tv Fast Money Halftime Report CNBC April 16, 2015 12:00pm-1:01pm EDT
message into him. >> julia, any buzz coming out of the itunes release, the first digital release that "star wars" ever did. what are you hearing about that? >> i'm hearing that this is really just disney setting the stage to what we think will be a huge build-up to the launch of the movie in december. let's get over to post 9 and the half. ♪ ♪ thanks so much welcome to the halftime show, live today from post 9. josh brown is the ceo of wealth management. joe terranova is the senior managing director at vertis investment partners, jon is co-founder of option monster and our game plan today looks like this. party city, with that company and two other big names going public today, should you be a buyer of any of them? or will the ipo balloons soon
pop? the banks are back with citi, goldman and others seemingly hitting their stride this quarter. is this key sector really about to take off? we begin with the netflix blowout. a huge quarter as the company subscriber growth blew past expectations. the stock as you probably know by now is surging today. maybe nobody knows it more than dr. j. you bought the stock the day that we had mark cuban on the program. >> i got out way too early. being a fast money trader, getting in and out quick. that's not a curse. but nonetheless, a longer-term investor like mark who famously said when you and i asked him the question, how long are you in this thing, he said forever. he said my timeframe is forever. my price target is -- infinity. >> i think he was making the point that he's not a short-term guy. my conviction is so deep on this name that i'm not looking to make a buck. i'm looking to make a lot of
them for a long time. >> yeah. i got out over $75 ago, judge, was not in for the earnings announcement last night unfortunately. had a lot of friends tell me that they had nice positions and stuck with it. kudos to them. kudos to you, mark, it's a fantastic company. 62 million as far as streaming folks around the world. >> international really strong, joe as well. >> internationals come around, that's exactly what many were questioning, multiple quarters go, could they do it on the international side. i've traded the stock along with you, doc. now having successful earnings reports consecutive, two or three in a row, now you begin to ask yourself, does this become a core growth holdings, they're achieving the metrics they desired, they're seeing the growth subs in the international space. many were concerned with the volatility surrounding the stock. it doesn't appear that volatility is present any more.
the position and the fundamental thesis that he aligned himself with, how right was carl. i would like it see netflix pull an apple, split the stock. >> i would love to see them do it you'll get more longer-term oriented type investors in the name. more mutual fund money. more passive money. this is a great growth story. >> josh the fact is that doubters have been repeatedly punked thon name of late. >> we make this point on the show all the time. the great growth stories throughout history were never cheap. never gave you an opportunity to buy at a below-market multiple. if that's your bogey to get involved with a name like this, if you're a value investor, you shouldn't be here. if this you're a growth investor, this is a must-own stock. that's survey done by fbr, which put a $900 price target on the stock. that suggested users of netflix love it more than tv itself. and quite frankly, if this is
going to be a $10 billion a year revenue company, a couple of years from now, they're going to be in a position to generate $2 billion plus in earnings, just from the u.s. business. it's not egregious to say the stock should be higher. $900, i don't know, but higher than 5. >> we'll bring in the analyst in just a minute, who doubled his price target today. let's bring in another analyst who has been right, and who was criticized frankly for putting a $600 price target on netflix last october. back then it was just under $440 a share. rich greenfield of btig is back to discuss netflix. rich, welcome back. as i said, you were right, you were criticized, where did the conviction come from back then? where is it today? >> it all flows from the consumer. people love streaming content on netflix. i think it's really looking at consumer behavior and i think when you realize that the average u.s. consumer now, is streaming over two hours of netflix a day.
per subscriber, per household, the household subscriber, two hours a day. people just love streaming it and if you love it you're not going to turn off. and that is really the core of the story is giving consumers more to stream that they really like and getting them literally hooked on ad-free, high-quality television. >> it it sounds like you may have a blackberry in your pocket. if you do, you could put it on your desk. >> or are you just happy to see us? >> i have no blackberry. >> maybe somebody here does. so what now? mine what do you do next? right? >> i think what they have to do now is take what they've done really well in the u.s. and apply it globally. you talk to think just a minute ago you were talking about their global rollout. they're very early in the global rollout. japan doesn't launch until the fall. they haven't announced south korea. but they've told you they're going for the rest of the world. they're still in a relatively small fraction of the world. so i think as you see them take what they've done really well in the u.s. and apply it around the
world, that's really the big opportunity from here. but then i think the other piece that's really interesting is that they're now kind of reaccelerating. consumers were really worried or investors were worry about the u.s. business topping out and now you're seeing them actually reaccelerate in the u.s. think that's why you're seeing the big pop in the stock. in that they are literally replacing traditional television and that should be a big scare to the discoveries, the viacoms, really everyone out there in traditional tvland, including nbc. it should be concerning that consumers are shifting to ad free television. >> what are the risks? amazon? are they real risks? >> what i would think about it as the risk of amazon or the risk of hbo going directly to consumers with hbo now. you saw the apple event. these are big changes to the ecosystem. the issue is as more people make it easier to cut the cord, that actually plays right into netflix's favor.
