Think the credit crisis is a bad thing? Well, Wilbur Ross doesn't. He's a maestro restructuring expert – having decades of experience on highly complex deals. In fact, he was prescient with key roll-ups in sectors like steel (where he made billions).
His next stop? He likes US banks. In fact, according to a piece in Bloomberg, Ross is putting together a $4 billion fund to capitalize on the opportunity. Apparently, he's talking to a variety of investors in Abu Dhabi. Hey, sovereign wealth funds have already shown their alacrity for US financial institutions, with investments in mega firms like Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C).
Ross' strategy makes a lot of sense; that is, he wants to buy 100 to 200 banks. Thus, by building some heft, he should realize economies of scale – and ultimately build more value for his investors. Simply put, it's a formula he has refined.
Actually, Ross has already been aggressive in the financial services sector. For example, he recently spent $1.1 billion on Option One Mortgage, which was purchased from H&R Block (NYSE: HRB).
Shares of U.S.'s largest tax preparer H&R Block Inc. (NYSE: HRB) are surging today after the company announced last night better-than-expected third-quarter earnings results. H&R also issued encouraging earnings guidance and showed optimism about successful negotiations for its remaining Option One Mortgage sale.
H&R announced its quarterly loss narrowed to $47.4 million, or 14 cents per share, helped by higher sales and smaller losses from its subprime mortgage lending subsidiary, up from its loss of $60.3 million, or 18 cents per share in the same period last year.
Included in the company's earnings was a $26.3 million pretax charge related to staff reductions expenses and executive departures. Excluding that, H&R Block's earnings numbers would have come at 8 cents per share. Analysts' estimates (which typically exclude one time items) was for 6 cents per share in the quarter.
Stock futures were lower early in the morning, indicating another low start on Wall Street as concerns remain about the economic slowdown and the credit crisis. The dollar hitting a new low against the euro and oil reaching new record highs didn't boost investors' sentiment. Upcoming interest rate decision by the Bank of England and the European Central Bank will likely have an impact this side of the pond.
On Wednesday stocks started with significant declines only to rebound late getting a boost from the technology sector. The Dow Jones Industrial Average posted its first rise in five sessions of 41 points, or 0.34%, the S&P 500 added nearly 7 points, or 0.52%, and the Nasdaq composite climbed 12 points, or 0.55%.
Not much economic data is to be released today. At 8:30 a.m., weekly jobless initial claims is due and at 10:00 a.m., January pending home sales will be reported.
What investors may watch closely is monthly sales figures that many retailers should report today. Economists expect February same-store sales in the U.S. to rise 0.5% to 1%, according to the International Council of Shopping Centers, the worst since 2003, when sales rose 0.9%. High gas prices combined with a weak housing and credit market influenced consumers' decision. While Costco (NYSE: COST) and Wal-Mart (NYSE: WMT) may have benefited from consumers being price conscious, most other retailers have not.
So far, tax season as not been kind to the number two tax preparer in the U.S., Jackson Hewitt Tax Service Inc. (NYSE: JTX). A slow start to the season led to a sharp decline in fiscal third-quarter earnings, the company reported today. Net income in the quarter ended January 31 fell 34% to $18.2 million, or 61 cents per share, from the year-ago period. Revenue was down 15% to $97.6 million. Analysts surveyed by Thomson Financial had expected profit of 99 cents per share on revenue of $118.4 million.
Jackson Hewitt shares dropped more than 30% on Tuesday, reaching a new multi-year low of $13.51, and closed at $13.68.
The leading U.S. tax preparer, H&R Block Inc. (NYSE: HRB), is scheduled to report fiscal third-quarter results tomorrow. It has missed earnings estimates in three of the past four quarters. For the current quarter, analysts polled by Thomson Financial expect earnings of 6 cents per share, compared to 8 cents in the year-ago quarter.
H&R Block's earnings per share growth forecast for this year is 19.5%, better than the industry average of 13.7%, as well as Jackson Hewitt's 16.3%. The analysts' consensus recommendation is to buy HRB. Shares have risen from the 52-week low of $16.89 in January, but today continued their recent slide to close at $17.82.
