'Fast Money' Recap: Ken Lewis Trade
NEW YORK (
) -- More mixed economic data caused stocks to zig-zag in the last trading session of the third quarter Wednesday, with the major indices ending in the red.
The
Dow Jones Industrial Average
declined 29.92, or 0.31%, to 9,712.28, while the
S&P 500
slipped 3.54, or 0.33%, to 1,057.07. The
Nasdaq
, meanwhile, lost 1.62, or 0.08%, to 2,122.42.
Late-breaking news that Ken Lewis had retired as
Bank of America's
(BAC) - Get Report
chairman and CEO dominated Wednesday's session of
CNBC's
"Fast Money" TV show.
As is their wont, the program's panelists asked themselves: Is there a trade here?
Karen Finerman said, "I think it's a mild positive. The timing of the event is what's newsy." Many BofA watchers didn't expect Lewis to take his leave for another year at least. But with some of the "noise" caused by Lewis' legal and/or regulatory problems seemingly now out of the way with his retirement, Finerman said BofA shares could benefit.
Steve Grasso, meanwhile, said BofA shares could receive a short-term bump on the news, calling Lewis and the regulatory issues surrounding him an "overhang" on the stock. Indeed, in after-hours trading, BofA issues were moving at $17.15, up 1.4% from the regular session close.
For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
3 Stocks I Saw onTV |
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Was there a flip-side trade, mused "Fast Money" moderator Melissa Lee.
Guy Adami attempted to address the question. He said the housing market may not be as strong as some people think. As "great" as the BofA franchise may be, Adami remains concerned that the businesses the bank plays in may hit a bottom again. But he certainly prefers the Charlotte, N.C., behemoth to
Citigroup
(C) - Get Report
. "BofA is an investible stock," he said. "Citi is only a tradable stock at this point."
CNBC's
producers were able to wrangle banking analyst Dick Bove for his opinion on the Lewis news. Bove sung Lewis' praises, calling him "one of the most brilliant banking execs in this country". Any other potential candidate for the job -- BofA did not name a successor -- will represent a trade down in terms of executive quality, Bove added.
Still, the analyst agreed that Lewis' absence will relieve the bank of "the whole governance issue" that has fogged BofA and its shares of late. He suggested that investors stay long in BofA stock, given its "dominant position in a variety of lending products" and the sheer size of its deposits, the largest of any bank in U.S. history.
In other after-hours news,
General Motors
(GM) - Get Report
said its deal to sell Saturn to
Penske
had fallen apart and that it would unwind the division.
Were there any trades available on this news, Lee asked.
Guy Adami, semi-stumped, said one way to play it was to go long shares of GM rival
Ford
(F) - Get Report
. He sees the stock heading back above $8.
Crude prices surged by the end of Wednesday's regular session on the New York Mercantile Exchange and this got the panelists talking commodities.
Joe Terranova said money mangers will likely allocate money in the fourth quarter to commodities such as oil, copper and sugar, which Terranova himself bought Wednesday. He added that oil ETFs will likely perform just as well in the fourth quarter as crude futures.
Gold, meanwhile, again broke the $1,000-per-ounce mark, leading Terranova to remark that he bought some gold futures during the session, albeit for less than $1,000. He said that all the news lately has given gold prices every reason to decline, and yet the yellow metal has held steady. He views this as a bullish sign.
Guy Adami disagreed, saying that one could make the same argument the opposite way. "It had every reason to go up, and hasn't." For now, he agreed, the signs do point north for gold. But, he added, "It does scare me, though."
Options expert Jon Najarian appeared as a guest to make some "fallen angel" picks: downtrodden stocks that could spike in the fourth quarter. He recommended three: including
Leap Wireless
(LEAP)
, whose stock has declined 41% in the third period;
Synaptics
(SYNA) - Get Report
, a maker of touch-application technology for computers and smartphones, whose shares have lost 35%;
MEMC Electronics
(WFR)
, a solar play that was hammered in the quarter.
Najarian added that options trading in Leap has been active of late, perhaps as takeover speculation heats up in the tech sector.
Biotech Watch
Swine flu has produced interest of late in biotech and pharma stocks.
CNBC
biotech reporter Mike Huckman said
BioCryst
(BCRX) - Get Report
is moving its antiviral drug into late-stage studies, and that the big vaccine producers
Novartis
(NVS) - Get Report
,
Sanofi
(SNY) - Get Report
and
AstraZeneca
(AZN) - Get Report
have already begun shipping their products. But, he noted, investors are more interested in drugs with long-term commercial potential. To that end, he said, Novartis has a new multiple sclerosis pill that has potential.
For his part, Terranova said he likes
Abbott Labs
(ABT) - Get Report
and
Gilead
(GILD) - Get Report
, inventor of the antiviral flu drug Tamiflu.
In the "Final Trades" portion of the show, Terranova recommended
Frontier Oil
( FTO). Guy Adami mentioned
Vertex Pharmaceuticals
(VRTX) - Get Report
, which said after the bell that it plans to begin a mid-stage study of its treatment for rheumatoid arthritis. Finerman said, "It's sort of the stock of the day; I'll go with it. BofA, long." And Steve Grasso gave a nod to
Disney
(DIS) - Get Report
. His rationale? "My daughter Emily loves Mylie Cyrus."
-- Written by Scott Eden in New York
To watch replays of Cramer's video segments, visit the Mad Money page onCNBC
.
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.
