Tuesday, June 13, 2017

Globe Bears Its FAANGS

Was after sunset when they changed:

"A slump in tech stocks that leaves some investors mystified" by Landon Thomas Jr. New York Times  June 12, 2017

NEW YORK — The laws of gravity apparently apply to technology stocks after all.

After a relentless three-year ascent, large bellwether companies like Apple, Facebook, Google, and Amazon led a two-day sell-off, prompting fears of a wider stock market retreat.

No one trigger related to the fundamentals of these companies spurred the snapback. As has been the case for years now, these technology giants sit on trillions of dollars in cash, are growing at a breakneck pace, and, compared with companies in earlier tech frenzies, do not have absurd valuations.

Yet it has been this lack of an identifiable cause — a disappointing earnings result or a major investor’s unloading of stock, for example — that is worrying some market specialists.

“There was no real catalyst; I just think there has been a psychological change,” said Julian Emanuel, a stock market strategist with UBS Securities in New York.

While traders have said hedge funds could be bailing out on these stocks, the larger question is the extent to which retail investors — given how vulnerable they can be to mood shifts in the market — will stick with them.

According to FactSet, a data- collection company, 82 percent of today’s combined investor exposure to Facebook, Amazon, Apple, Netflix, and Google is in the hands of large mutual fund companies such as Vanguard, BlackRock, Fidelity, and Capital Group.


Hedge funds as an investor class, according to FactSet, hold just $58 billion in these stocks, which are collectively known by the acronym FAANG. (Some analysts prefer FAAMG, substituting larger Microsoft for Netflix.)

Compared with the $688 billion held in traditional mutual funds and their faster-growing cousins — exchange-traded funds, or ETFs, which trade on stock exchanges — that is a very small figure.

To a large degree, the ascendance of these companies is a result of their ability to grow and achieve startling success in a sluggish economy.

In the last week, however, a number of analysts have argued that the disconnect between FAANG (or FAAMG) stocks and other sectors tied more directly to the economy, such as financial and energy stocks, has become too significant to ignore.

Credit Suisse, in a trading alert Monday, recommended that clients ditch QQQ, a $50 billion exchange-traded fund that tracks the Nasdaq index, in favor of XLF, a $22 billion ETF that follows large financial companies.

In the last week, QQQ has declined by 3.3 percent and XLF has increased by about the same amount as investors large and small have started to make this change....

They have everybody in there but the KKK!


Related: Tech Bubble Bursts

"US stock indexes slipped again Monday as technology companies, which were near record highs last week, suffered a second day of sharp losses. Tech has surged in recent months, and on Monday almost all of the losses came from the big companies that have led the way recently: Apple, Microsoft, Facebook, and Alphabet, Google’s parent. Julian Emanuel, an equity strategist for UBS, thinks technology stocks may wind up 10 percent lower than they were last week. The companies should continue to do well, he said, but the stocks have done so much better than the rest of the market in recent months that they are due for a downturn. General Electric, meanwhile, made its biggest gain in almost two years after it said CEO Jeffrey Immelt will step down....."

That would take you to the front page and the BIG STORY:

"Jeff Immelt ends 16-year tenure as CEO of General Electric" by Jon Chesto Globe Staff  June 12, 2017

General Electric Co.’s Jeff Immelt will step down as chief executive this summer, an earlier-than-expected departure that will leave Boston’s biggest company under new leadership just a year after it relocated from Connecticut.

John Flannery, the 55-year-old head of GE Healthcare, will take the reins as CEO on Aug. 1, the company said Monday. Now, it will be up to Flannery to execute his mentor’s vision in a way that satisfies GE’s increasingly impatient investors.

The list of frustrated investors notably includes Nelson Peltz at Trian Partners. GE recently announced it would more closely link executive bonuses with the company’s performance, in part due to pressure from Peltz and his firm. Trian declined to comment on the leadership transition on Monday.

GE’s shares closed up $1 to $28.94 on Monday. Under Immelt, the stock has been the worst performer in the Dow Jones average, falling 30 percent while the blue chip benchmark more than doubled.

