Dell has delayed a shareholder vote of a proposed buyout deal in which founder Michael Dell and Silver Lake Partners would take the company private.
Dell on Thursday said it adjourned a shareholder meeting to “provide additional time to solicit proxies from Dell stockholders,” and that a special meeting will reconvene on July 24 at 5 p.m. CDT at the company’s campus in Round Rock, Texas.
Michael Dell and Silver Lake in February proposed a deal to buyout Dell for $24.4 billion, or $13.65 per share. The deal includes a $2 billion loan from Microsoft, and debt financing from Bank of America, RBC Capital Markets, Merrill Lynch and Barclays. Dell’s board backed the deal, saying it was the best offer on the table.
But some shareholders came out against proposed deal, believing the company was being undervalued. Some advisory firms recommended shareholders vote for the deal in the wake of a weakening PC market and Dell’s uncertain future. Dell’s business is largely centered around the deteriorating PC business and the company has little to no presence in the growing smartphone and tablet markets.
Former Bank of America CEO Ken Lewis got a lot of things wrong during 2008 but picking up Merrill Lynch’s brokerage business wasn’t one of them. …read more
It was a week without a definitive direction on Wall Street, but at the end of the day, stocks continued to move higher. The Dow Jones Industrial Average was up 1.13% this week and the S&P 500 rose 1.74%. On the economic front, we saw slow home sales on Monday, decent unemployment news on Thursday, and weaker-than-expected GDP and consumer confidence on Friday. But investors focused on more company-specific items to drive stocks higher.
DuPont led the Dow by jumping 7.5% this week. Last quarter’s earnings disappointment set extremely low expectations for the company in the first quarter, but it was able to meet them. First-quarter revenue rose 2% to $10.4 billion, and earnings from continued operations fell slightly to $1.46 billion, or $1.56 per share. The real hope was that earnings will pick up later in 2013 because ag unit sales were up 14% and volume grew 8%, so we could be in for much better results in the future.
Microsoft rose 6.8% this week as sentiment toward the company continued to improve. Microsoft beat earnings estimates, and the stock continued its steady rise all week. The two main news items were a patent ruling win against Motorola and a debt offering. The patent ruling was the first of two major cases in which Google‘s Motorola subsidiary had claimed it was owed $4 billion in royalties, but the judge found that $1.8 million was a more appropriate payment. The second trial is set for this summer. The company also announced $2.7 billion in bond sales.
Bank of America rounds out the top three, gaining 6.5% this week. The stock is especially sensitive to economic news, and despite GDP growth that came in lower than expected, investors were happy to see solid growth, and decent unemployment data helped pushed the stock higher. The company also settled with former Merrill Lynch brokers who claimed they were owed deferred compensation. The company will pay $21 million to settle the class action lawsuit, putting another black eye from the financial crisis behind it.
Bank of America’s stockdoubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.
By Robert Lenzner, Forbes Staff The President of the Federal Reserve Bank of Boston, Erick Rosengren, suggested this week that there could still be runs on money market mutual funds, as took place at the peak of the 2008 financial crisis, since these funds have “no capital” and invest in uninsured short term securities of banks and other financial service firms. While debate over potential regulatory solutions for money market funds continues on, the Boston Fed chief, emphasized that the safety of the money market mutual funds are a “significant unresolved issue.” As of April 13 there was $903.56 billion in retail money market funds sponsored by Fidelity, T. Rowe Price, Dreyfus, Invesco and others, The total amount of all kinds of money market funds, some owned by institutional investors, was $2.6 trillion. The average weekly yield was a record low of only 0.02%. He also singled out the issue of capital for the broker-dealer fraternity, where he raised the problem of “virtually no change for broker-dealers since the collapse of Lehman Brothers in September, 2008 and the shotgun marriage of Merrill Lynch into BankAmerica. The solution Rosengren recommended was that the “larger(these investment firms) get the higher the capital ratio”: should be imposed on them. The Boston Fed chief executive, speaking at Bard College’s Levy Institute conference on the economy and financial markets, seemed to be suggesting that the cause for this vacuum in policy is that “Regulatory bodies haven’t evolved as much as the financial markets.” In other words, 5 years after the 2008 meltdown we still have a major challenge in trying to make the global financial system secure against runs and speculative bubbles. There is still further to go in the structural reorganization of the danger from derivatives, but he believes clearing derivatives contracts on exchanges and the decline in bilateral transactions has reduced an element of risk. Nevertheless, Rosengren made crystal clear in conversation after his talk that he “sees no bubbles anywhere, not even in real estate where prices are still below their 2006 peak.” He believes prices of residential real estate in Boston and New York are still 15-20% under their peak– and prices in Miami, Phoenix, Las Vegas, California– are still priced at a steeper discount to the peak in 2006. As for the economy in general, Rosengren sees “traction” picking up momentum, in which case he would support the “prudent” position of gradually reducing the QE stimulus program. However, he is troubled by the fact that monetary policy(quantitative easing and record low interest rates) are in conflict with fiscal policy, the restraint of sequester and reduction of federal, state and local government spending, ie “the Obama cuts.”
