Weekly Market Overview
Stocks closed up today after a late day bounce. Increasing strains in the credit market coupled with a Fed that is apparently open to rate cuts eased investor concerns as short term Treasury bills rallied late in the day. The Fed funds rate is currently trading well below the target of 5.25% at just 5.06% - meaning that all the liquidity concerns that have been causing downward pressure are being eased by Fed injections. In the end, many believe that the markets are still in trouble, but for now it seems that the Fed as eased concerns in the short-term. Whether or how long this will last depends on many factors, so investors should be aware that risks exist!
Top 10 Stocks to Watch this Week
Fundamental Analysis
- Brinks Company (BCO)
– The Brink’s Company remains on our watchlist since both MMI and
Pirate Capital still hold significant stakes in the company. The
company recently announced higher than expected earnings along with a
dividend increase. Pirate Capital recently announced that it has
determined that the majority of investors would support at least the
consideration of a breakup. They also
- Ceridian Corporation (CEN)
– Bill Ackman’s activist play also continues to hold appeal with us
since the breakup could unlock substantial value. We have not seen an
announcement of an official date, but as of March 13th, Pershing Square
is still engaged in a proxy contest with the company’s board of
directors. Recently, Pershing Square lost its battle to obtain
questionable letters, but vowed to continue pursuing its objectives.
However, news came out today stating that one potential buyer of
Ceridian was able to obtain $3.5 billion in debt financing, which is
great news for shareholders holding out for a buyout. Meanwhile,
shareholders recently won a lawsuit against the company that may level
the competitive bidding landscape, paving the way for an increased bid.
- Hexcel Corporation (HXL)
– OSS Capital demanded today that the company engage an investment bank
to explore strategic alternatives. The company’s shares are worth $14
per share above the current market price if priced at its peers’
levels. All we are waiting on is the support of the board of directors!
Meanwhile, the company has received several analyst upgrades and sits
near its 52-week high.
- Applebees International (APPB)
– Breeden Capital Management first approached Applebees several months
ago suggesting that the company put itself up for sale. Three weeks
ago, the company announced that it had received several takeover offers
and would review the bids before taking final offers. Recently, the
company also agreed to yield two board seats to activist investor
Breeden Partners. The company finally announced a sale today at $2.1
billion - a 4% premium to Friday's close and a substantial increase
from when we first mentioned the stock.
- Universal Power Group (UPG)
– 3V Capital Management announced last week that they weren’t pleased
with the company’s valuation. They recommended several changes that
they hope would enhance shareholder value. We are still waiting on more
details and a response from the company, but this was definitely a
stock worth following!
Technical Analysis
- Hudson City Bank Corp. (HCBK) - Intermediate term bullish head and shoulders bottom.
- Investools Inc. (SWIM) - Intermediate term bullish continuation wedge.
- Ebay inc. (EBAY) - Intermediate term bullish continuation diamond.
- Medarex Inc. (MEDX) - Long term bullish continuation diamond.
- Neustar (NSR) - Long term bullish continuation diamond.
Stock of the Week : Gyrodyne Corp. (GYRO)Gyrodyne Corporation
(NDAQ:GYRO) directors may face some competition at the company's next
annual meeting. Full Value Partners announced in a Schedule 13D/A
filing their intention to solicit proxies in an attempt to takeover the
company's board during the next annual meeting. The hedge fund said
that it plans to eliminate the company's poison pill and work to unlock
value in the company if successful. (Read More)
Tip of the Week : Understanding Subprime Mortgages
Subprime
mortgages have been causing quite the stir in Wall Street, but what are
these types of mortgages and how might the failure in this relatively
small sector of mortgages affect the larger economy? (Read More)
Final Words
The
market remains optimistic despite questionable yields and other
economic data. While this is good news for investors in the short term,
be sure to use caution and only invest prudently.