tv Fast Money Halftime Report CNBC June 22, 2016 12:00pm-1:01pm EDT
are you surprised? >> no, adobe has warned that there would not be a linear increase in the digital marketing revenue, but overall, they are going to meet or exceed the annual targets. >> yeah. right now, adobe is the worst performing s&p name. rest up for tomorrow, and let's get over to wapner and "the half half." carl, thank you so much. welcome to the "halftime report" i'm scott wapner, and the trade is the solarcity shocker, and what one famed hedge fund manager is saying about it. it is a "halftime" exclusive. with us, e stephanie link, and josh brown, and jon najarian, and it is the talk of the day. elon musk offering to buy solarcity in a deal that is drawing reaction today from the famed short seller jim chanos who told me moments ago in the exclusive statement, and i quote that the brazen tesla bailout of
solarcity is a shameful example of the corporate gofr nance at its worst. this is a company headed towards financial distress and burning hundreds of millions of stress every quarter, and now a burden that the tesla shareholders will have to e bear. if you don't believe me, can consider this, the combined market drop in the value of both companies is more than the equity value of the deal itself which means that tesla shareholders believe that the t solarcity shares were worthless. finally, it is hard for me to believe that this deal was not being contemplated when tesla and mr. musk, himself, sold shares just a few weeks ago. >> well, i have to give chanos
credit, because a lot of us like to go with musk when he comes out to cheerlead the stock the, and has the distortion work, and you can see a noticeable bump, but this is a no-brainer, and nobody with a brain cell would want to put these two together. i don't know what the potential is putting these two together except for two thing, judge, one to mask what is actually going on at the company, because it is not a pure play at all anymore, and two, the fact that solarcity desperately needed a bailout. no other hand out there willing to lift them up other than mr. musk and now that he has done it, the market does not like it much. >> and musk said that the synergys will be experienced immediately, and barclays out with the note and in my hand with the headline, it wille in the way of synergys and much in the way of cash burn, josh. and the street is weighing in universally negative on the deal. i read you barclays' statement, and we will read a statement
from the oppenheimer, and there are implications on both sides of the ledger for solar city and tesla, and also on what chanos had to say, and what do you think about this deal? >> what is not to like. you have a combined company to burn $5 billion cash to burn, and you have a founder who has pledged a huge amount of his inves investment in tesla against something else. so you have a potential for selling and red ink as far as the eye can see. it is really, really tough here, scott. clearly, the guts that it took for e e lon lon to get as far a has and hyperloops and all of the things, but from the shareholder perspective, i have been uniform in the comments saying it is too hard, and this is going to make it harder. so as much as you admire elon
musk and love the car and the idea of sustainable transit, it is a tough situation to be an investor here with a straight face, and i don't know how you do it. >> so many questions that you sort of look at the tesla secondary done recently which is what everybody expected them to do because of the ramp up of production of the model three, and it appears that most of it goes to absorbing solar city, and so from the tesla shareholder e perspective, you wonder now if they have to raise capital yet again, and what that is going to mean for the delusion of the shares. i mean, there are so many ways to think about the transaction, and the broad implications for the shareholders of both companies. >> and not only change the narrative owhat tesla is, but it changes the entire shareholder base, because the existing shareholders thought that they were getting an innovative company and disrupter, and industry leader and growth company, and maybe some production problems, but people
thought from the last deal they would start to fix those problems and now all of the sudden, you have a energy solutions company, and it is not only is it disruptive, but it puts back on the question mark on production, and can they get the production or so distracted. so distraction, delusion, andyn about, and the comparables, and so there are so many reasons i why i would not put money in this company now. >> and so now, including our next guest who downgraded tesla, carlton rush joining us from oppenheimer live from new york city. welcome to "halftime" and good to have you on the show. >> thank you for having me. >> and i hope that you have heard what mr. chanos said exclusively? what is your reaction of the e deal? >> there is a lot of concerns here on the multiple levels, and the first is use of capital from tesla, and capital efficient historically, and good stewards
of capital and putting the money in things that we have a return of capital of over 20% as they go into the energies service market, and what looks like the ipp on the distributetive bay is is and the opportunity is an 8 to 9% on capital, and that is not a good use of resources in the point, and that is not getting into the corporate issuance, and with elon musk, there are four members that are significant shareholders and that is a concern for us, and as we see it go for the vote for the share hoerlds, that is brought out in the public and people will be debating that and we will look at a couple of the large shareholders that hold tesla and solarcity on the institutional side to see where this vote is going to be held up. >> is the race for capital a formality and a given? >> well, there is refinancing, and solarcity has a robust portfolio ofs a is s assets, an have gone through a real estate
