In today’s briefing:
- Doosan Bobcat Block Deal Sale – Overhang Remains
- Time to Get Defensive After 1.5-Month Uptrend Breaks; High Yield Spreads Widening Much Like Mid-Aug.
- Becton Dickinson and Co (BDX US): EO Ruling Is Positive; Strong Base Business to Drive Growth Ahead
- Twitter’s Banks Are Stuck With Largest Chunk Of Unsold LBO Debt
Doosan Bobcat Block Deal Sale – Overhang Remains
- Doosan Bobcat Inc (241560 KS) announced a block deal sale of 5 million shares. representing 5% of outstanding shares.
- There are three major reasons why we have a negative view of the block deal sale and on Doosan Bobcat.
- Two of these reasons include an overhang associated with remaining shares which could be sold as well as a potential downturn in construction markets in North America and Europe.
Time to Get Defensive After 1.5-Month Uptrend Breaks; High Yield Spreads Widening Much Like Mid-Aug.
- Since early-October we have discussed our expectation for a bear rally, targeting the 200-day MAs on the $IWM and $SPX; targets were hit (within 0.5% of hitting on SPX).
- We are now seeing short-term uptrend breaks on the IWM and the DJIA; this is a good time to get defensive and/or take profits, as the 1.5-month rally appears over.
- We expect more weakness in the weeks ahead, and we cannot rule out another test of the 2022 lows.
Becton Dickinson and Co (BDX US): EO Ruling Is Positive; Strong Base Business to Drive Growth Ahead
- Ruling on Ethylene Oxide in favor of Sotera is a positive for all the medical devices companies including Becton Dickinson and Co (BDX US), who have EO sterilization facilities.
- In FY22, BD reported strong base business, which grew 6.9% y/y on reported basis. On currency-neutral basis, base business increased 9.4% y/y in FY22, accelerated from 8.1% in FY21.
- FY22 marks 51st consecutive year of dividend increase for BD, which makes it one of the leading dividend yield stocks. Currently, the stock has a dividend yield of 1.53%.
Twitter’s Banks Are Stuck With Largest Chunk Of Unsold LBO Debt
- Twitter’s banks are stuck with 30% of total US LBO debt unsold debt.
- The banks already had lost more than $500 million on Twitter’s LBO debt even before the deal closed. They could sell it even at 50-60 cents on the dollar.
- The trouble with Elon aggressively blowing up Twitter is that it’s banks probably won’t take his calls when Twitter needs more cash—which it probably will in the near future.
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