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tv   Fast Money Halftime Report  CNBC  February 13, 2017 12:00pm-1:01pm EST

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>> having quite a photo-op with president trump at the white house at the oval. >> that's what i'm talking about. spending on factories. a lot of good jobs there. perhaps counter balancing the jobs that i tell is losing. >> finally, ten companies account for about 21% of s&p market value right now. apple, microsoft, berkshire, amazon all lead that incredible list. let's get to the judge at "post nine." ♪ >> thanks so much. welcome to the "halftime report." post nine new york stock exchange. top this hour, russell run, yet another record high for the smaller cap index which is now up 17% since the election. that easily outpaces the other mayer jos but does it mean it's the best place for your money right now? with us for the hour today, joe terranova, josh brown, john. it is the russell that continues
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to get our attention. joe, it's up 43% in a year. it's been running almost every day since the election. >> so it's not necessarily the best place for your money but it is one of the places for your money and it should be there. well talked a couple of weeks ago heading into earnings about the importance for financial institutions to contribute once again. understand the russell index, not the etf, iwm, russell index has signature can't ificant exp. mid 20s. you are seeing the appreciation of financials. both jim and josh have talked about the disappointment that investors felt a couple of weeks ago. financials once again with are good. 2 to 10 spread, that's moving in the right direction once again. ten-year treasury lifting. these are all good conditions for the financials and russell index. >> why not? >> it's -- it's not -- when i say not the best place -- >> why not? it is one of many places.
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i think to have an overattraction to any asset class, that's not the right discipline or risk management strategy. >> jimmy, agree or disagree? >> i agree. important nuance. much like the other indices there are clear winners and losers in the russell 2000, scott. it is a stock picker's market. look, i own small cap stock in the portfolio run for clients. some of them have underperformed like winnebago, we've talked over the years. it's off about 15% -- actually about 20% from its highs and doing very, very well. i can find another company like dco, small aerospace company that is just on a tear. it's also doing well. but by point is today i would be a buyer of winnebago. i wouldn't rush out to guy a ducomu. >> if you have a choice between the iwm, you know, the s&p, the dow, these etfs, josh, why not go into the russell? if you look big picture you
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don't have to deal with some of the issues that worry people about investing in bigger stocks that are multi-nationals, that are, you know, so tied to the movement and the dollar maybe trade wars. the rhetoric, sure. >> but with small caps you have other issues and those include things like the credit market is tightening. not that that's happening right now but that will put a crimp in the russell quickly. look at the fact that small caps didn't go anywhere in 2014-2015. and median company in the russ sell 2,000, scott, into the end of the correction last february was down something like 25%. that is a much larger drawdown, median drawdown than what you saw amongst the mega caps. what i want to say right now is that it's an incredible time for diversified investors. you've got the nasdaq composite, nasdaq 100, russell 2000, midcaps, the dow, the s&p, all making new record highs. and bigger than that, is that
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the breakout is becoming global. take a look at the dax, up 30% from lows. japan going ballistic right now. latin america is on the verge of breaking out. you've got entire asset classes that we never talk about here that are starting to make people a lot of mmoney. the key is not to wait until it happens and then say, oh, wow, the russell is up 17%. you've got to be in these places when no one the s. talking about them and that's starting to work. >> nasdaq what it's doing in the s&p with a new record. are the best opportunities now outside of -- >> look at the wall street cover story today. europe, european equity, earn g earnings are growing for the first time in four years and the fastest pace of growth in five years. and again, these stocks trade at significant discounts because there's politicliolitical turmo europe, blah, blah, blah. political turmoil here, too. >> those are the places that
