Schaeffer's Trading Floor Blog

5 Ways Electronic Arts Inc. (EA) Has Helped Me Cope as a Bills Fan

Being a Bills fan would be unbearable, if not for Electronic Arts Inc.'s Madden Mobile

by 12/24/2014 12:34 PM
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As the NFL regular season winds down, I feel the need to make a confession: I now prefer football games (of the board and video variety) to actual football. I've played a lot of football games over the years, from the classic vibrating football board, to obscure card games. But here's my latest obsession -- Electronic Arts Inc.'s (NASDAQ:EA) Madden Mobile, which I play nearly every day on my Apple Inc. (NASDAQ:AAPL) iPad.

My wife can probably account for all the time I've wasted on this new obsession -- though, who is she to judge, sitting at Level 1,000,000,000 of King Digital Entertainment PLC's (NYSE:KING) "Candy Crush Saga"? But I'm simply here to tell you why I've had a change of heart on this all-important matter. After all, I gave up football video games in 2009 (and fantasy in 2007), without ever relinquishing my love for the sport itself.

In a nutshell, here are five reasons I prefer football video games to the actual thing:

  1. Cost: EA's Madden Mobile is free. Yes, some players spend real cash to upgrade their teams, but it's easy to play at no cost (time and self-esteem notwithstanding), and still field a respectable roster.

    By contrast, almost everything NFL-related costs money. Back in the days when I subscribed to DIRECTV's (NASDAQ:DTV) NFL Sunday Ticket, the package was $300 a year. Going to a sports bar week after week cost even more. Even my current solution for watching games a day after they're played -- NFL Game Rewind -- is $40 for the regular season, and another $20 for the playoffs.

  2. Free Agency Works: In Madden Mobile, there are no questions about player performance when it comes to the game's version of free agency. You may overspend slightly (in "Madden Cash") to get a player with an overall rating of 96, but he will perform like a 96.

    This is important to me, as a Buffalo Bills fan. In recent years, I've watched the Bills hand out $13.5 million to Chris Williams, $27.5 million to Mark Anderson, and $49 million to Derrick Dockery. Don't recognize any of those names? Consider yourself lucky.

  3. The Blame Game: If my team doesn't do well when I'm playing Madden Mobile, I only have myself to blame. Sure, sometimes I throw to the wrong receiver, but not as often as J.P. Losman Kelly Holcomb Trent Edwards Ryan Fitzpatrick E.J. Manuel Kyle Orton.

    By contrast, when the Bills don't do well -- which is more often than not, given their 15-year playoff drought -- I'm never sure exactly where to point the finger. I desperately want to point the finger, but I'm never sure whether the futility is a product of the players, the coaches, or the front office that selects the players and coaches.

  4. No Post-Game Press Conferences: Seriously, there are only so many ways to explain a loss. "They outplayed us." "We made mistakes." And, when teams win, the comments are pretty much the opposite. "We outplayed them." "We didn't make mistakes." Lather, rinse, repeat.

    This is never the case with video games. You play, you win/lose, you move on.

  5. The Bills Stand a Chance: I mentioned in passing that the Bills haven't made the playoffs in 15 years -- 15 years. No other team in the league can claim such a dubious distinction -- not the Browns, not the Bucs, not the Jags. It's the second-worst streak since the NFL merged with the AFL back in 1970.

    But in Madden Mobile, the Bills -- my Bills -- make the playoffs every year. In fact, they win the Super Bowl every year.

    So when the Bills laid an egg in Oakland last Sunday against a 2-14 team -- dashing the hopes of a re-energized fan base -- the disillusionment was more fleeting this year than in seasons past. Why? Because the Madden Mobile Bills remain in the playoff hunt.

However, I'm not the only one who's a fan of Electronic Arts Inc. (NASDAQ:EA), as evidenced by the stock's charts. The equity has more than doubled in 2014, and on Monday tagged a six-year high of $48.35.

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Analyst Update: Continental Resources, Inc., Virgin America Inc, and Walgreen Company

Analysts adjusted their ratings on CLR, VA, and WAG

by 12/24/2014 9:19 AM
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Analysts are weighing in today on oil-and-gas issue Continental Resources, Inc. (NYSE:CLR), airline Virgin America Inc (NASDAQ:VA), and pharmacy chain Walgreen Company (NYSE:WAG). Here's a quick look at today's brokerage notes on CLR, VA, and WAG.