so greater competition is actually good for netflix. because once you've cut the $70 cable bill and you're only paying for netflix and amazon or netflix and hulu and netflix and hbo now, for $24 a month you can get netflix and hbo without having to pay for multichannel television, there's a tremendous amount of content for a lot less than any of us on air pay for cable, let alone consumer as it are watching this right now. >> i want to you stick around, rich, because i want to bring in barton crockett from fbr, he's the analyst, he upped his price target, more than doubled it to $900 a share. now he's the biggest bull on wall street. barton, welcome. i almost don't know where to begin. you must expect that a call like this is going to be subject to some sort of ridicule. how you double, more than double your price target overnight. and go from what i believe was a
neutral to such a hyperbolic price target and rating. >> okay. so i've covered netflix for a number of years. i had a buy rating on it from 100, to 3 50. i stepped aside. because i didn't see how successful they would be. the international trajectory has been better than i ever anticipated. i upgraded it to 100 because i thought the original content would work. i didn't realize they would get to the point they're getting to right now in the this survey we just completed. is that people who are netflix is your describers half, or more than half watch netflix more than they watch pay tv. they would keep netflix over their pay tv subscription. for an $8 a service, that gives awe tremendous leverage to drive up rate over time and the contribution margin on that is great. with this modful consumers love your content where you're fully deployed in the u.s., your pressure to grow content spend is less. if content is table and you're
growing $1 a month. that's $750 million of annualized profit. a little bit of that goes a long way. each one million subscribers, stable content spend is $100 million of annualized profit. i think people don't fully appreciate the leverage of the model when you're at scale and i think these guys are at scale if people love them as much or more than they love pay tv. >> i want to discuss the survey. when was it completed? the implication is that because your rating is based maybe not solely, but overwhelmingly on a proprietary survey thaw did, that the upgrade was locked and loaded ready to go before the numbers even hit the tape. you're judging this more on your own survey rather than on fundamentals. >> look, i'm clearly aware of the fundamentals. the timing on the survey, it was sent out to consumers in the first week in april and we just got the data back within the past few days. it's going to be a larger report, we're generating off of
the survey. there were a few questions very relevant for netflix. and you know we pulled it together and we ran with it. fortunately, the fundamentals at netflix are reporting is consistth with with a we're seeing on the survey. they're reporting close to two hours of global streaming usage daily. they're reporting 20% kind of year-over-year growth in is your describers, he including growth in the u.s. and a big trajectory internationally. and the reporting and improving margin in the u.s. all the fundamentals were supportive of our survey. you look at it and you have to move. what we believe is that this company is very likely to get 60 million domestic subscribers by 2020 at a greater than 40% contribution margin. the present value of those cash flows is $300 per sure. you look at international, we think with six times the broadband sub opportunity, international is easily worth twice the u.s. over time. we think you can get to 120 million subscribers by 2020. that's $600 in the stock. that gets us to $900.
we don't even have china where it looks like they're more interested in entering china that we had assumed. >> i want to get rich greenfield. rich, do you have a comment? and i asked mark cuban what he's doing with the stock if anything. and he said he hasn't sold a single share. on that note, a gentleman who is exceptionally bullish on this name. has not sold a single share. converted the calls he had into stock. so he's a happy man today. rich, you want to weigh in? >> you look at mark cuban. think when you, i remember when you had mark on. he was right when we, everyone was questioning our call and our timing. we got right in front of q 3 just as the company missed expectations and people were really starting to doubt whether the netflix story was really had legs to it. and mark was one of the people that actually stepped in and listened to what our view was, is that they were winning consumers time and i think that's really what everyone has to focus on is time spent with media and entertainment is shifting to netflix. and that really is a big
opportunity. and they're delivering a product that is very hard for the traditional media companies to compete with. this whole ecosystem of multichannel television is not designed to live in a world without advertising. and especially at a very low price point. so that unbundled ad-free experience uniquely positions netflix. i think when you look across the whole ecosystem. it's clear that this is what consumers like. and the media companies, you know the biggest innovation right now in the world of media is when you're using video on demand, disabling fast-forwarding and forcing you to watch ads. that's a losing proposition. and i think the media companies know it they just don't know how to get away from that $65 billion of advertising that supports the business. >> guys, i'm going to leave it there. thanks to you both. barton for coming on and defending a call that's raising a lot of eyebrows. rich, you're probably the most identifiable analyst around this name. so we appreciate having you on certainly as well. a guy who has been right from the get-go.
