'Fast Money' Recap -- AOL and Verizon Hookup, Hottest Trade for 2015

NEW YORK (TheStreet) -- Verizon Communications' (VZ$4.4 billion buyout deal for AOL (AOL) was among the top topics for CNBC's 'Fast Money Halftime Report' panel Tuesday, along with the impact of rising interest rates on stocks and the hottest trade for 2015.

The panel first heard from Eric Jackson, managing partner of hedge fund Ironfire Capital and a contributor for TheStreet.com, who made the call at the start of the year that AOL would be acquired. In addressing the panel, Jackson said AOL's CEO Tim Armstrong had to play the hand he was dealt with when he was initially hired by AOL and did well for the company during his tenure, raising its share price by roughly 150%.

In comparing AOL's performance with Yahoo (YHOO), Jackson complained that Yahoo CEO Marissa Mayer has not done the same, leaving the internet pioneer with a negative valuation of approximately $5 billion to $6 billion when excluding its cash and Asian assets.

He also pointed out that Mayer, in essence, has two poison pills wrapped around Yahoo's core business, which could reduce interest by potential suitors. One poison pill is its stake in Alibaba (BABA) which the company has said it plans to spin off later this year and the other is its ownership of Yahoo Japan, which would add roughly $7 billion to a Yahoo purchase price, said Jackson.

Jackson, who owns shares in Yahoo, said he still plans to retain his stake in the Internet pioneer, nonetheless, when asked by a Fast Money panelist why he doesn't sell his Yahoo holdings.

"Yahoo should be a stock that gets to $80 a share sooner or later," Jackson said. Yahoo closed Monday at $43.60.

Pete Najarian, co-founder of optionsmonster.com, agreed with Jackson that Yahoo is a keeper for now. "There is nothing but upside from here."

Regarding Verizon's decision to snap up AOL, Josh Brown, CEO and co-founder of Ritholtz Wealth Management, said he was surprised Facebook (FB) didn't pickup AOL instead. "I get why Verizon did it," Brown said. "Cash is free. THey are throwing off a ton of cash. This is something to do instead of buybacks."

Addressing trades that they would make, the panelists offered up these buys and sells. Najarian said The Gap (GPS) is a stock to buy since it is finally down to more attractive buying levels. The Gap closed Monday at $39.87, down from the 43 range in early April. Jim Lebenthal, CFO and chief investment officer at Lebenthal & Co., said he would let Pall (PLL) go.

Meanwhile, Stephen Weiss, managing partner of Short Hills Capital Partners, said Rackspace Hosting's (RAX) stock has been volatile and he would need to take a closer look. Brown said Tesla Motors (TSLA) looks good, especially since the high-end electric vehicle maker on Monday received the green light from the Federal Trade Commission to do direct auto sales to consumers.  

But as for the hottest trade in 2015, Brown pointed to commodities. 

"The S&P is up 1% year to date and the dollar rally has seemed to subside. But one thing that's been happening over the last few weeks that is really different than what has been happening over the last few years is strength in commodities," Brown said. 

In looking at the materials themselves and letting investors extrapolate from there, Brown pointed to the PowerShares DB Commodity Tracking ETF (DBC). "It's really been making a move, such that it  hasn't in a really long time."

Drilling down into the components of the ETF, Brown noted copper has had its longest rally since 2005, rising 10% over the course of eight consecutive days. Silver is up for the year, a rare event that has not been seen for awhile, he added. And, of course, oil has risen 24%.

Which commodities haven't followed suit yet but have potential? Try agriculture, said Brown. He pointed to the PowerShares DB Agriculture Tracking ETF (DBA). "It's just starting to lift off of the lows," said Brown. "That's a trade that hasn't happened yet and it's under-owned."

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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