Those who were hoping for an Obama victory lap on the floor of the NYSE only got their toes bitten by bears. Weakening economic data and the market preparing for very weak retail sales numbers took away any shot of major gains today, and you can always blame major profit taking after a multi-day rally phase we saw.
Arcelor Mittal (NYSE: MT) was slapped after the global steel giant gave guidance for EBITDA in Q4 at $2.5 to $3.0 billion. This is being taken as an earnings warning with 2008 expectations being implied at roughly $24.2 billion as being more than 10% under consensus expectations. Shares were down 20% at $25.30 on above average volume shortly before the close.
Greenhill & Co., Inc. (NYSE: GHL) was down after it filed to sell up to 3.5 million shares of common stock in a secondary offering. Shares were down over 11% at $61.61 shortly before the close.
Today ended up being another one of those days that almost could have been special. Despite futures being lower all morning after the Asian markets slid into oblivion with Japan at 26-year lows, U.S. markets recovered on less-bad housing sale data and an S&P report that said the Christmas of 2008 shopping season may only be flat compared to 2008. Both were bad, but very acceptable for the current poor sentiment. Unfortunately, late day selling from redemptions and the "re-emergence of fears" took hold.
Dillard's Inc. (NYSE: DDS) was up over 30% at $4.48 in today's final minutes of trading. Management bought shares and insiders want new management.
Humana (NYSE: HUM) almost didn't make sense as far as the trader reaction to earnings is concerned. The health insurer posted earnings at $1.49 EPS vs. estimates of $1.47 and gave guidance of $1.00 to $1.10 after a $0.10 item vs. $1.20 estimates. For 2009, it sees earnings at $5.90 to $6.10 vs. $5.85 EPS estimates. That gives a forward P/E ratio of under 7, yet shares were down 14% at $31.12 right before the close of trading.
Back in the summer of 2007, Apollo Management LP struck a typical private equity buyout. The deal called for paying $6.5 billion for Huntsman (NYSE: HUN), a chemicals company. In fact, the deal provided lots of synergy since Apollo already controlled a variety of similar businesses (through an entity called Hexion).
Well, of course, this was the peak of the private equity boom – and the credit markets began to unwind fairly quickly. What's more, the fundamentals of Huntsman started to weaken.
As a result, Apollo tried to extricate itself from the deal. And this meant a tough litigation fight.
Of course, this can be pretty a dicey thing. That is, the Delaware court ruled against Apollo and there was an order to get the deal done.
Yet again, this was bad news for Apollo (which has other faltering deals, such as Linens 'N Things). Actually, some of the top private equity firms have been taking some major hits lately, such as the TPG Group with its Washington Mutual (NYSE: WM) disaster.
So, to deal with the court ruling, Apollo has agreed to pony up $540 million to close the Huntsman transaction. Interestingly enough, Apollo has also agreed to give up its lucrative fees (amounting to $100 million or so).
This means that Huntsman should be on firm footing (especially in terms of its solvency). And, something else: the banks on the deal – which include Credit Suisse and Deutsche Bank – will have to raise the necessary funding, which will likely mean losing several billion on the transaction.
Volatility is becoming the market's new name. Much of yesterday's 700+ point drop in the DJIA was largely erased as the DJIA was up more than 400 points for most of the last hour today. The markets weren't driven by a bailout package. It was the BELIEF that a new passage would get passed by the weekend. Consumer confidence did come in stronger than expected, although the Conference Board noted that the data cut off date was September 23, before the last round of malaise hit.
Here were today's unofficial closing bell levels: DJIA 10,862.61 (+497.16; +4.80%) NASDAQ 2,082.33 (+98.60; +4.97%) S&P500 1,163.93 (+57.54; +5.20%) 10YR T-NOTE 3.827% (+0.195) 52-WEEK LOWS TOP UPGRADES, many moved here. TOP DOWNGRADES
Abercrombie & Fitch Co. (NYSE: ANF) rose after an analyst upgrade this morning. The young adult clothing company was raised to an "Outperform" at FBR. With shares on a year low and having sold off nearly 60% and a P/E ratio of well under 10.0, that brought some interest from Wall Street. Shares were up over 11% at $39.70 in today's final minutes.