okay. cleared for takeoff. this name, doc? >> when i look at it, judge, i don't see hbo as a competitor. i don't see cbs or any of the over-the-tops as competitors. they're higher priced actually. at dwz 8.99 a month. think this thing, the only competitor i see on the horizon for them is apple. multidevice, watching it on multidevice, controlling your television with multidevice, that, if apple price it is right, could be the biggest arrow in the quiver of anybody who wants to go them. >> somebody needs to place a call out to the west coast to make sure that michael pacter is okay today. >> i would say -- >> hit me on email, pacter, tweet me or something. >> he raised his target by $25, did you see that? >> did he really? >> i swear to god. he went from $10 to $35? >> no, $170 to 205. he threw a token target rise in there. >> i think from a strategist standpoint.
want to look at where it is priced now and understand any time you get a retreat in the price, which you got in the fall. i missed it, john and mark cuban stepped in, they bought it you want to own it, you don't want to trade it. what we've learned from the last couple of earns reports, if there's any disappointment. there's enough on the other side of that to reverse it to the stock comes back. don't trade it, own it. >> one very quick point. if you're going to be in the name, you have to buy in, the last thing crockett said, which was international. he thinks they're going to have 300 million international subs, and that's not counting another 200 million from china, or something to that effect. if you believe that, you own the stock. if you don't believe that, it makes it tougher. >> that's a big move for certain. coming up, big banks on the move. is this a tipping point? how should you play the financials right now? then it's an ipo party today. with three big names making their debuts. we go to the trading post for the latest action. plus, how to spot the next
billion dollar ipo. bringing in a silicon valley investor. that and more straight ahead. live post 9 at the new york stock exchange. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. do you have something for pain? i have bayer aspirin. i'm not having a heart attack, it's my back.
>> it's been a mixed picture. sometimes these banks are up or down, even though their profits are up or down. you can see goldman sachs down about a third of a percent. we'll get to it in a bit. let's talk about citigroup because it is america's third biggest bank. report a hefty decent-sized profit beat and yes the shares are up, one of the best performers in the s&p 500 financials right now. they were helped by some cost-cutting measures, helped to offset the trading weakness they saw from some of their divisions, so citigroup shares up on a good earnings beat. goldman sachs is down about .33 in trading, despite knocking the cover off the ball. beating analysts expectations, they show their fixed income currency and commodities trading surged by 10% after a decline last quarter. those shares still down, goldman sachs saying its investment banking revenues the highest since 2007. and blackrock, those shares are down as well. the company got a lot of inflows, about $70.4 billion of
long-term fund inflows in its fund of managed products. some of the highest levels in terms of inflows since they bought the i-shares platform from barclays global investors. a big move there. also what's happening here, they got a lot in terms of $4.8 trillion in assets. one stock here, american express, reports earnings after the closing bell. back to you. buy, sell, hold. jp morgan. >> buy. >> citi. >> hold. >> goldman. >> buy. >> jp morgan. >> buy. >> goldman, buy. breaking out going a lot higher. >> citi? >> citi? meh. >> what do you mean, no one is meh on citi. >> bank of america, even though i think it's undervalued. i don't know where they're going to get the big boost. judge. >> josh?
