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Fannie and Freddie Ride Again: Financial Winners

Fri, 24 May 2013 16:35:25 EDT

NEW YORK (TheStreet) -- Fannie Mae and Freddie Mac were again huge winners on Friday.

Shares of Fannie Mae were up 41% to close at $2.97, while Freddie Mac was also up 41% to close at $2.81, after Ralph Nader in an op-ed piece in the Wall Street Journal said the two companies' common shareholders should fight against the federal government's "great Fannie and Freddie rip-off.".

The two mortgage giants together are known as the government-sponsored enterprises, or GSEs, and were taken under government conservatorship in September 2008. Also see: Ralph Nader, Wounded Shareholder of Fannie Mae Freddie Mac >> ...

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Small Businesses Need Disaster Recovery Plans

Fri, 24 May 2013 15:18:37 EDT

NEW YORK (TheStreet) - Whether it's a tornado, a hurricane or the toilet exploding, small businesses should always have disaster recovery plans in place.

Natural disasters are here to stay and last week's devastating tornado that ripped through Moore, Okla. killing two dozen people and injuring hundreds, is a prime example that U.S. weather patterns are becoming increasingly chaotic. Small business owners should be prepared for events they can't control.

June 1 marks the start of hurricane season, and while many parts of the New York and New Jersey coastal communities are still rebuilding from Superstorm Sandy, one of the worst hurricane's in U.S. history, The National Oceanic and Atmospheric Administration (NOAA) forecasts a higher than average 2013 Atlantic hurricane season. ...

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Ralph Nader, Wounded Shareholder of Fannie Mae Freddie Mac

Fri, 24 May 2013 12:41:04 EDT

NEW YORK (TheStreet) -- Famous consumer advocate and former presidential candidate Ralph Nader has renewed his efforts on behalf of common shareholders of bailed out mortgage giants Fannie Mae and Freddie Mac .

In a Wall Street Journal op-ed, Nader argues that the government treated shareholders of the government sponsored enterprises or GSEs unfairly when it placed the agencies in conservatorship in 2008. Nader made a similar case in the newspaper in 2011.

Shareholders, including Nader himself, had purchased Fannie Mae and Freddie Mac shares believing them to be safe investments, he said. They had held on to their investments even as the financial crisis loomed larger, encouraged by statements from the companies' executives and high-ranking government officials that the agencies were "adequately capitalized." ...

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4 Western Bank Stock Picks From Sterne Agee

Fri, 24 May 2013 11:47:24 EDT

NEW YORK (TheStreet) -- "With investors becoming more hesitant about an extended bank stock market, we see less value than earlier in the year."

Sterne Agee analyst Brett Rabatin's above comment in a note to clients on Thursday sums up the changing landscape for investors looking for bargain bank stock picks. Over the last few years, as the banking industry has recovered from the credit crisis, investors have been able to pretty much rely on a continued upward movement in earnings, while also enjoying plenty of heavily discounted stocks to pick from.

But the KBW Bank Index has returned 18% this year, following a 30% increase during 2012. The KBW Regional Bank index is up 13% year-to-date, after rising 10% last year, showing that the smaller banks had not fallen quite as far as the large-cap banks. ...

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Procter & Gamble Investors Cheer Lafley, but Bounce Won't Last (Update 1)

Fri, 24 May 2013 11:06:00 EDT

Updated from 9:33 a.m. ET with additional information throughout.

NEW YORK (TheStreet) -- Procter & Gamble shares were gaining Friday on news A.G. Lafley will return to lead the company as it searches for a permanent CEO, but Lafley may not find it so easy to repeat his previous success.

Lafley, who takes over from Bob McDonald, led Procter & Gamble for a successful stretch from 2000 to 2009. During those years, P&G returned more than 12% to shareholders excluding dividends, while all the major indices posted losses. ...

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Abercrombie Plunges Amid Disappointing Earnings, Lowers Guidance

Fri, 24 May 2013 09:11:14 EDT

NEW YORK (TheStreet) - Abercrombie & Fitch , the provocative teen retailer embroiled in controversy over resurfaced comments its CEO made years ago, said on Friday first-quarter comparable stores sales declined 17% compared to the year before and reported a quarterly net loss of $7.2 million, or 9 cents a share.

While the loss was better than what the New Albany, Ohio-based company reported a year earlier - a net loss of $21.3 million or 25 cents a share - Wall Street had forecast Abercrombie to post a net loss of 5 cents a share on revenue of $941.6 million.

The stock was plummeting more than 7% to $50.50 in premarket trading. ...

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5 Things to Know About Small Business This Week: May 24

Fri, 24 May 2013 06:00:00 EDT

NEW YORK (TheStreet) -- What happened in small business this week?

The Small Business Administration steps up lending to military veterans; Google plans to transform small business; is there disaster aid for Oklahoma small businesses?; Quiznos/Smashburger founders' debut pizza concept; young employees' need mentoring.

1. SBA steps up lending to military veterans. The U.S. Small Business Administration launched on Tuesday the SBA Veteran Pledge Initiative, a commitment by 20 of the largest banking institutions including Bank of America , JPMorgan Chase , Citigroup , TD Bank as well as regional lenders to increase their lending activity to military veterans by 5% per year over the next five years. ...

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Gap Beats Top and Bottom-Line Expectations

Thu, 23 May 2013 16:37:12 EDT

NEW YORK (TheStreet) -- The Gap Inc. reported first-quarter results that topped analysts' expectations for both profit and revenue.

Gap posted a profit of $333 million, or 71 cents a share, for its fiscal first quarter ended May 4, increasing from $233 million, or 47 cents a share during the year-earlier quarter. The company posted revenue of $3.73 billion, an increase of 6.9% from a year earlier.