transaction and raising money that way, but they are spending upwards to 500 to $600 million per quarter in the cap x, and they have to look at the portfolio to raise the cash, and we want more details of how we are going to be moving forward, but there are strains in the ball lance sheet. >> is there synergy? >> well, it is hard to say how much. the geographic footprint is not necessarily a clear overlap, and there is a lot of concentration there, and you have to have boot s on the ground the solve the system, and this is not a direct fit with tesla's footprint. so there is opportunities for solar city to expand, but it is going to require more cap x. and the tesla brand to solar city is going to help their brand, but the metrics around that is very, very hard to tell at this point. >> collin, josh brown, and so
one of the colleagues and the biggest bear on the sell side for tesla on the street, and maybe you know who i am talking about said something very dire today, just looking at what solar city is when you break it down, which is that it is a specialty finance company, and middleman arranging and financing for the rooftop solar cell, and the customers and consumers and this idea that really it is only worth $7 to $10 if you were to value it like a mortgage banker or some other middle layer of the finance. is that way out of bounds or is there something to that? >> well, i think that we talk about solar city as defined differently, and yes, it is a specialty finance e entity, but it is a specialty company, and they have boots and the trucks out to install the systems, and those can be sold outright and they don't have to finance it, but there is another leg to the business model that can generate cash, but our concern is what
happen ed to the portfolio, and look agent solar city with the 6% raised rates of the solar city, and coming out with the current share of the portfolio, and so our valuation of solar city is looking at the forward projections of the free cash flow, and there is a handful of ways to generate the cash flow, and whether it is getting the customers to payt for it outright or working with another financial institution, and so that is going to go through the evolution, and whether solarcity wants to hold it on the balance sheet or not. so i don't agree with the dire projections from the other analyst, but there is far more complex business model that needs to be handled here, and i'm not clear that the synergy is there nor that the management team ist not distracted from the ambitious plans by integrating the businesses. >> we are lucky that you cover both of them. from the solar city perspective if jim chanos characterizes this
as a bailout, is that what you would say? >> yes, the debt markets would absolutely say that, and if you are looking at the convertible notes at solar city, they were trading 65 cents on the dollar at the close, and this is is in the realm of distress. we thought that they had a window of opportunity to go through and use the portfolio and accelerate the velocity of the capital within that model, and so we are still modestly bullish on the name. i think that, you know, similar to some of the other solar companies that have been pursuing a finance model, there are probably some things that were not clear to toss in the public markets that could have been driving us as well. we don't want to speculate on that, but certainly, the debt markets were saying that this needed a bailout, and this is going to be, you know, that the way that tesla has handled it. >> and you are suggesting that the debt market was suggesting or raising questions if you will as to whether solarcity would be able to continue to service its
debt or potentially break the debt covenants? >> i believe so at 65 cents on the dollar. >> colin, thanks for being here, and good to talk to you. colin rush from oppenheimer downgrading the shares of tesla on this move. and now, let's bring in a bear, randy mow was is with us today. and welcome back. you have a sale on the stock. what do you do now that this has all transpired? >> well, i put a sell reck m recommendation on tesla on the 7th of april when it was $65 and i have a $180 target on the stock, and i have no reason to change it after the news yesterd yesterday. i would probably remove my sell recommendation if it dropped below $80, and i would not think of touching this name on the long side until it retests the 52-week low of $40 a share which is even expensive at that price
point. >> if you are a tesla shareholder today, how should you feel? >> i would be upset. if it wasn't this the news, it would have been something else to bring tesla down. this is a bailout of a company that musk owns 20% of, and solarcity was on life support 24 hours ago, and now they have $6 billion of debt and liability and they were expected to lose $1 billion next year on half a billion of revenue, and the stock had gone from 60 to $15 last year. it just doesn't make any sense. i see the price targets on tesla of 385 on oppenheimer, and that is goes to put them at the same level as general motors. and general motors has $10 billion in profit, and tesla doesn't have 10 billion in revenue.
