Tag - Meca

Small-cap stocks pushed higher on election day, lifted by strong commodity and financial stocks and relief that a long, yet historic political campaign was about over. The Russell 2000 (NYSE:IWM) closed up 7.47, or 1.39% at 545.97, the sixth consecutive daily gain, something that hasn’t happened all year. For 2008, the Russell is down 29%, while the Dow is off 27% and the S&P 500 is down 31%.

Today’s rally clearly favored large caps as investors still have a tinge of risk aversion that tends to favor bigger companies. Also, the rally in energy stocks had a more powerful influence on large caps as many energy companies have sizable market caps. For large caps, it ranked as the biggest election day rally since 1984 when incumbent Ronald Reagan carried 49 of 50 states, with runner-up Walter Mondale carrying only his home state of Minnesota and the District of Columbia.

Within the energy arena, the Energy Select Sector SPDR Fund jumped 6.3%, mirroring a big surge in crude oil prices. Crude gushed 10% on talk that Saudi Arabia was slashing production. In addition, commodities like crude oil benefited from a sizable slide in the U.S. dollar, which makes dollar-priced goods more attractive. The greenback tumbled more than 300 basis points, or some 2.4% against the euro, triggering a buying spree in all sorts of commodity goods.

The Commodity Research Bureau Index of 19 physical markets shot 5.3% higher today, with gains seen in everything from gold, sugar, coffee, grains, cattle and copper. The latter is seen as a key economic benchmark and copper prices jumped 6.4% in U.S. trading. In addition to the macro trends on the dollar, strong earnings for soybean processor Archer Daniels Midland Co. (NYSE:ADM) fueled a supportive tone for beaten down commodity stocks. ADM shares rallied some 14%.

Financial shares also were a big part of the story today, with the Financial Select Sector SPDR Fund up 5%, boosted by yet another decline for inter-bank lending . . .

Magna Entertainment (Nasdaq:MECA), Taser International Inc. (Nasdaq:TASR) and LSB Corp. (Nasdaq:LSBX) are among the biggest percentage gainers in Tuesday's trading among companies with market capitalizations under $1 billion.  

Also included among the results: Alloy Inc. (Nasdaq:ALOY), Encore Bancshares Inc. (Nasdaq:EBTX), PokerTek Inc. (Nasdaq:PTEK), Savannah Bancorp Inc. (Nasdaq:SAVB), Ultra Clean Holdings Inc. (Nasdaq:UCTT) and BCB Bancorp Inc.(Nasdaq:BCBP).           

Here are the biggest percentage gainers among small caps:   

Magna Entertainment Corp. (Nasdaq: MECA), announced before the start of trading that it plans on being debt-free by the end of 2008.

As a result of the completion of a strategic review, the Aurora, Canada-based horse racetrack operator has adopted a plan to reduce to zero its net debt by December 31, 2008. Magna Entertainment said that it will generate proceeds of between $600 million and $700 million by selling assets and entering into transactions involving racing, gaming and technology operations.

The company also reported that it has arranged for $100 million in additional funding to boost its liquidity, pay for its operations and implement the debt-elimination plan.
 
“This plan, unanimously approved by MEC’s Board of Directors, has now firmly and publicly set us on a course to eliminate debt and improve operations,” said interim CEO and founder Frank Stronach.

Stronach, who also heads Magna Entertainment’s board, said that the company has identified the assets to be let go and is moving to sell them.

On the chopping block are a racetrack in Michigan and another in Ohio, as well as the company’s interest in a track in Portland Meadows, Ore.

Magna Entertainment said that it will hire an investment bank to help it identify potential buyers.

At 2:41 p.m. ET, shares had gained $0.41, or 22%, to $2.27.

Horse track owner and operator Magna Entertainment Corp. (Nasdaq: MECA) was cut to a “hold” rating from a “buy” rating by Brean Murray Carrett & Co. Monday.

Brean Murray Carrett & Co analyst Ryan Worst cut the company’s rating on the idea that that Magna’s change in CEO reduces confidence in the company’s ability to execute on existing assets.

Worst wrote in a research note, “…the risk that Friday’s CEO change arose from a disagreement over Magna’s strategic direction or execution outweighs other potential reasons for the departure and reduces our confidence in MECA shares.”

On Friday, Magna announced that then current CEO Michael Nueman was stepping down to pursue other opportunities. The Canadian company named Chairman Frank Stronach to be interim CEO.

“We are concerned that the execution of asset sales and the company’s strategy may differ under Mr. Stronach,” Worst wrote.

Stocks ended the day down sharply due to fears that hedge funds that have invested in sub-prime mortgages will need to be bailed out. The Russell 2000 weathered the sell-off relatively unscathed, falling 5.06 points, or 0.60%, to finish at 834.75. The Dow Jones Industrial Average shed 185.58 points, or 1.37%, to 13,360.26.

Stocks were already heading south this afternoon and news that investment bank Bear, Stearns & Co. (NYSE: BSC) has assumed the $3.2 billion loans to its hedge fund in order to stop creditors from seizing assets only made things worse.

Handicapping the future of Magna Entertainment Corp. (Nasdaq: MECA) is difficult -- almost as difficult as a horseplayer trying to pick a winner from the cheap claimers running midweek at just about any North American racetrack.

The Canadian company, which is the largest racetrack operator on the continent based on revenue, is a poster child for a business that hasn’t figured out what it takes to pick the pockets of gamblers. While the casino industry continues to expand its presence as it reaches deeper into the consumer psyche, the racing industry continues to struggle. Simulcasting has made it easier for horseplayers to get in on the action both coast to coast and on the international front, yet the racetrack operators haven’t found the magic formula to parlay increased exposure into fresh fan interest.

Sure, the Kentucky Derby brings out the once-a-year fans, and Magna’s Pimlico Racetrack in Baltimore will garner a fine share of attention this week, as Street Sense bids to win the second jewel of the thoroughbred Triple Crown, The Preakness Stakes. But the host’s owner continues to hemorrhage money, posting a 2006 net deficit of $85.2 million, following three years of $100 million-plus losses. Debt is piling up, and investors are unhappy about a stagnant share price.

The following small-cap companies were making news in after-hours trading Wednesday:

Avici Systems Inc. (Nasdaq: AVCI) plunged $3.04, or 22.5%, to $10.50 on unusually heavy volume after the routing systems provider announced plans to transition away from core router development to focus on its new product initiative, Soapstone Networks. The company also announced a special dividend of $2 per share and released its first quarter financial results, which included a profit of $6 million, or $0.42 a share.