tv Fast Money CNBC February 17, 2015 5:00pm-6:01pm EST
you mentioned mgm today. the ceo talked about converting assets into a reit. we have the ceo on tonight. we're going to ask him about that potential plan. >> we were asking brian kelly about the reit question earlier. a lot of investors have this on mind, melissa. >> exactly. all right. thanks, kelly. "fast money" starts now. live from the nasdaq market site overlooking times square, traders tonight, pete najarian, karen finerman, guy adami. no reports of an i-car coming, an apple car could be the iphone of the future. he'll explain. go pro going higher soaring 12% today despite the lockup expiration. is it too late to buy into this stock? we'll debate it. first, our top story, a little bit of greece. reports greece will ask for a bailout extension tomorrow. the current bailout plan scheduled to expire at the end of the month. repayment s come due in march.
headlines driving the u.s. market? pete najarian? do u.s. investors care at this point? do they just assume something is going to work out? >> i think the investors do assume and obviously i think when you look at the way the markets were working today, that move to the steadily to the upside, people were i think starting to grasp on to this idea that maybe there's going to be some sort of a deal. even if they have to buy some time, there will be a deal eventually. i think it's still something that's actually quite frankly well up into the air. i like the way the volatility index bounced off the 200 moving day average last friday and stayed above that today. that tells us a bit of something. people aren't that lax into this. they have a little bit of discomfort. the stabilization in oil is why the markets themselves have been moving up and closing on new record highs of 2,100. >> guys, you're an observer of the tlt. >> forget about today. the last 2 1/2, 3 weeks it's gone from 138, 127 and change. you have to start questioning, am i going to continue to be correct in terms of my bond view? i think we're right up against
supporting the tlt which means i think rates still have room to go to the downside. we have held this basic trend line now for quite some time. that said, the last eight, nine trading sessions have not been good. it's been very difficult to maintain that view. i'm still of that belief. get a close below 125, we have to completely re-evaluate. >> i found the move, maybe you can comment, with gold here and the bond market here kind of hard to reconcile these two things at the same time. >> i think, you know what, it is hard to reconcile. i people now saying, you know, pete's point -- >> if it's an ununwind -- >> it's an unwind. it feels like it's wi unwind. the gold play isn't as interesting as it was. the gold play is still interesting. the bond move is still in tact over the last 18 months but you have to at a certain point you have to say, you know what, time to re-evaluate, maybe i'm wrong. >> you put all these things together on top of taking a look at the chart of the euro/u.s. dollar and it's finding a bottom. people are saying, maybe this is time to buy in. >> that's exactly the point.
the bond market has completely fallen apart, gold's completely fallen apart. i would not be out there shorting either of these. in fact, i'm actually long both of those and looking for a place to get long the euro versus being short the u.s. dollar. these would be correction type of trades. it's the best way to play it right now. why would you try to bet this is going to continue to go on when? when if comes to greece, yeah, they'll probably come with a deal. u.s. investors don't care. we had terrible news this morning. gro greece's talks falling apart, ukraine's cease-fire that lasted 12 hours i think. still the u.s. stock market went higher. until that changes trend, it's hard to be bearish on the u.s. stock market. >> you're sort of in the bullish camp. what were you trading today? buying today is. >> i've been adding to financials. i think the upward move we've be been seeing continues. technology continue to work to the upside. we're going to touch on apple in a moment. it's some of the other big cap tech names as well. fireeye. since those earnings the stock has been on fire. started turning around at the
low 30s. now we're pushing. this is one of the on fire type stocks. look at technology now, intel had a bid, microsoft starting to get a little bit of a bid again. there are multiple names out there. ibm. that's a name the whole desk is basically neutral on. even ibm has been moving to the upside. technology i think is the strength right now. >> you mentioned apple. apple trading to a report high today on reports apple is getting into the auto industry. our next guest says the opportunity for apple is huge and apple car could be the iphone of the future. let's bring in brian white, he's got a buy rating on april, $160 price target on the stock. good to see you. when you say iphone of the future, do you mean the next big sort of product cycle, the beg big revenue driver of the future? >> one thing i notice when i go to ces, all the car companies are there and electronics is becoming very, very important. everything connect to your car. i see it as, number one, a huge opportunity and device that is connected to everything we have. i think that's very, very exciting. some of the numbers we
highlighted, u.s. $500 billion, global could be a $2 trillion opportunity. >> when you talk about the big opportunity in your note, you're using car numbers. you're talking about 80.6 million units in 2015. you're talking as if am is going to build an actual car and sell an actual car. you go as far as talking about average transaction prices and the fact apple usually prices higher than the industry norm. is that your belief? is that sort of the crux of you saying it's going to be the next iphone, that it's going to be a physical icar? >> i would not be surprised if apple launches a full-blown car. i don't think it's in the next couple years but i think in the next five years. and that's what we're saying. a big picture i think about, everything is becoming a computer. our phones became a computer, the tv is becoming a computer, our car is becoming a computer in a way. there's only one company in the world that makes the hardware/software together with a seamless digital ecosystem. that's apple and very exciting. >> cars are different from hardware. i mean -- >> google has done hardware and
