Stocks Return to Losing Ways (MMM, COGT, INTC, IFNNY, SNY, GENZ, HPQ, DELL …
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Despite another flurry of M&A activity, stocks returned to their recent losing ways. For companies with boatloads of cash, this is a good time to be a buyer given generally depressed stock prices. The same is true for individual investors as well. While economic uncertainty remains, we still believe stock valuations are attractive, with many bargains to be found for those with a long view.
The Chinese Advertising Stocks Index was the top performing tickerspy Index on the day, led by SearchMedia Holdings (IDI) with a 7% gain.
Stocks tumbled on the day, with the Dow falling -141 points to 10,010. The S&P slipped -16 points to 1,049, while the Nasdaq dropped -34 points to 2,120. Oil ended -47 cents lower to $74.70 a barrel, while gold edged up $1.50 to $1,237.10 an ounce.
On the economic front, the Commerce Department said that American personal income rose by $30 billion, or 0.2%, in July, following a revised -0.1% decline in June. Meanwhile, consumer spending jumped by $44.1 billion, or 0.4%, for the period after slipping by less than -10 basis points in the final month of the first half. Both July figures came in ahead of economist expectations for a 0.3% rise in spending and a 0.2% rise in income. The faster spending growth relative to income led to a lower savings rate, which reached 5.9% in July, compared to a revised 6.2% in June.
In merger news, conglomerate 3M (MMM) sent shares of Cogent (COGT) soaring by 24.5% after announcing plans to buy the firm for $943 million, or $10.50 per share — an 18% premium to Friday’s closing value. The target specializes in fingerprint scanners and other biometric technologies. The deal is worth about $430 million net of acquired cash, and is expected to close in Q4. At the end of Q2, two Pros held Cogent in their top-15 U.S.-listed equity positions, and 65 tickerspy members hold the stock in their portfolios.
Elsewhere, Intel (INTC) is looking to penetrate further into the cell phone chip market with the acquisition of the wireless unit of Germany’s Infineon Technologies (IFNNY), which trades over-the-counter in the U.S. The deal is worth $1.4 billion in cash and is expected to close in the first quarter of 2011. Shares of Intel fell -2.2%.
After a great deal of speculation, French pharmaceutical giant Sanofi-Aventis (SNY) confirmed its bid for biotech player Genzyme (GENZ) at $69 per share in cash over the weekend. Genzyme quickly spurned the offer, noting that the board “is not prepared to engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues the company.” Shares of Genzyme rose 3.4% on the news.
Computer giant Hewlett-Packard (HPQ) gained 1.5% after it approved an additional $10 billion in stock buybacks amid a bidding war with Dell (DELL) over data storage firm 3Par (PAR). The company was already approved to repurchase about $4.9 billion of its own shares under a plan approved last fall, and the additional $10 billion was approved in an effort to manage the supply of outstanding shares and avoid dilution of the stock. Approximatley 309 Pros counted HP among their top-15 U.S.-listed equity holdings at the end of the second quarter, and currently 1092 tickerspy members hold the stock in their portfolios.
Tags: COGT, DELL, GENZ, HPQ, IDI, IFNNY, INTC, MMM, PAR, SNY