Category Archives: oud

Tesla’s Apple, AMD Hiring Scoops Could Squeeze Chipmaker Nvidia

Tesla Motors ’ ( TSLA ) poaching of key Apple ( AAPL ) and Advanced Micro Devices ( AMD ) engineers could squeeze graphics-chips partner Nvidia ( NVDA ), an MKM analyst wrote Monday ahead of Nvidia’s April 5 analyst day. But MKM analyst Ian Ing reiterated his buy rating and 39 price target on Nvidia stock, which was up 1% in afternoon trading on the stock market today , earlier touching an eight-year high at 34.98. Nvidia and Tesla have partnered in machine-learning — widely seen as key to autonomous driving — for the better part of a decade. Last year, Nvidia’s automotive segment grew 80% — to $320 million in revenue. Together, the duo faces stiff autonomous-driving competition from rivals like General Motors ( GM ), Alphabet ( GOOGL ) and Apple. Tesla CEO Elon Musk has famously called Apple the “ Tesla graveyard,”   saying Apple has hired engineers that Tesla had fired, but recent reports indicate that Tesla might be swiping Apple and AMD engineers. Still, Ing says those engineers aren’t as steeped in graphics processing units and machine learning as Nvidia’s staff. “Although there are widely reportedly headlines that Tesla has been hiring chip architects from Apple and AMD, we note that expertise has been focused more on multi-purpose application processors vs. the GPU accelerators necessary for machine learning,” Ing wrote. Nvidia stock rocketed 35% over the past month, recovering from a five-month low of 24.75, hit Feb. 12. On Feb. 17, Nvidia reported record Q4 and 2015 sales that easily topped Wall Street expectations. Core gaming brought in 58% of Nvidia’s January-quarter sales, but the chipmaker also has a bright future in virtual reality, self-driving cars, autonomous drones and cloud data center acceleration, Ing wrote. And a recent data center wave featuring  Qualcomm ( QCOM ), Intel ( INTC ), Broadcom ( AVGO ), Integrated Device Technology ( IDTI ) and Inphi ( IPHI ) will likely lift Nvidia’s tide as well, Ing wrote. Last month, Nvidia noted its alliances with Chinese Internet major Alibaba ( BABA ) and Facebook ( FB ) for speedy artificial-intelligence chips. This year, Google joined Facebook’s Open Computer Project, which aims to lower the cost of data center ownership. Google also announced a beta “cloud machine learning” service that lets users customize machine learning, ahead of Amazon ( AMZN ) Web Service and Microsoft ( MSFT ) Azure. Image provided by Shutterstock .

Microsoft Reportedly Among Those In Yahoo Acquisition Mix

The process of finding a buyer for struggling Web portal Yahoo ( YHOO ) is reportedly in the middle of its first round, and interest is high, according to a CNBC report , which cited sources close to the matter. This comes after a separate report said  Microsoft ( MSFT ) might put up “significant” financing in a bid for Yahoo. Microsoft executives are in talks with potential investors about providing funds to buy the troubled Internet company , Re/Code reported. A Reuters report said those talks are in the early stages. Microsoft and Yahoo have a longstanding search and ad partnership, and Microsoft is focused on preserving that relationship, it said. Private equity firms interested in Yahoo have approached Microsoft, Reuters said. Microsoft declined to comment. Microsoft has been meeting with private-equity firms and saying it might lend “significant” financing in a bid for Yahoo, according to Re/Code . In 2008, then-Microsoft CEO Steve Ballmer tried to buy Yahoo for about $45 billion. Yahoo’s overall market cap is now $33 billion, but that includes its its major stakes in China e-com leader  Alibaba Group ( BABA ) and in Yahoo Japan. Minus those holdings, analysts have pegged the price of Yahoo’s core business at $6 billion to $8 billion. Excluding its 15% stake in Alibaba, Rosenblatt analyst Martin Pyykkonen said in an industry note last week : “Yahoo’s current market cap implies $3.3 billion valuation for the core business and the Yahoo Japan stake. We think the fundamental outlook for Yahoo as a ‘growth’ stock is continuing to erode, especially in light of strong secular trends which are benefiting the likes of Facebook ( FB ) and Google owner Alphabet ( GOOGL ), both of which have more revenue concentration from mobile advertising.” Possible Yahoo Buyers Said To Include AT&T, Verizon Re/Code said that Yahoo started engaging with “strategic” bidders that include AT&T ( ATT ), Verizon ( VZ )and Comcast ( CMCSA ), with private equity and other investment firms to come next, the report’s sources said. Interested parties reportedly include Advent International, Vista Equity Partners, TPG and KKR ( KKR ). Verizon Chief Financial Officer Fran Shammo said in December that the U.S. wireless carrier could look at buying Yahoos’s core business if it were a good fit. Activist investor Starboard Value announced Thursday that it wants to sweep  out all of the ailing Web company’s nine directors and replace them with its own slate during Yahoo’s 2016 shareholder meeting. This month, Yahoo appointed two members to its board: Catherine Friedman, a former managing director at Morgan Stanley ( MS ), and Eric Brandt, a former chief financial officer at  Broadcom ( AVGO ). “This is gearing up to be an epic proxy fight, and we believe that this will create a significant overhang on Yahoo shares,” said Mizuho analyst Neil Doshi in an industry note on Thursday. “It’s unusual to see an investor try to replace an entire board, but this clearly highlights to us that Starboard does not trust any of the existing board members will do what needs to be done to create value for Yahoo shareholders.” Yahoo Chief Executive Marissa Mayer has struggled to turn the company around in her nearly four years as Yahoo’s leader. Yahoo stock was up 1%, near 35, in afternoon trading in the stock market today .