brought in hardware elsewhere and had software for it, so you actually drove a google driverless car. >> no, it wasn't a google car. it was a car maker's driverless car. i mean, it's like you think that apple is going to have its own plant, going to spend $1 billion on each auto plant and going to make chassises? i mean, how far is this going to go? >> one thing, you know, we cover the electronics manufacturing industry for a long time. >> sure. >> and one thing that this industry has been shifting toward is more production of automobiles. so, you know, an important supplier, they have grander ambitions in the auto industry. some of the u.s. manufacturers are at least 10%, 15% of revenue is in the auto industry. i think you have a big ecosystem out there not to mention the traditional auto suppliers to actually help you bring a car like this to market. >> so, buy wrriabrian, last yea time we were sitting around this desk asking about the apple tv, it was going to take over our living room. is that gone now? what happened to that? what's the story. >> yeah, i'm a big believer in apple tv. and so, you know, whether it's this year or next year, there's
no doubt in my mind that they can reinvent that market. so you're seeing a lot of markets' tradition areas that need to be changed, need to be brought into this century and i think automobile is one area and television is another. >> so if apple came out within the next five years and said we're going to build an auto plant and we're going to have apple cars rolling off an assembly line, you would actually become more positive about apple? as opposed to, you know, our reporter, phil lebeau was saying, maybe apple wants to own the dashboard. that's a completely different business model than build a car. >> sure. i think today's article they kind of leave it open. >> right. >> for interpretation. clearly car play they work with 30 different oem brands right now in the auto market. i think they're hinting the team is becoming so big now, ambitions of 1,000 people on this team, they could get involved in the auto market, itself. steve jobs had a love for the automobile and i think there's always been this thought out there maybe this is an area apple can change.
i think if they can change it, that's exciting. if they leave it as is, it's not. >> brian, good to see you. thanks for coming. brian white. what do you think? >> let's change gear on the car things. apple car, i mean, that's not my gig. but let's just -- american express topped out in july around 96 bucks. down about 20% since. why do you bring up american express? wel well, the costco announcement last week, obviously costco is moving away from axp. start to connect the dots. a lot of people have talked about this. does apple pay step in? that to me is potentially extraordinarily interesting for apple to take it to the next level higher. how do you trade the stock? pete said for a while, you don't trade it, you own it. i've tried to trade around it not successfully. jim cramer says the same thing. >> back to cars, at this point you don't care about the car. you're more excited about apple pay. >> apple car for me? i mean -- >> i know, i know. >> that's a stretch. >> you think your ipod is an
etch a sketch. >> a lot of analysts that are excited about the idea of a car, a partnership makes more sense to me in terms of apple and accelerates the process of let's get into the car business. instead of just reinventing this whole thing, let's jump in with somebody. i know they're stealing engineers right now from tesla. maybe that would make sense rather than fighting against each other to somehow work together. the e kro systcecosystem, look logic 52-week highs, look at sky works. look at those that are dependent on apple if you think you're late to the apple game. >> you're an apple shareholder. >> i am. >> more or less excited when you read the "journal" article about an apple car? >> you know, i'm happy -- i feel like i'm paying zero for it. >> right. >> that seems like good price to me. i'm happy to -- >> all right. let's get an earnings alert on fossil getting hit in the after-hours session. the details. dom? >> 13%, melissa, to the downside f for fossil. dropping right now sharply after
hours. the accessory and watch maker earned 3 buck a s a share. it missed on sales as well. fossil says it expects fx, foreign currency charges and restructuring will hurt its full year 2015 results. the company also, though, separately announced a new deal signing a global licensing agreement with designer kate spade. they will be responsible for the kate spade new york watch brand. fossil shares on balance with all of that news are down 13.5%, melissa, guys, in today's trade. back over to you. >> dom chu. thanks to much. karen? >> i don't love it as a holder. it can't be anything great. it could be a negative. >> interesting, when we get this as we are also hearing about apple. ordering 5 million to 6 million units for its watch. >> right. >> more competition for the wrist. >> yeah. it just shows you there's so much competition, where are people going to gravitate to? i think as much as i'm pessimistic about the watch, itself, not nearly as excited, it will be something people want
to have at least early on until they actually figure out whether or not it works as well as they'd like. >> okay. the bulls cogopro bulls coming today. the stock up. we have a bull that stay says stock is going to 70 bucks a share. the derailed train in west virginia, the impact coming up on "fast." stay tuned. there's nothing stopping you, and a lot helping you. technology that's with you always. this is our promise. it's never been better to wander, because wherever you go, you'll find us doing everything we can, so you can.
