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Baron Asset Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2020, the Baron Asset Fund returned 28.02% (institutional shares). In comparison, the benchmark S&P 500 Index was up 20.54%, while the Russell Midcap Growth Index was up 30.26%. You should check out Baron […]

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(Bloomberg) — Amateur investors who loaded up on J.C. Penney Co. shares as the retailer went bankrupt are now pleading with a judge to spare them from a complete wipeout.“I hope and pray for you to consider the shareholders,” wrote 50-year-old individual investor John Hardt in a letter dated May 25, one of dozens sent to the Corpus Christi, Texas-based court overseeing the case in recent months.Hardt is part of a growing number of retail traders — many driven by lockdown boredom and free online trading — who have piled into the stock market. Speculation by amateurs is nothing new, but for the first time experts can recall, investors are buying shares of even bankrupt companies. Hertz Global Holdings Inc., oil driller Whiting Petroleum Corp. and J.C. Penney have all seen their stock price surge in recent sessions, despite being in Chapter 11.Those gains almost always prove fleeting, leaving retail traders with little to show for their stakes other than an expensive lesson in the U.S. corporate bankruptcy process — where shareholder value disappears almost as a rule. That’s because all creditors have to be made whole before equity owners get anything. For J.C. Penney investors, there’s little to suggest this time will prove any different.A representative for the company declined to comment on the shareholder letters. An unrelated hearing scheduled for Monday may yield an update about extending the deadline for lenders to approve its turnaround plan.“If there is any possible way — any way — to give a meaningful recovery to shareholders, we will fight for it,” Joshua Sussberg of Kirkland & Ellis, J.C. Penney’s bankruptcy lawyer, said at a June 9 hearing.Read more: Robinhood’s new traders ignore danger signs to bet on stocks Mom-and-pop investors who insist on betting on struggling companies would be well advised to stay away from those in or near bankruptcy, said Fred Ringel, a partner and co-chair of the bankruptcy department at law firm Robinson Brog Leinwand Greene Genovese & Gluck.“People who buy equity hoping that they’re not going to get wiped out in a bankruptcy just don’t understand the process,” Ringel said.He added he’s been baffled to see retail investors putting cash into bankrupt stocks given the complexity of the restructuring process. “I don’t understand this phenomenon at all,” he said.J.C. Penney filed for Chapter 11 in mid-May. After climbing as high as 67.9 cents last month, the company’s stock is trading at around 30 cents. Some of the retailer’s most junior debt — which still ranks ahead of shares in the repayment line — is quoted at less than 2 cents on the dollar. This implies extremely thin odds that bondholders will get repaid, and in turn that nothing will be left over for stockholders.Hardt, when contacted by Bloomberg last week, said he had “zero knowledge of the bankruptcy process” before buying about 10,000 J.C. Penney shares. The Plano, Texas native said he’s already sold the position.Chasing AmazonSeveral of the letters from J.C. Penney shareholders criticize the company’s failure so far to announce a buyer, after media reports cited several potential bidders, including Amazon.com Inc. Bloomberg reported in May on talks between Authentic Brands Group LLC and mall landlords Simon Property Group Inc. and Brookfield Property Partners LP to acquire the chain.Retail investors hoping for a sale may have thought a buyer would pay cash for outstanding shares. Yet that’s practically unheard of in bankruptcy, where any asset value that remains after court costs belongs to lenders with senior collateral claims. Once they’re made whole, other creditors, including unsecured lenders and vendors are next in line. J.C. Penney entered bankruptcy with more than $2 billion in secured debt and $8 billion in total debt.Some recent J.C. Penney investors said in interviews that that they bought shares on the expectation that the company would be able to rebound once stores shuttered by the Covid-19 outbreak were able to reopen, and therefore the retailer would be able to secure better terms in its restructuring negotiations than the typical Chapter 11 debtor.The company has struggled for years, but analysts generally expected before the pandemic that it could hold out until at least 2021.Some of the letters also criticize the decisions of corporate management and claim that Chief Executive Officer Jill Soltau offered false hope to investors. The company maintained in public statements through the end of March that it remained “optimistic about J.C. Penney’s ability to weather this pandemic.”“I saw no bankruptcy coming only the promise of turnaround and great news,” wrote shareholder David Dean of Baltimore, who submitted a letter to the court on June 3. “Now this bankruptcy filing. Who could have known.”The case is J.C. Penney Company Inc., 20-20182, U.S. Bankruptcy Court for the Southern District of Texas (Corpus Christi)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — It was sold as an all-or-nothing moonshot into space, the boldest pay package in corporate history.Now, with Tesla Inc.’s stock on a seemingly unstoppable rise, Elon Musk is poised to collect the second tranche of his pay award, worth $2.4 billion.Barring a sudden drop in the electric-car maker’s shares, the final performance threshold tied to market value should be met in a matter of days. That would unlock 1.69 million stock options, yielding Musk the 10-figure sum if he were to exercise and immediately sell the shares.The remarkable payout follows an equally remarkable ride for Tesla, whose shares have more than quadrupled this year and ballooned Musk’s net worth to $70.5 billion, making him the seventh-richest person on the Bloomberg Billionaires Index. The automaker is currently worth more than Toyota Motor Corp., Volkswagen AG and Hyundai Motor Co. combined.Read more: Elon Musk Soars Past Warren Buffett on Billionaires RankingThe rally has left Wall Street analysts struggling to make sense of the firm’s valuation, which topped $300 billion on Monday. Some have focused on the company’s work to improve batteries or the prospect that it may soon start selling cars in India.Tesla is scheduled to release second-quarter results July 22. If it reports a profit, it would be the fourth consecutive such quarter — a milestone needed to be considered for inclusion in the S&P 500 Index.Ambitious TargetsMusk, 49, has never accepted a salary, with his pay instead consisting of option awards that he can collect only if the California-based company meets ambitious targets.The most recent iteration, unveiled in early 2018, was the largest-ever corporate pay deal struck between a company’s board and its chief executive officer. It includes 20.3 million options, split into 12 tranches, that could yield Musk more than $50 billion if all goals are met, according to Tesla’s estimates.Getting all of it, however, is far from certain. Each tranche is tied to specific targets for revenue, adjusted earnings before interest, taxes, depreciation and amortization, as well as Tesla’s average trailing market capitalization over 30 days and six months. The first market-value threshold was set at $100 billion, with the others following in $50 billion increments.Tesla reached its first milestones for sales and Ebitda — $20 billion and $1.5 billion, respectively — last year. And its 30-day market value average has been well above the $150 billion threshold for some time. Once the six-month average exceeds that level, Musk will claim the 1.69 million options and can exercise them at will.Musk said on Twitter last week that he could cash in on some of his stock eventually to further the mission of his other most high-profile company, Space Exploration Technologies Corp.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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"There are renewed expectations that the Pfizer vaccine will be ready for approval by the end of October, which is sooner than expected – so that's very good news," said Thomas Hayes, managing member at Great Hill Capital LLC in New York. Merger news also perked up investors as Analog Devices Inc announced a $21 billion deal to buy rival Maxim Integrated Products Inc , sending its shares up 13.0%. Pepsi Co gained 1.5% as it benefited from a surge in at-home consumption of salty snacks such as Fritos and Cheetos during lockdowns.