and general motors has 150 billion in revenue, and the tesla market cap is the same as fiat, and mazda and ferrari combined, and it is ridiculous. i am a looking at 280 again. >> isn't it possible that we are all missing something here? it is easy to be negative on the deal like this, and synergys are in question, and i can understand why jim chanos made the comments in which he did, and the analyst that we spoke to is analyst, and -- that analyst is negative, and mr. musk is not an idiot, so are we not giving him credit to see what the synergys could be here, and are we missing something? >> no. we are not missing anything. i have all of the respect in the world for elon musk. and i can't even hammer a nail
into the wall, and so when somebody sends a rocket into spa space, and what you will have right now is people who think it is is overvalued, and it is an overvalued stock today versus the people who think that it could double in the next ten year years and possible that both sides are richlgt my argument is that there are hundreds of stock s in the stock market right now that will double in the next ten years without the downside. >> ronnie moas, we appreciate your coming on today. >> thank you. >> and we reached out to tesla for xherngts and we will let you know if and when we hear from them. meanwhile, the fed chairman y l yellen is on the hill again testifying. we will bring you the thaedlines and bring it all to you on cnbc.com. and there she is in front of the humphrey hawkins' testimony this time in front of the panel.
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we are back on "halftime report" and the countdown to brex it is on. one day away from the historic vote to decide if the uk remains in the eu or not. wilfred frost is on the ground in london to join us about the way that things are shaping up. wilfred, with less than 24 hours to go, and what is the mood there?
>> well, the mood is uncertainty, and very, very close. the latest poll out 30 or 40 minutes ago confirmed that. a poll of 3,000 people for opinion, and it putley just ahead. it was taken from the 20th to the 22nd of june, and leave 45%, and remain 44%, and the previous reading on the 14th through the 17th of june was 44% leave edging up one point, and the main quotation from the release, everything rests on the 9% undecid undecideds. and so the betting markets re t reacted a little bit, too, but they imply a 75% of the remain, and so some confidence in the betting markets for remain. i caught up with lab brooks, the company ahead of the political betting, and i asked matthew shaddick what it would take for the confidence to be wrong? >> well, the one big unknown is the waeather.
if it turns out that the brexit is so much more motivated to turn out in disproportionately numbers, then we could be in for a massive u surprise. >> it is due to rain heavily tomorrow, and maybe that is going to be having an impact. and more polls the come, and the market s wis will be looking ate with bated breath and response accordingly. >> will fred frost, thank you, and we will talk to you throughout the day tomorrow. wilfred frost on the ground in london. stephanie link, i have not talked to you about your view on this, and how you are preparing and investing? >> well, i think that it is going to be volatile in the next couple of hours, days, whatever. i'm kind of slow ly picking thi week, and slowly, because i don't know, an nonef of us know the outcome, and if there is a brexit, i think that we go down. the volatility continues for a couple of days, but then i think that cooler heads prevail. even if they do leave, it is one to two years before the programs
will be put into place, and so it is not automatically, things will change overnight, and i know it is a big deal. >> the currency prices will change over night, and the stock markets around the world will change overnight. >> i am not disputing that, it will be volatile, but the cooler heads will prevail, and the flight to quality is the theme, and people will come to the u.s., and i think that getting this out of the way and just getting it behind us is a really good thing, because the markets don't like this uncertainty, and just to understand the whole situation and to learn more about it over the coming years yosh lu get this buying opportunity, and also, there is a lot of money on the sidelines waiting. i think that the buying if the market is up, and buying if the market is down. >> doc? >> well, we are seeing the volatility at the record highs. highest levels according to the vix specialist that we spoke to this morning at the cboe, and he said the highest weekly volatility on record for the vix options themselves, and so the derivative of the drerivative o
the derivative and nonetheless, it is what you would expect, judge, as wilfred said, another poll swinging slightly one percent within the margin of error, but nonetheless, swinging towards the leave vote again. i don't know that are remain campaign has made a strong case, and if indeed the 9% or the 10% of the undecideds -- >> you think it is a leave? >> y i do. i heard from the james dyson, the inventor who makes the vacuums and the fans and high-end product, and he said there is no reason to remain there. they don't have a treaty or the trade deal with china and the eu and not one between the eu and the united states. >> and i could say that the ceo of ryan air was on with will are fred this morning and said that there is every reason to stay. >> i wish he could elucidate and the tell us what those reasons would be, judge. >> the reasons are -- >> there are 200 billion