On Tuesday, TD AMERITRADE will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Discount brokers have become increasingly popular as a low-cost way to invest, and TD AMERITRADE is a big player in the discount brokerage space. But competition has become fierce, and even with markets at new highs, some investors have been reluctant to put their money to work ever since the bear market of 2008. Let’s take an early look at what’s been happening with TD AMERITRADE over the past quarter and what we’re likely to see in its quarterly report.
Stats on TD AMERITRADE
Analyst EPS Estimate
$0.26
Change From Year-Ago EPS
4%
Revenue Estimate
$676.3 million
Change From Year-Ago Revenue
0.5%
Earnings Beats in Past 4 Quarters
3
Source: Yahoo! Finance.
Are things looking up for TD AMERITRADE? Analysts have gotten more optimistic about TD AMERITRADE’s earnings prospects over the past few months. They’ve boosted their earnings-per-share estimates for the just-ended quarter by a penny, and full-year fiscal 2013 estimates have risen by a nickel per share. The stock has also performed well, jumping more than 11% since early January.
TD AMERITRADE and its discount peers offer low-cost trading for stocks, ETFs, and other financial products. By offering services at a fraction of the cost of full-service brokers, discount brokers have grown substantially over the years, broadening their product lines and offering new services such as banking.
But the industry has gotten fiercely competitive, especially as trading activity has fallen in recent years. TD AMERITRADE has answered by joining the big fee fight over exchange-traded funds, with its offering more than 100 ETFs from various fund families at no commission. Yet archrival Schwab answered back with its ETF OneSource offering earlier this year, with a suite of 105 ETFs one-upping TD AMERITRADE’s list.
Competition is also coming from other corners. Leveraging its purchase of Merrill Lynch during the financial crisis, Bank of America has reupped its efforts to attract new customers through its Merrill Edge discount-brokerage unit in an attempt to gain the opportunity to cross-sell clients into B of A banking and other financial products.
In TD AMERITRADE’s quarterly report, be sure to see how the broker’s ETF business is faring against Schwab and other competitors. If its attempt to draw in assets has been successful, then the move could continue paying dividends for TD AMERITRADE well into the future.
Credit Acceptance will see big blocks of its shares change hands over the next few days. The company has specified the pricing of a previously announced underwritten public secondary stock common offering of $105.00 per share. Trusts associated with the firm’s founder Donald Foss, in combination with Karol Foss and people and entities connected with Prescott General Partners, aim to sell a combined 1.5 million of their shares. Additionally, the underwriters will have a 30-day option to buy up to an extra 225,000 shares.
Credit Acceptance anticipates that the offering will close on April 17. In the press release announcing the pricing, the company stressed that it will not receive any monies from the issue.
The joint book-running managers of the offering are Bank of America unit Merrill Lynch and Credit Suisse‘s Securities division.
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In McDaniels, et al. v. Wells Fargo Investments, LLC, et al. (9th Circuit, April 10, 2013), Plaintiffs are former employees of Wells Fargo, Morgan Stanley, and Merrill Lynch: Douglas McDaniel and Bryan Clark are former Wells Fargo financial advisors (Wells Fargo Investments, Wells Fargo Bank, and Wells Fargo Advisers collectively referred to as “Wells Fargo”). Holly Hanson, John Rennell, Marcia Bloemendaal, and David Notrica formerly worked for what is now known as Morgan Stanley. Kristen Heilemann and Marcella Lees worked as financial consultants and portfolio managers for Merrill Lynch. While employed at Wells Fargo, Morgan Stanley, and Merrill Lynch, the employees were denied the ability to open self-directed brokerage accounts at other firms. The employer firms argued that federal law requires brokerage firms to promulgate rules and regulations reasonably designed to supervise their employees in order to deter the misuse of material, nonpublic information. Accordingly, the employers claimed that their denial of employee requests to open outside self-directed trading accounts promoted sound compliance policies and furthered the federal requirement to properly supervise.