Huntsman Corp. (NYSE: HUN) was one monster mover today. A judge ruled that the private equity firms that walked away could not claim the material adverse change. Shares were up a whopping 70% at $12.59 in today's final minutes.
Intel Corporation (NASDAQ: INTC) rose on a call out of Piper Jaffray as one of several key technology upgrades. The firm raised its Neutral rating to a Buy rating with a $22.00 price target. Shares were up 6% at $18.36 in the final minutes of the trading day.
Conexant Systems Inc. (NASDAQ: CNXT) rose sharply after the communications chip company raised its guidance to EPS of $0.24 to $0.26 vs. $0.15 estimates. Imagine a chip company raising guidance in today's climate. Shares were up 42% at $4.10 in the final trading minutes today on more than 5-times volume.
Despite all this, some deals are getting done. Perhaps the most notable is the BCE (NYSE: BCE) LBO. BCE has reached an agreement with its private equity sponsors and banks to close its $51 billion LBO. This will represent the biggest buyout in history.
Now, there are some wrinkles. The closing date will be extended to December and there will not be any dividend payments for the rest of the year. The break-up fee was also upped from $1 billion to $1.2 billion.
Yet, the fact is that the price tag will remain unchanged (at $42 per share). No doubt, this is a big feat, especially in light of the credit crunch.
Apparently, there was much discussion about renegotiating the price. Then again, the prospects of massive litigation were daunting, as we have seen in a variety of other deals such as with Clear Channel, SLM (NYSE: SLM) and Huntsman Corp. (NYSE: HUN).
MOST NOTEWORTHY: Symantec, Cardinal Financial and BP Plc were today's noteworthy upgrades:
ThinkPanmure upgraded Symantec (NASDAQ:SYMC) to Buy from Accumulate based on improved execution, stable growth in core business, and ramping competitive position in some high-growth businesses.
Baird upgraded Cardinal Financial (NASDAQ:CFNL) to Outperform from Neutral based on valuation, the company's favorable credit risk profile in Northern Virginia, and its excess capital position.
Societe Generale raised BP Plc (NYSE: BP) to Hold from Sell as it believes the bad news is priced into shares and earnings could be better than expected.
OTHER UPGRADES:
Alcatel-Lucent (NYSE:ALU) was upgraded at Merrill Lynch to Neutral from Underperform.
Jefferies lifted Hunsman (NYSE: HUN) to Hold from Underperform.
Stocks were up today, but less than you might imagine after a large drop of more than $4.00 on oil in late-day prices. So much for Goldman Sachs' raising oil target again today, as well as lifting the oil services sector and upping price targets for some of the sector's stocks .
Here are today's unofficial closing bell index levels:
Evergreen Solar Inc. (NASDAQ: ESLR) was one of the huge winners today with shares up over 20% at $12.33 in today's final minutes. The company announced a huge second round contract that added significantly to its backlog.
Huntsman Corporation (NYSE: HUN) imploded after its private equity buyout was officially notified as "being killed" by the buyers, and shares were down 38% at $12.79 at the end of the day. Mark that as an all-time low.
MOST NOTEWORTHY: UBS AG, Coventry Health, Express Scripts and Medco Health were today's noteworthy downgrades:
Credit Suisse downgraded shares of UBS (NYSE:UBS) to Neutral from Outperform as they believe UBS will have difficulty rebuilding the franchise and do not expect a quick recovery for its private bank unit.
Wachovia downgraded Coventry Health (NYSE:CVH) to Market Perform from Outperform citing concerns regarding visibility around higher than expected inpatient/outpatient costs following reduced 2008 guidance.
UBS downgraded Express Scripts (NASDAQ:ESRX) and Medco Health to Neutral from Buy citing the Pfizer (NYSE:PFE)/Ranbaxy settlement, which reduces the likelihood of a generic Lipitor launch in 2010.
OTHER DOWNGRADES:
Goldman downgraded ENI SpA (NYSE:E) to Neutral from Buy and removed the stock from the Pan-Europe Conviction Buy List.
Huntsman (NYSE:HUN) was downgraded to Underperform from hold at Jefferies.