“It’s a shot of adrenaline in the vein of General Electric, bringing it back from the coma it has been in,” said Eric Schiffer of California private equity firm Patriarch. “[The stock] has been a total train wreck from a valuation perspective.”

WTF? All the fanfare regarding GE coming to Bo$ton was in regards to a company in a coma?

GE didn’t mention the tangling with Peltz and Trian in the company announcement on Monday. Instead, the focus was on Flannery and his long list of accomplishments with the company.

According to a regulatory filing, the company set Flannery’s compensation at $2 million, with a target bonus of $3 million. Immelt’s salary last year was $3.8 million. His total compensation, including bonus and stock awards, was $21.3 million.

Flannery joined GE in 1987, working with GE Capital, where he initially focused on evaluating risk for leveraged buyouts. He moved through far-flung outposts of the GE empire, including stints in New Delhi, Tokyo, and Buenos Aires. Flannery will be replaced atop GE Healthcare by Kieran Murphy. Meanwhile, chief financial officer Jeff Bornstein has been promoted to vice chairman.

Local business leaders are unfamiliar with Flannery. But they said they’re hopeful that GE’s decision to promote an executive from the health care business is promising for Boston, a global hub for health care research and life sciences.....

They just got here.



"Incoming CEO John Flannery, who will move from Chicago, professes to get us. His parents and grandparents are from the Boston area; he is a Red Sox fan with a dog named Mookie Betts; and, as if to prove he’s Bostonian enough, Flannery comfortably breaks into a strong regional accent to declare that he is “wicked hard-core” for the city. Jeff Immelt, we hardly knew you, and yet you’ll always be celebrated here as the guy who delivered General Electric to its rightful home after the city and state ponied up to $150 million in incentives for GE to come here....."

Okay, that was a fine bit of fellatio that brought a smile to the man's face, but not everyone is celebrating.

"Judging GE’s Jeff Immelt vs. predecessor Jack Welch" by Barry Ritholtz Bloomberg News  June 12, 2017

NEW YORK —  After the 2000 stock-market bust, we learned of earnings manipulation and accounting shenanigans. The criticism was that GE Capital acted as an opaque leveraged hedge fund that always could be counted on to help GE beat profit forecasts by a penny. GE eventually settled accounting fraud charges with the Securities and Exchange Commission and paid a $50 million penalty.

Oh, NO! 

All the profit numbers and everything were BOGUS NUMBERS like Madoff? 

And they were only $lapped on the wri$t to the tune of $50m?

Although the accounting manipulation came to light during Jeff Immelt’s tenure, they likely predated his term. Barron’s, for example, reported that the company underfunded reinsurance reserves by $9.4 billion, helping to inflate profits from 1997 to 2001. (And led a to massive exit $419 million bonus for Welch.) Immelt was in charge of cleaning up the mess left by the legendary Jack Welch.

Then why is Welch lionized? 

Greed is good, huh? 

Looks like thievery to me!

■ Halo effect: By the time he retired in 2000, Welch had become a superstar. To this day there are GE shareholders who refuse to accept he did anything wrong.

A classic example of the halo effect is contained in Jim Collins’s 2001 book ‘‘Good to Great.’’ Eleven ‘‘fantastic’’ companies selected for their market performance were cited as examples of management brilliance. Most subsequently crashed and burned. The author ignored the halo effect, confusing good stock returns during a huge bull market for management genius.

■ One other advantage Welch had: At the time, GE owned NBC, including the financial and business news channel CNBC. Welch skillfully managed his image via the channel, invariably getting good press. The anchors even joked about softball questions while interviewing the boss. It not only set the tone for the rest of the press, but it helped drive the legacy of Welch, making him almost bulletproof in the investing public’s imagination. The accounting scandal and unimpressive stock performance made it almost impossible for Immelt to appear on CNBC and crow in the same way that Welch did. GE sold NBC to Comcast Corp. for about $30 billion in 2009.

Yeah, the pre$$ is part of the problem.