JACKSONVILLE, Fla.–(BUSINESS WIRE)– Fidelity National Information Services, Inc. (“FIS“) (NYS: FIS) , a leading provider of banking and payments technology, today announced the pricing of its sale of $250 million in aggregate principal amount of 2.000% Senior Notes due 2018 (the “2018 Notes”) and $1.0 billion in aggregate principal amount of 3.500% Senior Notes due 2023 (the “2023 Notes”), together (the “Notes”). The Notes will be guaranteed by certain of FIS‘ subsidiaries. FIS intends to use the net proceeds from this offering to fund the purchase, through a call for redemption, of $750 million aggregate principal amount of our 7.625% senior notes due 2017, to pay fees and expenses related to this offering, and for general corporate purposes, which may include the repayment of other existing indebtedness.
Barclays Capital Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are joint book-running managers for the offering. The offering of these securities is made only by means of a prospectus supplement and accompanying prospectus. Copies may be obtained by contacting Barclays Capital Inc. at 1.888.603.5843 or by e-mailing barclaysprospectus@broadridge.com, J.P. Morgan Securities LLC, Syndicate Desk collect at 212.834.4533 and Merrill Lynch, Pierce, Fenner & Smith Incorporated at 1.800.294.1322 or by e-mailing dg.prospectus_requests@baml.com. The Notes are being offered pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission on March 5, 2013.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes, nor will there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale is not authorized or to any person to whom it is unlawful to make such offer, solicitation or sale. Any offer, solicitation or sale of the Notes will be made only by means of the prospectus supplement and the accompanying prospectus.
FIS (NYS: FIS) is a leading global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100 countries. Headquartered in Jacksonville, Fla., FIS employs more than 35,000 people worldwide and holds leadership positions in payment processing and banking solutions, providing software, services and
Closing in on the end of the trading day, Bank of America share prices are up 0.33%. They’ve been on the climb since last Friday, following a dramatic dip in share prices across all the big banks last Wednesday that I have yet to find a good explanation for.
At the risk of looking a gift horse in the mouth, here are a few thoughts as to why B of A and its big-four peers are doing so much better than they were this time last week.
Hale and hearty all around But first, here’s a quick overview of the rest of the big four and the markets:
Citigroup is up a big 2.61%.
JPMorgan Chase is up a healthy 1.21%.
And Wells Fargo is up a solid 0.63%.
The markets are generally feeling hale and hearty, as well:
The Dow Jones Industrial Average is up 0.90%.
The S&P 500 is up 1.11%
And the Nasdaq is up 1.73%.
Defying expectations So first, the markets are all up. And when the markets are all up, chances are your favorite stocks, like B of A, are going to be up as well. Or is it the other way around? It’s a virtuous circle, is the answer, at least for today. On other days, it’s a vicious cycle, and the markets and your favorite stocks are all down.
Earnings season is about to start, too. To kick things off in the banking sector, JPMorgan and Wells Fargo both report this Friday. This can affect stocks in two ways: Investors feel frightened at what they might hear, or hopeful.
By what we’re seeing with B of A’s performance today, as well as with that of the superbank’s peers, it seems that investors are looking forward to the prospect of first-quarter earnings reports. Going on that theory, Citi investors must be feeling particularly hopeful, and well they should be: Last quarter’s earnings were startlingly good.
But in some ways, B of A’s performance this week is defying expectations. Last Fridaynews broke that a federal judge signed off on a $2.43 billion settlement B of A made with investors over allegations the big bank misled them when it bought Merrill Lynch. Now, the settlement was reached last fall, so it’s possible the market vented its fury at the deal then, but still, this news could have been a painful reminder.
Or maybe the markets are hoping that, with this multibillion-dollar judicial signoff, B of A is well on its way to putting the worst of its financial-crisis cleanup behind it. I don’t think the bank is there yet, but a lot of investors do.
