Mutual Fund Investors Back from Long Weekend

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Mutual Fund Investors Back from Long Weekend

Sep 02, 2014

Mutual Fund investors are returning to the markets this Tuesday morning with a bit of a positive bias as the month of September ushers in new money flows, potential global concerns, and everything else that investors tend to fixate on. This morning is filled with bullish analyst calls, more news of deals, positive drug trial updates, and more!

Deal Headlines as M&A Continues

Anyone who has been following the retail space has been watching the bidding war between Dollar Tree (DLTR) and Dollar General (DG) for the pursuit of Family Dollar Stores (FDO). This morning’s headline has Dollar General raising the cash offer to $80 per share. While the offer is only $1.50 per share more than Dollar General’s previous $78.50 per share cash offer, the bigger piece of news was Dollar General’s management agreeing to more than double the number of stores it would shed to ease the antitrust concerns of its takeover target. This could clear the way for the deal to get pushed through from regulators’ standpoints. Either way, it’s a nice little bonus for private investor Carl Icahn and Family Dollar shareholders, waking up to a little price bump.

Elsewhere, a big merger in the cruise industry is underway as Norwegian Cruise Lines (NCLH) shares are up nearly 15% in early trading following news of the cruise operator announcing a deal to buy luxury cruise-line company Prestige Cruises International Inc in a $3.03 billion deal, including debt. The cash-and-stock deal will be immediately positive for the bottom line, which is also pleasing to Wall Street’s eyes.

Finally, a big $2.5 Billion tech deal is being announced as Compuware (CPWR) and Thoma Bravo jointly announced that Compuware has entered into a definitive agreement to be acquired by the private equity investment firm. The company counts more than 7,100 companies using its technology management performance services.

Positive Drug Updates Lifting Big Pharma & Biotech Shares

Shares of Novartis (NVS) are higher this morning by over 3% as the company announced experimental drug study results that showed its heart drug cut the chances of dying of heart-related causes by 20% and for any reason by 16%, compared to the older drug. It also reduced the risk of being hospitalized for heart failure by 21%. The drug can soon help more than half of the 6 million Americans and 24 million people worldwide with heart failure symptoms. The company expects to file for drug approval by the end of this year in the United States and early next year in Europe.

Headlining this morning’s big biotech news is Regeneron Pharmaceuticals (REGN), where shares are up nearly 5% or $17. The company, in collaboration with Sanofi (SNY), announced study results from its experimental cholesterol-lowering drug that showed its drug halved the number of heart attacks and strokes in a clinical trial.

The drug targeting a protein known as PCSK9 would be the first of its kind to suggesting reduced cardiovascular risk from PCSK9 inhibitors. The ongoing drug study is expected to conclude early next year, but researchers said the early sign of efficacy was clearly positive.

Wall Street’s Bullish Calls Continue

Momentum for Apple (AAPL) continues this morning as Piper Jaffray raised Apple’s price target to $120 per share, ahead of the widely-expected launch of the company’s next generation iPhone 6 launch next week.

Tesla (TSLA) shares are also feeling the momentum as Stifel Nicolaus put a $400 price target on the company citing the company’s ever-growing moat around the EV market.

Gap Inc. (GPS) has been named a top retail pick by a Sterne Agee analyst, with its price target being bumped to $52 on the back of what will be easy comps, and company-specific initiatives.

Asset-management giant Waddell & Reed (WDR) saw its price target raised to $64 a share from Jefferies Co. this company. The analyst points to recent flow trends having improved and is favorable on management’s long-term investment performance track record. Coupled with a reasonable valuation (13 times 2015 estimates), a higher stock price would seem to make sense.

Will September Be Its Normal Tough Month for Mutual Fund Investors?

As 2014 continues to be a solid year for investors, September can often be a bit of a struggle for market performance. Some tie it to the back-to-school and back from the summer vacation doldrums that can be a bit of an overhang for investors and companies alike. As with any investing strategy, the best plan for mutual fund investors is to remain methodical in the long-term approach to putting capital to work in areas of strength, and understanding lower prices will come sooner or later.

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