■ Stealing from the future: Recoveries from stock-market bubbles take a long time. Enormous gains, especially in the final innings of the frenzy, are outsized relative to median performance. I have described this as stealing returns from the future, and it inevitably leads to subsequent mean reversion and years of stock underperformance.

They are stealing, all right.

Does anyone doubt that big market gains, partly based on fraudulent accounting and fake earnings, are a fatal combination to future market returns? That was the hand dealt to Immelt by his predecessor and the financial markets.

That looks so damn criminal to me, and at the very least it can be considered lying.

There isn’t a whole lot of glory to be found reassuring shareholders that the false earnings reports are no longer happening and that the company’s sullied books are now clean. That is a long, slow, and distracting process.

OMG, no wonder they need all the tax loot!

Welch had lucky timing, Immelt didn’t. The accounting shenanigans at GE Capital under Welch, followed by the financial credit crisis, all but guaranteed that Immelt would come up short. Despite this, many still consider Welch the gold standard for CEOs.

I am not suggesting that Welch was an awful CEO or that Immelt was great. Rather, in reconsidering the two CEOS in light of all the facts, it seems clear that one was given more credit than is due while the other got less....


He says the "announcement wasn’t all that surprising," but it was to the pooh-bash in Bo$ton and the Globe.


More things in which to sink your fangs:

Maryland and D.C. sue Trump over his private businesses

When you finally expose his Zionist crime connections get back to me; otherwise, it's all nothing. Explains his smirk in the photo.

Who loves him more? Trump’s Cabinet members gush at meeting

Looks like he has a weight problem.

Jeff Sessions’ testimony to Congress will be open to public

That means Jerry Springer will not be seen today so we can bring you live coverage of the Senate Intelligence hearings. Ugh!

Undocumented Derby resident Luis Barrios has asylum case reopened

Another appeals court upholds block of Trump’s travel ban

Didn't even scratch him, and any word of the health bill?

‘Julius Caesar’ controversy isn’t a tempest in a teapot

Local theater leader defends N.Y. company in ‘Julius Caesar’ controversy

Trumpian ‘Julius Caesar’ incites thought, not violence

They made a movie about Bush being assassinated and no one cared. Any mention of it during Obama's time brought howls, and now the pre$$ seems determined that it actually happen to Trump (as Ivanka vamps on China).

It's either that or go down as another Hoover.

N.Y. railroad cancels two dozen runs for summer

Poor Chris Christie.

Jury begins deliberating sex charges against Bill Cosby

I suppose in that case you ladies would get the nails out and find a better man.

Investigator testifies about discovery of Bella Bond’s body

Michelle Carter ‘involuntarily intoxicated’ by prescription before friend’s suicide, psychiatrist testifies

She is looking better.

New N.H. law takes its cues from the Lizzi Marriott case

He is a bum and she was a lady in red?

"Some 21 years after the body of a woman was found dumped near the entrance to Tolland State Forest in Otis, Robert Honsch was convicted in Hampden Superior Court in Springfield on Monday for killing his wife....."

Jury deliberating in Minnesota police shooting trial

Puerto Rico to press statehood demand

Phone call for you.


"Local scientists are waiting for lab results that could shed light on what is killing dozens of northern gannets. Since April, the plunge-diving birds have been washing up dead or dying along the South Shore and Cape Cod. The symptoms seem to be primarily neurological, said Stephanie Ellis, executive director of Wild Care Inc. of Eastham, a wildlife rehabilitation hospital. The illness does not seem to be affecting other birds. Avian influenza has already been ruled out, but another possibility could be a local red tide outbreak, a harmful and sometimes toxic algal bloom that can affect the central nervous system of fish and could cause neurological symptoms in the gannet, Ellis said. “It would be an example of how everything is interconnected,” Ellis said......"

My first thought was some sort of chemical or biological release or test, but it doesn't seem to be affecting other birds.

So it is the fish that are the problem?

RelatedHot or cold, whining about the weather is a local tradition

That's the old New England cliche. You don't like the weather, wait 20 minutes, it will change.