In the end, remember that the markets work in mysterious ways: One week your favorite stocks are up, and the next they’re down. As a Foolish investor, you’re in it for the long term. Keep an eye on company fundamentals, and leave the rest to time.
Looking for in-depth analysis on Bank of America? Check
IBM is a giant among Dow stocks. The IT hardware and services veteran accounts for 11% of the Dow Jones Industrial Average index by weight, and its price swings always make a big difference to the Dow’s daily value changes.
This morning, Big Blue‘s shares jumped as much as 1.5% on an analyst upgrade. That’s enough to add 25 points to the Dow’s overall value, thanks to IBM‘s $211 share price, and a major driver of today’s bullish Dow action.
The fuel for this morning’s rocket ride came from star analyst Steve Milunovich, formerly of Merrill Lynch but now a managing director at Swiss powerhouse UBS. Milunovich is the kind of rainmaker who can move even blue-chip mega caps like IBM with a stroke of his pen.
In this case, Milunovich boosted IBM from “hold” to “buy” with a $235 price target. That would be a 12% upside to Tuesday’s closing prices.
He paints Big Blue as a company in transition, “well positioned” to become a leader in so-called “IT-as-a-service” cloud computing. That’s a model where businesses kick their IT operations out as a stand-alone business or divisions, moving a traditional cost center into the realm of flexible and potentially profitable operations.
These IT-focused entities are often powered by advanced cloud-computing solutions and big outsourcing contracts — two areas where IBM is both huge and growing.
Milunovich calls this a “sound strategy,” and it’s hard to disagree.
IBM has been heading in this direction for many years now, but the IT-as-a-service trend is primed for massive growth in the near future as the idea enters the mainstream. IBM stock has already crushed its Dow Jones peers over the last five and 10 years, and it’s likely to keep on keeping on.
So this man among Dow stock boys looks primed for further gains. Milunovich sees a 12% return for the next year, and I believe that’s an appropriate long-term growth rate for the next five years as well. In fact, I just started a long-term outperform CAPScall on IBM to underscore the comprehensive power of IBM‘s cloud-focused industry muscle.
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JACKSONVILLE, Fla.–(BUSINESS WIRE)– Fidelity National Information Services, Inc. (“FIS“) (NYS: FIS) , a leading provider of banking and payments technology, today announced that it intends to make an offering, subject to market and other considerations, of senior notes in one or more tranches with intermediate maturities (the “Notes”). The Notes will be guaranteed by certain of FIS‘ subsidiaries. FIS intends to use the net proceeds from this offering to fund the purchase, through a call for redemption, of up to $750 million aggregate principal amount of its 7.625% senior notes due 2017, to pay fees and expenses related to the offering and for general corporate purposes, which may include the repayment of other existing indebtedness.
Barclays Capital Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are joint book-running managers for the offering. The offering of these securities is made only by means of a prospectus supplement and accompanying prospectus. Copies may be obtained by contacting Barclays Capital Inc. at 1.888.603.5843 or by emailing barclaysprospectus@broadridge.com, J.P. Morgan Securities LLC collect at 212.834.4533 and Merrill Lynch, Pierce, Fenner & Smith Incorporated at 1.800.294.1322 or Dg.prospectus_requests@baml.com. The Notes are being offered pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission on March 5, 2013.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes, nor will there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale is not authorized or to any person to whom it is unlawful to make such offer, solicitation or sale. Any offer, solicitation or sale of the Notes will be made only by means of the prospectus supplement and the accompanying prospectus.
FIS (NYS: FIS) is a leading global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100 countries. Headquartered in Jacksonville, Fla., FIS employs more than 35,000 people worldwide and holds leadership positions in payment processing and banking solutions, providing software, services and outsourcing of the technology that drives financial institutions. FIS topped the annual 2012 and 2011 FinTech
LOS ANGELES–(BUSINESS WIRE)– Reliance Steel & Aluminum Co. (NYS: RS) announced today that it has entered into an underwriting agreement for the sale of $500 million principal amount of its 4.500% Senior Notes due 2023 at an issue price of 99.585%. The notes will be guaranteed by Reliance’s subsidiaries that guarantee its credit agreement and its senior notes due 2016 and 2036. Reliance intends to use the net proceeds to finance a portion of its pending acquisition of Metals USA Holdings Corp. If Reliance does not consummate its acquisition of Metals USA on or prior to December 15, 2013, the merger agreement with Metals USA is terminated at any time prior thereto or Reliance determines in its reasonable judgment that the acquisition will not occur, Reliance will be required to redeem all of the notes at a purchase price in cash equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. The offering is expected to close on April 12, 2013.
