After Hours Summary: URI +7%, ETFC / LVS +3%, SNBR -13%, TEAM -9%, PLXS -6%, AA -2% among earnings/guidance movers
After Hours Summary:After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: URI +7.2%, ETFC +3.1%, LVS +2.9%, TCBI +2.1% (light volume)
Companies trading higher in after hours in reaction to news: MBIO +223.3% (St. Jude Children's Research Hospital publishes results of lentiviral gene therapy for treatment of infants with X-linked severe combined immunodeficiency), PBR +2.9% (being attributed to CFO comments suggesting the sale of new group of natural gas pipelines), AFMD +2.6% (announces regulatory update on AFM11 clinical program), VFF +1.8% (extending today's 10% move higher), WYNN +1% (following LVS earnings)
Cannabis related stocks higher on potential Canopy Growth (CGC +7%) / Acreage Holdings M&A deal: HEXO +6.8%, IGC +4.2%, APHA +3.3%, PYX +2.4%, TLRY +2.2%, NBEV +2.1%, etf - MJ +1.9%, CRON +1.6%, ACB +1.6%After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SNBR -13%, TEAM -9.4%, PLXS -5.9%, LLNW -4.8%, AA -1.7%
Companies trading lower in after hours in reaction to news: EIGR -7.9% (announces proposed public offering of common stock), STNE -6.7% (still checking), NOW -2.5% / ZEN -2% (following TEAM earnings), TRVN -2% (entered into $50 mln common stock sales agreement with H.C. Wainwright for "at the market" offerings), GPOR -1.3% (reports Q1 net production averaged 1,263.6 MMcfe per day), CLF -1% (following AA results)
Third Point to eye corporate governance more closely as it makes new bets
NEW YORK (Reuters) - Hedge fund Third Point LLC, which sometimes pushes companies to perform better, said it is beginning to look more closely at corporate governance issues, including executive pay, as it evaluates future investments.
“More carefully and systematically studying governance is giving us a new analytical lens and validating our conviction that good governance makes good companies, and vice versa,” the hedge fund wrote to investors in a quarterly letter seen by Reuters on Wednesday.
The $14.5 billion fund, which has been pushing food company Nestle SA to untangle its corporate structure and streamline its portfolio, is seen as an occasional activist with a record of having earned a 300 percent return on these types of bets in the last eight years.
As delivering top returns becomes tougher for hedge funds, Third Point, run by Daniel Loeb, is telling investors that it is good at activism and is using data to become even better.
“We are currently developing methods to systematize our governance practice, including by adding data analytics to our research process,” the letter said.
Good governance has become a hot-button issue as investors react to companies where management teams are falling behind while sticking to the status quo and their boards that fail to correct the damage.
Third Point said in its letter that some board members “make decisions to preserve their status and income stream rather than to drive shareholder value.”
Since 2000, Third Point said it has engaged in 45 active or constructive investments and won 24 board seats. It also said that it views every activist investment as “an opportunity for value creation driven in part by improved governance and advocacy for shareholder rights.”
Dozens of Medical Professionals Charged With Illegally Prescribing Opioids
Indictments, which focus on the Appalachian region, are part of a broad Justice Department effort to combat the opioid crisis
Federal prosecutors have charged 60 doctors, nurses, pharmacists and other medical professionals with illegally prescribing more than 32 million powerful and addictive pain pills.
The indictments announced Wednesday are part of the Justice Department’s broader effort to fight the nation’s opioid abuse crisis. They include a man in Tennessee who called himself the “Rock Doc” and allegedly prescribed medication in exchange for sex; another medical professional who prosecutors say recruited prostitutes to become patients and let them use drugs at his house; another who wrote prescriptions on behalf of Facebook friends; and a dentist accused of needlessly pulling teeth to justify giving his patients addictive drugs.
The charges involve more than 350,000 illegal prescriptions written in Kentucky, Alabama, Ohio, Tennessee and West Virginia, according to the indictments. Prosecutors say medical professionals knowingly provided addictive drugs to vulnerable patients, accepted costly cash payments, signed blank prescription forms to be completed by their staffs and billed Medicare and Medicaid for unnecessary tests and procedures.
The cases reflect a larger push by the Justice Department in recent years against health-care practitioners who recklessly prescribe the kinds of powerful drugs that have fueled the nation’s opioid epidemic and resulted in more than 47,000 deaths in the U.S. in 2017, according to federal data.
Federal authorities have been particularly focused on the hard-hit Appalachian region, which has been ravaged by addiction, relying on a variety of data to reveal which doctors are the biggest prescribers and how far patients are traveling to see them along with other information.
