Rail Traffic Declined Last Week!

North American rail traffic fell 7.5% for the week ending April 16

The Association of American Railroads, AAR, reported U.S. rail traffic for the week ending April 16.

For this week, total U.S. weekly rail traffic was 489,801 carloads and intermodal units, down 8.1% compared with the same week last year.

Total carloads for the week ending April 16 were 221,228 carloads, down 6.8% compared with the same week in 2021, while U.S. weekly intermodal volume was 268,573 containers and trailers, down 9.2% compared to 2021. North American rail volume for the week ending April 16 on 12 reporting U.S., Canadian and Mexican railroads totaled 319,064 carloads, down 6.8% compared with the same week last year, and 354,060 intermodal units, down 8.1% compared with last year.

Total combined weekly rail traffic in North America was 673,124 carloads and intermodal units, down 7.5%.

North American rail volume for the first 15 weeks of 2022 was 9,987,458 carloads and intermodal units, down 3.9% compared with 2021.

Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Kansas City Southern (KSU), Norfolk Southern (NSC), Trinity Industries (TRN), Greenbrier (GBX), Wabtec (WAB), FreightCar America (RAIL), Union Pacific (UNP) and GATX (GATX).

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Hasbro questioned by shareholder!

Alta Fox urges Hasbro to address questions on Q1 earnings call

Alta Fox Capital Management, the beneficial owner of approximately 2.5% of the outstanding shares of Hasbro (HAS), urged the Company to address the following questions when it reports Q1 financial results tomorrow:

“Why has the Company pushed back the record date for the 2022 Annual Meeting of Shareholders?

Given that the Board of Directors appears to be more focused on entrenchment than value creation, we are forced to question the motivation behind moving the record date to May 9th.

We fear the Board is hoping that the delay will provide time to court friendly shareholders, who are likely to support the incumbents.

In our view, this seemingly self-serving maneuver has parallels to the defensive PIPE transactions recently initiated by other underperforming companies facing election contests.

Why is the Company forcing a costly election contest instead of accepting a modest Board refresh and a capital allocation review committee in response to shareholders’ concerns regarding Hasbro’s chronic underperformance?

In our view, investors have reason to question whether the Board is acting in shareholders’ best interest or engaging in further entrenchment to maintain the Hassenfeld family’s influence.

Why did the Company expand its Board to 13 members instead of carrying out a viable director refresh?

We contend the decision to expand the Board from 11 members to 13 members following our nomination reflects an unacceptable level of dysfunction and entrenchment in the boardroom.

Why did the Company feel it was appropriate for Cynthia W. Williams, the newly appointed President of Wizards of the Coast, to join another public company’s board within two months of being appointed to her new role?

We question why Williams would want to join the board of Aterian, a company whose stock is down almost 70% from its IPO in 2019 and which has been accused of serious wrongdoings.

We find it surprising that Hasbro’s Board allowed Ms. Williams to dilute her attention so early in her tenure at Wizards of the Coast and was comfortable associating Hasbro’s senior leadership with Aterian.

Cynthia W. Williams

How did the Board determine so quickly that a spin-off of Wizards of the Coast was ill-advised, and why will it not share this analysis with shareholders?

We believe spinning off Wizards of the Coast could help enhance Hasbro’s corporate structure and unlock the full value of the division, which has a completely different growth, margin and valuation profile than the Consumer Products and Entertainment segments.

In light of the Board’s apparent credibility issues, we find it hard to believe the Company comprehensively and objectively evaluated strategic alternatives for the unit.

We believe shareholders deserve a detailed explanation of the Board’s purported evaluation, and that the analysis should be re-examined with shareholder-appointed directors focused on creating shareholder value rather than preserving the Hassenfeld family legacy.

To date, the Company has provided little evidence of business unit “synergies” that could not be accomplished through a partnership arrangement.

Why is the Board resistant to forming a capital allocation committee when investments, such as the Entertainment One deal, have been value destructive?

It is confounding to us that Hasbro continues to assume no accountability for poor capital allocation when organic and inorganic investments have failed to produce meaningful shareholder value over many years.”

Alta Fox has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with its nomination of five candidates for election to the Company’s Board at this year’s Annual Meeting.

Hasbro reports on April 19th before the market open. HAS is down 2% to $83.47.

