the broader market. Continue reading

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Up Big Since the IPO, Bluegreen Shares Still Have Upside Potential

Bluegreen Vacations (BXG) completed its IPO in November 2017. The company had been wholly-owned by BBX Capital (BBX). In the IPO, Bluegreen offered a total of 7.47 million shares (including, with the overallotment option, 3.74 million shares owned by BBX Capital) at a price of $14 share. Net of underwriting discounts, commissions and other expenses, the offering raised an estimated $95.8 million, of which $47.2 million was received by Bluegreen, the rest by BBX. On a pro forma basis (as of Sept. 30, 2017), the offering raised Bluegreen’s cash position to $171 million and its equity book value to $901 million. Bluegreen intends to use the proceeds for general corporate purposes, including increasing working capital, making acquisitions and developing new properties. Continue reading

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GE Preannounces Insurance-Related and Other Charges

GE announced this morning that it will take an after-tax charge of $6.2 billion in the 2017 fourth quarter against the value of GE Capital’s run-off insurance portfolio, North American Life & Health (NALH).  In addition, GE Capital will make $15 billion of statutory reserve contributions over the next seven years, including $3 billion in February and $2 billion annually from 2019 to 2024. Continue reading

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Notes on the 2017 Massachusetts Investor Conference (Part 2)

Affordable Housing. According to U.S. News and World Report, Massachusetts ranks as the best state in the nation in 2017, with top 5 scores in education, health care and economy. All around the state, there has been a resurgence in urban areas and revitalization of town centers. Massachusetts is a one of the most desirable places to live, but it is also one of the least affordable. Continue reading

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Notes on the 2017 Massachusetts Investor Conference (Part 1)

The Massachusetts economy is experiencing its most robust expansion since the late 1980s. Third quarter GDP growth was clocked at 5.9%, according to Mass Benchmarks. Leading indicators anticipate 2017 fourth quarter GDP growth of 3.3% and 2018 first quarter growth of 3.0%. Massachusetts’ unemployment rate was 3.9%, below the national average of 4.1%. Job creation has been strong and broad-based, except for manufacturing. Early in the recovery cycle, hiring was concentrated among white collar workers, but more recently, blue collar workers have been the primary beneficiaries of continued job growth. Continue reading

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Notes and Analysis From GE’s Investor Update

“You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is”
      -Jack Welch

As everyone knows, this has been a tough year for GE shareholders.  GE’s stock is down 40.8% year-to-date (thru 11/17) on a total return basis.  By comparison, the S&P 500 has delivered a 17.3% positive total return.  GE’s stark underperformance reflects both the decline in its earnings expectations – its 2017 operating EPS guidance (industrial operating + verticals) has been cut from $1.60-$1.70 at the beginning of the year to $1.05-$1.10 currently – and now the halving of the dividend.  2018 has been characterized as a “reset” year.  Management currently anticipates 2018 adjusted EPS of $1.00-$1.07, which is roughly half of the previous target of $2.00.  According to management, the change in performance and outlook reflects primarily sharply reduced expectations for GE’s Power business and continued weak performance in Oil & Gas and Transportation. Continue reading

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Notes and Analysis from HPE’s Analyst Meeting

Key takeaways:

  • Through its HPE Next transformation plan, HPE will spend $1.1 billion over the next two years to achieve annualized cost cuts of $1.5 billion by the end of 2020. It will reinvest about half of the savings to beef up global sales and marketing efforts.  HPE Next will streamline the company and make it more responsive to customers.
  • HPE’s key strategic emphasis is to accelerate growth by offering high margin services and solutions driven by its innovations in hybrid IT and the intelligent edge.
  • Management offered pro forma non-GAAP EPS guidance of $1.00 for 2017 and $1.15-$1.25 for 2018.
  • Longer term, HPE has set as targets 0%-1% annual revenue growth,4%-5% operating profit growth and 7%-9% EPS growth.
  • At 14.3 times pro forma 2017 EPS and 12.0 times projected 2018 EPS, HPE is cheap to the market and its peer group.

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American Express (AXP) 2017 Third Quarter Results

  • Ken Chennault announces retirement in February 2018 and Steve Squeri will become Chairman & CEO
  • Third Quarter EPS of $1.50 vs. $1.20 last year and consensus of $1.48
  • Management raised full year 2017 guidance from $5.40-$5.80 to $5.80-$5.90
  • Earnings growth driven mostly by decline in tax rate and decline in share count.  However, one-time impairment charges offset the increase in tax credits booked in the quarter. Continue reading
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GM’s Q3 Results Beat Expectations

General Motors Company (GM) reported third quarter EPS of $0.08 vs. $1.76 in the prior year.  Excluding unusual items – a $2.3 billion, $1.24 per share deferred tax adjustment related to the sale of GM’s European operations in 2017 and a ($69 million), ($0.05) per share adjustment to reverse a small gain on an ignition switch recall in 2016 – third quarter non-GAAP EPS was $1.32 vs. $1.71.  Analysts had expected EPS of $1.12. Continue reading

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Sears Canada Moves Toward Liquidation

Sears Canada (SCC.TO) announced yesterday (10/10) that it would seek court approval to close all of its stores and lay off nearly all of its 13,000 employees.  The move comes after the company’s Executive Chairman Brandon Strazl failed to obtain sufficient financing for his bid to acquire the company.  The Board of Sears Canada has approved the liquidation.  A court hearing is scheduled for October 13.  If nothing changes, the company could begin liquidation sales on October 19. Continue reading

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