Archives for August 15, 2017

Why Sysco is Sinking

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…and why it might be a buying opportunity.

Sysco (SYY)–the food company, not the tech giant–is slipping today after reporting earnings that only met the Street consensus.

Sysco reported a profit of 72 cents a share, in line with analyst forecasts, on sales of $14.4 billion, narrowly beating estimates for $14.34 billion. Still, that wasn’t enough for the market, as share of Sysco have dropped 1.1% to $51.00 at 12:57 p.m. today. The Consumer Staple Select Sector SPDR ETF (XLP) has risen 0.7% to $55.49.

Wells Fargo’s Zachary Fadem writes that he “would use any weakness this morning as a buying opportunity.” He explains why:

We believe FQ4 results serve as further evidence that solid industry trends remain intact, and SYY is transforming its business to drive more efficient operations and improved profitability. While skeptics may point to slower volumes and margin deceleration this quarter, we believe gross profit dollar growth is a much more meaningful metric (and notable positive), and would use any weakness this morning as a buying opportunity. With Tom Bene taking over the CEO helm in January, we believe SYY likely sticks with current practice of providing limited forward commentary this Q. We anticipate more robust FY18 commentary and a new 3-year plan at an investor event this fall, particularly with respect to the go-forward outlook, commentary on margins and an update on Brakes integration progress.

Until then…

Hedge fund that profited from Whole Foods-Amazon deal discloses bet on Blue Apron

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During the second quarter ended June 30, activist hedge fund Jana Partners snapped up 600,000 shares of meal kit delivery company Blue Apron (APRN), a position valued at $5.6 million at the time, according to a 13-F filing posted on Monday.

This is interesting because Jana is also the fund that had been pushing Whole Foods Market (WFM) to sell itself, which it eventually did to Amazon (AMZN) on June 16. Jana made a massive profit of about $260 million on the deal. But that deal also took momentum out of the fanfare building up to Blue Apron’s June 29 IPO.

Furthermore, Amazon dealt a blow to Blue Apron investor later in July when it announced plans to launch its own meal-kit delivery service.

In the less than two months since Blue Apron has been public, the stock has gotten annihilated. It has fallen from $11 to as low as $5. Today, it trades at around $5.34 per share.

It’s worth noting that Blue Apron is a very small position for Jana.

Shares of Blue Apron have collapsed since the meal-kit delivery service company went public.

In early April, Jana, which is led by Barry Rosenstein, disclosed a nearly 9% stake in Whole Foods. The company didn’t exactly welcome the activist with open arms. Whole Foods’ CEO, John Mackey, referred to them as “greedy bastards” in an interview with TexasMonthly.

“We need to get better, and we’re doing that. But these guys just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so,” Mackey told the publication in late April.

Jana sold all of its 26,074,830 shares of Whole Foods in late July.

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Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.

AMD is challenging Nvidia’s crown after releasing its newest graphics cards

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AMD’s stock price is on the rise as reviews of the company’s new Radeon RX Vega 56 and 64 graphics cards are released.

Shares are up 4.05% on Monday, the same day the cards were released. The cards are currently sold out on Newegg, and only a few units are still available on Amazon, though they are selling much higher than the manufacturer’s recommended price.

The cards are the company’s long-awaited answer to Nvidia’s dominant GeForce GTX 1080 and 1070, released last year. AMD has lacked a serious offering to compete with the Nvidia graphics units until the new Vega cards. The number in the name of the new AMD cards refers to the number of computing cores the card has, either 56 or 64.

Reviews of the cards boil down to a solid, if unenthusiastic, “they’re fine.” PC Gamer says “AMD now shows up in the discussion” around high-end graphics cards when it previously hadn’t, and Gizmodo says the company’s cards are now “neck and neck” with Nvidia’s offerings.

While testing from both outlets showed that performance from AMD is comparable to the Nvidia cards, power consumption for the Vega cards is higher than the year-old GeForce options. The high-end graphics card market is worth millions a year, and AMD now has a chance at grabbing some portion of that market, according to PC Mag writer Jarred Walton.

The shortage of cards seen on launch day is not a new phenomenon. Cryptocurrency miners have been buying up tons of graphics cards from both Nvidia and AMD to speed up their mining. Nvidia is set to release a mining-specific graphics card soon, and the company’s CEO has said Nvidia will continue to serve the needs of miners. Meanwhile, AMD’s CEO has said that cryptocurrencies are not a “long-term growth driver” for the company.

AMD is up 12.64% this year, including Monday’s bump.

amd stock price
amd stock price

 

Warren Buffett dumped his entire stake in General Electric

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Berkshire Hathaway dumped its entire $315.4 million stake in General Electric in the second quarter, according to filings.

The firm owned about 10.6 million shares in the company.

GE just recently promoted John Flannery to CEO, as Jeff Immelt stood aside. Flannery was head of GE’s healthcare business before being tapped for CEO. Flannery was able to take hold of the healthcare division and grow it into a $18 billion business as its helm.

Berkshire Hathaway disclosed it closed its GE position in an SEC filing that reflects the firm’s second quarter holdings. It’s worth noting that the firm’s positions could have changed since the date of the filing.

In addition to the GE move, Buffett’s firm also added a large share of Synchrony, equalling about $520.7 in value, and a $418.1 million stake in Store Capital. Berkshire Hathaway decreased its holdings in IBM and Wells Fargo while increasing its BNY Mellon, General Motors and Apple positions.

The firm’s top holdings are all well-known brand names that Buffett has become famous for championing. Kraft Heinz, Wells Fargo and Apple are the top three.

General Electric Shares are down 20.08% this year and rose 0.63% on Monday, the day the filing was released.

general electric stock price
general electric stock price