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Epic Games receives $2B cash infusion

Sony, Lego holding group invest $2B in Epic Games

“Fortnite” maker Epic Games announced a $2B round of funding to advance the company’s vision to build the metaverse and support its continued growth.

This round includes investments from existing investor Sony Group Corporation (SONY) as well as KIRKBI, the family-owned holding and investment company behind The LEGO Group, with each party investing $1B respectively.

Epic continues to have only a single class of common stock outstanding and remains controlled by its CEO and founder, Tim Sweeney.

“As a creative entertainment company, we are thrilled to invest in Epic to deepen our relationship in the metaverse field, a space where creators and users share their time.” said Kenichiro Yoshida, Chairman, President and CEO, Sony Group Corporation.

Tim Sweeney, Epic’s CEO and Founder

“We are also confident that Epic’s expertise, including their powerful game engine, combined with Sony’s technologies, will accelerate our various efforts such as the development of new digital fan experiences in sports and our virtual production initiatives.”

Epic’s post-money equity valuation is $31.5B.

The closing of the investment is subject to customary closing conditions, including regulatory approvals. Other investors in Epic Games include Tencent (TCEHY), KKR (KKR), and Disney (DIS).

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Nielsen sold for $16 billion

Brookfield Business Partners enters partnership to acquire Nielsen in $16B deal

Brookfield Business Partners (BBU) announced it has entered into a partnership to acquire Nielsen Holdings plc (NLSN) in an all-cash transaction valued at approximately $16B.

Nielsen Holdings operates as a measurement and data analytics company worldwide. The company provides viewership and listening data, and analytics principally to media publishers and marketers, and advertising agencies for television, computer, mobile, CTV, digital, and listening platforms. 

The companies said, investment highlights include, “Market-leading position. Nielsen is a global leader in audience measurement and a trusted partner to its customers across the entire media ecosystem.

The Company has more than 50 years of statistically significant historical data and its scale is unmatched by competitors.

Nielsen’s measurement data underpins the $100+ billion video and audio advertising markets and its measurement data is the established industry standard by which video and audio advertising spend transacts. Resilient performance and outlook.

The Company’s history of consistent growth is driven by its valued offering and longstanding customer relationships.

Nielsen’s scale and existing market position should support the Company’s ability to consistently grow its measurement business.

Value creation potential. Nielsen is well positioned to be the leader in cross-media measurement as audience viewership behavior continues to evolve.

The development and adoption of Nielsen ONE, Nielsen’s cross-media measurement service, will deliver a unified measure of consumer viewership across all media and support the Company’s growth strategy.”

Brookfield will invest approximately $2.65B by way of preferred equity, convertible into 45% of Nielsen’s common equity. Brookfield will be actively involved in the Company’s governance.

Brookfield Business Partners expects to invest approximately $600M, and the balance of Brookfield’s investment will be funded from institutional partners.

Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

The transaction is subject to customary closing conditions and is expected to close in the second half of 2022.

NLSN is up $4.58 to $26.81.

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Poly sold for $3.3 billion

HP Inc. to acquire Poly in all-cash transaction for $40 per share

HP Inc. (HPQ) announced a definitive agreement to acquire Poly (POLY), a global provider of workplace collaboration solutions, in an all-cash transaction for $40 per share, implying a total enterprise value of $3.3B, inclusive of Poly’s net debt.

The company said, “The acquisition accelerates HP’s strategy to create a more growth-oriented portfolio, further strengthens its industry opportunity in hybrid work solutions, and positions the company for long-term sustainable growth and value creation.

The rise of hybrid work is creating sustained demand for technology that enables seamless collaboration across home and office environments.

Approximately 75% of office workers are investing to improve their home setups to support new ways of working. Traditional office spaces are also being reconfigured to support hybrid work and collaboration, with a focus on meeting room solutions.

Currently, there are more than 90 million rooms, of which less than 10% have video capability. As a result, the office meeting room solutions segment is expected to triple by 2024.

Poly will help drive the growth and scale of HP’s peripherals and workforce solutions businesses.

Peripherals represent a $110B segment opportunity growing 9% annually, driven by the need for more immersive experiences.

Workforce solutions represent a $120B segment opportunity that is growing 8% annually, as companies invest in digital services to set up, manage, and secure more distributed IT ecosystems.

