XLF, Banking and Financial Sector Stocks
- Kirk
- Kirk
- Rande
- Kirk
- Kirk
- SteveT
- Rande
- JenL_2
- Kirk
- Rande
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» Kirk - Yeah, you do have to look at the overall package.
Yeah, you do have to look at the overall package. They can't all go up at the same time.The point is you CAN sell some stocks that are soaring and then buy others that are on the way down and often the added diversity helps overall performance. Especially selling some when high and buying others when low. Of course, nobody I know can sell at absolute highs just like they can't buy at the very bottoms. I've never made the claim to buy at the very bottom or sell at the very top.
The ONLY way to truly measure performance is for a total portfolio, not just a pick here and a pick there. Even with MANY picks being far from perfection, my newsletter portfolio IS beating the averages in both 1999 and 2000. IF someone doesn't have the same portfolio, then they won't get the same results.
-- posted by Kirk
-- posted by Kirk
» Kirk - Merger Activity
Looks like the mergers we predicted late last year, as a reason to buy Financials, is starting. I understand that "pooling of interests" accounting will end after 2000 so this is supposed to be a good year for mergers.Look at XLF components and you have a hard time missing.
Good YTD action too!
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
Could still be some value in the smaller players like FSRBX and BTO
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
Any other suggestions for those that are late to the party? Probably still upside on XLF (I hope so!)
-- posted by Kirk
» Kirk - Credit Suisse confirms plans to buy DLJ
Wednesday August 30, 10:42 am Eastern Timehttp://biz.yahoo.com/rf/000830/l308290_2...
Credit Suisse confirms plans to buy DLJ
By Alice Ratcliffe
ZURICH, Aug 30 (Reuters) - Credit Suisse Group said on Wednesday it would buy U.S. investment bank Donaldson, Lufkin & Jenrette (DLJ) (NYSE:DLJ - news) in a deal worth an estimated $13.7 billion to form a global investment banking powerhouse.
Including an additional three-year staff retention plan, the total cost to Credit Suisse will be around $14.9 billion.
The deal creates one of Wall Street's premier investment banks to rank alongside Merrill Lynch (NYSE:MER - news), Schroder Salomon Smith Barney (NYSE:C - news), Morgan Stanley Dean Witter (NYSE:MWD - news) and Goldman Sachs (NYSE:GS - news).
Switzerland's second-largest financial services group said it had agreed to pay $90 per DLJ share, or $11.5 billion. Sources close to the deal said it would pay a further $2.2 billion for outstanding options which Credit Suisse will issue to DLJ employees in exchange for options they already own.
It will also set up a staff retention fund totaling $1.2 billion to keep DLJ employees.
Credit Suisse First Boston (CSFB), the investment banking unit of Credit Suisse Group, is expected to derive the most immediate benefits from the move.
``DLJ's strengths in investment banking are highly complementary to (CSFB's) activities,'' Credit Suisse said in a statement. These included the high-yield bond business and industry sectors including telecommunications, financial institutions, technology and health care.
DLJ is 71 percent owned by AXA Financial (NYSE:AXF - news), itself owned by French insurance group AXA SA .
AXA's shares hit a record high of 178.5 euros in early trade in Paris, but then fell back to stand down 1.7 percent at 169.50 euros.
CAPITAL GAIN OF $2.75 BILLION
Credit Suisse will pay AXA 30 percent in cash and 70 percent in Credit Suisse shares for its stake. AXA said the sale would produce a net capital gain of $2.75 billion.
Through the deal, AXA will gain an additional 8.5 percent of Credit Suisse for a total stake of around 10 percent.
Credit Suisse shares, already under pressure amid widespread speculation about the deal, fell further when details of the transaction were confirmed. They were down 3.0 percent to 370 around 1415 GMT, off a low at 362.
Credit Suisse Group officials have said the group wants to grow organically, but top management also has stressed distribution of products as an avenue to expand its personal wealth management business, which include insurer Winterthur.
