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Insider Activity: Conn’s (CONN)

Posted: 07 Jun 2019 03:00 AM PDT

Multiple directors buy at the regional retail firm.

Three different directors have been buying shares recently in regional retail outlet Conn's (CONN).

Director James Haworth picked up 2,240 shares, shelling out nearly $40,000 to do so. Director Bob Martin picked up 26,600 shares, for a commitment of over $453,000. And director William Saunders bought 10,000 shares even, paying nearly $180,000.

This kind of cluster of buys by directors is a solid sign.

With only 125 locations in the South and Western United States, Conn's operates as a specialty retailer of consumer goods and services. The company offers furniture, appliances, and electronics. Besides selling products, the company also offers financing and repair services for those products.

The company has also been making some recent changes in the executive suite, with an eye towards improving their credit business. Retail sales have been weak in the most recent quarter, however, with a sizeable drop in same-store sales. The insider buys indicate confidence that there are no longer-term drops likely.

Action to take: Trading under 7 times earnings, the company certainly looks like a much more attractive investment prospect than bigger, pricier, retailers. And with its small geographic footprint, the company has some big growth prospects ahead as well. Shares look attractive under $17.50… as with anything in the retail space, however, be cautious and willing to take a quick profit!

Google Pays $2.6 Billion for Looker

Posted: 07 Jun 2019 03:00 AM PDT

Google dominates web searches but lags behind others in the cloud and big data space.

Strategic acquisitions are alive and well in this market, as Google buys Looker Data Services in an all-cash deal. The company is in the business intelligence and big data space, and will now be part of the Google Cloud suite.

During the last private equity round for the company, Looker was valued at $1.6 billion, so this represents a hefty premium of about 62 percent.

In the cloud platform space, Google runs behind Amazon Web Services and Microsoft Azure. This acquisition will help to narrow the gap. This comes on top of the moves made at Google last year to replace the head of its cloud division with Oracle executive Thomas Kurian.

The deal is the largest for Google since it bought Nest Labs in 2014 for $3.2 billion. Given the announcement earlier this week that Google and other tech companies will face enhanced government scrutiny to avoid any antitrust issues, the merger may take some time to play out. However, in this space, where Google is the underdog, the markets expect the deal to go through.

Google shares rallied on Thursday, but lagged the performance of the overall market. Such under performance is typical when a company announces a purchase.

30-Year Mortgage Rates Fall to Two-Year Lows

Posted: 07 Jun 2019 03:00 AM PDT

Lower mortgage rates could spur refinances, boost housing market nationwide.

With many investors focused on declining bond yields as a potential yellow flag for the economy, a few advantages are emerging for investors. Thanks to the drop in yields, borrowing costs are lower as well.

For 30-year mortgage rates, the drop has gone from 4.5 percent one year ago to about 3.8 percent as of Thursday. The rate is close to all-time lows, and may entice refinancing activity.

Most mortgages are eligible for refinancing, even those made as recently as 2018. The total value of such mortgages is over $2 trillion. Lower mortgage costs can ease household budgets, or allow buyers to purchase more expensive homes than previously expected.

Both events tend to be bullish for real estate prices, which have lagged in some markets, although not all. Likewise, a rise in mortgage rates tends to slow refinances as well as new home purchases, slowing the real estate market.

Action to take: Review your mortgage rates to see if refinancing would significantly lower your monthly payments. Traditionally, any time you can lower your interest rate by at least 1 percent, it makes sense to do. The cost savings on interest payments will more than cover the cost of refinancing, and you can free up cash each month for other uses.

Unusual Options Activity: Freeport McMoRan (FCX)

Posted: 07 Jun 2019 03:00 AM PDT

Big bet that copper mining giant will move at least 10 percent higher by early July.

At least one trader is betting on a 10 percent pop in Freeport McMoRan (FCX) in the next month.

On Thursday, nearly 5,900 contracts traded on July 5th $11 calls. With shares just over $10, they would need to rally nearly $1, or about 10 percent, for these calls to expire in-the-money.

With a prior open interest of 102 in the contract before the trade, this is a big move.

As a copper producer, Freeport is best-in-class. However, copper prices have been weak year-to-date, amidst trade war fears.

In investing circles, copper is often known as Dr. Copper. This is due to its propensity to predict a recession, as falling copper prices reflect reduced demand. Copper is used in nearly every physical industry, from wire and piping to higher-end electronics.

Action to take: Consider a stake in Freeport. A call option with a September date and $11 strike will give you more time for a bounce in copper to play out. But shares could be an interesting long-term buy here as well. New copper supplies are failing to meet up with current demand, and a shortage is likely to develop in the next few years as this trend continues.
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