Diamonds and Dogs

10/21/16

Reynolds American (RAI) is heating up. The tobacco giant is up 20% after British American Tobacco (BTI), which already owns 42.2% of Reynolds American (RAI), has made a proposal merger of the two companies. The transaction would create a broader, larger business, delivering more diversified sources of profit growth. The deal would be accretive to earnings in the first full year and accretive to the dividend.

Moody's (MCO) is feeling a little moody today. The credit rating agency reported better than expected earnings this morning, but the stock is lower on news the Justice Department was preparing a civil complaint alleging the company violated federal law leading up to the 2008 financial crisis. The DOJ sent a letter to the company late last month claiming that the ratings service improperly rated residential mortgage-backed securities and collateralized debt obligations in the period preceding the crisis. It took the DOJ eight years to figure this out? Really ?!!!!