  • After recently announcing it will cut spending by roughly 41% and reduce its rig fleet amid plunging oil prices, CLRreceived a price-target cut to $42 from $44 at Barclays -- though the firm reiterated its "overweight" rating. It's been a miserable 2014 for the shares, which have dropped 28.4% to rest at $40.26. However, more than half of the analysts covering Continental Resources, Inc. have doled out a "buy" or better recommendation, and its consensus 12-month price target of $53.04 stands at a nearly 32% premium to current trading levels. In other words, if CLR maintains its longer-term trajectory, additional bearish brokerage notes could come down the pike, exacerbating selling pressure.

  • Wall Street newcomer VA has advanced 32.6% since going public in mid-November, landing at $35.81 last night. A trio of analysts reacted to this price action this morning, initiating coverage on the shares. Specifically, both Barclays and Cowen issued the equivalent of "buy" ratings, as well as matching $42 price targets, while Raymond James handed out a "market perform" assessment. In the options pits, traders have been extremely bullish toward Virgin America Inc. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1,254 VA calls compared to just five puts.

  • The brokerage bunch is responding positively to yesterday's earnings beat from WAG. Specifically, Barclays upped its price target on the shares by $4 to $72, while reiterating an "equal weight" opinion. From a technical perspective, this bullish note is warranted, given Walgreen Company's 33.2% year-to-date advance to trade at $76.51 -- and yesterday, the shares hit a record peak of $77.22. Not surprisingly, 55% of covering analysts have rated the stock a "buy" or better, with not a single "sell" to be found. However, WAG's consensus 12-month price target of $73.18 sits below the current price, suggesting additional price-target hikes could be on the horizon.

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Buzz Stocks: American Realty Capital Properties Inc, Cal-Maine Foods Inc, and Novo Nordisk A/S (ADR)

Today's stocks to watch in the news include ARCP, CALM and NVO

by 12/24/2014 9:19 AM
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Futures are pointed higher, as markets look to finish the holiday-shortened session on a high note. Meanwhile, among specific equities in focus are real estate investment trust American Realty Capital Properties Inc (NASDAQ:ARCP), egg producer Cal-Maine Foods Inc (NASDAQ:CALM), and healthcare concern Novo Nordisk A/S (ADR) (NYSE:NVO).

  • ARCP is down nearly 3% in electronic trading, amid more fallout from its accounting irregularities. Specifically, the firm said it reached a waiver agreement with lenders and suspended its dividend payment as it tries to get its fiscal house in order. Since the company first uncovered the incorrect financial statements in late October, shares of American Realty Capital Properties Inc have plunged 32.7% to trade at $8.33, and option traders have been rolling the dice on more downside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 1.11 ranks just 6 percentage points from an annual bearish peak.

  • CALM is bracing for a 10% plunge out of the gate, after the company's fiscal second-quarter profit fell short of analysts' estimates. Overall, it's been a good year for the stock, which is up nearly 47% to $44.18. What's more, CALM found a foothold atop its 160-day moving average -- currently located at $39.59 -- earlier this month. In spite of the equity's longer-term trajectory, short sellers raised the stakes ahead of last night's scheduled announcement. Short interest nearly tripled over the last two reporting periods, and now accounts for 14% of the security's available float. Additionally, it would take more than 11 sessions to cover these shorted shares, at Cal-Maine Foods Inc's average daily pace of trading.

  • It was a rough day for pharmaceutical firms on Tuesday, and NVO was no exception, shedding 3.2% to close at $42.72 -- its lowest settlement since June 2. Today, however, the shares are poised to bounce back, after the Food and Drug Administration (FDA) approved the company's diabetes drug, liraglutide, to treat obesity. Year-to-date, the shares are up nearly 16%, and in the options pits, calls have been popular in recent months. At the ISE, CBOE, and PHLX, NVO's 50-day call/put volume ratio of 4.10 ranks higher than 73% of similar readings taken in the past year. Echoing this call-skewed bias is the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.47, which sits lower than all other comparable readings taken in the past 52 weeks. Simply stated, short-term speculators are more call-heavy now on Novo Nordisk A/S (ADR) than they've been at any other point during the last year.

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Happy VIX-tivus!

Checking in on the CBOE Volatility Index (VIX) family

by 12/24/2014 9:17 AM
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Before I forget, I would like to wish a Happy Festivus to all. Or, as we say in volatility world: Happy VIX-tivus! And that, of course, means it's the time of year when we gather around the VIX-tivus Pole and air our grievances about how all our family volatility exchange-traded funds (ETF) have disappointed us all!