Analysts polled by Thomson Reuters on average expected the apparel maker to post fiscal first-quarter earnings of 69 cents a share on revenue of $3.68 billion. ...

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Fannie and Freddie: Financial Winners

Thu, 23 May 2013 16:33:28 EDT

NEW YORK (TheStreet) -- Fannie Mae and Freddie Mac were the big winners among major financial names, on an otherwise weak day for the stock market.

Shares of Fannie Mae were up 15% to close at $2.10, while Freddie Mac was up 20% to close at $2.00. The two mortgage giants together are known as the government-sponsored enterprises, or GSEs, and were taken under government conservatorship in September 2008.

Fannie's shares have returned 708% this year, while Freddie's shares have returned 669%, as both companies have shown very strong profits. ...

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Fannie Freddie Rally Returns With a Vengeance

Thu, 23 May 2013 15:15:51 EDT

NEW YORK (TheStreet) -- Fannie Mae and Freddie Mac shares have more than doubled over the past 10 trading days on heavy volumes, adding to big gains posted in March after the shares had been dormant for several weeks.

Professional investors who have long touted the junior preferred shares of the Government Sponsored Enterprises (GSEs) have shaken their heads in disbelief at the common stock rally, though at least one big fund focusing on distressed investments is now rumored to be trading the common shares. The senior preferred shares of the GSEs and 80% of the common stock are owned by the U.S. Treasury, which put Fannie and Freddie into conservatorship in Sept. 2008.

Despite a broad market decline on Thursday, Freddie Mac common shares were up 17.37% to $1.98 at about 2:30 p.m. EST and are up about 650% year to date. Fannie Mae shares were up 14.21% to $2.09 and are up more than 700% year to date. That compares to roughly 200% gains for preferred issues. ...

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Goldman Says, What Too Big to Fail Advantage?

Thu, 23 May 2013 12:50:23 EDT

NEW YORK (TheStreet) -- Goldman Sachs has published a paper that debunks the idea that the biggest banks get an unfair funding advantage because they are considered "too big to fail"

The firm's public policy research unit, the Global Markets Institute, said in a May report titled "Measuring the TBTF effect on bond pricing" that recent studies overstate the funding advantages of so-called Too Big to Fail Banks.

According to the researchers' findings, the big banks enjoyed a slight funding advantage of about 6 basis points on an average between 1999 and 2007, which widened sharply during the crisis but has now reversed to a "disadvantage." ...

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Children's Place Spikes as Guidance Is Raised

Thu, 23 May 2013 11:29:04 EDT

NEW YORK (TheStreet) -- Children's Place spiked more than 9% early Thursday after the children's apparel retailer raised its fiscal-year guidance despite disappointing earnings.

Children's Place said net income fell 22% in the 13-week quarter to $19.3 million, or 83 cents a share. Net sales dropped 3.5% to $423.2 million. Comparable-retail sales declined 5.5%, the company said.

Analysts expected Children's Place to earn 61 cents a share on revenue of $416.6 million. ...

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MoneyGram CEO: Focused on Growth

Thu, 23 May 2013 09:50:02 EDT

NEW YORK (TheStreet) -- TheStreet's Jill Malandrino sat down with Pam Patsley, the CEO of MoneyGram International , to discuss what the company is working on and why shareholders should pay attention. Pricing pressure has been a key focus point for MoneyGram investors, especially with Wal-Mart deeply discounting a similar service.

"We love growing market share and we love expanding margins," Patsley told Malandrino. Patsley said her company is focusing on alternative channels. Those include going online, using a mobile application or a kiosk to transfer money. The focus has really been on self-service and creating an easy-to-use system for customers, she said. When asked what separates Moneygram from its competitors, Patsley told Malandrino, "we have a brand message that resonates with the consumer. Convenience is so important."

Moneygram focuses on building a network that customers can send and receive money however they prefer, (bank-to-cash, cash-to-cash, bank-to-bank, etc.). When it comes to financing, Patsley said that retiring old senior notes and securing new financing will save Moneygram around $28 million per year in interest. ...

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Do Not Chase All Cheap Bank Stocks: KBW

Thu, 23 May 2013 09:49:25 EDT

NEW YORK (TheStreet) -- Investors late to the bank stock rally may prefer to load up on "cheap" bank stocks, but not all of them are necessarily bargains.

According to KBW analyst Christopher Mutascio, investors have been buying stocks that trade at low price-to-tangible book multiples on the premise that such stocks would have more upside as they are currently "under-earning."

"That may or may not be the case," the analyst wrote, adding, "Some banks may be 'cheap' on a P/TBV measure because they have materially lower-than-peer profitability today and in the future. So their discounted P/TBV multiple may be justified and warranted." ...

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Immelt Pushes Harder to Shrink GE Capital

Thu, 23 May 2013 09:35:26 EDT

NEW YORK (TheStreet) -- General Electric has made great progress in shrinking GE Capital, and CEO Jeff Immelt on Tuesday said the company was considering spinoffs through public offerings as a way to meet its goals.

GE reported first-quarter operating earnings of $4.059 billion, or 39 cents a share, increasing from $3.567 billion, or 34 cents a share, during the first quarter of 2012. GE Capital contributed profit of $1.927 billion, or 47% of the parent company's operating earnings. Also see: GE Beats Estimates, Revenue Falls >>

Immelt has long stated that GE's goal is to grow its industrial earnings and shrink GE Capital sufficiently to have the conglomerate deriving 70% of earnings from its industrial business. ...

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