check out shares of gopro moving higher today, post-ipo lockup. could be a good sign for the stock which more than doubled from back in june. still down nearly 20% year to date. joining us now, michael, securities managing director. he's here on set. he came into new york just in time for the very frigid cold weather, michael. >> thanks for having me. 72 at home by the way. >> thanks for rubbing it in. in terms of gopro shares some could argue the lockup expiration had been priced into the stock. is that where you stand? it was actually the move from 90 and change all the way down to about half. that was your -- >> that was a big chunk of it. i think that the shorts were relying on this. i think they've been capitulating for the last week or so, but i'm surprised of the big move today because clearly
the market wasn't flooded with shares, but the overhang is there forever until the insiders are sell. i don't think any of the executives are selling. i don't think nick woodman is selling any shares any time soon. you have a 75 million share overhang forever until they start to clear the market. >> at what point do you get concern -- i mean, that's just going to be an existing overhang forever or can we see a secondary -- the fears a bit will abate because they're doing something to smooth it out in the market? >> i think it's always prudent for companies to manage the release shares of the market. the underwriters obviously didn't think so when they priced the deal so they unlocked all these shares all at once. i think it's prudent. i think if you saw a 10 million share secondary, it would be a signal to the market that the other 65 million aren't coming any time soon. and i don't really think the company doesn't need money, as long as there are no primary shares, that's really the right way to go. >> in terms of the next catalyst, it turned out to be a gopro christmas. what's next in terms of either the product pipeline?
because it sounds like it's a company that's in such, like, overdrive when it comes to expansion that the sacrifice to revenues, the sacrifice to margins will still be there as they are aiming for different markets like china, for instance. >> you know, i think the surprise to most of us was that the low-end camera was not the biggest seller. they were consistently sold out so the company obviously managed supply on the low end in order to press, you know, push sales of the high-end cameras. so the flip side of that is the big surprise is how many 499 and 399 model cameras sold? i think that demand is going to stay. demand for the $129 camera is going to go up. i think the guys are going to have another big quarter. there's a lot of pent up demand at the low end. gopro is overlooking that low end market. i think the entry level people are like baby benz drivers. mercedes isn't trying to sell everybody a $30,000 car but are happy when you trade up to the $90,000 car. gopro should be going after that
market. they missed our kids are all exhibitioni exhibitionists. get a $129 camera in the hands of every 15-year-old girl and pretty soon every 25-year-old guy will have a $399 camera. >> i'm in your camp at gopro. i loved it in october and through and it's been wrong now for a while, but will they have to sacrifice margins? this is something in your notes. gain a distribution channel overseas or even to gain more foot hold here in the united states. and if they do, is that okay? >> international distribution is going to require a distribution partner, so they're going to sacrifice 700 basis points for sure. they have to. i think that the mix is going to help them because the high-end cameras are really high margin and as they get a bigger and solid base, accessories become a much bigger piece of the mix. i think that my competitors who hate the stock overlook the fact the doggy harness costs $1.50 to make. it has a 50% retail margin. gopro selling at $25 wholesale, only making $22.50 per doggy
harness. it's crazy how much margin there is in these accessories and the mix is going to keep going up as the install base grows. so i love this thing as a margin story. margins are going to expand. >> when do you start to see the content story kick in? if ever? i don't know how much you have in there for that. >> probably -- i have nothing in there for that. they get free advertising from it so it's pretty cool. as far as revenue, it's a late this decade story. i mean, if they come up with something like "america's funniest videos" and they get broadcast television and they get a youtube channel that actually works, and they get people $25,000 a week for the winning video and get millions and millions of people watching, sure, there's advertising revenue. they haven't even proposed that yet. red bull has been in the media strategy for about 15 years and they're now just starting to create real content. i think gopro is probably three or four years away. >> michael, thanks for coming by. >> thanks for having me. >> pete najarian? >> i think the growth when you look at the earnings, revenue,