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people coming into the year did not expect to see the performance they're seeing right now so they're rushing back in again. josh is membersing many asset classes. how about reits, how about how yields, how about investment grade? all are positive year to date. all these asset classes are doing well. >> because rates haven't acted as people thought they would. >> as if -- it's almost as if we are back once again in the sweet spot. the one sector that was not performing well was retail and there's one thing that can take care of retail's underperformance. >> i had somebody e-mail me earlier saying i can't believe the market is doing what it's doing given the disaster that retail is. retail stocks continue to roll over. >> not that bad. >> the market continues to go higher. >> not that big in the context of the overall market. >> retail is going right now that it's done every january into february. it rallies into the annings that come out mid february to end of february. it happens every year. and it has nothing to do with what the sales were in christmas. it's just people are looking forward to what the year brings
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ahead. >> listen, is s.e.c. proxy rules have never been more favorable for activism. the question becomes, does activists look at the retail sector and find opportunity to view it as cheap. that's a referendum on retail and we'll get into that in a little bit. >> in that particular sector there should be a lot of m and a and i hate to say it, there should be bankruptcies that will take out the capacity that is killing that sector. >> we're going to get to well-known activist in just a moment but since we're talking small, as in small caps, let's talk large, as in apple largest market cap. all-time high. less than a buck. 134.54 i think is the number you need to watch for the all-time intraday high. it's already above the all-time closing high. >> when you look at inflation adjusted, and not nominal, i think microsoft was bigger in real dollar terms back in the day, during the dotcom boom than apple is now but on a nominal
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basis we've never hat a $700 billion company. it's an exciting time to be an investor. >> look, pete nanlg, to his credit, has been talking about services, nonstop, about apple, arguing that it should get more cred than it does. steve with a note today, well-known analyst, right there in the best known analysts, is services undervalued in apple's market cap, he asks? >> i think the analogy here is amazon, not saying this is the same thing but aws is something that's grown at multidouble digit growth rates. and people are see that in apple services. i think apple does have a problem if you're going to look at apple services it's still too small relative to the relative iphone business. >> of course. >> i own it, scott. i'm in there. all i'm saying is, right nout apple is going up because everybody is following -- >> do you know who is buying apple right now? the people fading it from
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'90-'95. >> exactly. >> such a big market weight, it's a massive component in several major etfs and averages that active managers are being judged against. if you're out of it or materially underweight, you have some explaining to do and i think that that's the people that are buying it here. they are saying i was just waiting for the services business -- >> this is like an age old conversation about apple, one that carl icahn himself made years ago at this point. even at this level, you know, three years ago, four years ago, that it was underweighted by so many people. you had to essentially play catch-up and that was going to give the stock over the long term. >> they sell it when the s models come out. so like the 6 is a huge hit. everyone goes crazy. 6s, nothing special. then the 7 comes out. buy it back in. they sell it on those off years because they misinterpret a year over year drop as something secular. apple can't innovate apples
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over, et cetera. they do it every single time. >> you also brought into if conversation to the entire tech sector. every one that was cautionary about the concerns of, well, rising inflation, president-elect trump does not like the sector. we're going to have an issue as it relates to globalization being put to bed. technology has come right back once again and we're now focusing on the things that matter. corporate tax cuts repatriations. you want to talk about large cap? tech companies, how about the recovery in your favorite name, irk bm. ibm getting back to 180. >> indignation. >> a level it hasn't seen since 2014, i believe. you're mining for opportunities in technology beyond apple to find what the next potential one it could be. >> i was hoping when you were leading into that you were going to bring up cisco systems which reports on wednesday. but it's another one of these companies that's so under the radar, and ibm, i'll give you that. but cisco is going to hit a new ten-year high any day now.
