Eagle Bancorp Earns $1.28 per Share
Posted by Eddy Elfenbein on October 21st, 2020 at 4:50 pm

After the bell, Eagle Bancorp (EGBN) reported Q3 earnings of $1.28 per share. That’s up from $1.07 for last year’s Q3. Eagle easily beat Wall Street’s forecast of 81 cents per share.

CEO Susan G. Riel said:

“I am very pleased with the overall results of operations for the third quarter of 2020 at a time when the COVID-19 pandemic is having a significant effect on the business climate and operating environment. Highlights included the highest level of quarterly net income and total revenue in the Company’s history, continuing growth in the balance sheet, wherein assets exceeded $10 billion at quarter-end, solid asset quality, and a continuing trend of very favorable operating leverage as exhibited by an efficiency ratio of 38.10%.”

Some highlights:

• Record net income of $41.3 million supported by gain on sale of loans of $12.2 million
• Lower credit costs and OREO recovery
• Net interest margin of 3.08%
• Nonperforming assets were 0.62% of total assets and the allowance for credit losses on loans was 1.40% of total loans (CECL adopted January 1, 2020)
• Improved operating leverage resulting in efficiency ratio of 38.10%

At the end of the quarter, book value per share was $37.96. The bank had legal fees and expenditures of $957,000 in Q3.

Globe Life Earns $1.75 per Share
Posted by Eddy Elfenbein on October 21st, 2020 at 4:26 pm

After the closing bell, Globe Life (GL) reported Q3 operating earnings of $1.75 per share. That matched Wall Street’s estimates.

Some highlights:

Net income as an ROE was 9.4% for the nine months ended September 30, 2020. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 13.6%.
Life premiums increased over the year-ago quarter by 9% at the American Income Life Division and 8% at the Direct to Consumer Division.
Health premiums increased over the year-ago quarter by 8% at the Family Heritage Division.
Life net sales at the Direct to Consumer Division and American Income Life Division increased over the year-ago quarter by 50% and 14%, respectively.
Health underwriting margin increased over the year-ago quarter by 20%.
1.4 million shares of Globe Life Inc. common stock were repurchased during the quarter.

Regarding Covid, Globe Life said:

Over the past two quarters, the Company has seen a rise in life claims as result of the pandemic and a corresponding decrease in life underwriting margins. While the Company cannot precisely estimate the length or severity of COVID-19, we anticipate approximately $56 million in COVID-related life claims for the full year 2020. Despite the challenges created by the pandemic, the Company continues to effectively conduct business operations through its various distribution channels.

In August, Globe resumed its share repurchase program. During Q3, GL repurchased 1.4 million shares for a total cost of $118 million and an average share price of $81.79. This year, Globe has repurchased 3.1 million shares at a total cost of $257 million and an average share price of $83.74.

Globe Life sees full-year earnings of $6.84 to $7.00 per share. For 2021, GL expects earnings to range between $7.30 and $7.80 per share. Wall Street had been expecting $7.47 per share.

ALG Research on Eagle Bancorp
Posted by Eddy Elfenbein on October 21st, 2020 at 12:01 pm

At Seeking Alpha, ALG Research takes a close look at Eagle Bancorp.

Their thesis is largely similar to ours — that Eagle is a good bank and it’s historically undervalued. While ALG is neutral on the bank due to their legal issues, they do concede that the issues are probably near an end.

Earnings from Stepan and Silgan Holdings
Posted by Eddy Elfenbein on October 21st, 2020 at 9:13 am

We got our first two Buy List earnings reports this morning for the Q3 earning season.

First up is Stepan (SCL). The company earned $1.56 per share for Q3 which beat Wall Street’s consensus of $1.40 per share. The company also raised its dividend by 10.9% making it the 53rd annual dividend increase in a row. The quarterly dividend will rise from 27.5 cents to 30.5 cents per share. That makes the yield a little over 1%. The shares are about flat on the day.

Next up is Silgan (SLGN). For Q3, Silgan made $1.04 per share. That’s up 37% over last year’s Q3. Wall Street had been expecting 95 cents per share.

