(Bloomberg) — Just in the last week, 96,000 people on the Robinhood investing app opened a position in Hertz Global Holdings Inc. The number of users holding Whiting Petroleum Corp. grew roughly 10,000 in the last 24 hours.Two things the companies have in common: They’ve filed for bankruptcy protection. And each saw their shares double to start the week.It’s the same thing for Chesapeake Energy, as it prepares a potential filing. In the past, the court process usually wiped out equity shareholders. In this day and age, as small day traders salivate at any opportunity to get rich quick, a filing has apparently become a buy signal for many of them. There’s evidence retail investor actions have become a decisive driver of price.“Retail has a lot to do with it and I don’t think you’ve seen institutional investors buying those kinds of stocks,” said Christopher Grisanti, chief equity strategist at MAI Capital Management. “It’s too much risk. I would call it catching a falling knife.”The 2020 stock market has been full of peculiarities that nobody saw coming. The fastest drop for the S&P 500 into a bear market, followed by the fastest 50-day rebound in nine decades. Mom and pop scrambling to the right side of the recovery trade, while the advice of Wall Street legends falls flat. A health-care crisis forcing one of the deepest recessions, and in the midst of it, equities emerging unscathed.In a market as bizarre as this, it seems only fitting that the next step would be a growing affinity for companies that can’t pay their debts.According to website Robintrack, which uses Robinhood’s data to show trends in positioning but isn’t affiliated with it, individual investors on the app have been flocking to bankruptcy-protected companies in droves. (The site says it downloads popularity data each hour for every stock directly from Robinhood via a public application programming interface, or API. A Robinhood spokesperson declined to comment for this story.)Of course, interest in these stocks isn’t flowing solely from Robinhood clients. But the app is a lens into retail interest, particularly among younger investors, because unlike other popular brokerages, it’s possible to see holdings of its users in real-time. Some of the rallies in these shares may also be due to short covering.Robintrack’s data show 159,000 users now hold Hertz stock in some form. That’s a record high, and up from 37,000 users a month ago. Over the last three days, the car rental firm has seen the largest surge in popularity on the platform. Right now, more users on the investing app hold bankrupt Hertz than do Netflix Inc.Call it crazy, but don’t call it dumb. In the three sessions through Monday, Hertz shares surged 577%, just weeks after the company filed for bankruptcy. Trading volume in the stock has surged to an average of 197 million shares a day in June — more than 60 times what was typical in 2019.Chesapeake Energy has seen a similar turn. The oil company jumped 182% on Monday, and after markets closed, news broke that the firm was said to be preparing to file for bankruptcy. More than 20 million shares changed hands, the most turnover on record for the stock in a single day, Bloomberg data show. In recent days, Chesapeake’s popularity with users of Robinhood ballooned to 38,000 — a gain of 9,000.Same with Whiting Petroleum, a shale driller that went bankrupt in April. The number of users holding shares of the company rose to a record 50,000 this week. On Monday, the stock surged 152%, and more than 104 million shares traded.“It’s great that Vegas is open again, but who needs it when you have the stock market instead,” said Peter Boockvar, chief investment officer for Bleakley Financial Group. “After an incredible run since March, we now have clear froth in parts of the market. We know this level of speculation has coincided with a sharp increase in the activity of retail investors.”Boockvar added the activity has been encouraged by a “zero rate” and “unlimited QE” environment, referring to the Federal Reserve’s quantitative easing measures. Ahead of the central bank’s decision Wednesday, he’s not the only one laying blame.“In this tape, bankruptcies have become the flavor of the day,” said Michael O’Rourke, chief market strategist at JonesTrading. “At what point will Jay Powell and his colleagues at the Federal Reserve realize they have broken the market’s pricing mechanism? The bankruptcies are only a small part of the story.”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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Yahoo Finance’s Emily McCormick joins Heidi Chung to break down why Hertz’s stock declined Tuesday after its three-day rally.
