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TheStreet Open House

'Fast Money' Recap: Ending on a High Note

NEW YORK (TheStreet) -- After struggling in the morning, stocks finished higher on Friday, with the Dow Jones Industrial Average closing at record highs. 

On CNBC's "Fast Money" TV show, the trading panel had some thoughts on Apple's (AAPL) rumored $3.2 billion acquisition of Beats Electronics, the high-end headphone and music streaming company.

Pete Najarian, co-founder of optionmonster.com and trademonster.com, didn't have a problem with the acquisition. However, he questioned the valuation, pointing out Beats was valued at $600 million two years ago and just $1 billion in September. 

Josh Brown, CEO and co-founder of Ritholtz Wealth Management, said Beats Electronics is a profitable company that had $1 billion in sales last year. It's also a company that has 60% market share of headphones above $100. 

Guy Adami, managing director of stockmonster.com, suggested the acquisition was made to get Apple involved in the fashion and apparel market.

Brian Kelly, founder of Brian Kelly Capital, said the buyout is quite small for a company the size of Apple. He said investors likely don't care for the deal because it's not as exciting as some of the deals Facebook (FB) and Google (GOOGL) have been making. 

Bob Lefsetz, contributing columnist at Variety, was a guest on the show. Just because the late CEO Steve Jobs was not a "believer" in streaming music doesn't mean it was a poor acquisition by Apple, he said. He pointed out that music downloads are on the decline while music-streaming is on the rise. He argued that Spotify would have cost much more money and also said iTunes Radio cannot compete with Pandora (P) in its current state. 

The Russell 2000 has pulled back 6% from its highs and remains below the 200-day simple moving average. Kelly said that if the economy were growing, small-cap stocks are what investors should be long. The problem is that investors are not buying small-caps and the economy doesn't seem to be growing, he said. He called the price action "troubling."

Brown disagreed, saying that although the Russell 2000 continues to pull back, the S&P 500 has been holding up well. He said the divergence between the two indices is simply because investors are looking at the valuation difference between small- and large-cap stocks, with the small stocks being too expensive compared with the larger ones.

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