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Makets are called to open flat this morning. This is what's happening today:
Companies reporting results in Europe: Bilfinger, L'Oreal, Galp Energia
Companies reporting results in the US: American Capital, Radian Group, Masco Corp, Norwegian Cruise Line Holdings, Brookdale Senior Living
Nielsen Holdings, Annie's Inc
European Finance Ministers from the 17-member euro area meet in Brussels today to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain disrupt market calm. Group of 20 finance chiefs and centralbankers will gather in Moscow Feb. 15-16.
European Union leaders who last week reached a seven-year budget agreement that for the first time cuts spending will look ahead to Italy’s Feb. 24-25 elections as polls show the vote might fail to deliver a governing majority. European stocks last week posted a second weekly drop as investor concern about policy roadblocks in Italy and Spain revived. Yields on Italian 10-year bonds climbed to a year-to-date high of more than 4.5% as former Premier Silvio Berlusconi narrowed the lead of front-runner Pier Luigi Bersani. The euro’s climb was broken last week, falling 2% against the U.S. dollar to $1.3365, after European Central Bank President Mario Draghi voiced concern that euro strength could hamper the recovery.
In Spain, Rajoy’s government sought to rebut corruption allegations that spurred a rise in the country’s borrowing costs. The 10-year bond yield, which dropped below 5% a month ago, rose above 5.5% Feb. 7. Deficit data due this month will show how far the government reduced its budget shortfall in 2012, a year when Spain came close to needing a bailout. While 10-year borrowing costs are down more than 200 basis points from their July peak, two ratings companies grade Spanish bonds one level above junk and another cut may make them too risky for some investors.
Today I'd like to talk about a different type of company – Apollo Global Management (APO). APO provides global alternative asset manager services. The Company raises, invests, and manages private equity, credit-oriented capital markets, and real estate funds. The funds are invested across a core group of industries throughout the world.
Barclay's comments on the stock – The strong ENI and distribution beat were impressive and capped off a record year for the company. APO has been one of the strongest distribution stories in the space over the past few quarters and the shares have reflected that, increasing +68% over the last six months vs. an +8% increase for the S&P 500. We also note that performance so far in Q1’13 looks to be off to a strong start with the public portfolio up over ~6%, according to our estimates. In addition, APO continues to boast a strong accrued net carry position of $2.62/sh, which equates to a 12% yield on the current share price.
The bottom line, in our view, is that while the shares have increased significantly in a relatively short period of time, there does still appear to be value and meaningful future distribution potential looking out into 2013. While the alternative asset managers as a group tend to be volatile, we would look view a pullback in the shares as an opportunity.
For more information on pollo Global Management or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
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