Poly’s devices, software and services, combined with HP’s strengths across compute, device management, and security, creates a robust portfolio of hybrid meeting solutions.

Poly, previously known as Plantronics, is a leader in video conferencing solutions, cameras, headsets, voice and software.

Together, HP and Poly will deliver a complete ecosystem of devices, software, and digital services to create premium employee experiences, improve workforce productivity, and provide enterprise customers with better visibility, insights, security, and manageability across their hybrid IT environments.”

HP expects the transaction to be immediately accretive to HP’s revenue growth, margins, and non-GAAP EPS at close.

With the expanded value proposition of a complete hybrid work solution, combined with HP’s scale and go-to-market capabilities, HP expects to realize substantial revenue synergies in peripherals as well as meeting room and workforce solutions.

HP will be able to cross-sell across its global commercial and consumer sales channels, while driving incremental sales from combining Poly’s products with HP’s PC portfolio.

As a result, HP expects to achieve $500 million of revenue synergies by FY25 and accelerate Poly’s revenue growth to an approximately 15% CAGR over the first three years after closing.

In addition, HP expects the transaction to improve Poly’s operating margins by approximately six percentage points from current levels by FY25, driven by scale efficiencies across supply chain, manufacturing and overhead. The transaction is expected to close by the end of calendar 2022, subject to Poly stockholder approval, required regulatory clearances, and the satisfaction of other customary closing conditions.

HP will finance the transaction through a combination of balance sheet cash and new debt. This transaction is consistent with HP’s capital returns program target.

HP remains committed to aggressively buying back shares of at least $4B in FY22, and to returning significant capital to shareholders while continuing to invest in growth.

POLY is up $13.14 to $39.34.

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Investor demands replacing IAA CEO

Ancora urges IAA to replace CEO or run sale process

IAA, Inc. (IAA) operates a digital marketplace that connects vehicle buyers and sellers. The company’s platform facilitates the marketing and sale of total loss, damaged, and low-value vehicles for a range of sellers. It provides buyers with various bidding/buying digital channels, vehicle merchandising, evaluation services and online bidding tools, and replacement part inventory. 

IAA operates a car auction platform

Ancora Holdings Group, which beneficially owns approximately 2% of IAA’s outstanding common stock, sent a letter to the company’s board which stated in part,

“Given IAA’s underperformance and the fact that the Company’s market capitalization has plummeted by roughly 40% since reporting third quarter earnings in November 2021, the status quo cannot persist. We believe there are two strategic actions for the Board of Directors to consider at this point:

1. Replace Mr. Kett with a new CEO who is more dynamic and equipped to reinvigorate the organization. In our view, IAA needs a leader with a vision for achieving organic market share growth, improved margins and effective capital allocation.

2. If the Board is unwilling to act with urgency to improve leadership, it should run a formal sale process to sell the Company. ”

IAA salvage auction lot

The activist added, “In light of IAA’s attractive attributes and business model, we anticipate the Company would obtain a significant premium relative to its current share price if taken private by one of the many well-capitalized potential acquirers in the marketplace.

Ancora owns 5% of shares or $250M

We estimate a takeout price of $55 or more is achievable based on a trailing 12-month EBITDA of 15.5x and an analysis of peers’ valuations and precedent transactions.

2 At this point, a sale seems like the best risk-adjusted path forward for stockholders.”

IAA is up $2.51 to $38.83.

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Google buys Mandiant for $5.4B

Google to acquire Mandiant for $23.00 per share in cash

Alphabet’s Google (GOOGL) announced that it has signed a definitive agreement to acquire Mandiant (MNDT) for $23.00 per share, in an all-cash transaction valued at approximately $5.4B, inclusive of Mandiant’s net cash.

Upon the close of the acquisition, Mandiant will join Google Cloud.

With the addition of Mandiant, Google Cloud will enhance offerings to deliver an end-to-end security operations suite with even greater capabilities to support customers across their cloud and on-premise environments.

The acquisition of Mandiant is subject to customary closing conditions, including the receipt of Mandiant stockholder and regulatory approvals, and is expected to close later this year.

