Will HP's Bid for 3PAR Push Up News Sentiment?

The 24 hour news cycle creates a difficult climate for companies that suffer from bad headlines. Companies face a slide in news perception that never seems to go away. Bad news turns to very bad news because it lingers and gets rehashed for days on end. Let's examine the case of Hewlett Packard (HPQ) in Aqumin's AlphaVision Landscape.

Below left, I have a News Sentiment Landscape showing the Short Term News Score of each scoring news story (the Short Term News Score is derived from RavenPack News Analytics and reads -50 as lowest scores and 50 as the highest score). Each Building in the landscape represents that Story Score and those News Stories are grouped by the News Category, such as Stock Loss, Fraud, Dividend Announcement, etc. Tall green buildings have very positive News Scores and tall red buildings have very negative News Scores. Also note, each category is ordered on the landscape by the average score of each group. The very worst average News Sentiment Scores are in the back right and the very best average News Sentiment Scores are in the front left corner.

What does this mean for HPQ? Well, HPQ had the lowest average scoring stories of any major equity between August 5^th and August 20^th. Actually, most of the tall red buildings in the back corner are HPQ stories, the worst being under the "Corruption" category. There were only a couple of positive scoring stories centered around the earnings announcements.

Above right, is a detail of the story landscape that shows the effects of the CEO departure. Story categories like Stock Loss, Executive Scandal, Stock Loss and Executive Resignation all damaged the company and HPQ's stock price (to year lows). These News Categories have nothing to do with the economic performance of HPQ, but a lot to do with the perception about corporate governance. The HPQ Board of Directors acted quickly but tone of the sentiment remained very negative. In this case, the quick action was not well received by the market.

This makes me wonder about HPQ's announcement this morning to launch a hostile bid for 3PAR. No doubt HPQ is in a clash with Dell (DELL) for market share, growth and PC domination. This bid could be business as usual in a tough space. But a little part of me thinks this bid is to stem the tide of Negative Sentiment gushing from the open wounds of the Hurd departure. It is tough not to think that when looking at the blood red color of sentiment for HPQ lately on my News Sentiment Landscape.

To see how the 3PAR bid scores on the News Sentiment Landscape, download AV Pro and click the 12 Hour News Score in the AlphaVision View Library. If the sentiment is strong enough, look for HPQ to start to recover in the weeks ahead.

Andrew Giovinazzi

The opinions expressed by the author are his alone, and do not reflect the opinions of Aqumin LLC, its shareholders, partners or affiliates.

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What did this Earnings Season mean in the Banks?

For the most part, the major indexes climbed a wall of positive earnings reports until last week. Lately, it does not take much to make things turn south and push everyone to the exits. With the VIX in the mid-20's this is understandable but I would like to see additional reasons.

In Aqumin's AlphaVision Landscape I created a MultiView of two different sets of data on the same underliers, namely the Banks in the S&P 500 that have reported since July 1^st. The view on the left has Net Income Surprise as Height and Color. I have Regions Financial (RF) selected because it had the best performance of the Banks over the last month (those are the names in the lower left hand corner). The big green buildings are showing Net Income at least 10% above analyst expectations.

On the right side, you are looking at Sales Surprises with big green buildings 10% above analysts' expectations as well. While there are some positive results there is a lot more red in the landscape and not near the upside. Simply put, the Sales Surprises were not as good as the Net Income Surprises. The top line in the Banks was not giving everyone the happy feelings they were looking for. Right now the market is looking for "fantastic" to help counteract the multitude of new worries that seem to perk up every week. Slow Sales growth for Banks means they are not really lending. No bulls like that. On to next earnings season.

Andrew Giovinazzi

The opinions expressed by the author are his alone, and do not reflect the opinions of Aqumin LLC, its shareholders, partners or affiliates.

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Monitoring VWAP for Opportunities

By the time the market opens in the morning, I have a short list of securities I want to watch closely. I watch for opportune times to enter or exit positions on my list. One thing I monitor closely is where stocks are trading relative to Volume-Weighted Average Price (VWAP). A lot of large players like pension funds and mutual funds have rules about where they trade relative to VWAP, but I'm not concerned about my activity influencing the market, so I'm using VWAP as a way to alert me quickly to interesting activity.

I created this landscape in Aqumin's AlphaVision™ software. The buildings represent the stocks that I'm watching today. They are organized by sector, and sorted by market cap, so the big companies show up in the bottom left of each sector. Color tells me how each stock is trading: green means it's trading up, red means it's trading down. The height of each building tells me, in real-time, how each stock is trading relative to its VWAP. Stocks above the landscape are trading at a premium to VWAP.

I'm interested in the outliers. Bank of America (BAC) and General Electric (GE) immediately stand out to me. They are trading above their VWAP, but are red so I know they are down on the day. If I were monitoring this data in a spreadsheet, I would not have this level context. With the AlphaVision™ visual landscape, I noticed immediately two major stocks that were bucking the general market trend. Watching this play in real time, I noticed a nice opportunity to get into these positions right as they started a solid recovery off their lows.

If you have a Bloomberg terminal and would like to watch this view update in real-time, visit the Aqumin webpage to download a 30-day trial of AlphaVision™ for Bloomberg 2.5. After you install the software, search for VWAP Deviation in the View library on the right panel.

Jason Javarone

The opinions expressed by the author are his alone, and do not reflect the opinions of Aqumin LLC, its shareholders, partners or affiliates.

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