Investors saw Vroom shares soar in its public trading debut. Yahoo Finance’s Jared Blikre joins Heidi Chung to discuss.(Bloomberg Opinion) — It’s finally going to happen. Apple Inc. is on the verge of using its own chips over Intel Corp.’s for its Mac computers.Bloomberg News reported Tuesday that Apple is preparing to announce as soon as this month that it will use its own processors in Macs starting next year. The new Macs will incorporate the same internally-developed semiconductors, based on Arm Ltd. chip-architecture technology, that powers the iPhone. According to Bloomberg’s Mark Gurman, Apple plans to move its entire Mac product lineup to its own chips because of their higher performance and improved power efficiency.The move will have multiple negative ramifications for Intel’s chip business. The most obvious is the direct impact of losing revenue as the sole processor supplier for Apple’s PC line. The Mac currently represents 12% of the U.S. PC market based on units sold, according to the latest Gartner data. And Bernstein estimates Apple’s laptop line accounts for 2% to 4% of Intel’s sales and mid- to high-single digit percentage of its earnings. Apple also will be able to leverage Taiwan Semiconductor Manufacturing Company Ltd.’s better chip-making technology going forward. Apple uses the Taiwan-based foundry to manufacture its chip designs. In recent years, TSMC has moved ahead of Intel in its ability to fabricate chips at smaller, more advanced chip nodes. At first blush, the financial losses for Intel seem manageable. However, there are second-order effects that may prove more worrisome. First, if Apple is able to make better-performing and more power-efficient chips — an ability it has proven capable of in the smartphone market — then Arm-based Macs may be able to gain a larger share of the PC market on the back of its differentiated features. Further out, Apple’s move may pose a serious threat to Intel’s crown jewel server chip business. Here’s how.Currently, Intel dominates the high-profit-margin data-center business, where it sells server chips to cloud-computing providers and corporations. The segment generated sales of $23.5 billion for Intel in 2019, with operating profit of $10.2 billion. And according to IDC, the chip maker held 93% of the worldwide server processor market based on sales last year, versus Advanced Micro Devices Inc.’s 5% share.While Intel has long been able to maintain its strong market position in the server space, the arrival of Arm-based Macs may change the game. Linus Torvalds, the creator of Linux, has long said the main reason Arm chips have struggled to gain traction in servers was because there weren’t any Arm-based PC platforms at critical mass. He cited the importance of developers being able to iterate and test their server code on local machines. There have been Arm-based Windows laptops on the market, but they generally have not sold well. Now, though, with Mac shifting to Arm-based chips, developers will have tens of millions of Arm-based machines at their finger tips, offering a thriving ecosystem for the up-and-coming chip architecture. Yes, it will take some time for Apple’s move to impact the market. Intel is currently enjoying strong demand as employees are forced to buy more computer hardware to outfit their remote-working home offices, on top of surging cloud-computing demand for its chips as internet services usage rises in the Covid-19 world. And applications must be ported to work well on Apple’s Arm-based chip architecture.But in coming years, Intel’s key businesses will be threatened by Apple’s move. The step is an important one and will likely prove to be a turning point for the chip industry.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.
The cannabis industry is one of the fastest-growing business sectors in the western world. CBD, or cannabidiol, is disrupting many traditional industries such as cosmetics, beverages, and even pharmaceuticals.
Epistrophy Capital Managing Member Cory Johnson joins Yahoo Finance’s On The Move to discuss how cryptocurrencies are faring amid the pandemic.(Bloomberg) — J.C. Penney Co. shareholders got a helping hand Tuesday from U.S. Bankruptcy Judge David Jones.Jones will order the retailer to pay as much as $250,000 in professional fees to support an informal group of shareholders who have been challenging the bankruptcy, he said in a hearing Tuesday. In exchange, the group of retail investors agreed to nix its attempt to have the whole case thrown out along with its request for status as an official group, which could’ve resulted in huge legal bills for J.C. Penney.Shareholders typically get no recovery in a Chapter 11 bankruptcy, but the legal fights that result from pugnacious stockholders can slow down a case and hurt recoveries for creditors. Jones said he views the compromise as a way to help educate shareholders on where the case is headed and how bankruptcy works.“I’m looking at this as a very reasonable expenditure to further education and promote discussion,” Jones said. “It’s not a war chest.”The news comes on the heels of a head-scratching surge in the stock prices of J.C. Penney and other bankrupt companies. Some of the retailer’s bonds, which rank well above shares in the repayment line, were recently preliminarily valued at just 1.375 cents on the dollar in a credit-default swap auction, implying extremely slim odds of any payout to equity investors.Still, J.C. Penney shareholders have been active participants in its bankruptcy proceedings to date. Several have asked questions during hearings, including cross-examining witnesses and pleading with Jones to prevent a wipeout of the stock. In court papers, the informal stockholder group decried recent bonus payments to executives and insisted that bankruptcy could’ve been avoided.“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 in the hearing. But he added that not filing for bankruptcy “would have left the company on a desolate island without a chance for survival.”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.
Optimism on President Trump winning re-election may in part be fueling the stock market's latest surge, says this veteran strategist.
The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F […]