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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
Home / Markets
Monday, June 16, 2008
Uptick
Bulls Battle Bears to Stalemate
Matt Egan
FOXBusiness
Wall Street ended the day with a mixed picture as tech stocks sent the Nasdaq Composite to solid gains but the Dow closed in the red despite a decline in crude oil prices.
Today's Market
The Dow Jones Industrial Average slid 38.27 points, or 0.31% to 12269.08, the Standard & Poor’s 500 index rose 0.11 points, or 0.01%, to 1360.14 and the Nasdaq Composite Index picked up 20.28 points, or 0.83%, to 2474.78. The consumer-friendly Fox 50 fell 2.67 points, or 0.28%, to 954.19.
The Dow fluctuated between gains and losses for much of the day on Monday, at one point nearly 100 points in the red after crude soared to just under $140 a barrel. As oil futures subsided, eventually closing more than $1 in negative territory, the Dow peeked into positive territory.
The financials led the Dow on Monday, with Citigroup (C) and Bank of America (BAC) rising almost 2% each. On the downside, insurer AIG (AIG) fell 0.5% after it announced it ousted its CEO. Also, Verizon (VZ) and Coca-Cola (KO) slid more than 2% each.
The Nasdaq Composite advanced much further than the broader market, trading in the green for most of the day. Research in Motion (RIMM) led the Nasdaq 100 with a 6% jump after Citi said it expects the BlackBerry maker to beat the Street in fiscal 2009. Also, XM Satellite Radio (XMSR) and Sirius (SIRI) posted solid gains as they moved closer to receiving FCC approval for their merger.
Once again oil prices were the top story on Wall Street, trading in a huge $7 range on Monday. Crude closed down $1.17 at $133.69 a barrel but earlier in the day set a fresh all-time record of $139.89 a barrel on a weaker U.S. dollar.
“When you get bad news on the dollar, it’s going to be bad news for oil prices," Phil Flynn, analyst at Alaron Trading, told FOXBusiness. “This market is so emotional you get these draw-dropping moves in a matter of seconds. Any headline can drive us in one way or the other.”
While crude did close in the red, it still nearly hit $140 a barrel, spooking Wall Street in the process.
“How does $4 or $4.50 gallon gasoline not affect the consumer? If the consumer goes away, so does this market," Steve Grasso of Stuart Frankel & Co. told FOXBusiness.
The market was also under pressure from a new report from the Federal Reserve Bank of New York, which said New York State manufacturing activity deteriorated further in June, diving to -8.68 from -3.23. The index has declined four out of the past five months and the results were worse-than-expected.
Meanwhile, Wall Street was reacting to the ouster of AIG (AIG) CEO Martin Sullivan, who will be replaced by Chairman Robert Willumstad, a former executive from Citigroup.
Sullivan took considerable heat from major shareholders after saying AIG’s subprime investments were “manageable” back in December, but then disclosing a six-month combined operating loss of more than $13 billion. Shares of AIG have lost more than 40% of their value since the beginning of the year.
Lehman Brothers (LEH) formally posted a second-quarter loss of $5.14 per share -- more than four times worse than even the most pessimistic of analyst estimates. However, these results were right in line with preliminary results that Lehman posted a week ago.
Shares of Lehman rose closed about 5% higher on Monday on reassuring comments made during the company's conference call. The rebound for Lehman helped lift the rest of the financial sector, which rose modestly in afternoon trading.
Corporate Movers
General Electric (GE) fell to four-year lows after the corporate conglomerate was downgraded to "neutral" from "overweight" by JPMorgan Chase (JPM), citing uncertainty in the company's future earnings growth potential. JPMorgan cut its 2009 earnings forecast on GE to $2.30 per share, compared to mean estimates from Thomson Reuters for $2.42.
XM Satellite Radio (XMSR) and Sirius (SIRI) rose sharply after the chairman of the Federal Communications Commission recommended the $5 billion deal receive approval in exchange for several concessions. The buyout of XM received a green light from the Justice Department in March. The conditions the two companies agreed to include a three-year freeze on prices and an "open radio" standard designed to create competition between manufacturers. A final vote could come over the next several weeks.
CME Group (CME), the operator of the Chicago Mercantile Exchange, received regulatory approval from the Department of Justice for its takeover of NYMEX Holdings (NMX), the operator of the New York Mercantile Exchange. Shareholders and other regulators still need to sign off but the companies expect the deal to close in the fourth quarter of 2008. The CME Group, which also operators the Chicago Board of Trade, said it sees $60 million in cost savings from the deal.
InBev’s $46 billion bid to acquire Anheuser-Busch (BUD) should be reviewed by the Federal Trade Commission to see if it would create a beer monopoly, Missouri Gov. Matt Blunt argued on Monday. In Bev, the Belgian-Brazilian brewer of Stella Artois and Beck’s, made its unsolicited $65-a-share offer last week. Anheuser-Busch has reportedly considered buying Modelo’s, the Mexican brewer of Corona, as a way to stave off an InBev takeover.
Blackstone Group (BX) and GE’s NBC Universal are near a deal to acquire The Weather Channel for $3 billion, The New York Times reported on Monday. The news comes after Time Warner (TWX) reportedly dropped out of the bidding for the network, which is owned by privately-held Landmark Communications. A sale of $3 billion would be much lower than the $5 billion Landmark had thought The Weather Channel would fetch. NBC may decide to merge its NBC Weather Plus channel with the new entity.
Landry's Restaurants (LNY) soared more than 17% after the owner of restaurants like the Rainforest Cafe and Saltgrass Steak House signed off on a $1.3 billion deal to be taken private by CEO Tilman Feritta. The sale for $21 per share, which represents a 25% premium for the stock's closing price on Friday, is valued at $415 million plus $885 million in debt. Feritta's newly formed private equity firm Feritta Holdings will take control of the company.
McClatchy (MNI), a major newspaper publisher, announced plans to slash 10% of its workforce to save $70 million a year. The company owns 30 daily newspapers, including The Miami Herald, The Sacramento Bee and The (Raleigh) News & Observer. McClatchy said Monday its May revenue slid 15.1% from a year ago and sales tumbled 16.6%.
Cost Plus (CPWM) turned down Pier 1 Imports’ (PIR) $88 million takeover bid, saying its not in the best interest of the company and shareholders. Cost Plus, a home furnishing retailer, called the takeover offer “distracting and ill-timed.”
World Markets
The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, fell 29.84 points, or 0.84%, to 3532.83. The FTSE 100, London's benchmark index, lost 8.20 points, or 0.14%, to 5794.60.
On the continent, Paris's CAC 40 Index declined 24.56, or 0.52%, to 4657.74 while Germany's DAX slid 35.44 points, or 0.52%, to 6729.88.
Tokyo's Nikkei 225 Index gained 380.64 points to 14354.37. Hong Kong's Hang Seng gained 437.39 points, or 1.94%, to 23029.69.
Market Snapshot
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