The company said it anticipates a quarterly loss of $502.3 million, or $1.55 per share. Included in its losses is $366.2 million, or $1.13 per share, related to discontinued operations. A significant part of its discontinued operations losses came from its Option One Mortgage Corp., which lost many lenders because of increased borrower defaults and deteriorating credit markets. H&R business was also hurt by the last week's failed proposed sale of Option One to Cerberus Capital Management LP.
8 Stocks for '08 Making money by throwing darts at stock tables will be tough in 2008 if market gains are as modest as we predict they'll be. Kiplinger's best bet in the coming year include AT&T, Cemex, Consol Energy, Intel, Parexel, Stanley Works, Teva Pharma and XTO Energy. 8 Stocks to Own in '08 - Kiplinger.com Also: Where to Invest in 2008
Bail or Not to Bail? Should Americans who bought more house than they could afford be bailed out? That is the question and America appears to be split on if special treatment should be giving to those at risk. Most people believe the borrowers are to blame for their own problems. Americans split on blame, solutions for mortgage woes - CNNmoney
Extreme Celebrity Giving Take off their clothes? Tangle with police? Swim with dolphins? The charity options of elite stars like Victoria Beckham, Sting, Beyonce an dmore. Extreme Celebrity Giving - Forbes.com
Stock futures were tightly mixed Tuesday as investors looked ahead to this afternoon's interest rate announcement from the Federal Reserve Board. The Fed is widely expected to lower the Federal Funds rate -- the rate of interest banks charge each other -- by a quarter point, although forecasts of a half-point cut are growing.
In addition to the Fed's afternoon announcement, the Census Bureau of the Department of Commerce will release wholesale inventories for October this morning at 10.
On Monday, the Dow closed at 13,727.03 and the S&P 500 finished at 1,515.96, each higher by three-quarters of a percent. The Nasdaq reached 2,718.95, 0.47 percent higher. U.S. stocks were boosted by anticipation of interest rate cuts and an improved outlook on home sales. The National Association of Realtors reported yesterday that pending-sales of homes had climbed 0.6% in October, increasing for a second-straight month following a long skid.
After Monday's close, Washington Mutual (NYSE: WM) announced it will discontinue subprime mortgage lending and plans to cut 2,600 jobs in its home loans division. WaMu will write-down the value of its loans unit by $1.6 billion and now expects to report a loss in the fourth quarter, echoing similar news Monday from Swiss bank UBS (NYSE: UBS).
Top grocer Kroger Co. (NYSE: KR) is due to report quarterly results on Tuesday; analysts expect EPS of 35 cents per share. Tax preparer H&R Block (NYSE: HRB), initially scheduled to report second-quarter earnings Monday, now says it will not file on time.
Overseas, the dollar was little changed against the euro, and rose from 111.67 to 112.11 yen. The Nikkei 225 climbed 0.8% to close above 16,000, while London's FTSE 100 slipped in morning trades.
Stock index futures pointed to a higher opening Monday as investors expect a quarter-point interest rate cut from the Federal Reserve when it meets tomorrow.
Anticipation of a rate cut offset news from UBS (NYSE: UBS) that it will write down around $10 billion in subprime holdings, and that it expects a loss when it reports fourth quarter results in February. Muting the write-downs, UBS announced that the government of Singapore had invested $11.5 billion in the Swiss bank.
All eyes fell on the Fed Monday, with few other economic indicators scheduled. The National Association of Realtors is expected to report a 1 percent drop in October's pending home sales in its 10 a.m. report.
Although some analysts saw potential for a half-point cut in the Federal Funds rate, the interest rate banks charge each other, consensus seemed to expect just a quarter-point cut from the Fed, especially after latest data indicated labor market conditions remained stable in November. The Fed could also lower the emergency discount rate, currently 5 percent, to match the 4.5 percent Federal Funds rate, and hold the latter steady.
Among the few companies reporting earnings Monday, income tax preparer H&R Block (NYSE: HRB) is expected to announce a 35-cent loss per share when it reports earnings after the market closes Monday.
Foreign markets were flat Monday, with European bourses sagging slightly while Japan's Nikkei 225 finished down 0.2 percent at 15,924.39. The dollar slipped in Europe, fetching just 0.6816 euro.