The move will put CSFB back in the spotlight just when many believed a business perceived as inherently risky was being eclipsed by more staid wealth management operations.
But analysts said it also needed to increase its size to make headway in the competitive investment banking market.
``In investment banking, you have to have scale to survive,'' said Bryan Crossley, banking analyst at ABN AMRO. ``This is like a poker game -- you have to keep throwing money into the pot to stay at the table.''
Credit Suisse said it expected the acquisition to be positive for earnings starting after 2002. It will take a $850 million restructuring charge in 2000, as part of the deal, but said cost savings from the transaction were expected to range between $750 million and $1 billion annually, pre-tax, by 2002.
It will ask shareholders to approve a capital increase of up to 30 million shares in authorised capital and up to 12 million shares of conditional capital to help fund the deal. It will also ask shareholders to approve a share repurchase plan at its next annual meeting in June 2001.
DLJ Chief Executive Joe Roby will become chairman of CSFB's executive board. Allen Wheat will remain CSFB chief executive.
MIXED EMOTIONS
Analysts had mixed feelings about the deal.
``They are buying a more risky, more lumpy business. They have a much bigger challenge ahead. I am not very convinced,'' said Heinrich-Horst Wiemer, analyst at Bank Sal Oppenheim.
Some market watchers had hoped the group would strengthen its asset management business and reduce dependence on volatile earnings from investment banking.
The deal would give CSFB a top position in the traditionally high-risk business of junk bond underwriting and make it the third-largest stock offering underwriter.
Credit Suisse will also have scope to expand in investment banking areas like private equity. CSFB is bringing to the table its U.S. technology team led by Frank Quattrone.
Quattrone left Deutsche Morgan Grenfell for Credit Suisse in July 1998. Credit Suisse management regularly denies that he is paid a salary of several tens of millions of dollars a year, but its officials admit running such businesses is costly.
Credit Suisse has tended to grow internally. Its strategy has been rewarded, as its shares hit all-time highs of 390.50 francs on August 16. Its first-half results, to be reported on Thursday, are expected to be strong, with net profit forecast at 3.6 billion Swiss francs.
The move follows rival UBS AG's announcement in July that it planned to purchase U.S.-based PaineWebber, the U.S. broker.
Some analysts believe that Credit Suisse was unwilling to be left behind and pride may play part in the expected acquisition.
``It does look like that. To my knowledge, Credit Suisse has always said that no big acquisition was planned in the United States. So with this news, I am absolutely surprised. I thought the focus was more in Europe,'' said Christoph Ritschard, analyst at Zuercher Kantonbank.
-- posted by Kirk
» Rande - The Financial Accounting Standards Board on July 5 postponed the
The Financial Accounting Standards Board on July 5 postponed the release of a final statement that is expected to ban pooling-of-interests accounting for mergers and acquisitions. FASB said a final statement will probably be released in the first quarter.-- posted by Rande
» JenL_2 - Citigroup Buys Associates First Capital
Just heard on Business News Radio that Financials are rallying this AM on this news from 9/6 WSJ:Citigroup Agrees to Buy Associates First In a Share Deal Valued at $31.1 Billion
Dow Jones Newswires
NEW YORK -- Citigroup Inc. said Wednesday that it has agreed to acquire Associates First Capital Corp. in a share transaction valued at $31.1 billion.
Shareholders of Associates First will receive 0.7334 of a Citigroup share for each of their shares, valued at $42.49 based on the companies' closing share prices Tuesday in New York.
At 4 p.m. Tuesday on the New York Stock Exchange, shares of Citigroup were quoted at $57.94, while Associates First shares were at $28.
Citigroup said the purchase will add at least 10 cents a share to earnings in the first year of the groups' combined operation.
Associates First, which in the past has been seen as a potential target of Citigroup, offers the company a chance to build on its credit-card operations and branch network, both of which would help Citigroup's efforts to boost its consumer operations. Indeed, Citicorp purchased 129 branches from Associates First in a separate transaction last year.