J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC acted as joint book-running managers of the offering.
The offering is being made only by means of a prospectus supplement and an effective registration statement (including a prospectus), which have been filed with the SEC. A copy of the prospectus supplement and accompanying prospectus for the offering may be obtained by contacting J.P. Morgan Securities LLC, Attention: Investment Grade Syndicate Desk, 383 Madison Avenue, New York, New York 10179, by phone at 1-212-834-4533, or by fax at 1-212-834-6081; or Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention: Prospectus Department, 222 Broadway, 7th Floor, New York, New York 10038, by email at dg.prospectus_requests@baml.com, or by phone at 1-800-294-1322; or Wells Fargo Securities, LLC, Attention: Capital Markets Client Support, 1525 West W.T. Harris Blvd., NC0675, Charlotte, North Carolina 28262, by email at cmclientsupport@wellsfargo.com, or by phone at 1-800-326-5897. Alternatively, you may get these documents for free by visiting the SEC‘s website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, and shall not constitute an offer, solicitation or sale in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful.
About Reliance Steel & Aluminum Co.
Reliance Steel & Aluminum Co., headquartered in …read more
LOS ANGELES–(BUSINESS WIRE)– Reliance Steel & Aluminum Co. (NYS: RS) announced today that it proposes to offer, subject to market and other considerations, $500 million principal amount of senior notes due 2023. Actual terms of the notes, including interest rate, will depend on market conditions at the time of pricing. The notes will be guaranteed by Reliance’s subsidiaries that guarantee its credit agreement and its senior notes due 2016 and 2036. Reliance intends to use the net proceeds to finance a portion of its pending acquisition of Metals USA Holdings Corp. If Reliance does not consummate its acquisition of Metals USA on or prior to December 15, 2013, the merger agreement with Metals USA is terminated at any time prior thereto or Reliance determines in its reasonable judgment that the acquisition will not occur, Reliance will be required to redeem all of the notes at a purchase price in cash equal to 101% of their aggregate principal amount, plus accrued and unpaid interest.
J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC are acting as joint book-running managers of the offering.
The offering is being made only by means of a preliminary prospectus supplement and an effective registration statement (including a prospectus), which have been filed with the SEC. A copy of the preliminary prospectus supplement and accompanying prospectus for the offering may be obtained by contacting J.P. Morgan Securities LLC, Attention: Investment Grade Syndicate Desk, 383 Madison Avenue, New York, New York 10179, by phone at 1-212-834-4533, or by fax at 1-212-834-6081; or Merrill Lynch, Pierce, Fenner & Smith Incorporated, Attention: Prospectus Department, 222 Broadway, 7th Floor, New York, New York 10038, by email at dg.prospectus_requests@baml.com, or by phone at 1-800-294-1322; or Wells Fargo Securities, LLC, Attention: Capital Markets Client Support, 1525 West W.T. Harris Blvd., NC0675, Charlotte, North Carolina 28262, by email at cmclientsupport@wellsfargo.com, or by phone at 1-800-326-5897. Alternatively, you may get these documents for free by visiting the SEC‘s website at www.sec.gov. This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, and shall not constitute an offer, solicitation or sale in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful.
A New York judge has just approved Bank of America‘s $2.43 billion settlement of the lawsuit brought against it by B of A shareholders over its acquisition of Merrill Lynch. The shareholders felt Bank of America did not disclose to them Merrill Lynch‘s massive Q4 2008 losses. But, with B of A putting this litigation behind it, will Merrill Lynch prove to be a worthwhile investment after all?
Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.
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When it comes to buyer’s remorse, the purchase of Merrill Lynch by Bank ofAmerica in 2009 probably doesn’t come close to that of the Countrywide acquisition a year earlier. The Merrill buyout has spawned its share of losses, however, and the recent blessing of the lawsuit settlement terms reached last September by B of A and a group of institutional investors is, at $2.4 billion, a princely sum that will hit the bank’s bottom line like a slap — and, it’s not the only legal morass still facing the superbank.
