Published: Sept. 11, 2023 at 3:40 a.m. ET
By Christian Moess Laursen
Shares in Bushveld Minerals rose as much as 21% after the company said investment fund Southern Point Resources will invest up to $77.5 million in the company.
At 0723 GMT, shares were up 0.23 pence at 2.25 pence.
The…
By Christian Moess Laursen
Shares in Bushveld Minerals rose as much as 21% after the company said investment fund Southern Point Resources will invest up to $77.5 million in the company.
At 0723 GMT, shares were up 0.23 pence at 2.25 pence.
The South Africa-focused vanadium miner said Monday that the two parties have signed a binding term sheet for a cumulative investment of $69.5 million to $77.5 million.
Under the terms, Bushveld will receive an interim working capital facility of 150 million South African rand ($7.8 million) to expand production at its Vanchem vanadium processing plant.
Additionally, the investment fund will buy a 50% stake in Bushveld’s subsidiary that owns Vanchem as well as its 64% equity interest in the subsidiary that owns the Mokopane project for a total of around $25 million.
Southern Point Resources will buy up to $12.5 million worth of equity in Bushveld, although the number of shares to be subscribed for won’t exceed 29.9%, Bushveld said.
The rest of the investment is in relation to a three-year marketing and sales appointment of SPR, as well as a potential future investment into Vanchem by SPR.
Write to Christian Moess Laursen at christian.moess@wsj.com
After a decade of near-zero interest rates, investors no longer need to look far when hunting for yield. And bonds aren’t the only game in town.
John Rekenthaler, director of research for Morningstar Research Services, points out that investors have piled into intermediate- and long-term bond funds despite their feeble returns.
“Intermediate-term funds are in the red over the trailing one-, two-, and three-year periods, and are barely positive for the year to date,” he said in a note. “Long funds have fared even worse, being down in 2023 as well.”
That raises the question: What is better than bonds, and where else can investors find robust returns?
“We’ve moved from an environment where income and yield was scarce, to now where it’s far more bountiful, and therefore investors don’t have to make a lot of risky choices to capture income,” said Michael Arone, chief investment strategist at
Global Advisors.
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High on the shopping list: preferred stocks, which combine elements of stocks and bonds in one investment.
“Preferreds continue to be an attractive space for investors who are trying to toe the line between bondlike features, which is stable, fixed dividend payments, and equity-like appreciation,” he said. “Preferreds do a good job of balancing those two items.”
Treasury bills are still paying above 5%, but with a preferred stock, investors get an investment-grade security that yields 6.5%—so solid income—without taking on too much credit risk, said Arone. “To us, that’s a very attractive proposition in today’s market.”
State Street’s offering is the exchange-traded fund
SPDR ICE Preferred Securities ETF
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(ticker: PSK), which yields 6.56%.
Short-term T-bills are still attractive—the key is to hold the bills to maturity, rather than trying to bet on the direction of rates over the long term. The
SPDR Bloomberg 1-3 Month T-Bill ETF
(BIL) yields 4.1%.
ETFs that focus on dividend-paying stocks offer another avenue for income. Here investors can look for ETFs that invest in so-called dividend aristocrats, or companies in the
index that have a history of increasing dividends for 25 consecutive years or more.
Among the ETFs that invest in such stocks is
ProShares S&P 500 Dividend Aristocrats ETF
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(NOBL), an $11.65 billion fund that tracks the S&P 500 Dividend Aristocrat Index. The yield is 1.95% and year to date total return is 4.43%.
The yield on dividend stocks may not appear compelling at first blush, but there’s a long-term reason to consider adding them to your portfolio. “This is stock investing, not bonds, and therefore you get the opportunity for price appreciation,” Arone said. “And companies that exhibit these characteristics reward investors over the long term with outsize returns or better returns than bonds.”
Investors who are expecting a slowdown in the economy and a possible recession should have high-quality companies in their stock portfolio and dividend growers tend to be those high-quality companies, he added.
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This year investors have flocked to money-market funds—mutual funds that invest in cash and low-risk securities. One advantage of these cash-like instruments is that it is easy to move money into them from mainstream brokerage accounts.