the unit sales and all of this combined i think there's a lot of reasons why a guy -- i've been with you. i've been wrong as well. as this stock has been going to the downside. i still believe in the story. i know michael procter has a $70 price target on it right now. i would agree. i think they're start to piece this together. the sale of the units -- look at the p/e of this thing. forward p/e-trading around 30. this is not an inflated company anymore. >> what michael said about the accessories is the real story, the growth story. and is worried about whether or not they can get this content or will become a content company. if they can sell the accessories, look at the deal with nhl. think about the things they could start to sell off of that. for me i liked it at 48. it went way down to 44. i still like it here. >> got a market flash. changes to warren buffett's portfolio. >> let's keep the theme you were talking about buying on weakness here. one notable thing berkshire hathaway's, warren buffett did
is add to a position in ibm, the worst performing stock in the dow over the last two years and fell 17% in the fourth quarter. that prompted warren buffett and berkshire hathaway to add to their profit. boosted it by 9%. $12.4 billion stake in ibm and also added to a position in charter communications as well. moving on to another interesting one here about conocophillips. they've completely sold out of their small stake in conocophillips. it was about $33 million worth. notably, they've gotten rid of all of their exxonmobil holdings. that was about $41 million shares. about $3.8 billion worth. notable energy trade there. and then here's an interesting one. first of all, 21st century fox, fox "a" is a new position about $166 million worth. but deere is interesting. deere, they have a new $17.1 million share position. that's a billion naf dollar position. what's interesting about this, melissa, is at the end of the second quarter berkshire hathaway reported the small stake. as of the end of the third quarter, it was not mentioned
because they filed a private regulatory agreement with the s.e.c. saying that they didn't have to disclose it until they built up the stake. remember, buffett does enjoy that with the s.e.c. now at the end of the fourth quarter we know that the share stake is about 17.1 million shares. so, again, it looks like warren buffett's berkshire hathaway exercised regulatory ability to not report publicly until it built up the stake in deere. melissa, back to you guys. >> thanks very much for that. pete, you were mentioning ibm. >> a very stealth move. not like it made a monstrous move. it was down and made $11 off the lowest end of the ibm. ibm is trying to get themselves into storage and cloud where they see the growth. they're trying to position themselves or reposition themselves into a much stronger position. maybe this is something that's encouraged warren buffett, clearly he's adding down at the lows where there's blood in the streets. >> what grabs you? >> john deere. de deere & company. whatever they called it.
conocophillips i don't think is a big deal. deere is interesting. it's had trouble at $95 for years now going back i think to 2010. but it's not ridiculously expensive, zemseven times forwa earnings. this is one of the things he's looking 10, 15 years into the future as to what could happen to deere. still ahead a massive dividend cut and ceo departure or own guy adami has been all over from the very beginning. the name and how he's trading it next. plus, the shows, show girls, perhaps a few drinks and perhaps a famous vegas trip. we're heading back to sin city to sit down with the ceo of mgm resort jim muren in an interview.
big news, kicking off for top trades tonight. steven newman announcing he's stepping down as ceo. he took the board in march 2010 a month before the deep water spill. slashing its dividend by 80% for 2015. if you've been listening to guy adami, you would have seen the dividend cut coming. >> i think they're going to be forced to do something at some point if and when it happened they cut their dividend. you step in and buy a name like sedra which on evaluation has gotten ridiculously cheap. if dividend gets cut at rig, buy seadrill. s s seadrill was first and it wasn't seadrill specific. they're due to report. it will be a fascinating earnings report. whatever they say could set up karen who's been talking about seadrill for a while. that trade, you might get relief rally in a big way on cdrl.
