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Zacks.com submits:
State Street Corporation (STT) reported its second-quarter 2010 results on July 20. Operating earnings for the reported quarter were in line with the Zacks Consensus Estimate. However, investors were clearly not buoyant about these results. As a result, the share price plummeted following the earnings release. The overall response has been negative with respect to estimate revisions over the last 7 days as analysts covering the stock had sufficient time to absorb and consider the near-term fundamental downsides.Complete Story »

Hickey and Walters (Bespoke) submit:
Below is a list of the best performing Russell 1,000 stocks since the July 2nd correction low. As shown, Hewitt Associates (HEW) is up the most with a 40% gain, followed by MBIA (MBI) (26.56%), Anadarko (APC) (24.01%), priceline.com (PCLN) (22.37%), and Marshall & Ilsley (MI) (22.37%). Hewitt and a few other stocks on the list are trading in overbought territory, but most are not. This shows just how oversold stocks were before we got this bounce.click to enlargeComplete Story »

Rortybomb submits: (Update at end.) I explained before how Bear Sterns had a $40 million dollar upfront bet sponsoring a hedge fund that ended up putting them on the hook for billions of dollars in losses. That’s how it goes sometimes with hedge funds, especially with complicated strategies and tail risk. Implosions can go big, quickly. That’s the risk that the investors take: but is it risk that needs to be attached to someone with a commercial banking charter?Complete Story »

Promod Radhakrishnan submits:Quite unlike what many (myself included) expected, markets have continued to rally over the past couple of weeks. Though not unidirectional through the period, the DJIA has inched almost close to the 11K mark and emerging market indices have continued to rise...the MSCI emerging markets index in fact shot up 1.3%+ Wednesday. I still hold on to the view that there has been too much too fast in terms of market rebound and a short-term correction is imminent. Having said that, there are some interesting picks worth looking at among financial stocks - with a bunch of earnings announcements expected the weeks of April 12 and 19. Let's take a quick look:Complete Story »