2008: A bad year for acquisitions Investors claimed that they were kept in the dark regarding Merrill’s sorry fiscal state of affairs at the time of the purchase, as well as the plan to award over $3.6 billion in bonuses to executives. Later testimony by former CEO Ken Lewis lent credence to this claim, and the $50 billion deal that stockholders approved wound up costing B of A $9 billion in debt offerings, a fourth-quarter loss of nearly $16 billion, and triggered another $20 billion taxpayer bailout. At least the transaction only cost $18.5 billion, rather than the original $50 billion, when it closed in January 2009.
Unfortunately, this is not the only lawsuit pending against B of A pertaining to Merrill Lynch: Insurance giant Prudential has filed a claim in federal court in New Jersey claiming fraud on $2 billion worth of securities sold from 2004 to 2007 — and leveling racketeering charges against the bank, to boot.
A never-ending stream of legal hassles Those familiar with Bank of America are well-acquainted with its myriad legal problems, many caused by toxic mortgages produced by Countrywide — very nicely laid out here. Peers face problems in this arena, too. JPMorgan Chase recently celebrated a win in claims filed against it by Belgian bank Drexia over $1.6 billion in soured mortgage loans, it but still faces putback claims on mortgage-backed securities valued at more than $140 billion, as well as the $33 billion complaint filed against it by the Federal Housing Finance Agency.
Wells Fargo was sued last fall by the U.S. government over a decade’s worth of shoddy mortgage production. In addition, the bank has also been sued by homeowners who claim that Wells supplied no relief to borrowers who participated in Wells-acquired Wachovia’s “Pick-a-Payment” program, despite a judge’s instruction to provide assistance.
As for Bank of America, it still faces two onerous lawsuits, neither of which has been moving in a favorable direction for the bank. One is the lawsuit brought by investors including Blackrock and PIMCO, which was settled back in 2011 for $8.5 billion, but has now been reopened because of findings by the plaintiffs that B of A acted more in its own interest than that of investors when modifying mortgages. If the settlement is not affirmed by a judge, the bank may wind up owing much more.
The other is the battle in which it is embroiled with mortgage insurer MBIA …read more
At least three wealth management firms that market themselves as objective financial advisers are getting payments for investing their clients’ money in certain mutual funds, a practice that even some of these firms say could create conflicts of interest.
The firms, known as registered investment advisers, are typically paid by clients with fees tied to the growth or contraction of client assets, and not to specific products. But Fidelity Investments and Charles Schwab Corp. (SCHW) are paying these financial advisers as much as 0.25 percent of the assets that their clients put into no-transaction-fee mutual funds.
Such funds are popular with ordinary investors because they don’t have to pay commissions to buy or sell them, although some advisers say they have higher expenses than funds with commissions. Brokers such as Fidelity and Schwab make hundreds of millions of dollars in fees selling funds that they and others manage.
The three wealth management firms receiving product-related fees are Luminous Capital, a division of First Republic Bank Inc. (FRC); Sontag Advisory LLC, a unit of National Financial Partners Corp. (NFP); and PHH Investments Ltd., which specializes in managing retirement income for pilots, a Reuters review of regulatory filings shows.
Millions in Potential Revenue
A fourth firm, Dion Money Management LLC, had also been taking payments from Fidelity, according to a 2012 regulatory filing disclosing its business practices. Last month, however, the Williamstown, Mass.-based firm made a new filing that no longer mentions such payments.
The payments can potentially add millions of dollars of annual revenue for the wealth management firms, but also create incentives for advisers to direct clients to those funds for their own benefit.
Greg Berardi, a First Republic spokesman, said Luminous invests less than 4 percent of client assets in Fidelity’s no-transaction-fee funds. Luminous, founded in 2008 by former Merrill Lynch brokers, is among the 20 largest independent financial advisory firms, with $5.5 billion in client assets, according to its regulatory filings.
“Clients trust us to make investment decisions that are always in their best interests, and that is the way we have always conducted business,” Berardi said. The founders of Luminous, who sold their firm in December to First Republic for $125 million, declined to comment.