>> sdrl. >> what did i say? i meant "s." sea is s-e-a. >> good job. >> i'm glad we left the most important part of that clip in there. >> business there. >> what did you do? what do you think? >> first of all, it's lame that rig announces this on sunday night of a long weekend here in the united states. 8:30 sunday night. totally lame. i get their -- i get all that. optically not a good thing. i think seadrill should have been up a lot more than it was today. i thought you were going to get the relief rally once rig cut. you got a little bit of a rally. not much. i still think seadrill is stupid cheap here. karen might back me up here. i think the stock has room on the backside. rig is dead money. i think seadrill is your play. >> long seadrill stock. last week there was a little bit of bad news where they had to move a billion-plus contract from backlog into more uncertain categorization. >> petro products.
>> that's not a great thing. i think seadrill is cheap. i do like it. rig today, a lot of contrasting move. it was down, then flats, then up. you had the ceo leaving and the dividend cut. net, net, nut. flat. that's interesting. that all of these things countered each other. >> so, right. so is flat good or is flat bad? i mean, some people can say the ceo leaving, and this is after all, so they impair $2.8 billion in assets in the latest quarter. some analysts are saying there's more in come in terms of impairment charges. >> i think the one interesting thing we saw in rig, transocean just last week, not seadrill, just for a moment, was some monster buying out in march calls. looking for upside. buying the march 22s. >> how much? >> stock trade -- like over $20,000. i mean, these are some very large numbers. actually i took on a position last friday based upon some of that unusual activity we'd seen. just because it was big enough that -- rig has been pounded enough that even on this news today, it stopped going down. it dropped initially. finished basically call it flat at the end of the day. i think that's a great opportunity. i think it's going higher.
>> flat good for rig in light of the news? >> i think it's okay for rig. i think it's better for seadrill. i mean, given the two, we know that something -- when a ceo resigns on sunday night at 8:00, as guy said, there's an issue there. there's something going on where there's smoke there's fire. these two stocks to me look exactly the same. why wouldn't i just buy seadrill here for a trade only, though? i'm not convinced this oil rally is going to last. >> also, rig is reporting next week. >> right. >> that's not a great thing. >> right. ahead of the quarter. the ceo stepping down on a sunday night. >> can't be a fantastic quarter. >> let's hope nobody notices sunday night on a long weekend. >> he's right. >> i'm not joking either. >> to them -- but they have to be aware of a fact it's a three-day weekend here. >> yes. does not look good. agreed. next up, macy's getting hit today. the retailer getting nir inting with an underwait rating and price target, initiating on hudson bay with an equal weight and $27 target, barclays downgrading nordstrom. the target remaining 60 bucks a
share. macy's, karen, is the one you care about. they say valuation. >> it was a hazing actually, i thought. you know, it was -- i thought overdone. i think they were looking for a $55 price target which to me if it comes near where they say on earnings, it's just a ridicul s ridiculously cheap multiple. i don't agree. this makes horse races. the other thing, though, fossil news tonight also not fantastic for macy's. still valuation here, i like it. >> who likes macy's? >> not this guy. >> i like macy's but wonder if it's limited upside at this stage, after the monstrous move it made up toward 68 and pulled back this move down here. i think there's other names that have better exposure -- >> such as? >> i'd go with the athletic gear, underarmor, nike, lulu, al three of these. >> i like underarmor better an any of these. i'd do a pair, you long underarmor and short jwa. i know they're not exactly the same but tame out some of the market risk. >> every move of this -- i -- with that said, i mean, i'm
agreeing on those stocks. macy's, morgan stanley downgr e downgraded the stock in early february, the barclay's downgrade. macy's over the last couple years shrugged news off like this every single time. we've seen pullbacks like this eight times over the last two years in macy's. each time is an opportunity to get long the stock. again, that's what this is exactly. straight ahead, state of emergency declared for west virginia after a train derailed and caused a massive fire. what might the latest scare mean for the passing of the ski tone pi . plus, plunging revenue, feel how jim murren feels, what he plans to next on a first on cnbc interview. can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time?