Keep an eye on fees when shopping around. The popular Fidelity Money Market Fund (SPRXX), with a yield of 5.04%, has an expense ratio of 0.42%, while the Vanguard Federal Money Market Fund (VMFXX), yielding 5.27%, only charges 0.11%.
One caveat: Arone said investors should understand the liquidity, interest-rate risk, credit risk, and potential volatility associated with money-market funds. “Historically when investors have gotten themselves in trouble is when the yields are really juicy and attractive.,” he cautioned.
Write to Lauren Foster at lauren.foster@barrons.com
Published: Sept. 7, 2023 at 1:52 p.m. ET
By Josh Beckerman
Shares of Sigma Additive Solutions rose 32% Thursday after it reported letters of intent to buy travel technology company NextTrip Holdings and sell intellectual property assets related to its quality assurance software for 3-D printing to an unnamed strategic buyer.
The stock recently traded at 29 cents and is down 28% for…
By Josh Beckerman
Shares of Sigma Additive Solutions rose 32% Thursday after it reported letters of intent to buy travel technology company NextTrip Holdings and sell intellectual property assets related to its quality assurance software for 3-D printing to an unnamed strategic buyer.
The stock recently traded at 29 cents and is down 28% for the year to date.
Sigma said it will buy 100% of NextTrip in exchange for shares constituting 19.99% of its outstanding common stock plus additional shares upon the achievement of post-closing milestone earnouts. It said the total transaction will have a starting valuation of about $48 million if all milestones are earned.
The transactions are expected to be completed in the fourth quarter, subject to conditions including negotiation and execution of a definitive NextTrip acquisition agreement. Sigma is expected to change its name to NextTrip.
Write to Josh Beckerman at josh.beckerman@wsj.com
Published: Aug. 18, 2023 at 5:26 p.m. ET
The numbers: Commercial and industrial loans — a key economic driver — fell $6.2 billion to $2.75 trillion in the week ending Aug. 9, the Federal Reserve said Friday.
This type of lending has been falling for four straight months, ever since the collapse of Silicon Valley Bank in mid-March.
Key details: Lending by large banks fell $6.3 billion…
The numbers: Commercial and industrial loans — a key economic driver — fell $6.2 billion to $2.75 trillion in the week ending Aug. 9, the Federal Reserve said Friday.
This type of lending has been falling for four straight months, ever since the collapse of Silicon Valley Bank in mid-March.
Key details: Lending by large banks fell $6.3 billion to $1.54 trillion in the latest week. It was $1.55 trillion in mid-March.
Lending by small banks rose $1.6 billion to $716.3 billion. It was $743 billion in mid-March.
Big picture: Federal Reserve officials are worried that tighter credit conditions on households and businesses since the collapse of Silicon Valley Bank could be a source of headwinds for the economy. Officials were still uncertain about the extent of these effects. The Fed is worried that banks will pull back on lending and raise standards so high that it will cause a credit crunch in the economy.
Market reaction: The S&P 500
SPX
suffered its third straight weekly loss, with bond yields moving higher as the Fed remains concerned about high inflation. The 10-year yield
BX:TMUBMUSD10Y
climbed for the fifth straight week to finish at 4.251%.
has been playing second fiddle to its larger ride-hailing rival, but new CEO David Risher bought a large block of stock backed by his optimism for the company.
Lyft stock (ticker: LYFT) cratered 74% in 2022, far worse than the 41% drop in
stock (UBER). Both have recovered in 2023, but that has been lopsided, as well, with Lyft stock rising 1% compared with Uber stock’s 80% surge.
Risher was named Lyft CEO effective on April 17, and one of his first acts was terminating nearly 1,100 employees, about 26% of the workforce, that month. Disappointing guidance the next month sent shares sliding. On Aug. 8, after the market closed, Lyft reported strong second-quarter numbers that were overshadowed by a mixed outlook. Shares slipped.
With Lyft stock still smarting, Risher paid $1.1 million on Aug. 11 for 100,000 shares, an average price of $11.46 each. According to a form he filed with the Securities and Exchange Commission, Risher now owns 12.4 million shares, including grants of restricted stock units.
In response to a request for comment, Risher wrote in an email, “This is all about investing in Lyft as we build a very successful, very customer-obsessed business. Seeing this team in action shows me it’s the best investment I could make.”
