Quick Blurbs [Arch Capital, Chubb, WR Berkley]

10/26/16: CB (Earnings Call) There’s still a surplus of capital.  While the insurance industry mid-single digit ROE is “miserable on a risk-adjusted basis,” it’s appealing to many yield hungry investors today, and so more capital comes into the business. Commercial P&C insurance pricing and terms and conditions grew more competitive and terms during the quarter […]

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Quick Blurbs [Expedia, Priceline]

11/7/2016: PCLN (Earnings Call) Booking.com has 24.4mn potentially bookable rooms, of which 16.9mn are traditional hotel partners and 7.5mn are rooms in homes, apartments, villas. PCLN continues to see deleverage [that’s advertising expense as a % of gross profit] on its performance advertising (Google, etc.), partly due to lower advertising ROIs but also due to […]

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QUICK BLURBS [FDX, UPS]

(1,368 words) 10/27/2016: UPS (Earnings Call) Broad economic views: global growth modest, US consumer fundamentals healthy and are responsible for most of the economic expansion in the US while the outlook for industrial production looks weak (but w/ mixed signals across industrial markets).  Online shopping + subsequent returns are expected to bring UPS package volume […]

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QUICK BLURBS [AXP, BAC, C, JPM, MCO, WFC]

(4,009 words) 10/20/2016: MCO (Earnings Call) Opportunistic issuance on historically low rates drives massive USD issuance/refinancing during the q across investment grade (+20% y/y for the q; +10% for the full year), high yield (+35%; -5%), and leverage loans (+50% on refi and growing CLO activity; +10%), though some of this was pulled forward from […]

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[IBKR – Interactive Brokers] Some Opinions on Ameritrade/Scottrade/Interactive Brokers

(675 words) Before NPV’ing the tax shield, AMTD is paying around 3.8x revenue for Scottrade’s non-bank assets, implying Scottrade revenue of $710mn.  Co. says the “addressable expense base” at Scott is a whopping $750mn, which expense base can be cut by 60% within 3 years of close (w/ the biggest source of synergy coming from […]

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QUICK BLURBS [ESRX, JNJ, UNH, WBA]

(1,732 words) 10/18/2016: JNJ (Earnings Call) [PFE recently announced a biosimilar version of JNJ’s REMICADE (Crohn’s disease) for launch later this year], though the appeals process continues and commercial launch remains at risk.  Co. says that the threat from biosimilars is less than w/ generics – in Canada, Australia, and Brazil (where there is biosimilar […]

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[SVU] RETAIL FOOD DEFLATION CONTINUES AND FIERCE COMPETITION PERSISTS

(506 words) 10/19/2016: SVU (Earnings Call) On 10/17, SVU announced the sale of its Save-A-Lot business [discount grocer] to Onyx for $1.4bn in cash (proceeds to be used towards debt repayment) w/ an end of Jan expected close. Retail sales (comps -5.9%; traffic -5.2%, basket -0.7% w/ sequential deterioration) continue to be negatively impacted by […]

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ADS – LOW QUALITY BEAT AND RAISE, CREDIT SALES SLOWING BUT TENDER SHARE GROWING, REDEMPTIONS RAISE QUESTIONS ON BREAKAGE ASSUMPTIONS

10/20/2016: ADS (Earnings Call) Card Services (revenue +26% y/y, adj. EBITDA +14%) did better than expected: gross yields of 26.8% 60bps better than guidance and “cardholder friendly” changes made in mid-2015 lapping; operating leverage; loss rate of 4.7% 20bps better than expected, but co. thinks this is a timing issue and expects to give back […]

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