Sears Holdings (SHLD): On a Course to Bankruptcy

It has been about 12 years since Edward S. Lampert acquired Sears and merged it with Kmart to create Sears Holdings (SHLD).  Despite numerous spin-offs, asset sales and store closings, which have provided positive returns to shareholders, Sears Holdings today remains unable to stem the slide in its sales and net operating losses.  In fact, SHLD’s financial performance has worsened considerably over the past few years. Continue reading

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Imperial Oil (IMO): The Poor Stepchild of Exxon Mobil

Imperial Oil (IMO), in which Exxon Mobil Corp. has a 69.6% stake, is the largest integrated oil company in Canada.  Across the value chain, it is a leading producer of oil (primarily through its assets in the Athabasca oil sands), the largest refiner of crude oil, a leading marketer of petroleum products and a major producer of petrochemicals. Continue reading

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HPE’s Transformation Continues with The Seattle Spin-Off

Since it was spun off from Hewlett-Packard Company in November 2015, Hewlett Packard Enterprise Company (HPE) has made several important strategic moves to remake its business. Continue reading

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Housing Market Outlook

Housing has been a consistent bright spot in an otherwise mediocre recovery. Critics complain that the recovery in housing has been lukewarm, because production levels are still well below levels seen in the years before the housing bust. Yet, housing production and new home sales have grown at double-digit rates on average since the 2011 trough. Continue reading

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The Fed Keeps Interest Rates on Hold

At the conclusion of its two-day meeting on July 26, the FOMC kept the Fed Funds target rate unchanged.  While this was expected by the financial markets, I thought that the FOMC might still actually raise the target rate.  At the very least, I expected some hint in its statement that it might act sooner than markets were expecting. Continue reading

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The Market’s Mistaken View on Fed Rate Hikes

The consensus view of the financial markets suggests that the FOMC will next raise its target Fed Funds rate in December (by a quarter point).  Currently, the target range is 1.00%-1.25%. Fed Funds futures currently suggest (as of July 13) a 97% probability that the Fed Funds target rate will remain unchanged at its upcoming meeting on July 26. The current probability of the target rate remaining unchanged stays high until December, when the probability of a quarter-point increase rises to 49% and a half-point increase rises to 8.4%. Thus, the Fed Funds futures market does not see a better than 50% probability of any increase until December.  Most economists and market strategists echo the view of the futures market. Continue reading

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Baker Hughes Will Likely Reinstate Its Dividend

Baker Hughes and General Electric completed their merger on July 3, 2017.  Baker Hughes shareholders received $17.50 in cash and one share of new Baker Hughes stock (BHGE). Continue reading

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Five Star Senior Living Struggles to Regain Profitability

Shares of Five Star Senior Living (FVE) have performed poorly over the past two years, even underperforming FVE’s peer group, which has significantly underperformed both the health care sector and the broader market.  The industry is suffering from a slow but steady decline in occupancy due to the increasing supply of communities and slowing demand growth (for demographic, lifestyle and affordability reasons).  Investors are also concerned about the long-term impact of proposed cuts to Medicaid funding under new federal health care legislation.  FVE has struggled with declining occupancy and high lease costs under its contracts with its affiliate, Senior Housing Properties Trust (SNH).  Although management is taking decisive steps to improve the company’s competitive position and boost revenues, it is unlikely that those efforts will be sufficient near-term to reverse FVE’s operating losses. Continue reading

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An Update on National Bank of Greece (NBG)

Loan loss provisions are down sharply. Liquidity and capital measures are strong. NBG is positioned well to provide support Greece’s economic recovery. Yet, the stock trades at less than five times my estimate of pro forma EPS. Continue reading

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A Brief Update on Greece

Although the Greek economy looked like it was beginning to achieve liftoff in late 2014, its progress was set back in early 2015 by the newly-installed Tsipras administration’s effort to obtain major changes to the country’s bailout program. Greece’s compliance with the key provisions of that program was slipping even before the election, but the new administration reversed course on many reforms during renegotiations with its EU creditors. Continue reading

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