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It’s his first open-market purchase of Lyft stock since taking the helm, although he has been a director since July 2021. A former
(AMZN) executive, Risher also co-founded and headed Worldreader, a nonprofit firm that promotes reading for children.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
Although the financial calendar will cool down this week, a wave of retail earnings reports and economic data will keep traders busy.
Other earnings reports include
and
on Tuesday, followed by
Systems and
on Wednesday.
and
report on Thursday.
Deere
,
Estée Lauder, and
wrap up the week with reports set for Friday.
The Census Bureau will put out retail sales data for July on Tuesday. The consensus estimate is for spending to rise 0.4% month over month following a 0.2% increase in June. Resilient consumers have powered the economy this year in the face of a contracting manufacturing sector. The National Association of Home Builders will also release its Housing Market Index for August.
On Wednesday, the Federal Open Market Committee will release the minutes from its late-July monetary-policy meeting. The FOMC raised the headline interest rate by 25 basis points. The FOMC is expected to keep interest rates steady at the September meeting, barring any inflationary surprises. Also on Wednesday, the Census Bureau will report new residential construction statistics for July.
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The Conference Board will release its Leading Economic Index for July on Thursday. The consensus call is for a 0.3% month-over-month decline. The LEI has fallen for 15 straight months, and the Conference Board still expects the economy to slip into a recession later this year.
Tuesday 8/15
Agilent Technologies, Cardinal Health, Home Depot, and Jack Henry & Associates release earnings.
The Census Bureau releases retail sales data for July. Consensus estimate is for spending to rise 0.4% month over month following a 0.2% increase in June. Resilient consumers have powered the economy this year in the face of a contracting manufacturing sector.
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The National Association of Home Builders releases its Housing Market Index for August. Expectations are for a 54.5 reading, slightly less than in July. Homebuilders’ sentiment has risen sharply this year despite 30-year mortgage rates near 7%, as a slowdown in existing-home sales has created a surge in demand for new homes.
Wednesday 8/16
Cisco Systems, Synposys, Target, and TJX Cos. announce quarterly results.
The Federal Open Market Committee releases the minutes from its late-July monetary-policy meeting. The FOMC raised the federal-funds rate at that meeting by a quarter of a percentage to 5.25%-5.50%, which the majority of traders expect to be the last interest-rate hike for this cycle.
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The Census Bureau reports new residential construction statistics for July. Economists forecast a seasonally adjusted annual rate of 1.44 million privately-owned housing starts, roughly even with the June data.
Thursday 8/17
Applied Materials, Keysight Technologies, Ross Stores, Tapestry, and Walmart hold conference calls to discuss earnings.
The Conference Board releases its Leading Economic Index for July. The consensus call is for a 0.3% month-over-month decline. The LEI has fallen for 15 straight months, and the Conference Board still expects the economy to slip into a recession later this year.
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Friday 8/18
Deere, Estée Lauder, and Palo Alto Networks report quarterly results.
—Dan Lam contributed to this article
Write to Connor Smith at connor.smith@barrons.com
The capitulation of bearish investors seems to be a popular trend on Wall Street.
After months of unexpectedly strong stock market performance, more big-name investors have shuttered bearish bets or changed their dour tune—even as the stock market has begun to edge lower.
June and July short-covering was the largest over a two-month period in the past seven years among Goldman Sachs’ hedge fund clients, according to The Wall Street Journal.
Morgan Stanley strategist Mike Wilson, who has been sharply criticized for his negative views on the market, recently turned less bearish.
Carl Icahn, the activist investor, has decided that he, too, has wagered enough against the stock market advance. In a letter sent earlier this month to
(ticker: IEP) investors, he pledged to focus less on hedging stocks to express bearish views and more on what he is known for.
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“Activism is the best investment paradigm,” he wrote.
The market mob might delight in the difficulties of well-known investors. But schadenfreude is the wrong reaction—especially for those who, mostly through luck, were properly positioned for the 2023 rally.
Capitulation at the market’s highest levels is coinciding with a subtle shift in the market narrative: Many investors are increasingly fretting that corporate earnings are slowing, which should bode ill for stocks.