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our first guest today is targeting two stocks in the russell for his latest activist campaigns and is here exclusively with us to discuss them today. mick mcguire is joining are us. you threw me there with the beard. >> glad to be here, scott. >> new year, new look, new activist campaign. >> you got it. >> i have the letter you sent to me last week, buffalo wild wings, officially launching your proxy seat for four seats including one for yourself. i was wondering why you were forced to go to those measures and whether you had any conversation since this letter dropped a week ago either with anyone on the board, lead, et cetera. >> sure. so i think the reason why we took the step, we've been i vested with the company approaching a year now. and, you know, we see there's an enormous amount of opportunity to create value with the business but we don't feel like
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the company, the management team, or the board have yet articulated a clear plan to do that. the company had an analyst day in august. it was the first analyst day they've had in 2 1/2 years. that was the natural time for the company to articulate a clear plan to improve same-store sales, return on capital, all areas that the company has been struggling with. the company did not articulate that plan in august. they actually promised that they would arctticulate that plan in february, most recent earnings report. they again failed to do that. we think clear change is needed and that change should start at the board and we put to the a tremendous group of people that we think would make a real difference. >> when exactly is the annual meeting? and will you -- will you attend it? >> well, the annual meeting will be in may. the record day for people to vote in that meet willing be sometime in mid to late march. whether we attend the meeting in person or not i think will question de side at that point in time. i anticipate that we certainly will.
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but there's a lot of wood to chop between now and then. we plan to spend a lot of time with important shareholders and other constituents as part of the ploks roxy process. we think people will be excited to meet the talented members of this slate that we have put forward. they can go to our website, www.winning to read not only all the materials we produce and discuss with you in the past but also to read the biographies of these executives that will be a meaningful improvement to the status quo at the board level. >> what you want to have happen is you want the company to franchise most, if not all, of the actual restaurants that it still owns, correct? which what i can find is about 600, is that right? >> that's right. there are a number of things that the company can do to realry improve shareholder value. the most important and meet step the company needs to focus on is
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the restaurants that they do own have seen consistently deteriorating profit margins and the company's repeatedly stated that they have, you know, a plan to get those margins become up but have really for two or three years now on end, you know, failed to put forward any specific credible plan to improve those four-wall margins. we think that there is between 3 and 700 basis points of profitability improvement on a base that's in the high teens. that could be very material and the company could be making progress on that in the immediate term. over the median term, this is one of the few companies in the entire restaurant sector that sits right in the middle. they have a 50/50 mix of franchise and company-operated restaurants. you can see that companies that have shifted to an asset light, highly franchised business model, traded quite a bit higher multiples of ebitda. you've seen the best in class operators in the sector migrate that direction over time.
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we think this could be should do the same. >> i'm glad you went there because that's exactly where i wanted to go next. i looked at your slide deck from august where you sort of allowed your case in that presentation and you mentioned jack in the box, burger king, domino's as examples of other companies that have done what you want and that have improved their own operations. but you would admit though that buffalo wild wings is an entirely different skon accepco you will, it's a full service restaurant. cap x levels are different, they have lick you'quoliquor, et cet burger king and these other places don't that are driven by the fast food model. >> i think there are certain things that are true in all concepts. and that is that the incentive system for a franchisee is very different from the incentive system of a corporate manager. and you see that both across casual dining as well as fast
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food qsr businesses. and the motivation of franchisees to max mice the returns on capital and maximize the profit margins is really overwhelming and that's why even in the case of buffalo wild wings you can observe empirically that many of their largest franchisees generate higher unit volumes and higher four-wall margins and higher return on capital than the company does with its own restaurants. >> do you think that the restaurant industry itself is out of what people had called a recession in the last, you know, 18 months or so? >> i think that would be hard to say, actually. i think that traffic trends in -- certainly within the casual dining industry, have been soft for several quarters now. and that's not something that you would expect to see given what has been fairly robust employment trends.
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and so it's particularly that trend that makes it increasingly important that all the casual dining restaurants are particularly buffalo wild wings in this case, are acutely focused on maximizing their disciplines around, you know, where they're investing their capital, how they're using technology, their food quality, their service delivery levels, and that's why these directors that we're putting forward, you know, one of the things that this board really lacks is any executives with proper restaurant operating experience. and we've put forward three directors who each individually have really a tremendous amount of restaurant operating know-how, have worked at first class, you know, restaurant companies and can bring the kind of oversight and experience that this board needs in order to improve the operations of the company. >> they did put some new directors on the board.