The Associated Press reports that Cerberus Capital Management, the hedge fund, has decided to abandon its deal to purchase the mortgage business of H&R Block (NYSE: HRB). H&R Block's mortgage business, which has stopped accepting new mortgage applications, said it will lay off about 620 employees, close three offices and take a $75 million restructuring charge as it shuts down lending at Option One Mortgage Corp. (OOMC).
Why did Cerberus back out of the deal? The deal was struck in April, and since then the mortgage market has had some big downs. While Cerberus and H&R Block tried to renegotiate the agreement regarding Option One, they could not come to terms, announcing the termination was ''fully amicable." OOMC will honor $30 million worth of existing commitments.
The market is not happy with this announcement, sending H&R Block stock down 5.6% in premarket. It makes me wonder how much Cerberus -- which is already neck deep in mortgage problems with its GMAC ResCap investment -- must be thinking about the prospects for the mortgage industry. I would guess that the more it's learned, the less it likes.
Over-the-Top Bank Fees Paying an overdraft fee on your checking account is like having your mouth washed out with soap: The bank says it's for your own good-but is it really? In 2006, consumers paid an estimated $17.5 billion in overdraft fees. To avoid outrageous overdraft charges, keep close tabs and weave a safety net. Over-The-Top Bank Fees - Kiplinger.com
Real vs. Fake? Whether it's adulterated medicine that can kill you, bogus batteries that can burn you, or wannabe Guccis that simply wear out fast (though you may look stylish for a while), counterfeit merchandise is everywhere. Because today's fakes are not just the usual knockoffs, you need to take special precautions when you shop. ConsumerReports.org - Counterfeit products: What to look for counterfeit quiz - can you guess the fake?
While the race for Democratic nomination for president seems to be 67% wrapped up with Hillary Clinton getting the nomination, the Republican nomination is far from settled. According to Intrade.com, a betting site where you can bet on the outcome of the elections, Mike Huckabee has been gaining a lot of ground recently.
As a stock analyst, I can recognize a healthy, up-trending chart, and support for Huckabee has taken off in the last two months, from a 3% chance of the Republican nomination to a 12% chance of the nomination.
H&R Block Inc. (NYSE: HRB) Chief Executive Mark Ernst today resigned as his efforts to unloaded the company's money-losing subprime mortgage business Option One Mortgage Corp. to Cereberus Capital Management LP nears collapse, according to Bloomberg News.
Former SEC Chairman and hedge fund manager Richard Breeden, who had long complained about losses at Option One and lead a proxy battle against the company, was named chairman and Alan. M. Bennett, a former CFO of Aetna Inc. (NYSE: AET), interim chief executive. H&R Block is conducting a search for a new CEO. Bennett has told the company he doesn't wish to be considered as a candidate, the company said in a press release.
Cerebeus agreed to pay H&R Block $800 million for Option One in April, well under the $1.3 billion the company had hoped to get. Cereberus may scuttle the deal entirely now given the continued uncertainty of the credit markets. It's unclear what's going to happen to Option One which Ernst had said H&R Block may close if it couldn't find a buyer, Bloomberg said.
Shares of Kansas City-based H&R Block, which have slumped more than 17% this year, rose in pre-market trading. It will be interesting to see if Breeden will be able to help turn around H&R Block now that he's become an insider.
Think the credit crisis is a bad thing? Well, Wilbur Ross doesn't. He's a maestro restructuring expert – having decades of experience on highly complex deals. In fact, he was prescient with key roll-ups in sectors like steel (where he made billions).
Shares of U.S.'s largest tax preparer 
Stock futures were lower early in the morning, indicating another low start on Wall Street as concerns remain about the economic slowdown and the credit crisis. The dollar hitting a 
So far, tax season as not been kind to the number two tax preparer in the U.S., 
H&R Block
Tax preparer 
Stock futures were tightly mixed Tuesday as investors looked ahead to this afternoon's 
Stock index futures pointed to a higher opening Monday as investors expect a quarter-point interest rate cut from the Federal Reserve when it meets tomorrow. 
While the race for Democratic nomination for president seems to be 
Oil hits record $127.43 on supply concerns, raised Goldman forecast
Icahn's 'shock and awe' on Yahoo -- a gutsy play
Housing starts surprisingly rise in April on apartment construction
