Last quarter AA beat analyst’s estimates reporting earnings of 0.03 instead of the 0.00, and AA also beat the expected Q3 revenue by reporting 5.8 billion instead of the estimated 5.54 billion.  According to AA, management has made efforts to lower their $8.3 billion debt by concentrating more of their efforts towards developing products that can be used in the aerospace industry.  These efforts are in response to declining aluminum prices which are down from that of the previous year.  By cutting their debt, AA is attempting to offset the negative impact of lower aluminum prices.  The fourth quarter results for AA will likely reflect the previous movement of aluminum prices.  AA uses the London Metal Exchange’s (LME) aluminum prices to gauge their own prices.  According to Bloomberg the current LME three month price for aluminum is $2,065 USD per metric ton.  The current price for aluminum is down from the previous December high, which was around $2150.  Aluminum prices have bounced back from the October levels, which fell below $1900 USD per metric ton. The chart below displays the LME price graph for buyers of aluminum from the start of Q4 to today.  AA is standing by their claim that the demand for aluminum will double by 2020.   AA’s shares are up approximately 15% from November.  AA closed at $9.10 on January 7, 2013, and is up 0.03 in the after-hours session of trading. 

Author: Tyler Sciortino

Current Student at Roosevelt University, Majoring in Finance.

Contact for questions or inquiries at tsciortino@mail.roosevelt.edu

News hit yesterday when the CEO of Verizon said in an interview, “we have always said we would love to own all of that asset.” Currently, Verizon Wireless is 55% owned by Verizon and 45% by Vodafone. The partnership was formed back in 2000 when cell phones were just scratching surface, this allowed both companies to pool assets and share costs, cutting the risk in half. As time has progressed its amazing how large cell phone providers have become, and this is now making the partnership awkward as the business is taking the lead role in growth for the telecommunication companies.

The CEO of Verizon also said “I think (a deal) is feasible.” “Our wire line business is getting stronger and as that gets stronger, it makes it easier.” He believes that Verizon could buy the strake from Vodafone outright, but he noted there are “lots of different ways he could do it.”

Recently, Vodafone has been taking a beating from Europe as it contributes to around three quarters of its revenue. As Verizon Wireless is focused in the U.S. and has been thriving for years now. Its quite obvious what company is showing more strength as the partnership goes on…

Investors are very aware of this on-going conversation, and it seems as though they have come to a conclusion on what’s going to happen….customers are buying up Jan 26, Feb 26, Feb 27 and Feb 28 calls on Vodafone (VOD). Hint hint….Vodafone is getting taken over.

The fundamentals look positioned correctly for a takeover of Vodafone and the huge buying coming into it makes the case that much stronger. As nothing is a ‘lock’ in this business….I think its fair to say that Verizon is going to make a strong push at Vodafone in the near future, and the ‘smart’ money is leaning that way as well.

Author: Peter Nitso

pnitso@yahoo.com

Twitter: @PeterNitso

Paper bought 1395 FCX Jan 36 Calls for $.31 when stock was trading $35.28
Paper bought 6903 JNS Feb 9 Calls (55.2 times usual volume) for $.40
when stock was trading $9.15
Paper bought 1822 WDC Jan weekly 43.5 Calls for $.53 when stock was
trading $43.33
Paper bought 1100 URBN Jan 41 Straddles for $2 when stock       was trading $41.19
Paper sold 24,578 GFI April 13 Calls and bought Jan 14 Calls for $.32
credit (18 times usual volume) when stock was trading $12.15

The Basel Committee on banking supervision watered down bank liquidity rules and as a result European banks rallied on the news. Banks like DB and Credit Agricole rallied 3% across the pond overnight. This action many bring some tailwinds to Chicago and New York as we open today, financials will naturally be on many watch lists considering the former.

BlackRock Inc. is a leading independent investment management firm. BLK provides clients with a variety of investment and risk management services, similar to GS, MS, and CS. BLK generates revenues from client business. Clients range from pension funds to non-for-profits. These services include investing in equities, fixed income, and other assets. Products that retail traders may be familiar with are managed by BLK too. iShares exchange-traded funds (ETFs) and other exchange-traded products ( ETPs) are popular among trading community.

BLK is one of the best performing financial stocks. BLK is only down a mere 12% from its all time high (ATH). Stocks like GS and WFC are still down 46% and 21% respectively from their ATH. BLK, according to the chart below, may have broken out.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…

Author

salernoma@mx.lakeforest.edu