>> date goldman, marry jp morgan. kill citibank. >> that's the "game of thrones" version. i think you had a great quarter for everything goldman does, they smashed it and there's great and there's nothing bad you can say about their performance for a long time. but i think the stock tends to trade based on kind of banking and trading within each quarter which as we know is very lumpy. i think jp morgan wins no matter what. citi, no interest. >> i like the trading environment. think a lot of what you're hearing in from these banks tell you trading is good. >> cme. and how about wisdom tree. >> you want to play volatility, you want to play commodity volatility? you want to play increased trading, the exchange are rocking. i'm long cme for the contest. i think it's a great name. i think anywhere around 90, it's a buy. >> quickly, blackstone, didn't schwartzman tell "squawk" this morning they're an earnings
machine? stock up 2% today. >> they sold a bunch of properties. >> doesn't get enough chalk on the show i don't think. >> it's a little sleepy, judge. who else has $23 billion laying around in the couch? >> what are you talking about. i'm like rodney dangerfield, you're just mad because the islanders beat your capitals. >> we'll talk what we dot a blackstone last week we said it was the final trade. panera is on the rise, the chain boosting its buy-back, do the traders think it's a good time to buy? plus ipo party, virtu, etsy, party city today. there's a difference when you trade with fidelity. one you won't find anywhere else. one-second trade execution. guaranteed. did you see it? in one second, he made a trade, we looked for the best price,
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to the ten-year, a horse race is taking place between japan and china. for more let's go to jackie de angelis and the futures now crew at the nymex. >> it seems to be significant news that japan is taking over as the biggest funder of the u.s. government. i want to get your take on this, brian, you how should investors be reading this right now? >> it's indicating there's a couple of players in the bond market. japan and china moving together here. and that movement is putting a bid behind treasure irys, any time you see the yields behind the ten-year notarize, the japanese and chinese come in and buy them. when you have the biggest pension fund in the world. at 1.1 trillion raising their allocation from 11% to 15% allocation to foreign bids bonds, that will put a bid behind treasuries and that's your buyer in the market right now. >> jeff killberg we are watching the yield closely, it's rising today. but not near 2%. are we going do get there or
not? >> well jackie, think we will. but to brian's point we stuck in this range in the last month, about 188 in yields, up to about 2% or in the pits here, it's 128 handle, 130. a tight two-handle rein. but back to brian's point, japanese coming in and taking over as the number one buyer in the world. the ten-year yield currently at 191, buyers are coming. >> tune to the online show at 1:00 p.m., we're going to be talking about not only the market and are there new highs ahead, but also tcrude oil trad. futures now at cnbc.com. coming up right here amid the flood of ipos today we look at investing in the next billion-dollar start-up. could there be a bubble? in that space. one silicon valley insider says you have to be careful.
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hello everyone, here's your cnbc news update for this hour. russian president vladimir putin kicked off his annual televised q&a session in moscow called the direct line to vladimir putin. responding to one question regarding ukraine, putin said, russian military forces were not in that region. and that moscow was not supporting pro russian rebels. fbi agents arrested former jp morgan investment adviser michael oppenheim apt his suburban home. he's charged with four counts of converting $20 million of client funds for his own use. jp morgan telling cnbc it is angry he violated their customer's trust. he is expected to be in court later today. fire and burn hazards have prompted home light to recall
about 823,000 of its electric blower vacuums. over the past five years. mixed fan shawn kelly is $10,000 richer after sinking a half-court shot at halftime in last night's knicks game at madison square garden. he missed a shot before he sank the half-court shot. if only the knicks could shoot like that. well, maybe not. that's your cnbc news update for this hour. scottie, back to you. >> i was going to say somebody in that jersey can hit a bucket. >> even after a couple of tries, he hit it from the half-court. >> last game. good for him. busy day on the ipo front today, let's check on the movers so far. dom chu is on the floor with us. >> i'm wearing my rangers colors right now. blue suit red tie.
so anyway, let's talk about the ipos, the one here to start off with and that's of course what happened with party city today. priced at $17 a share. it got up as high as $20.84. up about 19%. $20.26 and we just saw the ceo walk right by us here. party city a focus here. the company is a decent size in terms of higher in terms of this ipo. now we move on to the nasdaq ones, you take a look at what's happening with the overall nasdaq ipos, etsy more than doubles in terms of its price today. $31 a share. it opened at 16, the stock has been losing a little momentum. still up about 85%. doubled at one point a little bit weaker right now for etsy. that makes etsy a huge, huge valuation tore this particular company. you look at the other one, the peer play, the purer play. high frequency trading firm, virtu financial, market-making high-frequency trading.
