Five Star Heads Toward a Restructuring

In an 8K filing dated October 23, Five Star Senior Living (FVE) reported that it had received a delisting notice from NASDAQ because its share price had remained below $1 for 30 consecutive days.  On its 2018 third quarter conference call, Five Star disclosed that based upon its cash balance as of Sept. 30 and its expectations of future earnings and cash flows, there is now substantial doubt about its ability to continue as a going concern.

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The Pause that Refreshes the Homebuilders?

It has certainly been a rough year for homebuilding stocks, but not nearly so bad for the housing market.  The Lark Research Homebuilder Stock Price Index, an equal weighted average of eleven publicly-traded homebuilder stocks, was down 29.2% year-to-date through December 7.  By comparison, the S&P 500 has declined 1.5% and the Russell 2000 has declined 5.7%.

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Notes and Observations from the MIT CFO Forum

This year’s forum, held on November 15, was the seventeenth in the series.  It kicked off with Co-Chairman Jeremy Seidman highlighting the planning process for the event.  Each year, about a month after the current forum, Mr. Seidman, Co-Chair Jack McCullough and team begin exploring what is top of mind for CFOs.  For this year’s version, the team recognized that CFO’s are stronger, more powerful than ever within their organizations.  The team also saw that while being different works, being bold is better: it often leads to greater success.  Smart strategic decisions are important.  M&A can have a big impact.  But most important of all, CFOs should not let doubts and fears get in the way or compromise their opportunities.  More than ever, he asserts, CFOs need to take risks. Continue reading

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BXG 2018 Third Quarter Update

Since floating the IPO in November 2017, Bluegreen Vacations Corporation’s (BXG) share price has come full circle.  The stock opened its first day of trading at $13.55, rallied to a high of $25.91 in July and has since fallen back to $11.85 (as of 11/9).  Although there are company-specific factors that precipitated the sell-off, the shares of nearly all publicly-traded timeshare companies have experienced similar losses so far in 2018. Continue reading

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After Earnings, GE’s Stock Hits a 9-Year Low

General Electric (GE) reported 2018 third quarter results on Tuesday, October 30.  This was the first conference call for newly-installed Chairman and CEO H. Lawrence (Larry) Culp, Jr. Continue reading

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Thoughts and Observations on Campbell Soup’s Upcoming Proxy Fight.

On May 18, 2018, in conjunction with the release of fiscal 2018 third quarter earnings report, Campbell Soup Company (CPB) announced a “CEO transition.”  Denise M. Morrison, who had served as Campbell’s President and CEO since August 2011, was retiring and Keith R. McLoughlin, a member of Campbell’s Board of Directors, was named Interim CEO. Continue reading

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Friday’s Drop in Unemployment: Less Than Meets The Eye?

The reaction to Friday’s labor market report was sharp and swift. Bond yields, especially on the long end of the yield curve rose and stocks sold off. The yield on the 10-year Treasury note ended the week at 3.23%, its highest level since April 2011. The financial markets fear that the Fed now has sufficient support from the economic data to continue raising the Fed Funds target rate by another quarter point in December and perhaps as many as three more quarter-point increases in 2019. Continue reading

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Questions About ESL’s Debt Reduction Proposal for Sears

On Sept. 23, in a 13D filing with the Securities and Exchange Commission, ESL Investments attached a proposal that it had made to Sears Holding (SHLD) that would reduce SHLD’s total outstanding debt by 78% through a combination of asset sales, proposed real estate transactions and conversion of debt into equity.  ESL has hired a financial advisor, legal counsel and public relations firm to assist in formulating and implementing the proposal.  SHLD has not yet endorsed the proposal, but since Edward S. Lampert, the founder, chairman and CEO of ESL Investments, is SHLD’s largest shareholder with a 75% ownership stake and also its Chairman and CEO, it is hard to imagine that the company will disagree. Continue reading

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Barrick and Randgold Agree to Merge

On Monday, September 24, 2018, Barrick Gold Corp. and Randgold Resources Ltd. announced that they had agreed on a share-for-share merger that would create the largest publicly-traded gold company in the world.  Under the terms of the merger, each Randgold shareholder will receive 6.1280 share of Barrick.  At Friday’s closing price of $10.47, that represented a value of $64.16, a premium of only 0.4% to Randgold’s 9/21 closing price of $63.91.  Since the announcement, however, both Barrick and Randgold shares have rallied, with Barrick rising 7% to $11.18 on 9/25. Continue reading

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A Review of AT&T’s Prospects Following the Time Warner Acquisition

AT&T completed its acquisition of Time Warner on June 14, 2018.  Under the merger agreement, Time Warner shareholders received $53.75 per share in cash and 1.437 shares of AT&T stock for each TWX share held.  In total, Time Warner shareholders received 1.126 billion shares, equivalent to a 15.5% stake in AT&T.  Together with the cash, Time Warner shareholders received $79.1 billion in total consideration.  In addition to the consideration paid to Time Warner shareholders, AT&T assumed $50.6 billion of liabilities, including $22.8 billion of debt, bringing the total cost of the acquisition to $129.7 billion.  AT&T ended the second quarter (June 30) with total assets (post-merger) of $534.7 billion. Continue reading

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