Category Archives: Stocks

Taco vs Burger

McDonald`s have underperformed for some time now, and the chain have also had some problems lately. Some of the critics have been that their menu is expansive and confusing. The employees at McDonald`s say their menu is too long which is leading to slower turnover times and longer lines resulting in lost business during meal rushes.

The latest problem is racism. Some black people were fired at McDonald`s being told that there were too many black people at work, lawsuit claims. A previous manager at McDonald`s said she was fired because she was black. She said one of her supervisors would regularly make inflammatory comments to her, such as “We need to get the ghetto out of the store.”

Another problem they have is people sitting there for hours. It could be unemployed people or poor people paying for their cheap burgers, and all this is not good news for McDonald`s Corporation. In addition; people tend to think that McDonald`s do have unhealthy food.

The company has seen declining company wide sales since the summer last year. Last month McDonald`s announced a menu overhaul to address its lackluster performance. The fast food joint also launched a massive marketing campaign to enhance its image.

U.S comparable sales were down 4,6% YoY in November and in October U.S comps dropped by 1% YOY. The past few monthly sales numbers have led to lower estimates for the upcoming quarter.

As the demand for McDonald`s is declining others are rising, and McDonald`s saw that many years ago. That`s why they bought shares at Chipotle Mexican Grill. Folks are flocking to the restaurant with their mexican taco food on the menu.

CMG 2015

As you can see on the chart above, the stock price has skyrocketed. I can understand why McDonald`s bought shares in that company. CMG`s stock price was $40 in 2008, and now it is $719,21. Up about 1000% in a few years.

People tend to think that Sushi is healthy food, but it isn`t. It is too much rice and sugar and that will make you fat. Rice and sugar are «No-food». Mexican food is «Yes-food». People want healthy food and that`s why they like CMG. That`s also why McDonald`s started to sell salad. Among the best thing you can eat on this planet, but McDonald`s is not a salad chain. Do they have an image problem?

CMG will report FQ4 results in Feb 03, and the conference call is scheduled to begin at 04:30 pm ET. Consensus view is EPS of $3,77 on revenue of $1,07B.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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Apple to acquire Sementric

Apple purchases a British startup company named Semetric, which is an analytic company that tracks the way people consume music across the internet. Sementric can give Apple vital information about the consumers to create a music service that gives artists better opportunities to interact with their fans.

This is a big deal for the UK`s cluster of music technology startups. Shazam is another London company that raised a new funding of $30 million, which values the company at $1 billion. I think it is party in London tonight. This is great for the British music industry.

Apple bought Beats for $3 billion last year, and nothing have happened since then. They didn`t buy Beats because of their headphones? If so, Beats headphones are this planets most expensive headphones. I think they are working on their new music streaming platform to vipe out Spotify.

musicmetric

As you may know, iTunes has seen a steep declines in music sales because consumers don`t want to buy music. They want to stream the music and as the iTunes sales are plummeting, people are flocking to steaming platforms like Spotify, Deezer and YouTube.

Apple bought Semetric behind Musicmetric which runs an analytics tool that help record labels, artists and others track the digital consumption of their music. It tracks the consumers behavior on YouTube, BitTorrent downloads, sales on iTunes and streams on Spotify.

Musicmetric is a six-year-old company which is well established, and they raised about $5 million (inkluding a $4,7 million round) in 2013. The deal is much like Spotify`s acquisition of Echo Nest in 2014. Spotify bought Echo Nest for $100 million.

It`s not clear to me whether Apple will close the brand Beats and roll it into iTunes. They were early on the market with iTunes, but not with their new streaming service. So, why should people change the streaming service?

Apple have a huge market out there and some of their opportunities can be first of all their platform. They need to come up with a new and innovative platform. They will also integrate Beats Music directly into the next version of their iOS mobile operating system, according to New York Times. In addition; they may drop the price of the subscription music service from the industry-wide standard of $10 per month.

The tool is also for TV-shows, films, e-books and links to social media, so Apple may have other plans than just their music streaming, because this is vital information for marketers. The tools are turning big data into big opportunities, and they can tell you all you need to know.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Low oilprice is good for oil tankers

The oil price continue to decline and brent oil is now trading at $47, and that is bad for someone and good for others. The supply in the oil-market are pushing the prices down and China will profit from that drop.