those shares can you see up by 16%, losing a little momentum. they again priced above their range. at least at the higher end of things, have seen a nice bump-up in their shares as well. some pretty big deals, etsy takes the crown. an 85% move. dom over to you. pete najarian has joined us here at post 9. do you want a piece of any of them. >> the one that intrigues me is virtu, i feel like i understand the business better than the other two. but market maker firm or high frequenciors there's been all sorts of debate over that for years. but that's exactly where i was going. these guys, the profitability standpoint. >> they made money every day since january of 2008. >> i thought there was one miss. i thought there was a miss along the way. >> that's like. >> that's a pretty, that's awfully impressive, right? we have do look at that and just say this is something i think would you want to be a part of. depending on valuation levels
and all the rest of that. this is a name that i think of the three really stands out most. >> etsy or party city? >> party city. >> party city. i like the retail locations that they have. i like the brand familiarity that customers have with it. etsy, people are getting comfortable with it. >> did you get any of these valuations? >> we did get some for the wealth management and the etsy. just out of sheer luck. i like it $54 million people in the marketplace. >> only about a million and a half are sellers and these are the actives, total count there of about 54 million. like what they're doing. obviously the stock seemingly underpriced when it came out but the party city folks, that's a big play, too. >> quickly, josh. >> etsy, i really don't know it well enough. i think it's a really unique business. but i have to dive more into the financials to see if it's something i would rather invest in or trade. i have no position right now.
i agree with pete that virtu is the most interesting of the bunch. party city, not so interested. this seems to be kind of like a catch and release play. private equity guys own it. and they own it again. i don't know if this is the kind of thing i want to be involved with. you only have so much capital. >> spotify got an $8 billion valuation. the latest in a string of private companies to join the billion dollar club. the next guest is a fund that allows you retail investors to get a piece of the private marks action. is the reward worth the risk? sven weber joins us from palo alto. people hear about this and they say okay, if we were worried about late-stage private tech investing before this has to market top or something close. >> first of all, thank you for having me. and let me comment on etsy. i agree the current valuation is quite rich with about a 20 times
revenue multiple. you have here. the company needs to grow significantly to grow into these kind of fundamental multiples you see here. the real winners here are the private investor who is came in a couple of years before going public. the losers you could say are the public investors that are now coming in at a very fully valued company and have to wait a significant time until that can appreciate to much higher values. so for us, you could make a statement -- two to three years before and what are the valuations there. and how these companies are valued there. >> you could make the statement that you made at the very top of the interview. probably about every single late-stage company save for a couple. a few that have tremendous valuations, $30 billion, $40 billion without having so much as a penny of even revenue. forget earnings.
>> well, a lot of them have revenue. don't underestimate the revenue. the question is what is the multiple elasticity with respect to revenue and revenue growth. a lot of these companies, why they're private have revenue growth of 50, 100, 150, we have one portfolio company growing 350%. can you justify certain revenue multiples are that are getting more normalized what is the price at the exit and for the public investor. what kind of multiples are paid there. if you pay today, at 10 x or 15 x in the private market and the company is growing 200% per year or 100% per year, you get to normal lies 2 x to 3 x market multiples very quickly. the real winners are always the private investors. and also private investors are certain security lines in there,
they have liquidation preferences and security rides that secure them a minimum. so it's important to get access to high-growth companies while they're private than after an ipo. that's our logic and take advantage of that. go in two to three years before they hit a billion dollar. and if they hit a billion dollar, you can be happy as a private investor and take advantage of the growth. >> sven, i'm sorry to cut you off. i want to get a question in, it's josh brown from the floor here with scott. so we saw box come public and do what i think is the first ipo down round for a high-profile kind of billion dollar private market company, comes public for less money than they had raised in the prior round. can the private market survive three or four more of those? or is that when everyone gets religion and they start caring about which deals they're involved with and care more about uh-oh i don't want to be in the next company that goes to the public market and raises
