Market Review 11/06/2013

TOP GAINERS:

CardioNet (BEAT) (+55%)

- Why: BEAT share price increased sharply due to positive business development; UnitedHealth, the largest US health insurer will cover BEAT devices.

- Background: BEAT provides hearth monitoring devices which allow a patient’s heartbeat to be monitored at all times and at any location. This can help to speed up the treatment of problems such as abnormal heartbeat rhythms.

- Fundamental: BEAT had a market cap of US$88m, P/BV of 1.19x and P/CF of 13.63x before the increase. But its operating income is negative.

- Technical: Avg. vol is only ~75k. 5 days ago (4 Jun), volume spiked to 730k, a 10x increase. On the day of the news the transacted volume was 6.9m, a 92x increase.

- Insider: President and CEO made several open market purchase totaling more than US$120k about 11 months earlier (Aug 2012)

 

Dole Food Company (DOLE) (+22%)

- Why: DOLE Chairman cum CEO made buyout bid for the remaining 60.5% stake that he does not own.

- Background: DOLE engages in sourcing, processing, marketing and distributing fresh fruits and vegetables to wholesale, retail and institutional customers. It fell sharply from $11 level after it sold off its packaged food business in Asia for 1.69 billion in a deal that closed in April 13. Furthermore, in May 13 it suspended its $200m share repurchase program as it reported other uses for its cash. At the same time, S&P had lowered the credit rating due to the divestiture weakening the business profile. But it turned out to be a buyout opportunity.

- Fundamental: DOLE had a market cap of US$0.91bn and P/BV of 1.48x and P/CF of 20.4x before the event. It also had high leverage D/E of 2.66x. Notably, the short float was about 15% of outstanding shares.

- Technical: Avg. vol is below 1mn. 3 days ago (6 Jun), volume spiked to 3.5mn, a 3.5x increase. On the day of the news the transacted volume was 21.3m, a 21x increase.

- Insider: Chairman cum CEO owns 39.5% of the company

TOP LOSERS:

Yanzhou Coal (YZC) (-9.3%)

- Why: YZC ex dividend. But RSI(14) indicator is 29.4 indicating that it’s been oversold.

- Background: YZC is a China based coal mining company that sells both hard coal and thermal coal. Its ADR is listed in NYSE.

- Fundamental: YZC had a market cap of US$4.47bn and P/BV of 0.62x and P/CF of 1.72x. It also had high leverage D/E of 0.9x. The valuation is now at its low. This is because of 2 factors: First, coal prices are declining. Second, YZC has increased its revenue in recent years, its net income has declined due to higher SG&A costs.

- Technical: Nothing notable

- Insider: NIL