pounds -- >> to do business outside of the continent. >> well, they can do business on the continent, and how are they stopped? there is presently no treaty in place between us and the eu and between china, and ta eu and obviously, nothing blocking britain in the eu unless they decide to the create one, and we are talking about a two-year exit anyway. >> and the other thing to consider is the contagion, and that what people are worried bt and even more so than brexit, and what happens to italy, and spain and all of the other countries that could also leave the euu because that is much more devastating i think. >> and if leave wins, josh, do the u.s. equities lose? >> like maybe immediately, yes. really, again, i have been saying all week that i felt that the market has come to terms with both possibilities. if leave wins it is a shock, and probably some people hit the
sell button, but i agree with e stephanie, like, it is a long drawn out process for the leave to happen, and there are unexpected negatives and some unexpected positives and in the end, business goes on, and think about the uk stock market how much of it is precious metals and mining stocks which are ostensibly gold is going to spike, and evenb the reaction on the uk stocks can't be known, and let alone what is known for the european and the u.s. stocks. i agree that contagion is the issue, and meaning do three countries leave six months later, and we don't know that is the case, and the market does not appear to be pricing that in even though remain and leave are tied in the latest polls. >> food fight. mcdonald's with a downgrade. it is no longer on the top restaurant picks. what is? we will find out. and facebook fails to deliver, and facebook and gordon ramsey teaming up. more on that after this.
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korea's latest missile launches and they will be facing more sanctions after they fired two suspected long-range ballistics missile missiles. five failed and the sixth threw 250 miles. another major wildfire is force forcing the evacuations in utah. the saddle fire has centered in the southwestern part of the state two miles southwest of silicon valley, and 250 firefighter firefighters are battling the blaze. there is another alligator attack in florida and this time in sumner county. the 58-year-old man found the gator on the property and shot him, and when he went closer to make sure he was dead, the alligator lunged at his leg. and errrory mcilroy is not going to be competing in rio because of the zika virus, and he said that his and his family's health is above
everything. >> and that is a bummer. golf back in rio, and one of the biggest global stars of the sport, and not the mention nike endorser. >> well, a loft the athletes are faced with that decision, and especially if it is not a big money-maker for you, i dont n't know why, judge, you would not do it. >> that is exactly the reason i am not competing this year. >> why are you guys laughing? >> well sh, it is a good segue, because the burger business may soon be getting -- come on, you walked into it. a little overcooked and mcdonald's walking on, and i was go ing to move on -- >> you crushed wit that segue for real. >> and the slowdown of the same sales, and year over year comps as well, and it is the call of the day, and making yum the large cap restaurant pick. stephanie link, long time mcdonald's supporter. >> yes. >> and longtime mcdonald's shareholder. no more? >> no, a month ago i sold it. i was taking profits and i felt
that 22 or 23 times forward estimates, i thought it was of valued. i love the story and i think what easter brooke is going to turn the company around in short order is good, but they are getting into some tough comparisons for the same-store sales and so if it were to pull back under $110 maybe i would get back in. >> is it a how much better can the story get ra rather than feeling negative on mcdonald's, and look at where the stock was and where it got to under easterbrook. and under $90, everybody hated it and thought it was going lower. at that point i thought that the balance sheet and the yield would help me until it started to turn it around, and est esterbrook has turned it around much, much faster. >> yes, the all-day breakfast is a big deal. >> and so, i thought, i don't want to be greedy and take my money, and at the same time i put it in yum grands, because it
has lagged -- >> you did it then? >> yes. i started. >> because that is the exact move that know mnomura said tha should do. >> yes, i was a little happy on that one, and i am slowly buying it, but it is not a rush. because they do a road show in the fall to talk about the china spin, and that is going to be the catalyst to get it higher, but i like that they have the balance sheet flexibility, and leverage and buying back stock, and dividend and fix iing the ce business and there is a lot that they can fix and i like that story. >> to steph's credit, you know it was almost impossible to be bullish on the mcdonald's in late 2014 prior to the -- they didn't know who the ceo would be, but it was bigger than that, and it was the idea that the food was so unhealthy, and the prez was so bad, but stephanie recognized that it is a fixable pr problem and not a problem that can never be solved and she was flong the 80s or 90s? >> yes, 90. >> 90. >> societiless odo this, and
deserves the props, and we have given props. she right. and now sh, is nomura right? >> i like obama! and i have not liked -- i like yum! and the problems are fixable, and are we going to cut it in half, and do the asian asset thing, and as that fades to get the hands around what their hands are on instead, and three power brands, it is compelling situation. and technically, a nice setup, and the stocks want to test the low 90s high, and has not gotten above, but if it does, there are no sellers at that level. and similar to mcdonald's hanging in through a slew of controe rever shall things that have happened over to the last few years, and never really broke down, and i don't believe there are a lot of sellers if they can improve the business fundamentally, and multiple expansion, too. >> and what about shack? >> well, it is a different situation. shack is -- you know, shack is