China said that the first phase of its oil inventory buildup is over. They revealed that they have 91 million barrels stored at four different sites, and it doesn`t stop there. Now they have a second phase of oil inventory accumulation, and has already stockpiled an additional 80 million barrels.

They have revealed that they want to have a reserve of at least 500 million barrels of oil in the next five years. USA`s oil reserves has a capacity of 700 million barrels. It`s good to know their strategic oil reserves because someone will benefit from that.

Oil tanker companies are happy for the declining oil prices and only a few months ago many of them couldn`t even cover their operating cost which is about $20,000 a day. Rates on the Asian route have gone straight up, trading at an average near $100,000 per day. Spot rates is about $60,000 to $70,000 a day.

This is a level not seen since 2008, and some of the world largest oil traders are hiring supertankers to store crude at sea, Reuters reports. In 2009 at least 100 million barrels of oil ended up being stored at sea. Some of the biggest trading firms have booked crude tankers for up to 12 months.

Storage

Some shipping sources consider the flurry of long-term bookings unusual and suggest that traders could use the vessels to store excess crude at sea until prices rebound. A strategy that was popular in 2009, trading gambit when prices last crashed.

The oil is floating at sea and it`s all stored on oil tankers that is waiting for the oil prices to go up again. When will the oil price turn up again and how long will those tankers wait out there in the sea?

Frontline (FRO) is up 243% in just three months amid speculation that a plunge in crude prices is spurring demand for the vessels to store cargoes. Nordic American Tankers (NAT) is up 65,1%, which owns 20 Suezmax crude oil tankers.

fro

If you think that the oil prices will go up again, then you must set a stop-loss on your Velocity Shares 3X Inverse Crude ETN (DWTI), which is up 380,5% in three months. An ETN you should buy in July last summer, trading at $22,25. It`s up 2,38% so far today, trading at $185,32. This is one of my favorite ETN`s.

Frontline Ltd is a shipping company that is engaged in the ownership and operation of oil tankers and oil/bulk/ore, or OBO, carriers, which are configured to carry dry cargo. It operates oil tankers of two sizes; VLCC`s and Suezmaxes. The stock is down -11,23% so far today, so when to jump in is the big question.

It can be too early right now. The selloff in oil was sparked in part by lower estimates from Goldman Sachs, which slashed its 3 and 6 months Brent forecasts to $42 and $43 a barrel respectively from $80 and $85. Goldman also cut its longer-term estimates on Brent.

Goldman sees crude bottoming in Q2, which means jumping in now could be too early. In a report, they said $2 trillion of future oil investments are threatened due to falling crude prices. That`s up 100% from December 2014.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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M&A continues

All sectors was in a red territory yesterday, but only one of them was up. The biggest loser was energy and the winner was the heath care sector. So far in 2014, the biggest loser is the energy sector, while the health care sector is the winner. This is just what I expected it to be in 2014. Read my article titled; health-care bull, dated January 8, 2014.

The takeover boom is not over yet, and 2014 will be the best in many years. Lawyers working with advice on takeovers say they`ve got a robust pipeline of deals in the works. Some of their works is delayed, so December will be busier than usual.

Health care stocks soared in 2014 and next year is shaping up to be another great year for these stocks.

The shares of Cubist Pharmaceuticals Inc rose 35% yesterday, and the reason is that pharmaceutical giant Merck (MRK) want to acquire its smaller peer for $102 per share. Included the debt, the deal is valued at $8,4 billion. This deal will strengthen Merck`s leadership position in the hospital acute care market.

Two of Cubist Pharmaceutical`s three commercial products focus on treating difficult-to-fight infections, and the firm`s reputation has become a «superbug» specialist in a business that has overlooked such infections until fairly recently.

The deal will be financed primarily by the issuance of about $9,5 billion in new debt, and Merck expect the deal to add about $1 billion in annual revenue. Cubist Pharmaceutical`s drugs should become significantly accretive to Merck`s EPS from 2016.

I wrote about M&A activity last year. Read my article titled M&A (merger and acquisition), December 13, 2013. First of all; it is very lucrative for companies to buy now when the interest rates are historically low, and I think this will continue until the Fed makes a jump on the interest rate.

If you look at 2013, the S&P 500 was up about 30%, and that was a good sign of a healthy stock market. Credit markets was also good with higher leverage levels. About 18,000 Private Equity Firms were also looking for liquidity given strong prevailing market conditions, in addition to increased corporate cash and finite-lived private equity capital reserves. All this factors have led to high degree of M&A activity in 2014, but what about 2015?

