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Buybacks and cash takeovers are at an all-time high (Trim Tabs)
Investment research firm TrimTabs says money committed to cash takeovers and buybacks by public US companies hit a record $1.41 trillion in 2015. “It’s not surprising that corporate America turned more to financial engineering as revenue and profits stagnated,” TrimTabs CEO David Santschi said in a press release. According to TrimTabs, cash takeovers for 2015 totaled $682 billion, and says previous peaks in 1999 and 2007 coincided with stock market tops. In addition, the $725 billion of share repurchases was second to only the $810 recorded in 2007. “Stock performance tends to deteriorate after periods of heavy merger activity, which is what we saw in the second half of last year,” Santschi noted.
Smith & Wesson boosted its outlook (Business Insider)
Gunmaker Smith & Wesson raised its third-quarter outlook because of unexpectedly strong sales. The company sees revenue of $175 million to $180 million for the quarter ending January 31, up from its previous estimate of $150 million to $155 million. In addition, the gunmaker boosted its earnings-per-share outlook to $0.39 to $0.41, from $0.27 to $0.29. “The sell-through rate of its products at distribution has been stronger than originally anticipated, resulting in reduced distributor inventories of its firearms,” Smith & Wesson said in a press release.
Investor sentiment is at a 2-year low (John Hancock)
The John Hancock Investor Sentiment Index hit a two-year low of +22 in the fourth quarter, edging down slightly from the +23 print of the third quarter. According to John Hancock, the index reflects “the percentage of investors who say they believe it is a ‘good’ or ‘very good’ time to invest, minus those who feel the opposite.” On a macro level, the survey found 53% of respondents say their biggest concern is unrest in the Middle East. At home, almost 6 in 10 investors say their greatest worry is the cost of healthcare.
RCS Capital will file for bankruptcy (Wealth Management)
On Monday, RCS Capital said it would file for prearranged Chapter 11 bankruptcy by the end of January. According to Wealth Management, the firm has negotiated a $150 million investment from its lenders, and will emerge from its bankruptcy solely operating as a retail broker. “The purpose of the Chapter 11 filing is to improve RCS Capital’s balance sheet and capital structure by eliminating certain non-core assets and liabilities,” RCS said in a statement.
Michael Oxley has died (Investment News)
Former Rep. Michael Oxley of Ohio died on January 1 at the age of 71. Oxley, who was the former chairman of the House Financial Services Committee and a FINRA lobbyist, was best known for co-authoring Sarbanes-Oxley, which requires top management to personally sign off on the accuracy of their company’s financial information. Sarbanes-Oxley was passed in 2002, in the wake of the Enron and Worldcom accounting scandals.
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