the tesla of burgers. so many things have to go right for this stock to go higher, but i am long in the name. i am long around here at these levels. i am willing to bet that -- >> you can love the burger, but it is more difficult to love the stock. >> well, it is not a cheap stock so it is a growth investment, and this is not a buffett-esque kind of buy, but they are opening up the stores in the right place, and e every time they do, it works. >> here is the real question, after danny myer called in for the program for your birthday, could you be a seller? >> i am completely biased, but i have loved it long and i'm a good customer in addition to being a shareholder. >> and doc, last thought, quick? >> and jack in the box, and i like the diversification of the burgers and the fast cash, so that is my pick to outperform any of the prior two. >> at least you are honest. >> and now, with meg terrell and
biote biotech. >> yes, there is a new medicare spending to drive up the stocks. and there is a question if the new regulation could trigger more restrictions, but today, you are e sseeing the ibb up 2% the report came out, and it did not trigger the new potential cost controls. so you are seeing the biotech, and amgen and secelgen and gile. >> you want to talk gilead? >> well, i don't have it in the halftime portfolio or my own. i like the move certainly, and it took a big hit. >> and the best day for the ibb in two months. >> yes, a big hit, and fell by $2 a day ago, and here, it reverses that and goes to 83 to the upside, and a lot the like about is secelgene as well.
>> steph? >> well, you want to be careful in biotech, and the political situation is not going away any time zoon, and have to deal with the elections in the faushlgs and even thereafter what they will do on the drug pricing, so you won't see the multiples that you have seen over the past year, and that said, some of the biostocks are down, and hammered like alex yon is the one i have owned, and sit down 25%, and it is orphan drug company and maybe they are more insulated on the pricing situation, and that i have a great pipeline so i have been slowly picking, but underweight on this sector. >> josh? >> yes, disburgs is surprisingly low on the biotechs meaning that they are moving a adds bloc more than ever, and they are not supposed to do that, because to steph's point, the companies are so unique. >> and it makes you think that the worst is over, and if the whole sector was thrown out with the rhetoric of the campaign trail, shouldn't you think that if it is abating a little bit, should tnt whon't the whole seca
reboot? >> well, thele whole advisory panel came in today, and a lot of fear that it would happen in 2016 meaning that medicare would cut the payment, and they came out to say it is 2017, so that helped the rally, but to see where they are trading, it is a lot of fear sector wide and the companies are not rewarded for the individual fundamentals and if you are a stock picker, this is a great opportunity for you the buy on the day when the whole sector is whack and pick up the name that you like, because of the prospects of the pipeline and not necessarily the political decision that you are expecting. >> ookay. coming up, gold is lower for the fourth consecutive day despite the unsecertainty of britain's g vote tomorrow, and what the fed going to do and when they will do it. we will go to the futures to talk about it. and we will go to facebook's latest moves with the pal deepak
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coming up on "power lunch" the countdown to the vote. will britain leave the eu? we will talk about that and more on the "power lunch" coming up at noon. >> and jackie dean jill lis is coming up with the futures now. >> and that is right. gold prices trading around 120 0 and well under the 1,300 level now. and jeff kilberg what can we
expect? is the uk going to stay in? should we go lower? >> well, jackie, we are $50 lower than since last thursday, and we have seen emotions taking us up to 120, and so i think that we will put the gold futures back in focus on the fed, because the fed is seemingly not going to be raising the rates for the rest of 2016, and that is going to continue the bid in gold, and move the path higher. >> and so, the other side of the coin, jim, is that the uk is out, and so how high do you believe that it can go? >> well, no question that it is a binary event and if the they vote to leave, we will feel nit in the gold market, and like jeff said, 50 ticks off of the high, and we will easily make it up to 1330 on the leave vote, and then we decide there how much the emotions are going to be. >> okay. gentlemen, thank you, and we will be back with the live show tomorrow, and scott is covering all of the action online, at
1:00 p.m. thank you, scott. >> and thank you, jackie deangelis. you own the gld? >> yes. >> and your brother has been riding the gdx. >> yes, he has been in the miners and day-to-day the miners are performing better and more insulated from it. but, i have spreads in the gld, and i intend to holdle them through the referendum tomorrow. >> and you think that you still think it is a leave? >> i still think it is a leave and i don't know the solid case of why they should stay. >> that is why you are going to be holding them through tomorrow? >> exactly. >> and now, kay homes after the better than expected are rewe will talk about the stock and the board. and doc is near the halftime lead as well, a and he is in it. his portfolio is up 14.5%, good for first place. we will be back right after this.