Oppenheimer strategist John Stoltzfus recently told clients that
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companies’ earnings seem weaker than expected for the second quarter thus far. He noted that earnings are down 7.8%, compared with an expected 6.4% decline.
Anyone who misses the significance of that surely understands this: Fitch recently downgraded the U.S. debt rating. Moody’s downgraded 10 regional banks and put others on notice that the same may happen to them. And 10-year Treasury yields have recently been above 4%, a level that has historically been bad for technology stocks, which have led the market higher this year. That’s because the discounted-cash-flow models used to value stocks are adversely impacted by higher interest rates.
Add to that the percolating financing troubles in the real estate sector and uncertainty about the odds of a recession, and you have the recipe for financial indigestion.
If you agree that the market narrative is changing—and you think it is premature that bearskin rugs are suddenly in vogue—consider protecting some of the extraordinary gains of 2023.
Hedging expenses remain reasonable. The
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or VIX, remains below its long-term average of 19. Michael Schwartz, Oppenheimer’s chief market strategist, has told clients to buy three S&P 500 November $4450 put options to hedge a $1 million portfolio. If the market falls 10%, he says the hedge would offset about 95% of any losses. (Puts give holders the right to sell a specified asset at a set price within a set period.)
Most bullish investors wait to hedge, or lock in profits, until they panic. The end of summer will bring many events that could prompt investors to sell stocks. The November expiration covers many key events that include the September and October trading months, which have historically delivered major market declines, several meetings of the Federal Reserve’s rate-setting committee, and loads of key economic data that will be parsed for clues on inflation.
If stocks rally into the fall, money spent hedging will be lost. Should that happen, of course, you can capitulate.
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Steven M. Sears is the president and chief operating officer of Options Solutions, a specialized asset-management firm. Neither he nor the firm has a position in the options or underlying securities mentioned in this column.
Email: editors@barrons.com
A raft of credit rating actions against more than two dozen U.S. banks by Moody’s Investors Service late Monday didn’t shock one buyer of distressed commercial real estate.
This is “more evidence of what is already known,” said Matt Windisch, executive vice president at Kennedy-Wilson, of Moody’s decision to cut it debt ratings on several small and medium size banks.
Moody’s, citing “profitability pressures” at banks and asset quality that “looks set to decline,” also placed ratings on six major U.S. lenders on review for downgrade.
“At this point, it feels like it’s specifically rates driven,” Windisch said Tuesday of pain felt by landlords and at banks from stress at commercial buildings. “But over time, if a recession hits, we’ll have to see.”
Beverly Hills-based Kennedy-Wilson Holdings
KW
made a splash in June with a private deal to buy a $5.7 billion construction loan portfolio from PacWest Bancorp
PACW
,
ahead of its sale to Banc of California
BANC
in July.
The firm paid about 95 cents on the dollar for the entire pool of construction loans and future funding commitments, mostly on multifamily properties and student housing. The average life of the loans in two years from purchase to maturity.
Kennedy-Wilson sees an opportunity to double the size of its roughly $7 billion commercial loan portfolio in the next few years, as rate shocks continue to reverberate through the commercial real-estate industry.
“We are obviously looking for other opportunities,” Windisch said, adding that the discount likely would have been greater if the loan book was backed by office or retail properties.
Unlike banks and lenders tethered to the U.S. banking industry, Kennedy-Wilson relies mostly on sovereign wealth and insurance company funding.
Still, Windisch said Kennedy-Wilson mostly plans to stick to multifamily and student housing in future loan acquisitions. That business also adds to the firm’s related lending platform, now with a national footprint since its purchase of the PacWest assets.
“These properties, themselves, don’t feel distressed,” Windisch said of a recent wave of landlords defaulting on or handing back keys to lenders on underwater multifamily properties. “It’s the capital structure that’s out of whack.”
The collapse of Silicon Valley Bank and Signature Bank in March sparked fears of broader stress at small and medium sized U.S. banks. The Federal Reserve has raised interest rates from nearly zero in the past 16 months, creating rate shocks at lenders with low coupon loans and bonds on their books, but also a flight of deposits from banks to other higher-yielding opportunities
PacWest in recent months had been subject to speculation that the bank might be vulnerable to collapse, before its sale to Banc of California.