Piper Sandler

Piper Sandler analyst Thomas Champion said he thinks the deal makes strategic sense given Google’s move further into the Enterprise. The Mandiant acquisition should complement Google Cloud Platform’s current security offerings, which include BeyondCorp Enterprise and VirusTotal, said Champion, who reiterates his Overweight rating and $3,475 price target on Alphabet shares.

Wedbush 

 Wedbush analyst Daniel Ives notes that this deal is all about Mandiant being further integrated into Google Cloud with more cyber threats facing enterprises/governments on the transformational shift to cloud and Mandiant establishing itself as “the Navy Seals of cyber security” over the last decade, the analyst contends.

#Ives believes this deal will have a major ripple impact across the cyber security space as cloud stalwarts Amazon (AMZN) and Microsoft (MSFT) will now be pressured into M&A and further bulk up its cloud platforms.

The analyst thinks cyber names such as Varonis (VRNS), Tenable (TENB), CyberArk (CYBR), Qualys (QLYS), Rapid7 (RPD), SailPoint (SAIL), and Ping (PING) standout as potential M&A candidates in cyber security given these vendors laser focus on protecting next generation cloud workloads from cyberattacks.

MNDT is down 50 cents to $21.99.

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Short Seller Targets Core Scientific

Culper Research short Core Scientific on ‘rigged deals,’ oversold businesses

In a recently published report titled “Core Scientific, Inc. (CORZ): Rigged Deals,” Culper Research says it is “short Core, as we think Core has wildly oversold both its mining and hosting businesses, which it cobbled together in a series of questionable transactions before dumping onto the public markets via SPAC.

Core’s acquired mining business, Blockcap, was formed in December 2020 with just $58.5 million, then flipped to Core for just 7 months later for $1.46 billion in connection with Core’s go-public.

We estimate Blockcap insiders made 20-25x their money.

On Monday, Core disclosed that its board waived the 180- day lockup on over 282 million shares, making them free to be dumped just 5 trading days from today.

We believe this shows insiders have abandoned any pretense of care for minority shareholders.”

“We think Core is no exception to what’s become a steady drumbeat of egregious projections made by many SPACs. We think both Core’s hosting business and its self-mining business have been wildly overhyped, and it’s no wonder that insiders can’t even wait 6 months to clamor for the exits,” the report reads.

“We also think Core has wildly overhyped the profitability of its self-mining business, where we estimate all-in breakeven costs of $41,723 per BTC (Bitcoin) vs. the Company’s SPAC claims of $2,700 just in power costs per BTC.

As such, we see Core as effectively using public markets to throw good money after bad while insiders set themselves up to dump billions worth of stock.”

In Thursday trading, shares of Core Scientific have dropped almost 3% to $7.50.

According to Wikipedia, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional “long” position, where the investor will profit if the value of the asset rises.

There are a number of ways of achieving a short position. The most fundamental method is “physical” selling short or short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender.

Core Scientific, Inc. (CORZ) last traded at $7.15.

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Rate Hikes are Coming!

Fed Chair confirmed a 25 bp rate hike this month

Fed’s Beige Book was released a few minutes ago. The report reiterated the economy expanded at a “modest to moderate” pace. Many Districts reported that the surge in Covid cases and severe winter weather disrupted businesses. Some firms noted a “temporary” weakening in demand in the hospitality sector to Covid.

The Beige Book reports an expanding economy

“All Districts” said supply chain issues and low inventories continued to restrain growth, especially in construction.

The overall outlook for the next 6 months remained one of stable and general optimism, though with elevated uncertainty.

Powell, FOMC Chair, Stockwinners
Fed Chief Jerome Powell

For the labor market, the widespread strong demand for labor was hampered by “equally widespread reports of worker scarcity.”

Meanwhile,  Fed Chair Powell’s testified before the Congress today. He confirmed a 25 basis points rate hike is in the cards for the March 15-16 meeting.

FOMC as policymakers look to address “indisputably” high inflation pressures. He also suggested more aggressive increases could be warranted down the road. Powell said liquidity has been functional thanks to a number of measures and facilities put in place, including swap lines and the standing repo facility.

FOMC is looking to soak up liquidity

The Fed has “institutionalized liquidity provisions” — hence the geopolitical pressures have not added stresses in the funding markets.

The markets are sharply higher across all sectors.