less, because you could kind of have a chain reaction of valuations being ratcheted down. what do you think about that idea? >> you have toe see on box, the last round had conversion rights. the last round of investors did very nice. they got conversion adjustments when box was prized in the night before going ipo. many people missed that out and rode off of that. so with that, private investors did fine, because these internal structures. i agree some of the valuations, definitely if you hit $5 billion or more you really have to show the fundamentals. and from my perspective, you will see a correction in some of the very, very high profile companies. in latest, acquisition or an ipo. i assume that there will be a correction or something like 30%. in some of the companies. still, the private investors will do fine, given their
preference rights, they have structurally built into their deals. the economy is what are the common shareholders receiving and how is the public market then trading. even after a lock up period of 180 days. >> sven, we have to go, i appreciate you joining us, thank you so much. sven weber, share post portfolio manager. is it just me or i have -- a bit of an issue with the notion that the private investors, the folks who got in the earliest, as have a sven says, yeah, they're going to do great. and then the retail investor, the person who gets in when it goes public or who gets in at the end of the game here, gets screwed. am i reading that wrong? >> no, not necessarily and same as it ever was. so like for example, there was a lot of screaming about facebook's valuation preipo. because we said oh, the retail investor is getting the cigar
stub, right? the whole gain is priced in. then they go public and a get a 5 x or a 3 x return. think it's possible for both to be reality. >> even those through a fund like this, though. public investors, retail investors, however you want to characterize them, getting in at the latter stages of the late stage game are more at risk of if something dramatic happens and this valuation bubble is overstretched and it pops, you're left holding the bag. >> the good news is they have the liquidity to get out and they don't have the onerous holding periods that the insiders have and that's a benefit and people are taking advantage of that in stocks like etsy today. >> investment is not an entitlement in terms of what we're seeing in capitalization companies coming to the marketplace. it's what the capital companies are all b. it's a good thing. >> ring, they're going in, there's still some rick, right, we've seen the price start to incline in the premarket. i think the interesting thing is how about the risk that goes
into it at the very beginning, right? there's where there's some serious risk being put in front of it as well. >> is it a good thing the fund now offers access to the retail investor to get into some of these names. what if they're the wildly overstretched valuation names? and what if they are the once wunz that are the winners of years past and continue to move higher? there's the possibility. there's risk, there's risk assumption in all of this and you understand that, but it doesn't deter you from getting involved in it. >> no one's got a gun to your head. if you choose to invest in this, you know you're a muppet. you know you're doing this because oh my god, i have to get uber. you're going to pay a ridiculous price, but that's what you want, so get it. >> 2 x or 3 x the return on this fund versus the market last year. >> when the top of the market comes it's not going to be if
that's a shift in the ipo bubble. >> don't you think it will be one of the places more dramatically hit perhaps? >> it will be dramatically hit but i think there's far more liquidity in the market place in 2015, you'll be able to get out. coming up, innajarians findg something interesting in the space. why some companies could lose big-time funding from the banks.
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with e*trade's investing insights center, you can spot trends before they become trendy. e*trade. opportunity is everywhere. coming up at the top of the hour, on "power lunch" mid cap stocks have been on a tear. sitting at record highs and easily outperforming their big-cap rivals, three mid-cap marvels for your portfolio. bubblishes stocks and bonds and three huge ceo exclusives on other show, the ceos of pfizer, merck and disney all live during our two-hour show.
all coming your way at the top of the hour on "power lunch." thank you so much. when something unusual happens, the najarians try to find it, make some money on it. they're at post 9, doc, you first what do you see? >> unusual put act in the tlt, judge. back on march 6th we saw of course the tlt drop down to about 123.5. it's now just below 130. somebody is looking for it to test back down. they bought about 10,000, a million share equivalent of the 128 puts. they're looking for that kind of movement, judge out of that particular contract. we jumped in here, bought these for about i think 65, 70-cent level, and we're looking for probably a two-week holding period. these are may options at the 128 put strike. >> pete, what about you? >> verizon pharmaceutical, back on march 20th. we said monster buyers come in
5,000 of the april 23 calls. 1.30, today they're trading $6.56. the stock is trading 29, 30 share. today the may 31 calls, huge buyer, 10,000 calls on the may 31 calls. they're selling the may 35 calls against that. reducing some of the cost also reducing some of their exposure to the upside. huge trade, they were right before, i think they're right again. i'm going to be in this. hold at least two or three weeks, if it doubles, i'm going to take off half. >> take off half. a couple of weeks. thank you, guys. coming up, traders doubling down on energy with the latest play shake up the halftime portfolio leaderboard? in our battle for trader of the year. we're back after this. when the moment's spontaneous, why pause to take a pill?