Paul Price submits:State Street Corporation (STT) is a financial holding company that provides a range of products and services for institutional investors worldwide. It operates in two lines of business: Investment Management and Investment Servicing. Services include custody, daily pricing, record keeping and administration, shareholder services, foreign exchange, brokerage, securities finance, deposit and short-term investment facilities, loan and lease financing, investment manager and hedge fund manager operations outsourcing, performance, risk and compliance analytics, investment research and investment management, including passive and active United States and non-United States equity and fixed-income strategies. As of year-end 2009, it held $18.79 trillion in assets under custody and administration and $1.91 trillion in assets under management. STT has operations in 25 nations around the world. After posting all-time record earnings of $4.30/share in 2008, State Street saw EPS drop to $3.46 (excluding non-recurring items) in 2009. It has fully repaid the TARP funding through share issuance and internally generated funds. After all was said and done, book value finished 2009 at its highest level ever and earnings per share (ex. non-recurring items) were the second best on record.Here are the per share numbers from continuing operations (ex one-time charges) as reported by Value Line:YearEPSBook ValueDividendAvg. P/EAvg. P/BV 52-Wk Range20001.8210.090.3528.9x4.94x31.20 – 68.4020012.0011.880.4125.2x4.22x36.30 – 63.9020022.2014.730.4820.9x3.07x32.10 – 58.4020032.3317.180.5618.2x2.44x30.40 – 53.6020042.4718.460.6419.5x2.62x39.90 – 56.9020052.8219.080.7217.4x2.63x40.60 – 59.8020063.2621.810.8019.0x2.82x54.40 – 68.6020073.4529.250.8820.2x2.42x59.10 – 82.5020084.3025.240.9515.0x2.27x28.10 – 86.6020093.4629.280.2711.7x1.20x14.40 – 55.87 The dividend cut from $0.24 to $0.01 (quarterly) came as a result of the fiscal crisis of 2008- 2009. I would expect that this rate will be rapidly increased in the reasonable future.At today’s quote of $44.60 /share State Street is now offered at < 12.9x last year’s somewhat depressed earnings and < 10.4x the consensus view of $4.30 for 2010. Value Line rates STT’s financial strength as ‘B++’ and puts them in the 85th percentile for "earnings predictability" (with 100th being best). Standard and Poors assigns STT an ‘ A-‘ quality ranking while maintaining their highest, five-star rating on State Street. STT’s normalized price to book value ratio had run from 2.27x to > 4x in the nine years from 2000 through 2008. Today’s 1.52x book value level is substantially lower than typical for this high-quality stock. Year-end 2010 book value is expected to exceed $33/share and a rebound to even 2x that figure would lead to a share price of $66. Similarly, a reversion to a more normal P/E of even 15x would bring me to a 12-month target price of $64.50 based on the $4.30 /share expected EPS for 2010. Standard and Poors now carries a (slightly more conservative) 1-year target price of $62. Even that would bring a 39% gain from this morning’s price. State Street is a good-quality, nicely situated world leader in custodial banking and investment management. The crisis has passed and the balance sheet has been firmed up. Dividends are likely to rise significantly over the next few years. (Value Line predicts an $0.80 annual rate by 2012 – 2014). My one-year goal of $62 - $66 leaves room for a 39% - 48% total return. That may actually turn out to be too conservative as STT shares touched highs of $$68.60, $82.50 and $86.60 in calendar years 2006-2007-2008 respectively.If you’re well versed in option techniques you might consider this very low-risk 23-month play: Cash OutlayCash InflowBuy 1000 STT @ $44.60 /share$44,600 Sell 10 Jan. 2012 $55 calls @ $5.10 /share $5,100Sell 10 Jan. 2012 $55 puts @ $15.20 /share $15,200Net Cash Out-of-Pocket$24,300 If STT shares rise to $55 or better [+ 23.3%] by the Jan. 2012 expiration date:· The $55 calls will be exercised.· You will sell your shares for $55,000.· The $55 puts will expire worthless.· You will have no further option obligations.· You will end up with no shares and $55,000 in cash. This best-case scenario would bring a profit of $55,000 - $24,300 = $30,700 $30,700 / $24,300 = 126.3% cash-on-cash (excluding dividends) for the approximately 23-month time horizon of this trade. Any move up of > 23.3% translates into a greater than 126% gain for those put on our buy/write combination play. What if STT doesn’t go up to $55 by expiration date?· The $55 calls will expire worthless.· The $55 puts will be exercised.· You will be forced to buy another 1000 STT shares.· You will need to lay out an additional $55,000 in cash.· You will have no further option obligations.· You will end up with 2000 STT shares.What’s the break-even point on the whole trade?On the original 1000 shares it’s their $44.60 purchase price less the $5.10/share call premium = $39.50 /share.On the ‘put’ shares it’s the $55 strike price less the $15.20/share put premium = $39.80/share.Your overall break-even would be $39.65 /share (excluding dividends) or $4.95/share below our starting price. STT could fall by up to 11% without causing a loss on this trade.Summary: State Street looks like a good bet to see 35% - 48% total returns over the next year or so. If you’re option savvy and willing to put on a buy/write combination out to January 2012 you could see better than a 125% gain on your actual cash outlay if STT moves up by at least 23.3% over the next 23 months.Disclosure: Author is long STT shares and short STT options.Complete Story »

Paul Price submits:State Street (STT) is one of the largest trust banks worldwide, combining banking, asset servicing and asset-management operations. It also offers foreign exchange, cash management, credit, and electronic trading, helping customers negotiate complex global financial markets. State Street Global Advisors, its asset management arm, is the world’s largest institutional money manager and a leading provider of ETFs.Complete Story »