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and wasn't one of those new directors from yum brands? so that would seemingly at least have some level of experience that you're looking for. >> they did put new directors, three directors new on the board in october. we were frustrate with that decision. we specifically had asked them -- we thought it was appropriate for them to consult with shareholder before they made any board changes and they did not do that. we think that is an example of fairly poor governance. they added three new directors to the board. two of those directors have absolutely no restaurant experience. i'm sure they're talented executives but have never worked for at or served on the board of a restaurant company in their careers. and the only one of those three has any restaurant experience in his background, it was a few jobs ago and it was in a financial capacity. yes, at yum brands. we're hopeful that that is, you know, at least one person on the board that the appreciate the value of a highly franchised system. if you look at the changes that yum brands has made they have
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separated their china operating unit from the parent and the parent is now a pure franchise business that believes they can actually grow more effectively as a franchiser. i think it closed at 15 times ebitda and that's the model that we think wild wings should explore. >> do you think that sally smith, the ceo, should remain in her job? and do you think you can reach a settlement to avoid the proxy? >> you know, i mean, we're certainly open minded to discussions but so far the company has been completely unwilling to explore anything in that regard. which is why we've been forced to take this step. you know, we have been in conversations with the executive team and with various members of the board since -- since early july. we've repeatedly requested an opportunity to have an audience with the full board, that has never been provided to us. we've shared with the company, you know, hundreds of panls of analysis that go into the
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various tradeoffs of franchising and operating improvement. that analysis is available on our website for everyone to examine. the company has not shared a single piece of analysis with us or shareholders generally, not one that describes what type of operating improvement they think they can achieve, how they can achieve it, over what time frame they can achieve it. as a result we think that change is long overdue. >> so we have a statement from buffalo wild wings, just want to read a couple things from it. get your reaction to it. they say, the company recently announced its undertaking a process to franchise approximately 10% of company-owned restaurants and in addition expects to add 35 new franchise stores. obviously, mick, that's far below the level that you want them to do. they finish by saying, the board and management team are acutely focused on driving shareholder value, remain committed to continuing to take steps that are in the best interest of all shareholders to achieve this objective.
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>> yes. i hear that statement. you know my reaction would be, first of all, difficult min news change in their corporate strategy. 10% of their company owned stores represent 5% of the system. that is an insignificant change. number two, the rational for refranchising this small amount of company operated units is that they believe the franchisees in those markets will be able to do a better job running those store than they do. i would waonder why it is that same rationale would not apply to most if not all the company operated restaurants. and lastly, unfortunately for shareholders that have owned this stock over the last, you know, three plus years, the company has an unfortunate track record here of making promises that improvements and shareholder value, driving initiatives are just over the
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horizon and, you know, all of those initiatives have failed to bear fruit over the last -- over the last three years and we think there needs to be accountability for that. >> mick, bear with us. we're going take a quick commercial. i want to come back and talk about some of the other things in the portfolio including the newest stock in the marcato book. here's what else is coming up on the "halftime report." >> with volatility at record lows, are we about to see a vixplosion? our suppliers at kensho may have the answer. ♪ when you have $7.95 online u.s. equity trades, you realize the smartest investing idea isn't just what you invest in, but who you invest with. ♪ isn't just what you invest in, but who you invest with. if only the signs were as obvious when you trade.