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With its stock down 9.6% over the past month, it is easy to disregard Exxon Mobil (NYSE:XOM). To decide if this trend…

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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. […]

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Yahoo Finance’s Adam Shapiro and Julie Hyman break down Monday’s trending headlines.

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(Bloomberg Opinion) — The boring part of the chip market is getting more interesting. For Texas Instruments Inc., that means stiffer competition from a stronger rival. Early Monday, Analog Devices Inc. announced a definitive agreement to acquire Maxim Integrated Products Inc. for about $21 billion in an all-stock deal that works out to a 22% premium to Maxim’s close on Friday. Maxim shareholders will get 0.63 share of Analog stock for each share they own, resulting in 31% ownership of the combined company. The transaction is expected to be completed in the summer of 2021 and is subject to regulatory and shareholder approvals.The deal would combine the No. 2 and No. 3 players in analog chips, one of the less sexy and more workaday corners of the semiconductor market. According to Bernstein, the category accounted for 13%, or about $54 billion, of the global $412 billion chip market last year. Analog chips have the specific function of converting physical world signal — including sound, temperature and pressure — into digital data. Compared to microprocessors — which are updated annually, cost up to hundreds of dollars per unit and require the latest bleeding-edge expensive chip manufacturing technologies — analog chips are very different. A typical analog product design can have a shelf life of many years, and they are inexpensive, often selling for less than a dollar each. And because they are also easier to make, they have high profit margins.But there are downsides for this segment of late. Analog-chip companies have faced growth challenges and have under-performed as a result. Shares of Texas Instruments, Analog and Maxim have risen less than 5% this year through July 10, versus a double-digit gain for the Philadelphia Semiconductor Index. The main problem is analog’s end markets are broad-based and account for the “nuts and bolts” basic chips used in all industry sectors – such as automotive and industrial. As such, they are beholden more to general economic trends. Wall Street analysts estimate fiscal 2020 sales declines of 14%,  12% and 7% for Texas Instruments, Analog and Maxim, respectively. In contrast, analysts forecast Nvidia Corp. – which makes digital chips for the surging growth applications of gaming, cloud-computing and artificial intelligence – will generate 33% revenue growth this year. Investors have taken note, bidding up Nvidia’s stock price roughly 80% this year.Given all that, it’s not surprising that a secondary player in the market such as Analog would feel compelled to do something to improve its fortunes. The classic consolidation playbook of  expense savings will have to do. The company said it will be able generate $275 million of cost synergies by the end of the second year following the deal’s close, adding the merger will be accretive to earnings within 18 months.More importantly, ADI-Maxim would create a stronger No. 2 player in the “standard linear,” or non-customized, analog chip market behind Texas Instruments. The new merged company would get scale benefits to spread out its chip design expenditures to a larger revenue base, improving profitability. To illustrate the potential, Texas Instruments, which generates more than double the sales of its rival, spent just 11% of its revenue for research & development last year, versus 19% for Analog. Further, a combined company would have more pricing power with customers.On a financial basis a deal makes sense. What about the regulatory risk? Amid the heightened political environment surrounding the technology industry, there will be some antitrust scrutiny. But as the deal would make a No. 2 player stronger, versus adding to Texas Instrument’s pole position, and because the end consumer likely won’t directly see price hikes, approval from Western regulators shouldn’t be difficult. The main barrier could be China. If geopolitical tensions between the U.S. and Asian country escalate in the coming months, the approval process for U.S. corporate deals may get arduous.But except for that risk, shareholders in the two companies should rejoice over the prospect of this merger.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Big banks such as Goldman Sachs, JPMorgan and Wells Fargo are all set to report earnings this week. Yahoo Finance’s Brian Cheung joins the On the Move panel to break down what to expect.

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Baron Asset Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2020, the Baron Asset Fund returned 28.02% (institutional shares). In comparison, the benchmark S&P 500 Index was up 20.54%, while the Russell Midcap Growth Index was up 30.26%. You should check out Baron […]

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