“The opioid epidemic is the deadliest drug crisis in American history, and Appalachia has suffered the consequences more than perhaps any other region,” Attorney General William Barr said in a statement. Mr. Barr, like President Trump’s first attorney general, former Sen. Jeff Sessions of Alabama, has said the problem is one of his top priorities.
Closing Stock Market SummaryThe S&P 500 declined 0.2% on Wednesday in a mixed trading session. Pronounced weakness in the S&P 500 health care sector (-2.9%) counteracted positive economic data and earnings reports, thwarting an early attempt from the benchmark index to re-test its all-time high. The S&P 500 finished right at the 2900 level.
The Dow Jones Industrial Average finished flat, and the Nasdaq Composite lost 0.1%. The small-cap Russell 2000 underperformed with a loss of 1.0%.
Stocks began the day modestly higher following better-than-expected GDP data out of China and earnings beats from many widely-held companies. The overall response, however, was muted likely due to the sense that much of the good news had already been priced in. An afternoon report from the Wall Street Journal indicating that the U.S. and China plan to continue another round of trade talks at the end of the month also produced little reaction.
Health care stocks, meanwhile, continued to remain out of favor amid political pressure to curb rising health care costs, which is likely to continue throughout the 2020 presidential campaign trail. The sense that there would be an opportunity cost in remaining in the sector overshadowed a positive earnings report from Abbott Labs (ABT 72.88, -3.50, -4.6%).
Some corporate news out of the semiconductor industry and positive reactions to earnings reports from transportation companies, however, provided offsetting support for the broader market. The Philadelphia Semiconductor Index increased 1.6%, and the Dow Jones Transportation Average increased 1.0%.
Shares of Qualcomm (QCOM 79.08, +8.63, +12.3%) received follow-through buying interest after the company settled a licensing dispute with Apple (AAPL 203.13, +3.88, +2.0%) yesterday. Intel (INTC 58.56, +1.85, +3.3%) followed up with an announcement that it will drop out of the 5G smartphone modem business.
Strength in the semiconductor stocks, and Apple, helped the S&P 500 information technology sector (+0.6%) brush past weakness from IBM (IBM 139.11, -6.03, -4.2%), which fell on a revenue miss.
United Continental (UAL 89.24, +4.07, +4.8%), CSX Corp. (CSX 78.94, +3.05, +4.0%), and KC Southern (KSU 122.81, +4.82, +4.1%) were some of the transport companies that released solid earnings results. PepsiCo (PEP 127.01, +4.60, +3.8%), Netflix (NFLX 354.74, -4.72, -1.3%), and Morgan Stanley (MS 48.26, +1.24, +2.6%) also beat earnings estimates, but Netflix also guided Q2 EPS below consensus.
U.S. Treasuries finished little changed in another tight-ranged session. The 2-yr yield decreased one basis point to 2.40%, and the 10-yr yield was unchanged at 2.59%. The U.S. Dollar Index finished flat at 97.01. WTI crude lost 0.4% to $63.78/bbl.
Reviewing Wednesday's economic data, which included the Trade Balance Report for February, Wholesale Inventories for February, the weekly MBA Mortgage Applications Index, and the Fed's Beige Book for April:
- The trade deficit narrowed to $49.4 billion in February (consensus -$54.0 billion) from -$51.1 billion in January, as exports were $2.3 billion more than January exports and imports were $0.6 billion more than January imports.
- The key takeaway from the report is that exports and imports increased in February. That will help temper concerns about the U.S. economy being at risk of slipping into a recession in the near future.
- Wholesale inventories increased 0.2% in February on top of a downwardly revised 1.2% increase (from 1.4%) in January. Wholesale sales were up 0.3% following an unrevised 0.5% increase in January.
- The key takeaway from the report is that inventory growth continues to outpace sales growth on a year-over-year basis, which should help keep price pressures in check.
- The MBA Mortgage Applications Index declined 3.5% following a 5.6% decrease in the prior week.
- The Federal Reserve's April Beige Book described the expansion in overall economic activity as "slight-to-moderate." Most Districts saw activity comparable to what was reported in the March Beige Book.
Looking ahead, investors will receive the following economic data on Thursday: Retail Sales for March, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for April, Business Inventories for February, and the Conference Board's Leading Economic Index for March.
- Nasdaq Composite +20.5% YTD
- Russell 2000 +16.2% YTD
- S&P 500 +15.7% YTD
- Dow Jones Industrial Average +13.4% YTD