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spiking. a new pack on autonomous driving. seems similar to what waze does for crowd sourcing to power the data. the two companies are planning to introduce this in 2018. looking at shares of mobile eye up 7%. back to you. >> seema modi with the latest there, thank you so much. back with mick mcguire. want to ask you about deckers. you filed last week with a 6% stake. you want to engage in discussions with the board. i'm curious as to what exactly do you want from deckers? >> deckers is a company that fits our investment model very, very well. it's a business with a great brand, generates a lot of cash flow and trades at one of the lowest valuations in its history. but they've made some very critical missteps around capital
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allocation and really a lack of discipline around costs and returns on capital. in an era where you and your team were mentioning this at the top, physical retail is under a lot of pressure. there's some real open questions about, you know, what the world of physical retail will look like in the future where and when every physical, you know, base retailer in the world is working to reduce their footprint and optimizing their footprint, deckers is investing hundreds of millions of dollars over the last five years, expanding greenfield physical retail locations. we think that's been a verifiable mistake. one that many shareholders had expressed concerns about all along the way. and we think it's time to revisit that strategy and instead focus on maximizing return on capital, profit margins, free cash flow, and shareholder value. >> are you suggesting that they should get rid of their retail
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stores all together? i've seen some suggestions that uggs could get $2 billion by itself if they were to look to sell that property. >> we do think that the ugg brand is a very, very valuable brand. we also -- in fact, the company has a handful of non-core brands that we also aren't nearly as valuable as ugg itself is but we think have value that is not being factored into the existing valuation of the entire business. but, yes, we think the principle capital allocation that the company has made for several years on end has been the deployment of significant investment in the physical retail stores that have really translated into no visible return on investment of any kind and, instead, the rapid expansion of unallocated corporate expense, store level gna, inventory and working
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capital to fill these stores. it's really something that needs to be reversed as soon as possible. the company has admitted as much. in fact, on a baseline of 200 million of ebitda the company recently announced that they were going to begin rationalizing some of these stores to save as much as $150 million of annualized savings. but unfortunately the company has been cryptic about how much of this savings will actually flow through the bottom line and they plan instead to reinvest most of that savings into, as of yet to be defined new initiatives. we think that is a questionable strategy given the poor history of capital allocation. >> i mean, it's a new position. as i said, have you had a chance yet to even speak with anybody and are we going to be talking about the possibility of a proxy fight down the road? >> well, this is a company, even though we have purchased our position very, very recently, actually just post-earnings this
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last week. we have had conversations with the management team prior to building our position and had indicated to them that we were concerned with their capital allocation framework and that we would be having this conversation if, in fact, things went the way we expected them to and we were able to buy it atlanta tractive levels. the company itself has a later fiscal year than a typical business. and so their annual meeting is not until august. you know, to the extent of proxy contest would be necessary, we would not have to make those sorts of decisions until later in the year. but we -- you know, we will have to see how our conversations progress. >> the board is not staggered. some are suggesting that any sort of battle with these folks could actually not take all that much time. the stock was at 75 bucks at the end of 2011 as we're having the conversation today, it's at $52
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and change. let me do this. there are other stocks in your portfolio. you mentioned my team. they are here. i know they have some questions for you, if you wouldn't mind entertaining them. i know jim lebenthal has one for you as it relates specifically to retail. jimmy? >> thanks, mick. on the sector as a whole, you want to bellwether in macy's. special situation in jcpenney. i'm curious about what you think about the sector? is it just trading up -- this was toxic a month ago. is it trading up right now on earnings which is seasonal? is it trading on m and a activity? is there something else going on? i would be surprised if you told me that brick and mortar retail is coming back but let me hear your thoughts on macy's and the sector. >> brick and mortar retail is not a sector i have a lot of enthusiasm for. i think the retailers that are going to win are going to have to figure out how to, you know, rationalize the footprint as quickly as possible and be able to connect to the consumer in a
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digital way. i would say we've rereduced our position in macy's fairly con significantly from our last filing when the stock rallied into the mid 40s in kind of the post-election period. we cut our position quite significantly at that level. it's obviously come down even further from there. you know, i would say one thing that macy's has that many other retailers do not is a very significant real estate portfolio and the company has indicated that they're taking steps to do that. most investors would like to see more progress on that more quickly. but recent media headlines suggest that maybe that's something that would, you know, potentially be in the mix and i think would translate into higher values then you see today. >> bear with me one minute, mick. i want to show you some tape right now from the white house, the president of the united states, canada's prime minister in the room with the female ceos, having that meeting a little bit earlier. this tape just coming to us
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moments a i go. it is the canadian prime minister's first visit to the white house though. he and president trump had spoken following the election. they're going to have a joint news conference in an hour and a half at the white house. 2:00 p.m. eastern time. the two men will officially meet the press. you will find out more of what their conversations have been about today. trade is obviously high on the list. so we'll be listening to that certainly in light of the president's feelings about nafta and the impact on not only mexico but canada as well. let's listen in. >> thank you all very much. this is a great honor. i recognize some of you. great success. so important. i'm honored to be here with prime minister trudeau. his father i knew and respected greatly. and he gave me a picture of myself and your father.
