For Immediate Release
Chicago, IL – July 13, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Broadcom Corp. (BRCM), Emulex Corp. (ELX), Primus Guaranty, Ltd. (PRS), Ambac Financial (ABK) and MBIA (MBI).
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Here are highlights from Friday’s Analyst Blog:
Broadcom Stops Pursuing Emulex
Broadcom Corp. (BRCM) yesterday dropped all efforts to acquire Emulex Corp. (ELX) after the latter rejected its revised acquisition offer. Broadcom had earlier raised its hostile bid to acquire all outstanding shares of rival Emulex from $9.25 per share to $11.00 per share.
Broadcom has been involved in a fierce battle to acquire Emulex since May. The company had earlier said that the $912 million revised offer was the best it could offer Emulex.
On the other hand, Emulex stated that the offer significantly undervalued its long-term prospects and was not in the best interests of its shareholders. The company appealed to the investors to not tender their shares into the offer.
Primus Grows with CypressTree
Primus Asset Management, Inc. (PAM), a wholly owned subsidiary of Primus Guaranty, Ltd. (PRS), announced the closure of the acquisition of CypressTree Investment Management, LLP on July 9, 2009. We view this acquisition as positive for PRS as it will gain more scale with a leveraged platform.
With approximately $2.4 billion of assets under management, CypressTree will operate as a wholly-owned subsidiary of PAM. The nature of CypressTree’s business is managing leveraged loans and high yield bonds among various other investment products, including collateralized loan obligations (CLOs), collateralized swap obligations (CSOs), off-shore funds and separately managed accounts. Following the acquisition, PAM now has over $25 billion in assets under management in structured credit vehicles.
Focusing on the single niche area of credit swaps, Primus is able to maintain lean operations and leverage its employee base while growing its business. As the company grows its portfolio with such acquisitions, the ratio of the notional amount of its credit swap portfolio to the number of its employees will decline, which could offset some of the current margin pressures.
In view of the challenging market conditions, PRS has decided to manage its business in the amortization mode versus the growth mode earlier and has also taken several other initiatives to reduce the risk of its portfolio and conserve its capital. However, the company expects to perform better than its peers — Ambac Financial (ABK) and MBIA (MBI) — in the upcoming quarters due to current CDS spread tightening. We are thus maintaining our Hold recommendation.
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