So, let me start with mine: the VelocityShares Daily 2x VIX Short-Term ETN (NYSEARCA:TVIX). The CBOE Volatility Index (VIX) is up on the year. TVIX tracks two times iPath S&P 500 VIX Short-Term Futures ETN (VXX). And it makes VXX look like a champ, as TVIX has pared two-thirds of its value in 2014.

Even by volatility ETF standards, that's shockingly bad. But, I suppose it makes sense. VXX itself has lost one-third of its value, so it's essentially in line. But … just wow. It's almost back to all-time lows not much more than a week beyond a nice volatility spike!

Let me throw another ETF out there that disappointed: the VelocityShares Daily Inverse VIX Short-Term ETN (XIV). XIV tracks the inverse of VXX. Again, VXX dropped about 33% in 2014, yet XIV has only gained a shade more than 1%. That's a little more underperformance than normal over the course of a year. But, it makes some sense, thanks to the exceptionally choppy nature of volatility this year.

As always, compounding kills tracking ETFs. Any churn over any time frame causes a drop in value. So, unless VXX moves in one direction, XIV will underperform. To max out your bets against VXX, you have to short it and incur borrowing costs (low or non-existent most of the year) and risk being short a theoretically open-ended vehicle.

Well, there are my grievances. Here are some of yours:

Hey, we got down to 3! Feels like we're headed there again by New Year's.

It also ends in some sort of singularity -- at least, that's what I learned in VIX-stronomy way back when.

I predict I will make more wrong VIX predictions than anyone!

Quick timeout to remember Leslie Nielson and Enrico Pallazzo. Anyway …

It does become a crowded trade. But, it's improved over the years, there was a time you had to pay up big-time to short VXX. And finally:

Indeed. Best holiday wishes to all!

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

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Analyst Update: Bristol-Myers Squibb Co, Achillion Pharmaceuticals, Inc., and Kimberly Clark Corp

Analysts adjusted their ratings on BMY, ACHN, and KMB

by 12/23/2014 2:53 PM
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Analysts are weighing in today on pharmaceutical companies Bristol-Myers Squibb Co (NYSE:BMY) and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), as well as consumer products manufacturer Kimberly Clark Corp (NYSE:KMB). Here's a quick look at today's brokerage notes on BMY, ACHN, and KMB.

  • After news broke that BMY's new melanoma drug Opdivo was approved by the Food and Drug Administration (FDA) ahead of schedule, Cowen and Company raised its price target on the stock to $70 from $59, while reaffirming its "outperform" rating. Bristol-Myers Squibb Co has been on a tear recently, outperforming the S&P 500 Index (SPX) by more than 12 percentage points in the last 60 sessions. However, despite this morning's positive attention -- and the fact it touched a 13-year high of $61.77 out of the gate -- BMY has followed its pharmaceutical peers into the red , last seen at $58.74. Still, 31.2 million shares of the drugmaker are sold short, and would take over a week to buy back, at the equity's average daily trading volume. If BMY can bounce back from this sector-wide decline and resume its run to higher highs, there's plenty of cash on the sideline to provide a boost.

  • ACHN is another pharmaceutical stock hurting today, off 25% after Baird downgraded it to "neutral" from "outperform," citing questions about recent drug data, but raised its target price by $4 to $16. The stock was last seen at $11.78, and until today was on fire, as yesterday it hit a seven-year high of $16.87. The sentiment in the analyst community is almost entirely bullish, with 90% of covering firms issuing "strong buy" recommendations. Elsewhere, Achillion Pharmaceuticals, Inc.'s 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.26 ranks in the bearishly skewed 79th percentile of its annual range, implying puts have been bought to open over calls at a faster-than-normal pace. However, this is likely the result of shareholders hedging against a downward move in the stock.

  • KMB touched an all-time high of $118.57 earlier, after BMO bumped its price target by $9 to $125 and reiterated its "outperform" recommendation. With today's 1.5% gain, the equity has added over 18% year-to-date to trade at $118.20. Additional analyst upgrades could be on the horizon for Kimberly Clark Corp, as nine of the 10 covering brokerage firms currently issue tepid "hold" ratings. Not only that, but the security has already surpassed its consensus 12-month price target of $111.62, possibly paving the way for additional price-target hikes.

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