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Epam shares tumble on Ukraine exposure

 Epam Systems withdraws Q1, FY22 guidance due to events in Ukraine

EPAM Systems (EPAM) announced it is withdrawing its first quarter and 2022 financial outlook due to heightened uncertainties and regional impacts resulting from military actions in Ukraine.

EPAM Systems, Inc. provides digital platform engineering and software development services in North America, Europe, Russia, Belarus, Kazakhstan, Ukraine, Georgia, East Asia, Southeast Asia, and Australia. 

“EPAM’s highest priority is the safety and security of its employees and their families in Ukraine. The company is proactively working to relocate its employees to lower risk locations in Ukraine and neighboring countries.

The company is executing business continuity plans and accelerating hiring across multiple locations in Central and Eastern Europe, Latin America, and India.

EPAM continues to operate productively in more than 40 countries and is committed to providing consistent high-quality delivery in all our geographies around the world,” the company said.

Shares of the Newton Pennsylvania company are down 46% to $207.75. Stock has a 52-week trading range of $198.25 to $725.40. Today’s loss took the shares back to 2020 levels, wiping out two years of gains.

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Rig Counts Rise as Oil Tops Out!

Baker Hughes reports U.S. rig count up 5 to 650 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 5 from last week to 650 with oil rigs up 2 to 522, gas up 3 to 127, and miscellaneous rigs unchanged at 1.

U.S. Rig Count is up 248 rigs from last year’s count of 402 with oil rigs up 213 gas rigs up 35 and miscellaneous unchanged at 1.

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Rig Counts Rise – See Stockwinners.com Market Radar to read more

The U.S. Offshore Rig Count is unchanged at 12, down 5 year-over-year.

The Canada Rig Count is up 4 from last week to 224, with oil rigs up 3 to 138, gas rigs unchanged at 85 and miscellaneous up 1 to 1.

The Canada Rig Count is up 61 rigs from last year’s count of 163, with oil rigs up 46, gas rigs up 14 and miscellaneous up 1.

Oil Tops Out

WTI Crude oil rallied to above $105 per barrel on news of invasion of Ukraine. In a classical top out price behavior, shares hit a multi-year higher then reversed intraday and closed lower. Today, the decline is continuing as price gap between Brent and WTI is closing. Furthermore FOMC is going to raise interest rates which means a stronger dollar, and lower commodity prices as they are denominated in dollar. OPEC+ is meeting next week to consider production quotas.

WTI Crude Oil 5-day Price Chart

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

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The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is down $1.45 to $91.35 per barrel. Brent crude is down $1.54 to $93.85 per barrel. Gasoline last traded at $2.870 per gallon down 5 cents on the day.

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Ford does not plan to spin off EV business!

Ford CEO says no plans to spin off electric business or ICE business

Ford (F) CEO Jim Farley said while speaking at the Wolfe Research Auto, Auto Tech and Mobility conference:

Jim Farley, Ford CEO

“I wanted to talk quickly about running a successful ICE (internal combustion engines) business versus a BEV (battery-powered electric vehicle) business as we’re scaling. The customers are different.

The EV customers are not like our ICE customers. Our go-to-market as the result has to be digital, no inventory and remote. It’s different. We can bridge to it today, but we have to go much deeper…

Ford to launch 50 new vehicles in China. See Stockwinners.com

Ford will ensure we have the right structure and talent in place to compete and win in this digital software-enabled vehicle business, but as well to revitalize our ICE business.

And here, I really want to emphasize the shift that we’re thinking about.

There’s a lot of focus on the digital electric growth opportunity. But we believe we have lots of room on our ICE business for better quality, lower structural costs and radical reduction in complexity.

All electric Ford Mustang

And despite the press speculation, we have no plans to spin off our electric business or ICE business. It’s really more around focus and capabilities, expertise and talent. Those are key for Ford, and this is what we’re working on. Now many companies have studied this.

Some even have a person in charge of EVs here and there. But trust me, Ford will go deeper because we know our competition is Nio and Tesla, and we have to beat them, not match them…

Nio electric car

We believe and we acknowledge that we have upside in our ICE business and it’s critical that we leverage that and we’ve been working on and making progress to get to that 8% EBIT margin as a company…

We believe that both ICE and BEV portfolios are under-earning. Let me say that one more time. This management team firmly believes that our ICE and BEV portfolios are under-earning and that is not price. That is lower structural costs, improving our bill of material for our BEV vehicles and scaling…

Tesla Model 3

The net all of this is we have ample headroom for growth, as you said, Rod, and increased our company EBIT margin target to get to that 8%… And what we want to get across to all of you is that we have a long view of Ford that we have rethought our entire portfolio.”