Market Folly submits:This is the third quarter 2009 edition of our hedge fund portfolio tracking series. If you're unfamiliar with tracking hedge fund movements or SEC filings, check out our series preface on hedge fund 13F filings.For the first time in our series we'll be tracking Matt Iorio's White Elm Capital. Previously, Iorio had spent six years at Stephen Mandel's Lone Pine Capital. Prior to that, Iorio graduated from the University of Virginia (McIntire School of Commerce) in 1993 and then went on to receive his MBA from Dartmouth's Tuck School of Business. After leaving Mandel's fund, he started his own hedge fund and we are tracking him due to his contributions to Lone Pine's success in the past. White Elm uses a long/short strategy with the goal of outperforming the market indices with less risk. The hedge fund employs a fundamental, bottom-up investment process focused on company specific research, very similar to the process employed at Lone Pine (Stephen Mandel) and before that at Tiger Management (Julian Robertson).Complete Story »

AlphaClone submits: by Maz JadallahNothing puts a cap on a roaring year for stocks like the performance in our top ten clone portfolios. These clones returned two and three times your money in 2009. How? Baker Bros focuses on medical and pharmaceutical companies and hit home runs with Vanda Pharmaceutical (VNDA) and Ariad Pharmaceutical (ARIA). Pershing Square did well with Borders Group (BGP) and General Growth Properites (GGWPQ.PK). OZ Mangement "banked" on the financial sector and succeeded with investments in Bank of America (BAC) and State Street (STT).Complete Story »

Markos Kaminis (Wall St. Greek) submits: Is Consumer Good Cheer Simply Symptomatic of the Season or is the Sun Shining Again?The Conference Board reported on Consumer Confidence Tuesday morning. December's reading marked improvement over November, as the index measured 52.9, up from a revised 50.6 mark in November. November also offered a gain over October's measure of 48.7. So we wonder what's got consumers so cheery?Complete Story »

