By Eric Neu
Contributing Writer
Market Highlights
Halliburton is set to buy Baker Hughes for $35 billion. As oil prices have been dropping in recent weeks, both companies believe this is a good step moving forward. Halliburton and Baker Hughes are number two and three in the energy sector. They have combined to take on the leader in the sector, Schlumberger. This would be the second largest deal in the energy sector this year.
What’s Happening in SIMM
On Friday, the group discussed the potential of buying the access to Money.Net. We discussed the pros and cons and even talked to some of the owners about our potential use. On Monday we listened to updates from the Healthcare, Tech and Industrial sectors. They discussed the big news from the last quarter and the direction of the stocks we currently hold. Wednesday we continued an update from the energy fund and gained some transparency on their holdings. We also had a buy pitch for Netflix that narrowly failed. And we had a sell pitch for Qualcomm that ended up being sold.
SIMM is a club that meets every Monday and Wednesday from 4pm-5:15pm in the Financial Services Lab (Swan 101). Any major and all experience levels are welcome. Researching companies and presenting recommendations help you develop personal investing skills provide education that can’t be found in any other class. If you are interested feel free to contact Steve Zimmer at zimmersm11@bonaventure.edu
This Week
Equity Fund: $268,502
Energy Fund: $245,500
Market Movers of the Week
GAINERS
For (F) 3.8%
UnitedHealth (UNH) 3.5%
Chesapeake (CHK) 2.3%
Harley Davidson (HOG) 2.3%
LOSERS
Trinity (TRN) -4.5%
Gilead (GILD) -3.7%
CDK Global (CDK) -3.3%
Trading Activity
BUY
QUALCOMM (QCOM),
QUALCOMM Incorporated designs, develops, manufactures and markets digital communications products and services in China, South Korea, Taiwan and the United States. Qualcomm is the leader in 3G mobile patent holdings as well as other patents in 4G and other technologies. We decided to sell based on future potential. While before they have had basically a monopoly on 3G services they have since lost much of their market share as other competitors have grown to develop better products and have an edge in the 4G and LTE markets. They also missed earnings this quarter and had a weak guidance. There is also speculation that there could be up to three large lawsuits that could all hurt them. We have held Qualcomm since 2011 and believe it is a good time to realize our gains before they lose market share or are hit by one of the lawsuits.
DON’TBUY
NETFLIX (NFLX),
NETFLIX operates as an Internet television network and is engaged in the Internet delivery of TV shows and movies directly on TVs, computers, and mobile devices. While margins on U.S. streaming service are expected to rise in the next few years, increased competition in streaming services from Amazon, Hulu, and Time Warner’s HBO are risks for Netflix industry going forward. However, Netflix has room to grow its streaming services as we see a transition away from traditional cable and satellite television services. Also, the discounted cash flow analysis and market multiples valuation were difficult to complete because of the lack of competitors for Netflix. Overall, the Fund chose to not buy at this time, but will continue to watch the stock’s performance and may revisit this pitch in the future.
neuea11@bonaventure.edu