still ahead from nasdaq, a train derailment causing concern over crude imports. what impact it could have on the industry. mgm's china problems overshadowed by its company's plans for real estate assets. details in a first on cnbc sbrir with the ceo coming up. american express cutting ties with costco. some betters are trading on a comeback for amex. we kick it off with this incredible video out of west virginia where csx train carrying more than 100 cars of
crude oil derailed on monday and exploded into a massive fireball. no serious injuries were reported in the crash. it was the second oil train derailment in three days. saturday, a canadian national train went off the tracks near the city of timmins in northern ontario. joining us, dennis gartman, publisher and editor of "the gartman litteetter." does this do anything in terms of keystone? >> i think, mel, it has to actually. this is the fourth major circumstance regarding a train derailment, luckily no one was hurt, no one was killed in west virginia, no one was hurt or killed in the circumstance in canada, but we have to remember the lake mcgontik fire of two years ago. i think this does very severe damage to the idea that we can continue to transport crude oil solely via rail. i think it has to put the president on a very difficult
sp spot, he doesn't have much choice to go ahead and improve the keystone pipeline. with the keystone, it's safe. certainly there are leaks every once in a while but don't have explosions like this. i think this changes the keystone pipeline dramatically. even though it was passed by the house and senate without enough votes to pass a presidential veto, i can't imagine the president can go ahead and veto it at this point. this puts keystone pipeline right in play and i think it does damage to any of the oil -- or any of the railroad companies who create or get such a large amounts of their earnings from the transport of oil. >> so walk us through the trade or how we should think about a trade? if keystone gets passed, that means there's more heavy crude that can go down to the refineries in the south more easily and less expensively than byrail, right? $5 for barrel versus $5 to $15 on a train. what does that do for the rebetwer
refining trade? >> what it does show is we're going to wind up moving crude oil into storage even more quickly. into and around cushing, oklahoma. it pushes out the carrying charge. i think it pushes the tanker trade. i think that's probably the quicker and easier explanation as to what goes on. how much crude moves, whether it's light crude or whether it's heavy crude, i'll leave that to the people who are far wiser than i am. i think we back up crude into cushing far more quickly and does damage to the railroad companies more than anything else. i think that's the direct play. >> hey, dennis. if you get a lot of crude in cushing, at some point all those tanks are filled. does that force the administration to talk about exporting crude? >> they have to. they have no choice. we're going to continue despite the fact rig counts are falling off the edge of a cliff and likely will continue, we're going to continue to see an increased amount of production in the united states, at least for the next six months so i do think it's only a matter of time until the president has to make the decision that we don't just
allow con den sates to move out of export trade but begin the exports of raw crude oil. it has to be done. he cannot do otherwise. >> dennis, thanks for your time. dennis gartman of the "gartman letter." dennis says it would hurt the rails. it would hurt even more the ones making the thickened and reinforced rail cars. >> look at how all of those traded. >> terribly. >> down to sideways. i don't think they're going to necessarily get any better off of it. so, you know, if you see something, if there's more traction on this, those are the names to short. >> soro, though, reported february 11th stock was trading around $88. we talked about the report. it wasn't great. it needed to be. we said if it holds $80, you'll see it bounce. you've had a couple analysts cut the stock. goldman sachs has a $99 price target. pops and drops. big movers of the day. big pop for kandi technologies
up 14%. >> the s.e.c. closed an investigation on that which i guess is good. up 14%. unlike the strange laws of 1965, b.k. does not want kandi. sell it. >> quickly, you bought calls? >> i did, indeed. >> drop for sothebys down 1%. >> down on the kalin report. friday they announced they're going to suspend their capital allocation program pending that process. so it's okay here. i wouldn't initiate any new position here. >> drop for box down 6%. pete? >> a high growth company, storage company. they don't make money. as a matter of fact, they're bleeding money because they're spend so much for their acquisition. i think right now it's a no touch. you got to give it a little time. they have to smart sttart showi can make money. >> pop for good year tire. >> the release of 2.2 billion u.s. tax valuation allowance after 12 years is a major milestone. it says we've made our turnaround in north america. that's management. pete talked to me about good year tire a couple weeks ago.