• Moody's downgrades Greece. Moody's threw its hat in with S&P and Fitch, which earlier this month cut the government bond ratings of Greece, as the country struggles to emerge from its economic crisis. But, the one-notch cut was less severe than the other two agencies - sparking a rally in Greece's bonds. The less-aggressive move eased concerns that the country's debt would be ineligible as collateral at the ECB. Moody's, which also cut the ratings of several Greek banks, said the government's long-term credit strength was "eroding materially," and cut the bond ratings to A2 from A1. It also issued a Negative outlook and said future ratings decisions will depend on whether the government makes good on deficit-reduction plans.
• State Street expands in Italy. State Street (STT) is paying €1.75B ($2.5B) for the depositary unit of Italy's Intesa Sanpaola, the Italian bank said. State Street is expanding its business overseas by adding hedge-fund and private-equity clients to its roster of money managers. Earlier this month, State Street snapped up Mourant International in the U.K.'s Channel Islands to strengthen its global alternative asset servicing.
• Ticketmaster, Live Nation get EC green light. Ticketmaster (TKTM) and Live Nation (LYV) will be able to merge after all, following a volte-face decision by U.K.'s antitrust regulator. In February, when Live Nation first said it wanted to buy Ticketmaster for $400M in stock, the regulator worried the combined group would have unrivalled power over music fans and prices. But in its final ruling today, the British Competition Commission said that "the merger will not result in a substantial lessening of competition in the market for live music ticket retailing or in any other market." The combination brings together the world's biggest concert promoter with the world's dominant ticketing and artist-management company.
• AIG exec wins big payday. An unnamed AIG (AIG) executive will get $3.26M in a deferred stock grant thanks to a nod from paymaster Kenneth Feinberg. The unnamed top-25 executive will also get an annual long-term incentive award of as much as $1M. "AIG has indicated that the employee is critical to AIG's long-term performance and stability, and that his continued employment by AIG will significantly aid AIG's ability to repay the taxpayer," Feinberg said, explaining his decision.
• More homeowners fall behind. The number of borrowers that fell behind on their mortgages - including the most creditworthy - rose in Q3 as the percentage of current and performing mortgages dropped for the sixth consecutive quarter, a regulatory report said. Those that fell behind on their prime mortgage payments more-than doubled to 3.6% from a year ago. Such troubles could mount as banks and thrifts remain unable to match modifications with the number of struggling borrowers who need help.
• Banks pay for bailout favors. An academic report asserts that U.S. banks that lavished more money on lobbying were more likely to get government bailout money, and that those who had executives serving on Fed boards were also more likely to receive TARP funds. "Political connections play an important role in a firm's access to capital," one of the two authors said. As of late September, nearly 700 financial institutions had received bailouts of $205B under the capital purchase program, the study found.
• Liddell is GM's new CFO. General Motors handed the steering wheel to its new CFO, Chris Liddell, an outsider who is leaving the same job at Microsoft (MSFT). The appointment will help GM bolster a financial operation that's been criticized by the Treasury's auto task force. Liddell oversaw $3B of expense cuts at Microsoft during the past fiscal year.
• Healthcare stocks rally on bill. Healthcare stocks staged a thank-you rally Monday as the Senate looked poised to approve a controversial healthcare bill that is less onerous than many had feared. Aetna (AET) gained 4.7% while Cigna (CI) rose 3.9%, helping to make healthcare one of the day's best-performing sectors. UnitedHealth (UNH) and WellPoint Health Networks (WLP) also rallied. Among other factors, the bill omits a provision for a government-run insurance plan, which managed care companies had fought against because they feared it would put them at a competitive disadvantage to private companies.
• Hackers attack Citi. Citigroup (C) lost tens of millions of dollars to hackers linked to a Russian cyber gang, unidentified government officials say. The FBI has been investigating a computer-security breach at Citi, which is currently 27% owned by the government. The FBI estimates that losses from online crimes in the U.S. topped $260M last year, with one expert saying attacks on corporations are at "an epidemic level." Citi denied the allegations.
• News Corp. aims for Sky. News Corp. (NWS) plans to raise its stake in Germany's Sky Deutschland by indirectly subscribing to a 49M placement of new shares; the sale is expected to generate €110-120M. News Corp. will increase its stake in the company, which now expects to report a net loss in 2011, up to 45.4%. Share proceeds will be used for sales and marketing initiatives, and to increase the rollout of Sky Deutschland's high-definition service, programming and new channels in mid-2010.
• All Nippon gives Boeing a lift. Japan's All Nippon Airways will pay Boeing (BA) some $2B for five 777-200ERs and five 767-300ERs. In a statement, a Boeing official said: "ANA's decision reinforces the value these two great airplanes have delivered for its fleet needs. The 777 and 767 have been proud contributors to ANA's success and will continue to play a vital role in its fleet strategy."
• Walgreen banks on late shoppers. Undaunted by heavy snowfall, Walgreen (WAG) confirmed what the National Retail Federation said recently - that 11th-hour shoppers will still make for a strong end to the holiday shopping season. "I think we're well positioned to take advantage of those last-minute shoppers," Walgreen CEO Greg Wasson said on the company's FQ1 earnings call yesterday. Heavy weekend snow wasn't enough to push NRF to revise its forecast for a 1% drop in holiday sales, and some retailers may extend promotions into Monday and Tuesday to attract shoppers, an NRF official said.

Earnings: Tue. Before Open

• Commercial Metals Company (CMC): FQ1 EPS of -$0.28 misses by $0.24. Revenue of $1.45B (-39%) in-line. "Coupled with an improving economy, the second half of our fiscal year appears more promising, though we believe at modest levels." (PR)

Earnings: Mon. After Close

• Jabil Circuit (JBL): FQ1 EPS of $0.32 beats by $0.03. Revenue of $3.1B (-8%) in-line. Sees FQ2 EPS of $0.20-0.32 vs. $0.19, on revenue of $2.9B-3.1B vs. $2.88B. Shares +6.2% AH. (PR)

Today's MarketsShanghai took a beating in an otherwise strong Tuesday in Asia. Europe markets are higher at midday, and futures are up in another light overnight session.Complete Story »