Predicting the future is risky business, but what are you gonna do if you don`t belive in something?

By tracking global sell-side mandates and deals reaching the due-dilligence phase of a transaction, it is possible to forecast future deal levels. If you look at the deal volume reported by Thomson Reuters, you can indicate future changes in the numbers of announced M&A transactions.

The latest Q3 data this year will forecast Q1 2015, and that suggests sustained momentum in M&A activity through 2015. Deal volume is expected to go up, and hot sectors will be entertainment, media, consumer, manufacturing and telecommunication. The most active sectors are expected to be energy and technology.

A forecast is based on facts today, but as you may know everything can change tomorrow. A change in macroeconomic or political conditions or even a change in the financial markets will change the whole picture and that can happen overnight.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Azul and Virgin America IPO

Azul SA is Brazil`s third-biggest airline after TAM and GOL, founded by David Neelman, who also founded JetBlue Airways Corp (JBLU.O). They may become No. 1 as Azul could offer about 3,000 more seats than their biggest competitors. Azul has a 15,9% market share and is the fastest growing airline in Brazil based on passenger kilometers flown, according to the National Civil Aviation Agency. Azul had $1,64 billion (4,2 billion reais) in revenue for the fist nine months in 2014.

Azul

Neelman left JetBlue Airways Corp in 2008 to launch the Brazilian carrier, which is his fourth airline startup.

David Neelman`s family is American, but he was born in Brazil and has Brazilian citizenship. That`s important, because Brazilian law forbids majority foreign ownership of airlines.

Azul SA revived plans for an IPO in Sao Paulo and New York. According to the U.S SEC filing, Azul plans to list referred shares on the Level 2 chapter of the Sao Paulo Stock Exchange, and American depositary shares on the New York Stock Exchange. It doesn`t say when the IPO will take place.

So far, they expect the IPO will be worth around $1 billion. Neelman owns 67% of voting shares and 4,58% of outstanding preferred shares. The private equity firms TPG Growth, Weston Presidio, Grupo Bozano, and Gàveo Investimentos, which is owned by J.P. Morgan, also own stakes in Azul Airline. The shareholders in Azul may sell an unspecified portion of their shares as part of the offering.

According to Azul`s prospectus, the money raised will be used to finance expansion plans and to pay down debt. They plan to buy 38 Airbus A320neo jets and lease 25 more. They have also begun international service with the first flight connecting Brazil and the U.S. In April, they announced plans to start flights to southern Florida early next year, followed by flights to New York, using a dozen leased wide-body jets, first A330-200 and then A350-900 aircraft.

Azul`s president Antonoaldo Neves said they are going to grow the cake, not steel from their competitors. He also said there`s no reason the market can`t double. Brazil`s airline association has said domestic demand is expected to rise to about 200 million passengers by 2020. That`s up 100%.

The IPO comes during a periode with few Brazilian offerings, as the equity issuance market stagnated this year as the economy slipped into a technical recession in the first half of 2014. The falling petroleum prices is helping airline stocks around the world, so the timing could be good. (Read my article “Airlines hammered”, October 14, 2014).

Sir Richard Branson know that. Delta (DAL) and JetBlue (JBLU) are both up over 50% this year. He`s low-cost airline Virgin America (VA) made an impressive debut on Nasdaq. The stock jumped 30,43% to close at $30 on November 2014. Virgin America raised $307 million through the offering.

Virgin America is the U.S offshoot of Branson`s London-based Virgin Group. Branson, through VX Holdings LP, own 24,8% stake after the IPO. The biggest shareholder with 32,8% is the Hedge fund Cyrus Capital Partners LP.

Virgin America has had a troubled time ever since its launch in 2007, and witnessed profits for the first time in 2013. Third quarter profits climbed about 24% buoyed by an increase in passenger traffic and higher fare rates. Revenue was up 4,7%, totaling $405,5 million.

Take note that Virgin America is the only U.S airline company to have gone public since another low-cost carrier, Spirit Airlines went public in 2011. Can Virgin America win this battle with their Wi-Fi service and comfortable leather seats? Will a hip airline work on Wall Street?

Anyway, it`s gonna be hard for Virgin America to fight with big players like American Airlines, Delta Airlines and United Airlines. It`s not going to be easy for Azul either, but investors will not ignore their growth in the future. Nor Azul and Virgin`s competitors.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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