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what a great picture. i will keep that in a very special place together. we are going to launch the can in da/united states council on the advancement of women entrepreneurs. we have some of the great ones in this room. and business leaders. we have so many great women leaders around the table today and we're going to go through your names and exactly because many of you i know, some of you i don't. i want to find out all about you. women, as you know and i can say that from my past life, have had so many women executives, phenomenal. phenomenal. and really helped me a great deal in business. so really fantastic. they play a tremendously important role, women, in our economy. women are the primary source of income in 40% of the american households. and households with children under the age of 18. in order to create economic growth and lots of very good
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well-paying jobs, we must ensure that our economy is a place where women can work and thrive. and i think that's happening in the united states much more so and very much involved in this and i appreciate you being involved in it. and i know, justin, in canada it's happening too. that's very important. we need policies to help keep women in the workforce and to address the unique barriers faced by female entrepreneurs. you are unique. we need to make it easier for women to manage the demands of having both a job and a family. we also need to make it easier for women entrepreneurs to getting access to capital. and i guess pretty much all entrepreneurs we have to help them out because the system is not working so well for entrepreneurs getting capital. but it's, in particular difficult for women. so we're going to getting access to markets and access to
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networks. and i look forward to hearing your advice. we're going to go around the table and i want to really learn something today. and again, it's a great honor to be with you. justin, i can say on behalf of our country, it's an honor to be with you. >> thank you. thank you. well, thank you for welcoming us. i'm really excited about launching this, sitting around the table here with a -- >> that of course the president of the united states, straight across the table now the canadian prime minister justin trudeau. female execs, ceos around the table there in that meeting. they're going to have a joint news conference at 2:00 p.m. eastern time. we're going take that live. you will hear more about trade, immigration, and other initiatives those two leaders with discussing. meanwhile, we do have other breaking news to get to. meg terrell has that for us. meg? >> scott, on another topic that's been of interest to the president lately, drug pricing, a scandal erupting last week over marathon pharmaceuticals. that is a private company. however, attracting a lot of
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attention with the price tag of a newly approved drug for muscular disstrofy. $89,000 a year. the reason it's suchen outcry is this drug is available for much lower prices in other countries. the company now receiving a letter from senator bernie sanders and representative elijah cummings calling the pricing outrageous and unconscionable saying we believe marathon is abusing our nation's orphan drug program which grants companies seven years of market exclusivity to encourage research into new treatments for rare diseases. not to provide companies like marathon with lucrative market exclusi exclusivi exclusivity. extra bonuses as a result of getting this drug approved in the u.s. a lot of people are nervous about this because marathon though a private company is a member of pharma. that group that just met with the president a couple of weeks ago. bringing a lot of unwanted attention to the pricing practices of the industry. scott? >> yeah, meg terrell, thank you
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so much. guys have a thought on this? this conversation has really been framed over the last six months or so on fears over what president trump could tweet. remember, it was in a magazine article where he said that drug companies regarding their prices were getting away with murder, or something to that effect. now you have senator sanders and representative elijah cummings getting involved. >> the last several weeks it's been dead money. goes up and comes right back down. comes down and it comes right back up. i'm in it for dividend yields for things like pfizer. i don't expect the prices of the stock to change at all until that's resolved. >> there's the nasdaq biotech ind index. still up on the day in what is a positive day. dow is up 130 points. all three of the major averages including the russell 2000 hitting an all-time high earlier in the session. let's get to our conversation
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now with marcado's mick mcguire. macy's has had a nice bump on suggests that maybe it is a takeout candidate. guy, remember there's the hudson's bay rumor and reporting that had been out in the marketplace lifting this stock. barron's over the weekend talking about significant upside as much as 50% if they were to do a deal and spin off the real estate asset. jim, terranova has a question about another stock. >> mick, obviously we're talking about stocks today that probably need a significant turn around. i've heard you talk about two names that have done incredibly well. united rentals and sotheby's. staggering performance. how should we be thinking about those? do you still believe this further upside potential for these two names? >> sure. i'm glad to talk about those. we've owned both of those companies in significant sighs over the years. united rentals we have sold out