it wants to trade up to 30 bucks here. >> com builder sentiment falling to its lowest level in four months. february, record snow and temperatures. the u.s. home construction etf, itb, are up 7% this year. check out the top holdings in each etf. xhb has names like lumber liquidators, aaron's and toll brothers. so time now for fast funds. would you rather addition of fast funds given the choice here? xhb or itb? xhb clearly has a little bit of the retail flavor in. itb is more strictly the builders. karen, what could you saw say? >> i'd go with the more diversified with the retail, the xhb. i want that other exposure. i don't want only the risk of home building which has unique risks as well as all the risks the other ones have. >> so i would have to go given those two choices i'd have to say xhb and that's because i don't think the itb rally is
sustainable. i think there's some soft pockets in real estate and saw with the mortgage applications today, they weren't as great as what people thought they would. i would stay away from that, and i want the diversification like karen. >> if a choice were neither, would that be your choice? >> absolutely. yeah, of course. >> so it's would you rather or neither? >> pete? >> you know, for a trade i like itb. i think in the short term with these low rates, i think these rates actually going up forces people to force their hand a little bit to push them into something. consumer confidence has been very strong for a trade itb, for long term, xhb because of the diversification and it's the dliftives really more off of housing rather than the builders, themselves. >> so i got to break -- is there a tie? it can't be a tie. how can there be a tie? >> there's four of you. >> i can create a tie. >> what do you want? >> xhb. i tell you -- i'll tell you why. 3-1. because lumber liquidators which has gotten crushed is a big portion of the xhb and has a 42%
short interest. up big today. you get a short squeeze in ll and stealth rally in xhb. >> interesting. >> swizzle getting it done there. mgm popping on earnings. we talk to the ceo jim murren on what got investors excited in a first on cnbc interview right after this break. pete spotted unusual bullish activity. he'll tell you which stocks the traders expect to keep soaring, right after this. i'm type e.
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♪ viva las vegas mgm investors looking for a bit of luck may have found it on the company's latest conference call. the casino operator posting a net loss for the fourth quarter reporting china revenues below expectations. shares ticked higher after mgm said on its call the company hasn't ruled out the possibility of converting assets into a real estate investment trust. joining us for a first on cnbc interview, mgm chairman and ceo jim murren. always great to see you. >> thank you for having me. >> i want to start off with news or potential news about this
reit structure. that's when the stock started ticking higher. what can you tell us in terms of a timeframe? you made a point of saying on the call, people on the call made a point of saying it had been considered in the past. it's not something that's brand new in terms of consideration. and that you are exploring all avenues to get your assets more fully valued. >> well, yes. this is not a new concept. casino companies looked at reits before recession and they have been looking at them now that the market's come back. we own more real estate in las vegas than anybody. i think more than any two other companies combined. we have some very valuable real estate in mississippi, in michigan, and we're building other properties as well. we look at this. i responded to a question. we're corporate finance folks at mgm. if we can find more value for our shareholders, we will do it. we've done it in the past. i think it's a recognition of the fact that there's a lot of
real estate embedded in these casino hotel companies which is why a lot of companies are looking at it. we've been looking at it as well. >> sure. in terms of when you considered it in the past and deciding not to go through with it, are those factors, do they exist today or have they gone away? i'm just trying to understand what the changing situation could be which might make it attractive once again and maybe more probable in terms of it happening. >> well, you know, we're not a shopping company or an office mall company. and the reason whey we're different is our loyalty programs are really different so we need to make sure we can keep that seamless relationship for our customers between going to mississippi and bellagio in las vegas. there's a very important commonality we need to retain. that's something a little unique on hotels and on casino hotels. that said, interest rates are low. real estate values are rising. reit valuations are very high.
