Diamonds and Dogs

10/12/15

Airlines are on fire, literally. A Jetlbue plane today out of Syracuse NY had to make an emergency landing due to smoke and a possible small fire on the plane. No one was hurt, but the airline stocks were on fire rising over 3% on strong September traffic numbers and lower oil prices. The airlines are one of the main beneficiaries from the drop in crude oil over the last year.   The stocks have been in a trading range since May, but may be ready to break out following third quarter earnings in the coming weeks. The companies have been buying back their stock in large amounts. Rumors of American Airlines buying back 8% of their outstanding float in just in the last quarters should boost earnings dramatically. Time will tell.

Good news for EMC doesn't look like good news for VMware (VMW). EMC agreed to be bought by Dell over the weekend for $67 billion. But in the deal, the shares of VMware owned by EMC may get spun off into a tracking stock. If this happens, half of VMware's outstanding shares will be in the hands of individual investors thereby increasing the float of the stock and possible downward pressure if these investors decide to book their profits. The uncertainty has current VMware shareholders heading to the exits. Can't blame them.