More bad news for Steve Cohen’s SAC Capital. Citigroup’s private bank is the latest firm to bail out on the controversial hedge fund manager, yanking its $187 million investment in the firm. Citigroup’s decision “should not be construed as a statement on the merits of any outstanding legal proceedings or potential regulatory action” related to government probes, a bank spokeswoman told the Wall Street Journal in a statement on Thursday. Meanwhile, Cohen was spotted in Davos, Switzerland, where the World Economic Forum is currently taking place.•••
Also in Davos is Bridgewater’s Ray Dalio, who told CNBC he believes 2013 is the year investors will move money out of large cash positions and into higher-return, riskier assets. However, he warns them not to chase headlines or predict the market’s next move.•••
Wall Street’s sell-side analysts missed the big one again. As shares of Apple were poised to tumble more than 12 percent to $450.50 Thursday, analysts who are paid to tell clients what to do with their stocks scrambled to slash their price targets. However, every one of them maintained their highest rating on the stock.
For example, Credit Suisse Securities cut its target to $600 from $750 a share. “We believe a lower ability to beat EPS expectations, and some concerns on demand, may weigh on the stock near-term,” it wrote in its report sent to clients Thursday morning. Hmm. Just last Thursday Credit Suisse reiterated its Outperform rating on Apple and its $750 price target. To wit: “Apple remains well positioned with a privileged advantage in the computer market and will be able to maintain momentum across key product lines driven by continued innovation in hardware, software and services,” it told clients last week. Still, in its most recent report, it stressed that it still believes the stock is inexpensive, given $145 of net cash per share.
UBS also pared its price target on apple to $600 but from a more modest $650 perch. Noting the company’s quarterly earnings beat expectations but with a lower iPhone count and better gross margins than expected, it added in its note to clients: “The shift to more realistic guidance seems overdue though it will result in substantial downward estimate revisions.”
Deutsche Bank reduced its price target to $575, from $800 but maintained its Buy rating. APL revised its guidance format and the combination of margin pressure and decelerating iPhone growth implicit in guidance raises growth concerns,” it explained in its note to clients. “We reset estimates and cut our price target to $575.”
Meanwhile Barclays lowered its price from $740 to $575, but reiterated its Overweight rating, while Morgan Stanley maintained its Overweight rating and $630 price target.•••
Netflix’s management knew better. When Carl Icahn took a nearly 10 percent stake in the company on October 31 and urged it to merge with a tech giant, the video programming company swung into action. One week later it adopted a shareholder rights plan to make it tougher on Icahn or some other investor to make an unwanted takeover offer. Score one for the poison pill. Since Icahn’s October regulatory filing, the stock is up about 75 percent. It rose more than 42 percent on Thursday to $146.86, after the company reported a profit in its most recent quarter when a skeptical Wall Street expected a loss.
In a belated response, Credit Suisse Securities raised its price target from $80 to $132, not exactly a helpful recommendation after the fact. It also downgraded the shares from Outperform to Neutral, citing valuation factors, and said the shares are now trading in line with its updated price target.•••
Tiger Global Management’s private equity funds recently sold more than 925,000 American Depositary Shares of TAL Education Group. It reduced its total stake to 9.075 million, putting the total holding in the company at 27.3 percent. The ADS can be exchanged for common shares at a 1:2 ratio. Tiger Global’s ownership stake in the company is down from more than 11.5 million ADS at the end of the third quarter. Shares of the after-school tutoring services provider in China are down more than 9 percent so far this year.•••
Call it dueling press releases. Agrium Inc. fired off a press release Thursday morning, announcing that its 2012 fourth quarter earnings would come in above its earlier guidance. “The increase in our estimated financial results is due to a very strong finish to the fall application season in our North American Retail operations, supported by an extended fall season in the U.S. and continued strength in grain and oilseed prices,” said Mike Wilson, Agrium president and CEO, in the statement. The Canadian company’s announcement came after New York-based hedge fund firm Jana Partners, which recently initiated a proxy fight with the company, published its own press release detailing a new presentation and other new materials to be used with meetings between Jana and its board nominees with shareholders of Agrium.