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Below are a few article highlights from this past week:
Matthew Bradbard -- one of our newest RM contributors talks about the trade of a lifetime in the Eurodollar
I am going out on a limb here, and if there is no change in interest rates in the next 27 months I will be wrong.
If and when rates move higher, bearish exposure in long-dated Eurodollar contracts could be the preeminent trade of my career. Not only do I see the potential for great profit, I like the outlook in regards to risk.
This is NOT the euro currency that is trading at roughly $1.26, but rather the debt instrument tied to the short end of the yield curve. As defined on the CME website: Eurodollar Time Deposit having a principal value of USD $1,000,000 with a three-month maturity. Quoted in IMM Three-Month LIBOR index points or 100 minus the rate on an annual basis over a 360 day year (e.g., a rate of 2.5% shall be quoted as 97.50). 1 basis point = .01 = $25. (Continued
-- also a new RM team player looks at the latest investments being made by high profile investors
At Insider Monkey, we track 13F SEC filings from many hedge funds and other large investors, including the investment activities of billionaires and their investment teams. For today's piece, we'll focus on the consumer sector: Within that space, here are the five largest new positions from billionaires.
First, Bill Ackman's Pershing Square initiated a position of about 22 million shares in Procter & Gamble
(PG) -- which, according to the fund's 13F filing, made this the second-largest position in the fund's portfolio. Shares of the personal-products giant -- whose brands include Pantene, Gillette, Pampers and Duracell -- has low market exposure, with a beta of 0.3, and the company pays a 3.3% dividend. It has also reported solid year-over-year earnings growth in the last quarter. The stock, meanwhile, trades at 18x trailing earnings. While that may be a bit high, Wall Street analysts believe earnings will continue to grow -- and, on a forward basis, its price-to-earnings ratio is 16x. Given the dividend yield, this may be a fairly valued defensive pick. (Continued
And on RealMoney Pro:
RealMoney Pro veteran Tim Collins explains his Netflix trade
(NFLX) has a major issue. It has little original content, yet does not want to pay up for the content it needs. It's like a moody teenager who wants to borrow the car for a long weekend road trip who refuses to even fill the car with gas.
Worse yet, the teen wants your credit card to use as well during the weekend. Amazon
(AMZN) has 33x the market cap, plenty more cash and a currency NFLX does not have (the stock) to use if desired to acquire content and sign deals. That is exactly what AMZN is doing. I won't argue that AMZN is fairly valued or undervalued here, but if they were smart then they would probably use what stock they could to acquire as much content as possible. Toss in the cable companies along with Coinstar
(CSTR) and there just seems like very little reason to own NFLX right here. And for those arguing a takeover is possible, well of course it is, but I still don't see it happening unless NFLX is in the high $20s or low $30s, so it can get some sort of "premium." I say that word loosely since that price is a long fall from where NFLX currently sits. (Continued
-- Stephanie Link
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