Moody’s said on Monday that its slate of rating actions against banks comes as asset risks have been “rising, in particular for small and midsize banks with large CRE exposures.”
Small and medium size banks significantly expanded their commercial real estate lending in recent years, at ultralow rates when property values were sky-high, but many were caught off guard by the Fed’s fastest pace of rate hikes in decades.
Shares of the SPDR S&P Regional Banking ETF
KRE
were off 1.7% on Tuesday, following the rating actions by Moody’s. The S&P 500 index was 0.7% lower, while the Nasdaq Composite Index was off 0.7% and the Nasdaq Composite Index
COMP
was down 1%, according to FactSet.
Read next: Don’t wait for Fed rate cuts, says debt buyer to banks holding distressed commercial real estate
Published: Aug. 4, 2023 at 5:22 p.m. ET
Shares of Federal Realty Investment Trust FRT inched 0.77% higher to $103.42 Friday, on what proved to be an all-around rough trading session for the stock market, with the S&P 500 Index SPX falling 0.53% to 4,478.03 and Dow Jones Industrial Average DJIA falling 0.43% to 35,065.62.
This was the stock’s second consecutive day of gains.
Federal…
Shares of Federal Realty Investment Trust
FRT
inched 0.77% higher to $103.42 Friday, on what proved to be an all-around rough trading session for the stock market, with the S&P 500 Index
SPX
falling 0.53% to 4,478.03 and Dow Jones Industrial Average
DJIA
falling 0.43% to 35,065.62.
This was the stock’s second consecutive day of gains.
Federal Realty Investment Trust closed $11.66 below its 52-week high ($115.08), which the company reached on February 2nd.
The stock outperformed some of its competitors Friday, as Realty Income Corp.
O
rose 0.65% to $59.22, Kimco Realty Corp.
KIM
fell 0.40% to $20.00, and Regency Centers Corp.
REG
rose 0.41% to $66.25.
Trading volume (635,912) eclipsed its 50-day average volume of 624,600.
Editor’s Note: This story was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones and FactSet. See our market data terms of use.
Sales of new homes have been a bright spot in an overall sluggish market. Now, two housing technology companies plan to take advantage of the new construction trend to boost their businesses.
(ticker: Z) and
(RDFN) on Tuesday announced a partnership through which
will provide
with listings of newly built homes. The agreement “will dramatically expand the reach of home builder listings on Zillow and allow Redfin customers to explore a broader range of new-construction homes for sale, creating a seamless home-buying experience,” Zillow and Redfin said in a press release.
Redfin and Zillow have different business models, but both are known in part for their home listing search tools. Through the partnership, Zillow will provide Redfin with new home listings from builders. The additional homes will be those not already listed for sale on a multiple listing service, the databases that agents and brokers use to list homes.
There are “tens of thousands” of active new construction communities listed on Zillow that will soon come to Redfin, a Zillow spokesperson told Barron’s. Zillow’s new construction listings will begin to appear on Redfin in the fourth quarter, according to the release.
“Zillow provides a standout platform for home builders to highlight their communities and connect with potential buyers,” Owen Gehrett, Zillow’s vice president of new construction, said in a statement. “The partnership with Redfin extends this unique and valuable resource to a wider audience.”
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The initiative comes as new home sales continue to command the spotlight in an otherwise slow housing market. About a third of all single-family homes for sale in the first half of the year were new construction, the release said, citing a Redfin analysis.
“With buyer demand outpacing the supply of existing homes for sale, Redfin’s home-buying customers are increasingly turning to new construction,” Adam Wiener, Redfin’s president of real estate operations, said in the release.
In a difficult year for home buyers, shares of builders and housing technology companies have outperformed. The
exchange-traded fund (XHB), which tracks home builders and related industries, has returned about 41% so far this year, exceeding the broader S&P’s roughly 21% gain. Redfin and Zillow shares have also soared, rising 70% and 254% year-to-date, respectively, and well outpacing the Nasdaq Composite.
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The announcement comes ahead of earnings for both companies. Zillow will publish its second-quarter results after the bell on Wednesday, while Redfin will report after the market closes on Thursday.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com