The potential collapse of the $10.6 billion buyout of Huntsman Corp. (NYSE: HUN) is hardly a shock.
For one thing, rising oil prices are crushing specialty chemical makers. Another thing is that the deal was announced almost a year ago, an eternity for the closing of a merger and acquisition. The Wall Street Journal argues that private equity shop Apollo Management and its Hexcion Specialty Chemicals Inc. are making a "novel" argument to get out of the deal.
"In a complaint filed in the Delaware Court of Chancery, Hexion said Huntsman's poor financial results -- increased net debt and lower-than-expected earnings -- would render the combined company insolvent," the paper said, adding that legal experts expect Huntsman to file a countersuit. Of course, shares of Salt Lake City-based Huntsman were plunging in premarket action and will likely open much, much lower. CNBC's David Faber points out that the Huntsman deal was "held out" to be the strongest of the LBO deals. That's scary. In a press release, Huntsman CEO Peter Huntsman said, "These actions appear to be a blatant attempt to deprive our shareholders of the benefits of the Merger Agreement that was agreed to nearly a year ago." The company added that it intends to "vigorously enforce" its rights under the merger agreement and seek to consummate the merger under the agreed upon terms.
Huntsman (NYSE: HUN), a chemical company, controlled by private equity investor David Matlin and Jon Huntsman, rejected Apollo Managements attempt to back out of merger a $28 cash merger agreement.
HUN is recently trading at $13.10 in pre-open trading, below its close of $20.86.
HUN overall option implied volatility of 82 was above its 26-week average of 48 according to Track Data, suggesting larger price risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
U.S. stock futures were mixed early Thursday morning after stocks closed Monday around three-month lows following a heavy selling session. It could be, though, that after such few days we might see a recovery of sorts in today's trading.
On Wednesday, stocks sank again after FedEx gave its grim outlook, Morgan Stanley reported results and Fifth Third's cut its dividend. The Dow industrials fell below the 12,000 mark during the session for the first time in three months, but ended down slightly above it, down 131 points, or 1.08%, the Nasdaq Composite dropped 28 points, or 1.14%, and the S&P 500 fell 13 points, or 0.97%.
Economic data today includes weekly initial jobless claims to be released at 8:30 a.m. EDT, the June Philadelphia Fed Index and Mays leading economic indicators, both due out at 10:00.
The Wall Street Journal (subscription required) reported that Sprint Nextel Corporation (NYSE: S) is disconnecting about 1,000 customers who have been calling customer service "excessively."
The Financial Times (subscription required) reported that Moody's Corporation (NYSE: MCO), the credit rating agency, will issue a report today criticizing the private equity industry's increasing use of debt to buy companies.
The New York Post reported, citing sources, that theme park operator Cedar Fair Entertainment (NYSE: FUN) has contacted private equity firms about the possibility of acquiring the company.
Huntsman appears to be a hot commodity. Keep in mind that on June 26th, the company agreed to a $6 billion buyout from Basell AF.
Apollo has a lot of history in the chemical business. In fact, the firm plans to merge Huntsman with its Hexion Specialty Chemicals company. All in all, it looks like a pretty good fit.
It would also bring scale. While Hexion has sales under $5 billion, Huntsman generates sales of about $10.6 billion.
Basically, the Huntsman family wants to get liquidity for its charitable mission. And Apollo looks like it could give those efforts a nice boost.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
Those who were hoping for an Obama victory lap on the floor of the NYSE only got their toes bitten by bears. Weakening economic data and the market preparing for very weak retail sales numbers took away any shot of major gains today, and you can always blame major profit taking after a multi-day rally phase we saw.
Back in the summer of 2007, Apollo Management LP struck a typical private equity buyout. The deal called for paying $6.5 billion for 
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Volatility is becoming the market's new name. Much of yesterday's 700+ point drop in the DJIA was largely erased as the DJIA was up more than 400 points for most of the last hour today. The markets weren't driven by a bailout package. It was the BELIEF that a new passage would get passed by the weekend. Consumer confidence did come in 
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I guess some dealmakers don't take off for the 4th of July. That appears to be the case with 
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