Out Fox The $treet

Summary Twenty-First Century Fox's pursuit of Time Warner probably isn't over. Valuations in the group are becoming stretched. Time Warner solidly beat Q2 '14 earnings estimates, increasing the value of the company to a bidder. A few weeks ago, the revelation that Twenty-First Century Fox (NASDAQ: FOXA ) (NASDAQ: FOX ) offered to purchase Time Warner (NYSE: TWX ) sent the latter's stock surging roughly 17% for the day. The stock sat around the offer price of $85 for a few weeks providing the opportunity to sell it at a solid price before the 12% drop today. The offer for the content giant is another step in the cable wars though it may not materialize into a merger now. The initial moves to consolidate the cable networks in the case of Comcast (NASDAQ: CMCSA ) (NASDAQ: CMCSK ) buying Time Warner Cable (NYSE: TWC ) is leading the content providers to look into ways of bulking up. Read the full article at Seeking Alpha....

After years of strong stock gains for the cable operators, the deal to buy Time Warner Cable ( NYSE: TWC     ) by Comcast Corp. ( NASDAQ: CMCSA     ) raises a lot of eyebrows that the company is overpaying for the assets . In light of the news that AT&T ( NYSE: T     ) is going to purchase satellite provider DirecTV ( NASDAQ: DTV     ) in a $50 billion deal, investors need to consider whether these deals are top ticking the market. The odd part of the equation is that the companies' stocks have surged the last couple of years, while their revenues are seeing limited growth. In fact, Time Warner Cable now trades at a historically high 21x trailing earnings. The company has squeezed out higher profits from existing operations, but how long can that last with revenue only growing roughly 4% each year? Based on the chart below and the limited revenue growth, now  doesn't appear the time to buy these stocks. Read ...

After holding a stock for a few years, no better exit opportunity exists than unloading the stock on a buyout with a nice premium. In the case of DirectTV Group ( NASDAQ: DTV     ) , the company's stock has nearly doubled in the last couple of years and the gains are attracting competition. The purchase price of $95 by AT&T ( NYSE: T     ) would provide an ideal exit point from an investment in the leading satellite television provider. Exiting a position is always tricky, especially for one that has worked extremely well. The stock of DirectTV Group traded below $45 as recently as the middle of 2012. With the company's stock now worth nearly $42.5 billion with it trading around $85, it might have peaked... especially with competition heating up from AT&T ( NYSE: T     ) and the recently proposed Comcast ( NASDAQ: CMCSA     )   and Time Warner Cable ( NYSE: TWC     ) merger. Read the full article ...

With all the discussion heating up regarding the legalizing of online gambling, most investors have probably missed that skill based gambling is already legal in most states. Betting on fantasy sports and other skilled based games is legal in nearly all states and has a preferential carve-out on the Federal level under the Unlawful Internet Gambling Enforcement Act of 2006. According to Forbes contributor Marc Edelman, daily fantasy sports are insulated from federal liability if it meets three conditions as follows: The value of the prizes is not determined by the number of participants. All winning outcomes reflect the relative knowledge and skill of participants. No winning outcome is based on the outcome of the score of games or the single performance of an individual athlete in a single, real-world event. Read the full article at Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The amazing part about the current rally is that the slow growing industries such as utilities and cable companies have led the rally. For the most part though, the rally hasn't been based on any fundamental changes in those industries. Most notably the move has been based on an investor chase for yield. Stocks paying 4% dividend yields are attracting investors getting next to nothing in 10-year Treasuries. So why has Comcast Corp. (CMCSA) followed in that rally? The current yield of 1.8% shouldn't be enough to attract investors with the stock trading at nearly 17x next year's earnings. In comparison, Time Warner Cable (TWC) pays 2.3%, while communications providers AT&T (T), V erizon Communications (VZ) , and Vodafone (VOD) pay over 4%. Read the full article at Seeking Alpha. Disclosure: Long VOD. Please review the disclaimer page for more details. 

Investors continue to ignore that massive buyback program undertaken by DirecTV (DTV) in favor of other cable and communications providers. In fact, this $31B market cap company used $1.1B to return capital to shareholder in the form of buybacks in Q4'11 alone. Now it has announced a new $6B buyback program that amounts to 20% of the outstanding stock. Investors are clearly enamored with dividends so much that they've clamored to cable companies and wireless providers that have higher dividend yields than DirecTV. Sure those yields are nice and far exceed treasuries, but why ignore the nearly 20% yield being offered by DirecTV? Read the full article on Seeking Alpha. Disclosure: Long DTV. Please review the disclaimer page for more details.