"Mark Wahlberg raked in $68 million last year, says Forbes" by Kevin Slane Boston.com Staff  June 12, 2017

On Monday, Forbes magazine released the Celebrity 100, its annual ranking of the 100 highest-paid celebrities, and a couple of stars with local ties made the list.

Mark Wahlberg finished 20th in the rankings, earning a jaw-dropping $68 million from June 2016 to June 2017. Meanwhile, comedian Louis C.K. placed 34th with $52 million earned, thanks to a deal he signed with Netflix for two standup specials, each of which nabbed him an “eight-figure check,” according to Forbes. The Newton native finished third in the comedians category behind Jerry Seinfeld (18th with $69 million) and C.K.’s longtime friend/collaborator Chris Rock (30th with $57 million).

Musicians dominated the top of the list, with rapper/entrepreneur Sean “Diddy” Combs finishing at No. 1 with earnings of $130 million, and Beyoncé (second, $105 million), Drake (fourth, $94 million), The Weeknd (sixth, $92 million), and Coldplay (eighth, $88 million) all finishing in the top 10.

Somewhat surprisingly, none of the four celebrities with local ties who made last year’s edition of Forbes’s Celebrity 100 made the cut this year. The quartet of Matt Damon (30th last year with $55 million earned from June 2015 to June 2016), Tom Brady (54th, $44 million), Ben Affleck (58th, $43 million), and Gisele Bundchen (99th, $30.5 million) was nowhere to be found on this year’s list.....

Poor babies.


What is this about Tom Brady playing for the Vikings next year?

"Viking Hedge Fund to Return $8 Billion to Investors" by MATTHEW GOLDSTEIN  |  JUNE 12, 2017

Viking Global Investors, one of the larger hedge funds, is losing a top money manager and getting smaller in the process.

The hedge fund, led by O. Andreas Halvorsen, a protégé of the famed hedge fund manager Julian Robertson, notified investors on Monday that the firm’s chief investment officer, Daniel Sundheim, was leaving and that the firm would begin returning some $8 billion to investors, a Viking officer said.

Rose Shabet, chief operating officer at Viking, said Mr. Sundheim’s departure from the firm was “amicable.”

Mr. Sundheim, who has been with Viking for about 15 years, is leaving to pursue “entrepreneurial” ventures, the firm said in a letter to investors.

In the letter, the firm added that the decision to return $8 billion reflects a chance to “reset to a smaller size.”

Still, Viking will remain one of the hedge fund industry’s largest firms — managing about $24 billion after it returns that money, a process that should begin in August. The main portfolio at Viking, which is based in Greenwich, Conn., is said to be up this year.

They looking to move?

In recent years, a number of large hedge funds have returned money to investors as they have found that managing too much money can hurt performance as it makes firms less nimble and hard to move in and out of positions.

Mr. Sundheim, 40, has been one of the better compensated traders in the hedge fund industry. And like many such traders, he has shown a fondness for collecting art. In 2016, Institutional Investor’s Alpha magazine included him on its annual list of top hedge fund earners. The magazine estimated he earned $280 million in 2015, roughly the same as he did in 2014.....



"Behind the scenes, federal investigators searching for a break in the world’s largest art theft were stymied by another mystery. The duct tape and handcuffs that the thieves had used to restrain the museum’s two security guards — evidence that might, even 27 years after the crime, retain traces of DNA — had disappeared. The FBI, which collected the crime scene evidence, lost the duct tape and handcuffs, according to three people familiar with the investigation. Despite an exhaustive internal search, the FBI has been unable to find the evidence, according to those people, who asked not to be identified because they are not authorized to speak publicly about the case. It’s unclear when the items vanished — the lost evidence marks another setback in an ongoing investigation that has been plagued by the deaths of suspects, defiant mobsters, fruitless searches, and a litany of dashed hopes....."

And these are the guys in charge of protecting the country from terrorists? 

No wonder they can only catch the patsies they set up.

Comey deserved to be fired!