F last traded at $17.00, down 30 cents.

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Rig Counts Surge!

Baker Hughes reports U.S. rig count up 10 to 645 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 10 from last week to 645 with oil rigs up 4 to 520, gas up 6 to 124, and miscellaneous rigs unchanged at 1.

Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count

The U.S. Rig Count is up 248 rigs from last year’s count of 397 with oil rigs up 215 gas rigs up 33 and miscellaneous unchanged at 1.

The U.S. Offshore Rig Count is down 4 to 12, down 4 year-over-year.

The international offshore rig count for April 2018 was 194. Stockwinners

The Canada Rig Count is up 1 from last week to 220, with oil rigs down 2 to 135, gas rigs up 3 to 85.

The Canada Rig Count is up 48 rigs from last year’s count of 172, with oil rigs up 35, gas rigs up 13.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is down 43 cents to $91.35 per barrel. Brent crude is up 31 cents to $93.25 per barrel. Gasoline last traded at $2.659 per gallon up a penny on the day. Get ready to pay more at the pump.

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MoneyGram sold for $1 billion

The private equity firm will pay $11 a share for MoneyGram

Madison Dearborn Partners agreed to buy the company.

MoneyGram International, Inc. provides cross-border peer-to-peer payments and money transfer services in the United States and internationally. The company operates through two segments, Global Funds Transfer and Financial Paper Products. 

MoneyGram (MGI) has been a takeover target for years, as more people turn to online payments and away from old-school money-transfer services.

Chinese financial-services conglomerate Ant Group Co. agreed to buy MoneyGram in 2017, but walked away after pushback from regulators.

The acquisition by Madison Dearborn will enable MoneyGram “to accelerate the advancement of our digital growth strategy,” Chief Executive Officer Alex Holmes, who will continue to lead the firm after the deal is completed, said in the statement. “We will have greater opportunities to innovate and transform MoneyGram to lead the industry in cross-border payment technology and deliver a more expansive set of digital offerings.”

Remittances to most regions increased last year, aided by the economic recovery in the U.S. and Europe. Flows jumped almost 22% in Latin America and the Caribbean last year, 9.7% in the Middle East and North Africa, and 8% in South Asia, the World Bank said in November.

The MoneyGram acquisition, which includes a 30-day “go shop” period, is expected to be completed in the fourth quarter. Debt financing for the deal is being provided by Goldman Sachs Group Inc., Deutsche Bank AG and Barclays Plc.

MGI is up $1.77 to $10.72.

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U.S. Ecology sold for $2.2 billion

Republic Services to acquire US Ecology for $48.00 per share in cash

Republic Services (RSG) and US Ecology (ECOL) have entered into a definitive agreement under which Republic Services will acquire all outstanding shares of US Ecology for $48 per share in cash, representing a total value of approximately $2.2B including net debt of approximately $0.7B.

US Ecology, Inc. provides environmental services to commercial and government entities in the United States, Canada, Europe, the Middle East, Africa, Mexico, internationally. It operates through three segments: Waste Solutions, Field Services, and Energy Waste. It offers specialty waste management services, including treatment, disposal, beneficial re-use, and recycling of hazardous, non-hazardous, and other specialty waste at company-owned treatment, storage, and disposal facilities, as well as wastewater treatment services.

Republic Services, Inc. provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States. 

The transaction is not subject to a financing condition.

Republic Services intends to finance the transaction using existing and new sources of debt.

Following completion of the transaction, Republic Services expects to maintain a strong balance sheet and solid investment-grade credit rating.

The company plans net debt-to-EBITDA, as defined in our credit agreement, to return back below 3x within 18 months of closing the transaction.

The transaction was unanimously approved by the boards of directors of both companies and is expected to close by the end of the second quarter, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by holders of a majority of the outstanding shares of US Ecology’s common stock.

ECOL is up $19.28 to $47.48. RSG is up 24 cents to $127.19.

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