Silgan raised its full-year guidance range to $2.92 to $2.97 per share. The previous range was $2.70 to $2.85 per share. Last year, Silgan made $2.16 per share.

For Q4, Silgan now expects earnings of 47 to 52 cents per share. They made 38 cents per share for last year’s Q4.

CEO Tony Allott said, “While we are still completing our annual budget process for 2021, at this time we anticipate overall operating earnings for the Company remaining at these strong levels.”

Globe Life (GL) reports after the close.

Morning News: October 21, 2020
Posted by Eddy Elfenbein on October 21st, 2020 at 7:05 am

WEF Says Machines Will Create More Jobs Than They Destroy But Warns of Pandemic ‘Double-Disruption’

The Fed’s $4 Trillion Lifeline Never Materialized. Here’s Why.

U.S. Banks Sweat Regulatory Exposure From Pandemic Loans

Google Antitrust Case to Turn On How Search Engine Grew Dominant

America’s Billionaires Tilting Toward Biden in Presidential Race

Big U.S. Treasuries Wagers Bet Against Election Fireworks

U.S. Retailers Secure Stores As Worries About Election Unrest Mount

Apartment Rents Are Plunging in the World’s Richest Cities. It’s Time For You to Negotiate

Snapchat Co-Founders Share $2.7 Billion Windfall

Disneyland and Other California Theme Parks Get Rules for Reopening

As Tropical Spots Reopen, Here’s What You Need to Know

Nick Maggiulli: Why Own Bonds When Rates are So Low?

Ben Carlson: Investors Need to Become More Comfortable With Volatility in Their Portfolios

Michael Batnick: Is Amazon In Trouble? & Animal Spirits: Bad Ideas

Howard Lindzon: Brick and Mortar Winners in a Post Covid World

Joshua Brown: Buy Stocks Now or After the Election?

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Housing Starts Rise in September
Posted by Eddy Elfenbein on October 20th, 2020 at 12:55 pm

This morning’s housing starts report showed a big increase. The Commerce Department said that housing starts rose 1.9% last month to a seasonally adjusted annual rate of 1.415 million units.

Single-family homebuilding, the largest share of the housing market, jumped 8.5% to a rate of 1.108 million units last month. But starts for the volatile multi-family housing segment fell 16.3% to a pace of 307,000 units.

Overall, housing starts increased 1.9% to a seasonally-adjusted annual rate of 1.415 million units last month. Data for August was revised down to a 1.388 million-unit pace from the previously reported 1.416 million. Groundbreaking activity rose in the West, South and Northeast, but fell in the Midwest.
Economists polled by Reuters had forecast starts increasing to a rate of 1.457 million units in September.

It’s hardly a secret why. Mortgage rates continue to be very low.

The stock market is up so far today. The S&P 500 is up about 1%. Many of the cyclicals are leading.

Morning News: October 20, 2020
Posted by Eddy Elfenbein on October 20th, 2020 at 7:04 am

China Is Experiencing a Boom in Share Sales

After America First, Some Investors Bet On A Biden Boost Abroad

Oil Industry Turns to Mergers and Acquisitions to Survive

As Washington Scrambles for More Bailout Money, the Fed Sits on Mountain of Untapped Funds

The Case(s) Against Big Tech

Walmart Cranks Up Advertising Drive, With or Without TikTok

Intel Sells NAND Memory Chip Business to SK Hynix for $9 Billion

The New 60/40 Portfolio

UBS Makes It Easier for Exiting Employees to Collect Bonuses

Offices Resort to Sensors in Futile Attempts to Keep Workers Apart

Many Stock Investors Are Too Young to Remember Black Monday in October 1987 — Why That’s A Problem

Chasing Illicit Money, Global Officials Circle a Puerto Rican Firm

Joshua Brown: Well This Is…Something

Ben Carlson: Opening An Investing Account For The Kids

Howard Lindzon: Momentum Monday…Black Monday Was 33 Years Ago Today

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Homebuilder Confidence Hits All-Time High
Posted by Eddy Elfenbein on October 19th, 2020 at 11:52 am

From CNBC:

The nation’s homebuilders are seeing no fall chill in demand from buyers, and that has the industry more confident than ever.

