Wednesday, November 11, 2015

General Electric Spins Off Synchrony Financial

On October 14th, the Federal Reserve announced that they had approved General Electric’s (GE) plan to spin off Synchrony Financial (SYF) as part of GE’s mission to reduce the size of their North American financial entity. On October 19th, General Electric officially announced an exchange offer to shareholders: to exchange their General Electric shares for those of Synchrony Financial, with that offer expiring on November 16th.
So what does this mean for General Electric shareholders? Do they take the offer or stay put?
Synchrony Financial has some serious appeal. Prior to their IPO, Synchrony Financial was a division of General Electric (formerly General Electric Capital Retail Finance) and was able to bring in nearly one-half of General Electric’s revenues. It was the third largest IPO of 2014 after raising roughly $2.88 billion in their initial public offering. In their first 15 months on the NYSE, Synchrony Financial’s stock has raised over $7/share (while GE has raised roughly $3.5/share over the same period).

General Electric’s (red line) and Synchrony Financial’s (blue line) stock growth dating back to Synchrony’s IPO in August of 2014 (click to enlarge)

All this sounds good, so why the split?
The financial division of GE ran into some distress during the monetary crisis a few years ago when it held some risky loans. Once Lehman Brothers collapsed, GE’s shares started to drop as the public grew concerned with GE’s financial division. It was at this point that General Electric set its sights on becoming less dependent on that area of the company, and the split is part of an ongoing effort to trim down that sector of its business.

If you’re someone who holds stock in GE, this exchange might be something to seriously consider. Despite the potential risk, there’s a lot of upside in Synchrony Financial. They are currently the largest provider of private-label credit cards in the U.S. (based on purchase volumes and receivables) -- a significant statistic as a Federal Reserve study found that the private-label credit card business has outpaced general-purpose credit card growth. Synchrony is also in the works of striking a deal with Apple to include their multi-purpose cards in Apple Pay.
While Synchrony doesn’t pay out a dividend, if management continues moving in the right direction, there could be some real value with SYF. Keep the offer’s expiration of November 16th in mind if you’re considering pursuing this opportunity!

Saturday, October 17, 2015

The Crimestopper Breaks into Houston

According to Aquille Carr’s twitter and other sources reporting the like, the 5’6 guard has signed with the Houston Rockets and will compete on their preseason roster. For those basketball fans out there that have never heard of Carr (aka “The Crimestopper”), you are in for a treat. Carr is listed at 5’6, 150 pounds (that’s nearly 3 inches shorter than Nate Robinson for comparison) but doesn’t lack the talent. The ball skills of Jason Williams combined with the scoring ability of a young Steve Francis, on the court, Carr is most known for his dazzling handles and his ability to score with some emphasis - 50 points in a game was not out of the ordinary for Carr at Patterson High school in Baltimore, Maryland.
He quickly became a YouTube sensation making his high school counterparts look as if they were playing on skates. After showing out in a tournament playing for Team USA in Milan, Virtus Roma (a professional team in Italy) offered the then high school sophomore $750,000 to drop out of high school and come play for them (the same team Brandon Jennings played for before turning pro). Carr would pass on the offer and return to finish high school at Princeton Day Academy. In 2012, he verbally committed to play collegiately at Seton Hall University, but would never step on campus and instead play overseas in China for a brief time, perhaps to support his newborn daughter.
Carr was drafted to the Delaware 87ers (affiliate of the 76ers) in the 3rd round of 2013 NBA D-League draft but was subsequently released a few months later. He was eligible for the 2014 NBA draft but went undrafted and signed to play with the Saint John Mill Rats of the Canadian National Basketball League. His time in Canada didn’t last as he was released 9 games into the Mill Rats season after two suspensions during his tenure. He was officially released on December 13, 2014 and it looked like the 21 year-old’s basketball career was on the decline and certainly the aspirations of an NBA career were an afterthought.

On October 14, 2015, Carr tweeted this:

As a basketball fan you have to be happy for this kid. He didn’t come from much in Baltimore, which is perhaps an understatement, and despite his stat line was often overlooked. I’ll definitely be tuning into a few Rockets preseason games to hopefully watch this kid continue to ball.

I could keep going but I'll leave it to 3.

Sunday, September 6, 2015

Time To Trade Robert Griffin III

An elite-level QB with elite-level swagger, RG3 more than deserves a shot elsewhere
The NFL's cut down to 53 players has come and gone and Robert Griffin III was not one of those cut by the Redskins despite the uneasy relationship with management, embarrassing on the Washington Redskins part. As a Giants fan I certainly don't like the Redskins but when it comes to the NFC East I'll root for Washington over Philly and Dallas any day of the week, especially when RG3 is under center. One could argue I'm bias after I closely followed and relished his college career at Baylor, or maybe one could just look at the facts/numbers. The facts are Robert was drafted #2 overall (!) not because of his arm but because of his arm/feet combo, in other words he can make plays running (ran for 815 yards, 7 TD, 6.8 yards per carry as a rookie). And it somehow seems that Robert's best attribute (his ability to take off and run) has become his biggest weakness. The Redskins (and it's primarily Jay Gruden) have taken away RG3's running game which has limited him as a player. When you take away his running capabilities then teams preparing for RG3 focus solely on his passing which come gameday has showed the last 2 seasons. I understand the injuries that come with a mobile QB, and which are certainly tied to RG3, but again, he wasn't drafted #2 overall because of strictly his passing ability. If the front office is all the sudden going to say "don't run" then they basically wasted a #2 overall pick, and if they didn't weight out the positives and negatives of drafting a scrambler #2 then shame on them. RG3 is a consummate pro who can play the game of football and certainly deserves a starting role elsewhere in the league. Say what you want about RG3 publicly saying he's the best QB in the league but how do you not love that fire and cockyness? - It kind of reminds me of Tom Brady (disclaimer: I'm not comparing RG3 to Tommy Terrific). Those are certainly qualities I want in my QB. Since the team did not cut Robert then hopefully they trade him for not only his sake, but their own as well since we all know that as long as RG3 is a 'skin, this will drag on. But from a team in such disarray that isn't going to finish above .500 this season, what else can you expect?

Link to his stats (click here)