Calls to Addison, Texas-based PHH, which markets itself as Retirement Advisors of America, and executives at New York-based Sontag Advisory, weren’t returned. A spokeswoman at Sontag’s parent, National Financial Partners, declined to comment. Dion executives and a spokesman at its parent company, Focus Financial Partners, didn’t return calls seeking comment.
Under securities laws, investment advisers registered with the U.S. Securities and Exchange Commission or state regulators are “fiduciaries” to their clients, which calls for undivided loyalty to the client and full and clear disclosure …read more
Bruce Berkowitz is undoubtedly one of the most respected value investors in the game; when he makes a move, people pay attention. But it’s hard to ignore one common factor shared by some of his top holding — outstanding lawsuits. With all of the uncertainty surrounding the potential costs of these legal battles, it’s no wonder share prices are depressed, but is Berkowitz investing because of, or in spite of the lawsuits? Let’s take a look at the two biggest cases at hand and see how investors, like Berkowitz, should approach companies with legal battles in the future.
Two-for-one Bank of America is the No. 2 holding for Berkowitz’s Fairholme Fund. Not only have Fairholme and Bruce had to weather the storm from BAC’s Countrywide legacy issues, but also the more recent spat between the bank and another Fairholme holding, MBIA. The insurer had a big win earlier this week when an appeals court ruling stated that the bank would be required to buy back securitized loans even if they were not in default. The ruling, which partially overturned a lower court ruling, noted that as long as MBIA could prove that the loan “materially and adversely” affected its interest, B of A would be required to repurchase the loan. The court panel also approved MBIA‘s rights to recover “rescissory damages,” which was previously denied by the lower court ruling.
As expected, Bank of America intends to appeal the case since it would set a precedent for other insurers to sue for the same reason. The bank’s most recent SEC filing stated that its current legal reserves for mortgage buyback losses would not be sufficient if the court ruled in favor of MBIA, leading investors to worry about its ability to cover legal losses in the future.
As if one wasn’t enough Another notable insurer is also seeking to recoup losses from mortgage-backed securities sold by Countrywide and Merrill Lynch (both part of the current B of A) — AIG. As the Fairholme Fund‘s top holding, AIG enters the fray with a big incentive to win in court — $10 billion. But any progress in the case has been derailed as the parties try to determine if AIG has the right to sue in the first place. The securities were bought as part of the NY Fed’s bailout of AIG, which B of A argues assumed the rights to sue when ownership changed hands. Though the Fed previously stated that it did acquire the rights, and AIG was out of luck, a recent statement from a Fed employee reversed that, saying that his previous comments were not meant to take anything away from AIG. Only time will tell how this suit plays out, but either way, one of Berkowitz’s biggest holdings is going to lose.
Today’s jobs report from the Bureau of Labor Statistics painted a mixed but troubling picture of the U.S. labor market. Although the headline unemployment number fell by a tenth of a percentage point to 7.6%, the number of new jobs created outside the agricultural sector was just 88,000, far below what we’ve seen in previous months.
But hidden beneath those headline numbers are some interesting observations:
Almost 500,000 people dropped out of the officially measured labor force, showing that many unemployed workers have given up actively seeking work. Because unemployment rates are based on labor-force figures, a smaller labor participation rate can make the headline unemployment number fall even with weak job growth.
Job-growth figures from January and February were both revised upward, adding a total of 61,000 jobs compared to previously reported estimates.
Wage growth continued to be minimal, with average hourly pay of $23.82 rising just a penny from last month and at a 1.8% pace over the past year.
Average weekly hours worked rose by six minutes to 34.6 hours.
But how do all these numbers really affect you? Let’s look at three big impacts from the jobs report on ordinary Americans.
1. What industry you work in really does matter. Throughout the past several years, different industries have had much different experiences. For those working in the health care field, for instance, the recession had very little impact on employment, as jobs growth continued nearly unchecked throughout the period in light of rising demand for health services from an aging population. In the construction and mining industries, however, unemployment remains at very high levels above 15%. Weakness in those industries has collateral impacts on related companies. Recent layoffs at Caterpillar and Joy Global , both of which rely on construction and mining activity to sell their machinery, reveal the extent to which the labor market is interconnected.