Closed-End Fund Craziness

By Alan Gula, CFA Last week, Barack Obama became the first U.S. president to visit Cuba in nearly nine decades. As you may recall, President Obama announced that the United States would re-establish diplomatic relations with Cuba in December of 2014. Of course, investors immediately began searching for ways to profit from the re-opening of trade and travel with Cuba. Some investors thought they had uncovered a gem called The Herzfeld Caribbean Basin Fund (NASDAQ: CUBA ), a closed-end fund (CEF). After all, the ticker seemingly told you all you had to know. From December 16, 2014 to December 23, 2014, CUBA rose 107%. The fund went from a discount of over 10% of its underlying net asset value (NAV) to a massive 70% premium . Except there was one big problem: CUBA had little direct exposure to Cuba. Close, but no cigar. By mid-January 2016, the fund had lost over 60% of its value and was once again trading at a discount to its NAV. CEFs, like CUBA, have a set number of shares outstanding. Therefore, supply and demand forces determine whether the shares trade at a premium or discount to NAV. CEFs tend to be relatively small and illiquid, so their holders are predominantly individual investors. As a result, CEF share prices are heavily influenced by the herding of retail investors – perfectly illustrated by the CUBA episode. However, CUBA is an especially small CEF. Such pricing anomalies would never occur with the larger funds run by prominent financial institutions, right? High-Yield CEFs In June of 2014, near the height of the “reach for yield” mania, I recommended selling two high-yielding PIMCO closed-end funds . At the time, the PIMCO High Income Fund (NYSE: PHK ) and the PIMCO Global StocksPLUS & Income Fund (NYSE: PGP ) were trading at absurd 57% and 66% premiums to their NAVs, respectively. Over the next 15 months, PHK and PGP both lost roughly 40% of their values (distributions included but not reinvested). The premium for PHK evaporated and the premium for PGP hit a more reasonable but still elevated 18%. But wait… The herd is back for more! The premiums have since re-inflated for both funds. In fact, the premium on PGP recently reached an unprecedented 103%. It seems as though many folks are using the snapback rally in the credit market as an excuse to bid up several closed-end funds with impunity. The following table is a list of several CEFs trading at high premiums: The premiums on Eagle Point Credit Company Inc. (NYSE: ECC ) and the DoubleLine Opportunistic Credit Fund (NYSE: DBL ) have recently surged to their highest levels ever. The Babson Capital Corporate Investors (NYSE: MCI ) is rated five stars by Morningstar and has a great track record, but no fund is worth a 20%-plus premium. The PIMCO Municipal Income Fund (NYSE: PMF ), PIMCO California Municipal Income Fund II (NYSE: PCK ), PIMCO New York Municipal Income Fund II (NYSE: PNI ), and PIMCO California Municipal Income Fund III (NYSE: PZC ) are all trading at very high premiums. No matter how bullish you are on muni-bonds, there’s no reason to pay up this much for exposure. The financial markets may not make sense all of the time, but, as you can tell, craziness is the norm in CEF land. When a CEF you own trades at a small premium to its NAV, you should at least consider selling it. When that premium exceeds 15%… hit the bid and get out as if you’re fleeing a communist dictatorship.