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if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. >> it is time for the blitz, and four trades on four stocks. kb homes is beating on the bottom line. and good housing data today. >> and yes, it followed linnard as we talked about yesterday on the halftime report, the revenues up 11 to 12% on the street estimates and beat by a penny on the bottom line, and
nothing to not like, and the stock is holding on to a 2.5% gain. >> and at the end of the program e yesterday, we talked about the expectation of kb and you said specifically, expecting good things because of what lennard did. >> yes, and the two move in rather lock step, and as far as the toll brothers completely different animal, but that is one that i would focus on as well. >> and the birds, e steph? you like the things that go in the homes rather than the guys who buy them? and the existing sales are back to pre-recession rates. >> well, like the things that go in the home like whirlpool and i have owned lowe's, but i have been trimming it, because it is expensive, but the trend will continue, and stanley black and decker is also a pick for me. >> and we are going back to you, because fedex. and what do you make of the fedex, because they beat the stock still goes down by more than 4%, and can you explain it for us and the viewers? >> they beat, but underneath the
surface the trends were not that good, so express the one division where we hoped to see better margins, they did, but it is all fuel-related with the fuel being down, and the sur charges on a delayed basis, but if you are looking at the expenses within express they were up, and that is disappoint i ing, and ground, and that segment is also disappointing, and so i believe they are behind u.p.s. in spending a ton of money over ground over the last several years ash and they are starting to see the benefit, and if you are going to choose one or another, it is the u.p.s. that is one that i own, and it is one to get ahead. >> and adobe? >> yes. >> weaker guidance. >> right. >> and not what you were expecting based on the comments of the program yesterday? >> not weaker guidance, but it depends what quarter it hits in. >> the stock is down 5%. >> and the tech revenue, the stock is talking all of the time, andreessen, and why the silicon valley companies don't
want to go public and this is why. it is a company that does it right, and transitioned the entire business into the cloud and regular beats in the raises and one quarter, 20.4% revenue growth, and the street wanted 20.5, and they the ripped 5% out of it and it is ludicrous, 2ed t of it. i'll be a shareholder by the end of the day or the week. there is a great opportunity a doby is not disappointing anyone that's got more than ten minutes worth of attention span. >> what do you make of this deal, doc? they're spending a $50 million paying celebrities, media companies to create videos for the live streaming. >> yeah. and they're big names like kevin hart and russell wilson. big names. i think the amount of money they're spending to do it is not a very big chunk of what facebook brings in as far as revenue. and given that they've got 200,000 or some such number of
advertisers on instagram and the people that want to reach folks on facebook, obviously the more of these kind of videos the longer they can hold folks, the better it's going to be for zuckerberg and company. >> all right. coming up, josh brown. he is focusing on peanut butter and jelly. >> of course he is. >> that's what they say. that's what they tell me. >> i think you ad libbed that. >> i did. it actually did say that. we'll tell you next. people talk about "deals"
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"power lunch" is a few minutes away. we're "the half ftime report." we have some unusual ". >> narrator: radar." what do you got? >> josh brown? >> we have some under the activity. >> yeah. i don't know. all right. so i like the new highs list. that is part of the rish you'll. i came across jm smuker. i felt like this is a really good feechable moment. take a look at the stock making new highs. over the last 15 years, it's up 765% including dividends that annualize at almost 15% a year. no innovation, no social, no cloud, no mobile. company is literally making peanut butter and jelly and they bought folgers.