the multiple on reit assets are 15 to 25 times cash flow. most gaming companies trade at ten times cash flow. so there's a tremendous arbitrage in valuation potentially. the challenges become tax, tax basis, lease payments. you know, i've bought a lot of companies in my career and sold a lot of companies. that's easier. this is a little more complicated which doesn't mean we won't do it or do parts of it. just means it takes more time. >> let's talk about china because those revenues dis appoint and seem to be a lot of head winds facing them at this point in terms of the chinese government stepping in. vip source strategies, also a potential full smoking ban that could come in 2016. what do you see in terms of mgm? have we seen the worst in terms
of sentiment and slowdown in revenues? >> well, we had a record year in profits last year. our fourth quarter was down about 20%. we outperformed the other companies, but that still doesn't make it feel any better, and it's really unclear what's going to happen in the next several months. we and the other concessionaires are taking a longer-term view. we have a very good dialogue with the central government as well as our other concessionaires. we're very confident of the long-term potential. the bridge from hong kong. the major infrastructure under way. the mass market is growing, but the vip business, the high-end business has been really suffering from corruption crackdown in china and the overall reduction in visibility in the high end. i don't think that volatility is going away near term. i think that we might get into the tail end of this year before you see any kind of stability, but i think that we're going to
make more money two years from now than we are now. this year is uncertain. >> last quick question, jim. by next quarter, will we hear more about this reit structure and whether or not it will happen? >> well, i can tell you that we're working really hard. we had the best january in our company here in las vegas since 2007. las vegas is lifting off. we're the largest beneficiary of that. we know that. a lot of real estate investors are coming to that realization as well. so i think the ball is in our court. and i think that our better days are ahead of us. and i will always try to maximize shareholder value in multiple ways. >> all right, jim, good to speak with you. thank you. >> thank you. good seeing you. >> jim murren, chairman and ceo of mgm. what do we think here? penn national did it, by the way, with a reit on long-term value. >> didn't have nearly the complex structure that one has here. i'm not -- i mean, i think this has been looked at for a long
time. i wonder, though, he talked about reit valuations being so high. i wonder if it is the top, rates have only one way to go. >> the top. >> yes. i don't know. >> that's a good point. unusual activity here. pete, cdw? >> cdw today, this is a stock that had record numbers this past week. the stock moved to a new high. it seems to hit new highs every day. another new high today. they were buying the march 40 calls today. started at 19 cents. went up to 45 cents. over 12,000 by the end of the day trading. very heavy activity. i tried to get in. i couldn't get in. i didn't want to chase it. hopefully i get an opportunity tomorrow. >> all right. still ahead, jet blue and costco may both be dumping american express, but traders aren't. we'll break down the bullish bets on the stock right after this. ♪ ♪
american express shares hit a 52 week low today before rising more than 1%. some traders see more gains ahead. mike is in austin with today's action. hey, mike. >> hi. it was interesting, we saw more than two times the average daily options volume in american express. the top ten most active options were all calls and most of them were seeing opening activity. i think an example, perhaps, that people are thinking that it might bounce off the lows we saw today were purchases of the february 80 calls that expire
next week. people were spending about 70 cents for those. more than 2,000 of them traded. although that was just one of the many strikes that was exceptionally active today. so i think maybe people are hard pressed to try to pick a bottom by purchasing the stock, but buying calls if it is going to bounce, probably the right way to make a bullish bet. >> thanks for that, mike. see you friday. we have earnings alert on jack in the box. dom in the newsroom with details. >> the two restaurant chains like you said trading higher on earnings beats here. first off, jack in the box, the restaurant chain's earnings grow by 24% because of better than expected results at both namesake restaurants and the mexican grill. they own that one, of course. it also raised same-store sales guidance. there's pot belly, the stock is surging see here in the afterhours. beat by 3 cents a share on the profit side of things. sales in at $85 million. the sandwich chain is forecasting 20% for full year 2015. potbelly, interesting there because potbelly hat exactly had the best run as of late.
up big in the after hours, melissa. back over to you. >> thank you, dom. jack in the box e vavangelist d there. >> it's going higher. >> look at the comps. all we need to know. go away. sorry. >> go away. all right. we will. we're coming right back. stay tuned. looking for a stock that can keep you warm in the deep freeze? i'm trying on a few that may fit the bill. plus the hottest semis in waste management, turned trash into treasure. but is there nr green comore gr from this garbage? "mad money" is next. then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts mean your peace of mind. now you can get the works, a multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more. $29.95 or less.
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time for the final trade. around the horn. pete? >> loving these financials. i think citigroup continues the run that it's on. it's going higher. >> i tell you what, tlt had a terrible couple days but i think it has bottomed here. tlt is your trade for tomorrow. >> karen? >> yes, mr. campbell, i want to be long sun edison going into earnings tomorrow. >> guy adami, you told me or america to go away? >> you. it was you. >> #jerk. >> tv talk, hard out. you had to go to commercial, go, go, go. that's what i was saying. >> you didn't say please. >> fun show. >> anyway. final trade? >> it used to be called john deere. now it's called deer & company company. >> it's called john deere. >> it's deere & company.
mr. buffett is involved and might be on to something. de will get you done. giddyup. >> that's a nice call by you. that means it's going higher. >> all right. i'm melissa lee. thanks for watching. see you again tomorrow at 5:00. more "fast money." don't go anywhere. >> my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts, now. >> hey i'm cramer. welcome to mad money. welcome to cramerica. other people want to make friends. i'm trying to make you money. call me at 1-800-743-cnbc or tweet me @jimcramer. it's fashion week in new york city which makes this the