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of. that stock has had an incredible run going from i think $70 as recently as, you know, october to, i think, last time i checked it was $125 or so. you know, we think that that is a great business. but we think you have to be careful about the multiple that you pay for that business, you know, the stock is extremely volatile one. and at the current levels i think it's pricing in, you know, an enormous amount of business and revenue that may not materialize for, you know, a couple of years. we think on a risk adjusted basis we would rather be invested elsewhere. sotheby's we still continue to own in size. we think the company continues to do all the right things to position themselves to benefit from a recovery in the art market. as you guys well know and have covered the art auction, business has been at very, very low levels here for the last
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couple of years. and in that time the company has made really m important changes at the executive level. they've repurchased a significant amount of stock and they've brought in a lot of new talent. i think that they're in a really good place to generate pretty significant earnings and margins when the art market recovers. looks like that might be happening. the early look on some of the material they have for their upcoming auctions looks to be pretty big improvement on a year over year basis. >> mick, it's josh brown. i want to get back to deckers. are you concerned at all that maybe ugg is over and that the next generation will not be as excited about it as prior generations? and i look at things like crocs ten years ago, a stock. people say no, still fashionable. now it's like seven bucks. does that concern you at all? is that the biggest risk to the deckers story that fashion just turns away completely?
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>> you know, it's certainly a consideration. it's something that i think people have had to focus on to invest in this business over years. you know, one thing i would point out is that i never was invested in crocs but i remember looking at the stock at various points in time and it traded at an outrageous multiple which the primary contributor to that sort of deterioration. this company today trades at, you know, it has net cash on the balance sheet. trades at something like, you know, 5 1/2 or 6 times ebitda. that ebitda is a level that, you know, could be 75% higher if the company just achieves its own stated cost savings plan. so from a valuation perspective and investment perspective you're very well protected. but to the fashion risk, ugg has i think done a really good job of proving that it is not a flash in the pan product. you know, this brand has been around for 20 plus years and
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only grown. it still has enormous growette opportunity internationally. enormous opportunity domest domestically into new segments like men and children and other categories out side of footwear where it can -- has established brand authenticity for comfort and luxluxury. we think the brand is a powerful platform but it needs to be executed more effectively. >> mick, i appreciate the time very much today. thanks for coming on and talking about a number of different stocks and on going situations that you have. talk to you again soon. >> good to be with you. >> all right, marcato's mick mcguire. we did reach out to deckers for reaction of what he was saying. if we do i will tell you what they have to say. take a quick break. come back and talk about downgrade for boeing. it is so underperform. we'll tell you why it happened. what it means for that stock, coming up next. hey gary. oh.
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"halftime report" at the new york stock exchange. boeing shares are high egg today about 1 1/2%. that's despite a downgrade the equivalent of sell at buckingham research. jimmy, what do you think on this? they say it's priced to perfection. >> it's not priced to perfection. it's not cheap but it's not priced to perfection. i think the problem with being a bear on this stock is you've got to ignore a lot of good things that are going on. so you've got the 737 max is going crazy. the 777 x is going tray cia zi. analysts are going to say what about the legacy 777 legacy 737? those orders will be filled because if you want a new plane in those lines these days you've got to wait until 2024 in order to get one. you buy one of the legacy ones for cheap. then there's the defense sector that's going really well. i think you've -- you've got seven years of backlog. you've got to ignore too many things going right to be barish on this stock. >> they should pair up some of
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these guys with like the technician so they say, all right, you're looking for a reason to go negative on boeing or cool off, don't do it yet. i'll tell you when to do it. if you have any awareness whatsoever on price action there's absolutely no way you're coming out with a downgrade on a day like today where it's eclipsing the prior high. this is a stock that's under accumulation. all the fundamentals are obvious. even the analyst is acknowledging everything is going great. downgrades on valuation very rarely work. wait for a break in price then say, okay, the move is over. >> stock has gone from 105 to 170. >> i think two names in the aerospace and defense sector would be l3, near its high for valuation basis, you probably don't like that. lll is doing very well. >> great company. >> a name i'm going to put on in the next week or so.