it's important as an investor to realize total return is important. so fast earning dividends. and then number two -- >> 90% in five years for that stock. >> right. you don't have to own the most high flying innovative companies that are changing the world. sometimes you can just buy consistency, steady management and companies say what they're going to do and do it year in and year out and make a lot of money. 10,000 in j.m. smucker. >> pb & j is worth. that the stock up is 300% in 20 years. >> how about that? steph? unusual? >> yeah. under the radar? >> i didn't own citigroup ever, i own it now. for obvious reasons swreshs to get through brexit. tomorrow afternoon you get the first phase of c car. next week you'll gut the equally
take theive and then we'll figure out the payout ratio. the stock is very cheap. back to february lows on valuation of .6 times valuation. the book value is growing. you can make an argument that it is cheaper than back in february. >> doesn't any part of you say to heck with the bank? why bother? >> no. because they're cheap. you have a catalyst ahead. but this really is like a trade for me. i much prefer other financials and banks management teams who have better execution. >> good jets fan, too. >> right. >> it is like a personality thing. >> i am a value person. so anyway, i think this will be more of a trade. >> okay. unusual activity now, doc. >> yeah. v verifone, judge. they lowered guidance. there's merger and acquisition buzz about this name as it hits new 52-week low either yesterday
or in the premarket this morning. immediately, they came for the calls in the july time frame. so relatively short term. maybe 16 days out number, 24 days out. they were buying the 19 calls. they already double. they went from 45 cents to i think $1.10 or there abouts. i already taken off half the position because they doubled. nonetheless, i'm holding this one, i hope, for most of the next two weeks. >> all right. let's talk about the market. we do have a few minutes left in the show. the gains are gone. in fact, we are near the session lows for the major averages. s&p 500 still positive. it is barely by one point. the dow has gone negative. we spent a lot of time discussing, doc, what happens if it's a leave, a brexit. what happens if it it's a stay? what does our market do? as much as that priced in from earlier in the week? >> some of it is definitely priced in. nonetheless, i agree with steph and josh that made the point at the top of the show that you'll see a little bit of strength
come back in to people's buying activity. it won't just be because they're right now flipping very quickly. they're coming in and out. but i think they'll actually buy and hold based on a remain vote if that's what we get. >> the risk is much more to the down side. are we all in agreement there? the big unknown if it's a leave? >> upside reaction. i mean that's my guess. >> what kind of upside reaction do you think you get? >> that's the thing. i think you may have already gotten it, right? you have this really nice recovery off the lows. i'm not just talking about the s&p 500. i'm look being at european bank stocks. even looking at some spreads tightening that people are concerned about. i think you might have already gotten the remain exhale. but maybe not. >> what happens if a leave vote means a weaker euro? i know everybody is focused on the pound and instant reaction that could be which george soros says could be 10% or more in a
matter of moments. but a weakening euro and a stronger dollar is not exactly what we want to see. >> that's definitely not what you want to see, for sure. but i mean, at the same time, i mean, i think that we will see a rally if they stay. but i think it will be more the stocks that rally could be kind of the cyclical stocks, right? i'd be interested to see if they actually try to bid up the staple stocks. i just have a hard time believing that just because they're so expensive. i think i'll look for what energy stocks do and industrial stocks, technology, financials. that's one reason i add it to citigroup. >> one of the other interesting things is that fed chair on the hill was almost a nonevent. i mean, it's important because of what it is. but there weren't any firecrackers that came out of that. any overwhelmingly meaningful headlines they were delivered in the weeks prior with the fed meeting itself and the news conference. >> right. and bullard stole her thunder
this time around. nonetheless, there will be some activity and she cited about it brexit and what it could mean. although, i would say if we do get that lowlower, it's a buy, judge. >> very minimal jie ragss in the market during the fed chair on the hill. thanks for watching. "power lunch" picks it up now. >> thank you very much. keep it right where it s halftime fans, we have a jam packed two hours ahead on "power lunch" brought to you by the letter b. that is because we're talking buy backs, brexit and a third one there, that would be the banks ahead of that stress test tomorrow. welcome, everybody, to "power lunch." along with melissa and brian. michelle is making her way to london ahead of tomorrow's big brexit vote. u.s.