Tag Archives: etf

Disney’s Exit From Toys-To-Life Video Games Could Boost Activision

Walt Disney ‘s ( DIS ) decision to end its Infinity interactive toy and video game product line could provide a lift to rivals in the toys-to-life business, namely Activision Blizzard ( ATVI ) and Warner Bros. Interactive Entertainment, a unit of Time Warner ( TWX ). Disney announced Tuesday that it is getting out of the self-published video game business and canceling its Infinity game series. Disney took a $147 million charge to its fiscal-second-quarter results to close the division. Disney’s Infinity exit leaves Activision’s Skylanders, Warner’s Lego Dimensions and Nintendo ‘s ( NTDOY ) Amiibo in the toys-to-life games segment. The toys-to-life genre involves the use of figurines or action figures that are placed on a small platform to interact with on-screen play for game consoles. “Disney’s announcement that they are exiting the toys-to-life category in a production capacity creates some interesting opportunities,” Cowen analyst Doug Creutz said in a report Thursday. “First, we think it paves the way for a significant bounce back in Skylanders sales this year; second, we suspect the Disney IP (intellectual property) will eventually wind up as part of WB’s Lego Dimensions franchise.” Toys-to-life video game sales, excluding sales of stand-alone toys, peaked in 2013 with the launch of Infinity, Creutz said. The category declined 20% in 2014 and was flat in 2015, he said. Nintendo launched Amiibo toys in 2014, but it doesn’t have a stand-alone game like Infinity, Skylanders and Lego Dimensions. Amiibo toys are integrated into existing Nintendo games. “With Activision now the only player planning to launch a toys-to-life game in 2016 (there will be some Dimensions playsets but no new game), if the category remains flat, Skylanders could grow by as much as 300%,” Creutz said. “This would be a source of surprise upside to Activision’s guidance. “In any case, the elimination of a competitor can only be a positive for both Activision and WB’s profitability from the category.” Cowen rates Activision stock outperform, with a price target of 44. Activision stock was up a fraction, above 37, in afternoon trading on the stock market today . The shares broke out of a cup-with-handle base at a 34.76 buy point on April 13. Cowen rates Disney and Time Warner stocks as market perform. Disney stock was down a fraction Thursday afternoon, while Time Warner was down more than 1%. RELATED: EA Stock Soars Like ‘Star Wars’ Millennium Falcon After Q4 Beat .

Court Ruling On Open Internet Imminent For Comcast, Verizon, AT&T

A federal appeals court could hand down a decision any day on the Open Internet Order — also called “net neutrality” — rules opposed by Internet service providers such as AT&T ( T ), Comcast ( CMCSA ) and Verizon Communications ( VZ ). The U.S. Court of Appeals for the District of Columbia Circuit typically releases decisions on Tuesdays and Fridays. Telecommunications, cable and wireless industry trade groups have challenged the Federal Communications Commission’s authority to enforce rules for an open Internet . In separate cases, Verizon and Comcast have successfully challenged earlier FCC net neutrality rules. A ruling from “D.C. Circuit 3” appeals court had been expected as early as April. The three-judge panel heard oral arguments in December. Judge David Tatel, who ruled against the FCC in an earlier case, in December appeared more favorable to the FCC’s position, some analysts say. Phone and cable TV stock will likely trade up or down depending on the ruling from the appeals court’s three judge panel. The case, however, could reach the U.S. Supreme Court. “Most agree this is an issue that will likely end up before the Supreme Court, especially if the FCC wins,” said Jennifer Fritzsche, a Wells Fargo analyst, in a research report published Thursday. Jonathan Atkin, an analyst at RBC Capital, said in a recent report that the appeals court may overturn rules on net neutrality that apply to wireless networks but uphold those for wireline broadband. Another court option is to “remand” the FCC’s rule-making back to the agency for additional work The FCC in February 2015 reclassified broadband services as a public utility, in order to enforce net neutrality rules under Title II of the 1934 Communications Act . The agency also expanded net neutrality rules to wireless networks for the first time. The rules bar ISPs from throttling, blocking or prioritizing Web traffic. The FCC also created a general conduct standard that ISPs cannot harm consumers or service edge providers, such as Alphabet ‘s ( GOOGL ) Google or Netflix ( NFLX ). Some consumer groups over the past six months have objected to new, so-called “zero-rated,” services offered by Verizon, Comcast and T-Mobile US ( TMUS ) that do not count video or data usage toward monthly caps.

What Is In Store For Buyback ETFs Ahead?

Stocks with an increased buyback are usually investors’ favorites. With a low interest environment commanding most developed economies including the U.S., buybacks should surge and the related ETFs should beat out the broader market benchmark. But this did not happen in reality. In the last one year (as of May 3, 2016), buyback ETFs underperformed the S&P 500-based ETF SPY . During this frame, SPY lost 0.08% while buyback-oriented ETFs lost in the range of 6% to 7%. Let’s find out why. Buybacks lower the outstanding share count and thus increase earnings per share. Having said this, if companies are buying back their own shares at steep prices and accessing the debt market to finance that buyback, the move is less likely to be helpful, as indicted by Market Watch . After all, S&P 500 (ex-financials) companies’ cash position remained decent, but probably not great. Cash and short-term investments balance of those companies was $1.44 trillion at the end of Q4 (ended in January 2016), down 0.5% year over year. On a quarter-over-quarter basis, the figure was flat, as per FactSet. Of the nine sectors, seven recorded a year-over-year decline in their cash balances (Utilities sector was flat year over year). Moreover, the market was guilty of overvaluation concerns, forcing companies to repurchase their shares at higher prices than what they are actually worth. Probably this is why a waning momentum was seen in the buyback activity. Dollar-value share repurchases were $568.9 billion on a trailing 12-month basis (TTM), representing a 0.5% decline year over year and flat with Q3 (August-October), as per FactSet. In Q4 (November-January), dollar-value share repurchases were $136.6 billion, up 5.2% year over year but down 13.5% from Q3. The splurge on buyback has been the main driver of the market rally lately. If this activity cools down ahead, the broader market will likely feel the pain. Moreover, the Fed entered the policy tightening era in December 2015. Though the central bank is presently staying dovish on global growth issues, sooner or later the market will see further hikes in rates. And then, financing buybacks through debt would not be an easy task. So, investors should now be cautious while playing buyback ETFs. There are a couple of ETFs that focus on this niche strategy. PowerShares Buyback Achievers Portfolio (NYSEARCA: PKW ) is the most popular fund in the space, managing an asset base of $1.64 billion and trading in good volumes of 210,000 shares a day. PKW tracks the NASDAQ US BuyBack Achievers Index, which comprises companies that have repurchased 5% or more of their common stock in the trailing 12 months. The fund holds a basket of 232 stocks and charges 64 basis points as fees (see Total Market (U.S.) ETFs here ). Another buyback ETF SPDR S&P 500 Buyback ETF (NYSEARCA: SPYB ) tracks the performance of the top 102 stocks with the highest buyback ratio in the S&P 500 over the last 12 months. The fund charges 35 bps in fees. The fund has about $9.4 million in assets. In Conclusion Having said this, we would like to note that both the ETFs outperformed SPY in the last three months (as of May 3, 2016). So, it can be said that the languishing trend has recovered to some extent. Also, both SPYB and PKW have a decent relative strength index, below 50. This indicates these funds are yet to reach the overbought levels. The products can thus be played for a few more days, though with a strong stomach for risks. Original Post