Builder sentiment set a record high for the second month in a row, jumping to 85 in October on the NAHB/Wells Fargo Housing Market Index. September and October are the first two months the index has ever been above 80. Anything above 50 is considered positive. The index stood at 71 in October 2019.

All three components of the index either set records or matched their highest readings. Current sales conditions rose 2 points to 90. Sales expectations in the next six months increased 3 points to 88, and buyer traffic was unchanged at 74.

In a related note: Today’s mortgage rates fall even lower.

The Market Crash, 33 Years On
Posted by Eddy Elfenbein on October 19th, 2020 at 11:11 am

Today is the 33rd anniversary of the 1987 stock market crash. As it turns out, that crash happened on a Monday.

The Dow fell 508 points for a total loss of over 22.6%. That was the largest drop in market history. Today, that would be like a drop of more than 6,000 points.

In fact, with the modern circuit breakers, that record may never be broken. Today, if the market falls over 20%, then the exchange is shut down for the day.

People often ask, “so what caused the crash?” At the time, the popular answer was program trading. But that’s misleading. A number of very unusual events happened just before the crash.

For example, over that weekend in 1987, parts of England were hit with the worst storm in 300 years. The intensity of the storm caught forecasters off guard.

That weekend, James Baker had gone on the Sunday talk shows and criticized Germany for its recent rate hike. An unnamed Treasury official said that we would “drive the dollar down” if necessary. This led European markets to fall on Monday.

Also, a tax bill had just been introduced in the House Ways and Means Committee that would severely limit tax deductions for interest paid on debt used to finance mergers or hostile takeovers (which had been running rampant throughout 1987).

Alan Greenspan was new on the job as Fed chair, and he raised interest rates just before the crash.

The day of the crash, many stocks couldn’t open for trading, yet the futures markets were working. As a result, a big gap opened between the two. By 10 am, 95 S&P 500 stocks, representing 30% of the index, were still not open.

With the 1987 crash, the market temporarily gave back its recent gains. Here I’ve altered the chart slightly, and it doesn’t look so unusual:

If you had been Rip Van Winkle and slept though the whole thing, the chart above would look perfectly normal. Fortunately, the market break had little impact on GDP:

Starting from the day before the crash, the Wilshire 5000 Total Return Index is up 30 fold.

Morning News: October 19, 2020
Posted by Eddy Elfenbein on October 19th, 2020 at 7:07 am

With Covid-19 Under Control, China’s Economy Surges Ahead

Lockdowns In Europe Are A Warning to the United States

EU Set To Gain WTO Clearance For U.S. Tariffs Next Week

Weakened U.S. Consumer Watchdog Expected to Bite Back If Biden Wins Election

For Long-Term Investors, Small Things Like Presidential Elections Don’t Matter

Conoco to Buy Concho for $9.7 Billion, Creating Permian Oil Giant

World’s Biggest Fracker Sees Signs of Rebirth as Slump Bottoms

Almost 60% of Mutual Fund Assets Will Be ESG by 2025, PwC Says

Atari Is Launching A Cryptocurrency Along With Its New Gaming Console

Disney Adds Warnings for Racist Stereotypes to Some Older Films

Jeff Miller: Weighing the Week Ahead: Will Strong Earnings Confirm an Economic Rebound?

Joshua Brown: Are Investors Getting Smarter? & Losing Money Is The Coolest!

Ben Carlson: What If The 4% Rule For Retirement Withdrawals is Now the 5% Rule? & You Paid Off Your Mortgage. Now What?

Michael Batnick: Animal Spirits: What’s in an Index? & Trading Through the Pandemic

Howard Lindzon: Kyle Samani Joins Me On Panic With Friends to Talk the Past, Present and Future of Crypto

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