The boards of both companies have approved the transaction, which Citigroup said it expects to close on or about the end of the year. Associates First shareholders still need to approve the company's purchase by Citigroup. The transaction also requires approval from domestic and foreign antitrust, banking and insurance regulators.
Citigroup will account for the transaction as a pooling of interests. It will be tax free to Associates First common stock holders. Once the transaction is complete, Associates First shareholders will own about 10% of Citigroup common shares.
Citigroup said the purchase of Associates First accelerates the company's consumer financial services expansion on a global basis. Once the transaction is complete, Associates First's North American consumer finance operations will combine with CitiFinancial, Citigroup's consumer finance business.
Associates First's commercial unit will join with Citigroup's Global Equipment Finance operations. Finance company Associates First's credit card operation will combine with financial services company Citigroup's card operations.
Associates First Chairman and Chief Executive Keith W. Hughes will become a Citigroup vice chairman and join the company's board. Associates First Chief Financial Officer and Senior Executive Vice President Roy A. Guthrie will have responsibilities that include Associates First's current operations in commercial and international finance.
Associates First has managed assets of more than $100 billion, while Citigroup has assets of more than $791 billion.
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....it was said that the financial sector was rallying in the anticipation of more mergers to come.......Jen
-- posted by JenL_2
» Kirk - Goldman to buy Wholesale Share Trader
Goldman’s shoring up retail, back-endNEW YORK (CBS.MW) – Goldman Sachs Group shares traded higher Monday after the firm confirmed buying wholesale share trader Spear, Leeds & Kellogg for $6.5 billion in stock and cash.
The terms set the purchase price at 34.4 million Goldman shares, valued at $4.4 billion, and $2.1 billion in cash, Goldman said in a conference call.
The deal is Goldman’s second acquisition of a trading business since the investment bank went public last year. This latest move “puts (Goldman) at the center of (share) price discovery,” Chief Executive Henry Paulson told investors and analysts on the call.
SLK is a top specialist on the New York Stock Exchange and one of the top Nasdaq market makers, giving the firm one of the biggest share order flows in the U.S.
SLK is also the largest stock and options clearing firm in the U.S. with 20,000 clients, according to Goldman. The deal underlines the increasing importance of back-office operations on Wall Street, where profits are made by volume instead of the direction of the market. Clearing accounted for some 40 percent of SLK’s profits in the last 9 months.
With SLK, Goldman also gains a big foothold in the business of the small investor. Spear, Leeds is the third largest market maker in Nasdaq stocks.
Goldman (GS) shares were up $6.19 to $130.44.
It’s not clear Goldman will keep the NYSE specialist operation, which accounts for some one-third of Spear, Leeds revenue. One executive from a rival specialist firm on Monday said he expects Goldman may seek to sell off SLK’s NYSE business.
Goldman added to the speculation, saying in a statement that SLK’s “market making, execution and clearing” businesses provide “tangible benefits for Goldman Sachs and its clients.”
However, Paulson indicated on the call that Goldman needs to retain “human talent” in reference to the specialist on the floor of the NYSE.
“Our view is that as the market evolves, the specialists will also evolve … It’s hard to predict exactly how it will evolve. We are going to need a combination of great technology … and human talent to make it work.”
Shares of LaBranche (LAB), the only publicly traded specialist stock, dropped 10 percent on Monday. Still, the stock has more than doubled in the past three months, partially on takeover speculation.
Shares of Knight-Trimark (NITE), the largest Nasdaq market maker, rose 94 cents to $32.
Goldman said it expects the SLK deal to close within the next four months, and to add “greater than 2 percent” to current estimates of its earnings next year.
Goldman expects to take a $350 million to $400 million charge in the quarter that the deal closes, largely because of a $900 million “retention pool” of Goldman stock that the firm will use to keep key SLK employees.
Emily Church is a managing editor of CBS.MarketWatch.com.
-- posted by Kirk
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