2. Don’t expect big raises. Economists love the fact that wages aren’t growing quickly, as it helps keep inflation down. But for families facing higher costs for gasoline, food, and other necessities, weak wage growth is just one more challenge to overcome. Again, where you work matters for your earnings, as workers in the financial industry have seen larger wage gains over the past year than leisure and hospitality workers. That matches up with news from Wall Street, where Goldman Sachs has boosted pay for its workers and Bank of America recently rejected a call to cut pay for brokers in its Merrill Lynch division. Overall, though, few people are seeing strong wage growth, and companies seeking to keep their profit margins high will keep it that way if they can.
3. Be smart about investing in your career. Weak employment has been especially hard for young adults coming into the workforce. With the unemployment rate among those ages 16 to 19 at a whopping 24.2%, counting on getting a job straight out of high school isn’t realistic, …read more
Reliance Steel & Aluminum Co. Announces Amended and Restated $1.5 Billion Credit Facility and New $500 Million Term Loan
LOS ANGELES–(BUSINESS WIRE)– Reliance Steel & Aluminum Co. (NYS: RS) announced today that it has amended and restated its existing $1.5 billion unsecured revolving credit facility and raised $500 million in a new term loan. The credit agreement has a term of five years, expiring April 4, 2018 and includes an increase option of the revolving credit facility for up to an additional $500 million. Both facilities allow for prepayments.
David H. Hannah, Chairman and CEO of Reliance said, “These financing transactions are a significant step in obtaining the financing necessary to complete our previously announced acquisition of Metals USA that we expect to close in the 2013 second quarter. The bank markets remain favorable and we are happy with the pricing and other terms under the new facility. We appreciate the continued support of the syndicate of 26 banks involved in our credit facility.”
Bank of America N.A. is the Administrative Agent and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association are Co-Syndication Agents. Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC were the Joint Lead Arrangers and Joint Book Managers.
About Reliance Steel & Aluminum Co.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, California, is the largest metals service center company in North America. Through a network of more than 240 locations in 38 states and ten countries outside of the United States, the Company provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of industries.
Reliance Steel & Aluminum Co.’s press releases and additional information are available on the Company’s web site at www.rsac.com. The Company was named to the 2012 “Fortune500” List and the 2012 Fortune List of “The World‘s Most Admired Companies.”
This release may contain forward-looking statements. Actual results and events may differ materially as a result of a variety of factors, many of which are outside of Reliance Steel & Aluminum Co.’s control. Risk factors and additional information are included in Reliance Steel & Aluminum Co.’s reports on file with the Securities and Exchange Commission, including Reliance Steel & Aluminum Co.’s Annual Report on Form 10-K for …read more
Microsoft and Apple are passing ships, and not in a way that you’d probably expect.
At a time when Apple is shedding investors and Microsoft’s hoping to wow the market with the operating system, mobile platform, and tablet it introduced late last year, sentiment may be shifting back in Apple’s favor.
Lazard Capital Markets is initiating coverage of Apple with a “buy” rating this morning, establishing a price target of $540.
Lazard analysts believe that the worst is behind the consumer tech giant. Sure, Android is eating its lunch and margins will continue to get squeezed, but have investors been approaching Apple the wrong way? Lazard offers up Apple as a data storage play since it’s “instrumental in driving data creation in ways its competitors are not.”
Fresh bullish perspectives are always welcome, especially with Apple trading less than 3% away from its 52-week low.
On the other end of the opinion-o-meter, Bank of AmericaMerrill Lynch is talking down Microsoft. After gluing itself to a “buy” rating on the stock for more than four years, Merrill Lynch lowering its rating to neutral. The original bullishness surrounded a massive stock buyback and the Windows 7 product cycle that didn’t pan out as planned. Things aren’t getting any better now that we’re several months into Windows 8.
Microsoft isn’t necessarily riding high with investors these days. Mr. Softy is trading closer to its 52-week low than its 52-week high at a time when some of the market gauges are hitting new highs. However, Microsoft’s stock hasn’t fallen as hard as Apple has since peaking last year, even though Windows 8, Windows Phone 8, and Surface rollouts have fizzled out as catalysts.
Apple at least has one notable analyst backing it now. If only it could get jaded analysts and even more skeptical investors to follow along.
Got Apple? Get smart. There’s no doubt that Apple is at the center of technology’s largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.
var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more