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all right, there's our leaderboard. bank earnings shedding light on a tough period for energy companies that rely on borrowed machiny. kate kelly has more. >> energy companies are in the midst of what could be some hair-raising talks with bank lenders about how much money they can continue to borrow at a time when crude and gas prices have really plummeted. these semiannual discussions known as credit redeterminations are prompting some to dump out of their bank loans altogether or in large part. take a look at some of these stats. the first quarter with $8 billion in new share issuance
was a record for the industry with companies like noble, whiting and concho raising a billion dollars, give or take. the debt capital market were active too. at least 14 new deals have occurred in both debt and equity markets. i talked to two recent debt issuers who said paying higher rates to public investors was worth it if it meant securing crucial cash basis especially given that crude prices could still be low. there's good reason for their caution. major banks have talked this week about increasing their reserves for potential energy losses with jpmorgan and citi saying they have set aside roughly $100 million for oil and gas losses. citi said also they're pulling back a bit in general as these markets remain both depressed. ti is off 47% from its june high last night and choppy as well. back to you.
>> all right, kate, thank you. joey, what are your thoughts on this story? and we should also say, by the way, i know we did it yesterday but you weren't here. the call you made a couple of days ago on oil certainly looked pretty good yesterday and they were giving a little bit of it back today but the stocks that you picked had a huge -- a huge move yesterday. >> and what i'm trying to do is focus on who i believe will be the winners and the survivors and a lot of the reasoning behind getting into these names has to do with the high-yield energy debt market that kate is just referencing. you've seen a lot of deal activity and it's been good activity. the apocalypse has not happened. i think energy, when you look at where it sits today, i think it's going to go higher by the end of the day. >> what about this notion kate was talking about with the drillers. that being crunch time, relying on a lot of borrowed money. >> i think the whole shale industry was built on a lot of easy monetary policy, that's what kept the wells going.
obviously the growth and production, there is a correlation between the low rates. so you've seen that. but the other side of that is you're not seeing the defaults that were expected at the end of december coming into this year. coming up, three hours left in this trading day. that's why we have your game plan for the second half coming up. plus, later on on "power lunch" do not miss disney chairman and ceo, bob iger. you can call me shallow... but, i have a wandering eye.
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>> i am tempted because of the flash memory, because of all the changes that apple has been making, i think that feeds into more demand for their products going forward. >> or not. or not. >> i'm glad that i was only tempted and didn't buy. that much is true. >> you mentioned it so many times as being tempted. >> and i should have done it -- i should have pulled the trigger
on it then, judge, when it was in the low 60s, even though it's down five today. i think when you look at where it was coming up off of the 52-week lows, it rallied up to about 70 or so and then, of course, it gave all that back with the earnings report last night. lost customers, fusion io, an acquisition they did, not paying off the way they thought they would. >> so this is a sandisk specific? >> i think it is. >> yesterday we were talking about the chips because of intel. >> intel, right. you're exactly right. micron certainly has not traded well either, so that space right now is definitely under pressure. >> we do have about three hours to go in the trading day. we also have about a minute and a half to go in this program. let's get your trades for the second half. josh, what are you watching today? >> one thing that i think is a really interesting feature of the market this year and it's continuing even on a day like that, expensive growth stocks are winning.
they're actually crushing the market. the median stock in the s&p 500 is a pe ratio of 21. stocks that have a pe ratio above that on average up more than 5%. stocks with a pe ratio below that median are actually flat on the year. that tells you where the gains are. there's no sign that that trend will abate. growth stocks doing really well here. >> i want to pull up goldman sachs, guys, in the control room if you can do that for me. knock the cover off the ball, right? why was the stock down today? >> the numbers as great as they were, the expectations were already built in and it did extend up to 202 and bulled back. >> you grab it here at $200? >> you do, you do. i think the market sets up nicely for the past half of april. >> so you like energy, you like the fms. >> i like the s&p. i like the s&p to make a new all-time high. >> quickly, pete. >> love these chemicals and we
had dow paper today, how about the cross between the volatility, 50 and 200-day moving average around 15. look for a spike. >> that does it for us. have a great rest of the day. steve liesman back at hq has breaking news. a lot of fed speakers. coming up, dennis lockhardt speaking down in florida talking about heightened uncertainty about the track of the economy. this is interesting because he's a centrist and the end of march he was talking about rate hikes in the june to september period. now he's saying a murky economic picture is not ideal for a major policy decision, so that sounds like a little bit of a change towards the dovish for lockhart in my opinion. anyway, he supports, quote, waiting a while longer before making a liftoff decision. he did not mention this june or september liftoff time frame like he did to me and to other reporters after that. he says the