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we're seeing the consolidation phase. pulling the trigger on a value play he has been telling us about. the blitz is just ahead. all. wait. data just changed... now she's into disc sports. ah, no she's not. since when? since now. she's into tai chi. she found disc sports too stressful. hold on. let me ask you this... what's she gonna like six months from now? who do we have on aerial karate? steve. steve. steve. and alexis. uh, no. just steve. just steve. just steve. live business, powered by sap. when you run live, you run simple.
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welcome back to the show. toronto stock exchange hitting an all-time high as prime minister trudeau and president trump meet at the white house. some of today's big winners,
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sierra wireless, telecom company in canada andl labrador iron or. >> 20,410 is where we are now. 20,410. >> market looks pretty good. >> it takes -- took this breather. >> yep. >> trying to figure out what was coming next. >> yep. >> from the trags or otherwise. and got restarted and here we are. all three major indexes and add the russell to that, you're continuing to set new milestones now almost every trading session. >> the interesting part of it is i'm not necessarily sure, i don't know if jim or josh were to agree. i don't think that sentiment
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matches where price is right now. i still think there's a tremendous amount of skepticism as it relates to where we're currently valued. >> that's what's going to chase it higher. >> people will chase what they don't have. >> desperation trade. it's a not here yet. people buy it because they're behind the benchmark. erks oh, my god, i have to throw money at the market. that's not fundamental but that's real. >> as part of our blitz, ak steel, joe, downgraded at morgan stanley. nu nucor was raised. >> steel is getting downgraded goes back to last year's where you bought the high-yield component. now that's getting unwound as it relates to steel. steel dynamics, to me, domestically, that's the better play and the one i would own. >> hasbro, initiated by goldman. >> initiating it after a massive
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gap after earnings. they may have missed the boat short term but this company is set up with all the properties, all the things they're working on very well going into the next year. if you're an investor you hope you haven't already gotten the benefit of all that, given how much it's already moved. >> jimmy, you talked about madison square garden being a potential value play. >> we beat the spur. >> we bought it. >> biggest win of the year. that's the kind of year it's been. >> here is the story. forbes has the combined value of the knicks and rangers at $4.25 billion. enterprise value $2.7 billion. dolans aren't go going to do anything to mess up the value.
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what's up man? go-getters, and should-be sleepers. from all of us at delta, because the ones who truly change the world, are the ones who can't wait to get out in it. markets closed just a few hours. my final trade is verizon. worst performer today. unlimited data is the new announcement. >> i just cut my bill by $70 and got unlimited data. ridiculous. >> buy it. buy it. focus on what the company is trying to become, diversified company. buy it. >> final trade. >> final trade. fang. thank you, jim cramer. put the idea in my head last monday. bought it thursday. >> adobe. look at that chart. it's lit. >> cisco systems, 52-week high today on its way to setting a
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ten-year high. >> 20 seconds left. dow is now plus 140 points on the day. never traded higher than it did in the last few minutes, 20,410. all three of the major averages, the russell joining suit there. "power lunch" picks up that story among other big stories of the day right now. >> taxes, trade, job, borders and pipelines. it is all on the table as president trump meets with the man who governs america's most important trading partner. it is trump and trudeau at the white house. also ahead, crisis in california, america's tallest dam on the brink as nearly 200,000 people are forced to flee their homes. why weren't earlier warning sign s ignored? i'm brian


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