GO
Loading...

Cash Rich Companies Looking to Put Money to Work?

Bulls drove the S&P higher on Wednesday with stronger-than-expected jobs data boosting optimism about the economy.

And in anticipation of a strong recovery CNBC's Fast Money gang thinks cash rich companies are about to put a whole lot of money to work.

In fact, they think we may already be seeing early signs of this trend.

For example, on Wednesday Qualcomm announced a deal to acquire Atheros, for $3 billion -- a 20% premium.

Also published reports suggested Sears and Urban Outfitters are weighing rival bids for clothing retailer J. Crew in a potential challenge to TPG Capital and Leonard Green & Partners LP’s $3 billion buyout.

The desk takes these developments as signs that companies are getting aggressive as they position for recovery. If cash rich companies are looking to put money to work, how should you put your money to work?

Instant Insights with the Fast Money traders

Karen Finerman thinks the hot sector for M&A in 2011 will be health care. Specifically in the space she's watching Tenet Healthcare which received an overture from Community Health last year. "I’m long the May 6 and May 7 calls," Finerman says, "because I think there’s more to come in this name and this space."

The JCrew deal also interests Finerman who tells the desk CEO Mickey Drexler is likely tied to any JCrew deal and she just doesn’t think he wants to work for Sears. "But I do think we're going to see deals across the board in health care and in retail," she concludes.

Meanwhile Joe Terranova is much more focussed on tech; he thinks that Qualcomm just sounded the M&A bells with their acquisition.

Qualcomm is attempting to beef up its position in mobile devices, he explains, a market that's expected to explode in 2011 with new tablet computers coming to market.

Terranova think other tech companies must now make similar strategic acqusitions to position themselves for "a recovery that is quickly expanding." And companies likely to make a move probably have big balance sheets. Some follow:

Apple $51 billion
Google $33 billion
Microsoft $44 billion
Qualcomm $19 billion
Cisco $27 billion
Source: SEC Filings

It wouldn’t surprise me to see any one of these companies go after Skyworks Solutions, he says. And on Tuesday's Fast Money he said Aruba Networks also belongs on your radar.

As a related trade on the Qualcomm deal, Guy Adami tosses out another name. "I'd look at Evercore Partners," he says.

--------

BEST SECTOR OF 2011: FINANCIALS?

Financials topped the tape on Tuesday with Bank of America and JPMorgan two of the best performers in the Dow. In fact, the XLF is up 3% in this new year.

What’s the trade?

I'm a raging bull when it comes to the financials, says Pete Najarian. I'm still seeing aggressive call buying in the XLF with investors gobbling up the 16 and 17 calls. I expect to see JPMoragn, BofA, Wells and Citi extend higher. (They're all top holdings in the XLF.)

I like the banks in general, says Brian Kelly but I’d play the space long NLY .

I'd put JPMorgan on the radar, adds Tim Seymour. Technical patterns in this chart are positive.

--------

TICK BY TICK RESEARCH IN MOTION

Research in Motion spiked at the end of the session into the after hours ahed of the consumer electronics show where its expected to unveil its new playbook tablet.

What should you make of it?

I think the move higher could have everything to do with the new QNX operating system, says Brian Kelly, which I think could transform the company.

--------

STREET FIGHT: ALCOA DOWNGRADED BUT MARKET DISAGREES

Citigroup downgraded Alcoa on Wednesday from 'Buy' to 'Hold' and reduced estimates -- a week before its earnings announcement -- saying the Street is too optimistic. "I don't think we're going to see meaningful upside in aluminum prices," says analyst Brian Yu. "And I anticipate higher production costs."

But Fast Money trader Tim Seymour says not so fast. He thinks Alcoa is being run as a better company. "I don't think the Street is pricing Alcoa's transformation properly," Seymour says.

Who makes the better argument. Watch the video and find out now!




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On January 5, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman's firm owns shares of BMW; Finerman owns (BP); Finerman's firm owns (BP); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (WMT); Seymour owns (BX); Seymour owns (TSL); Seymour owns (VIP); Seymour owns (AA); Seymour owns (AAPL); Seymour owns (F); Seymour owns (FXI); Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Adami's wife works at (MRK); Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (SLW) puts; Terranova owns (GLD) puts; Terranova is short (SLV) futures

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (YGE)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (SWC)
Accounts Managed By Kanundrum Capital Own (TM)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (BBT)
Accounts Managed By Kanundrum Capital Own (OSK)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (IPI)
Accounts Managed By Kanundrum Capital Are Short The Euro
Accounts Managed By Kanundrum Capital Are Short The Yen

For Brian Yu
A director of Citi serves on (AA) Board
Citigroup Global Markets or its affiliates owns 1% or more of (AA) , (CLF)
Citigroup Global Markets Or Affiliates Has Managed Or Co-Managed An Offering Of (AA) In Past 12 Months
Citigroup Global Markets or affiliates has received investment banking compensation for services provided within the past 12 months from (AA)
Citigroup Global Markets or affiliates expects to receive/seek investment banking compensation from (AA) , (CLF) In next 3 months
Citigroup Global Markets Inc. or an affiliate received non-investment banking from (AA) in the past 12 months
(AA) , (CLF) Is Or In Past 12 Months Was An Investment Banking Client Of Citigroup Global Markets
(AA) Is Or In Past 12 Months Was A Non-Investment Banking Client Of Citigroup Global Markets (Securities-Related Srvices)
(AA) Is Or In Past 12 Months Was A Non-Investment Banking Client Of Citigroup Global Markets (Non-Securities-Related Srvices)
Citigroup Global Markets or affiliate received compensation in past 12 months from (AA)
Citigroup Global Markets is a market maker in (AA)
Citigroup Global Markets And/Or Affiliates Has A Significant Financial Interest In Relation To (AA)

For Rohit Chopra
Wedbush Securities Is A Market Maker In (CSCO), (AAPL), (PLCM)
Wedbush Securities Provided Non-Investment Banking Securities-Related Services To (PLCM) Within Past 12 Months
Wedbush Securities Has Received Non-Investment Banking Compensation From (PLCM) Within Past 12 Months
}
Pete Najarian SOT
Pete Najarian owns (BAC) call spreads

For Mike Khouw
Khouw has no disclosures

Fast Fire SOT
Terranova had no disclosures on (GOOG) on 12/1/2010

GE is the parent company of CNBC
NBC Universal is the parent company of CNBC



CNBC.com and wires

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report

  • Bill Nygren, Oakmark Fund, explains why Apache, Bank of America and Google will be winners in 2015.

  • Nick Tiller, Sustainable America founder and chairman, tells CNBC's Kate Kelly oil prices are poised for a tradable rally. Tiller likes the Brent ETF and energy sector.

  • Discussing interesting trends contributing to the market's rally into year's end, with the FMHR trader Josh Brown and Dan Greenhaus, BTIG.