Diamonds and Dogs

2/13/18

Under Armour (UAA) flexing its muscles. Under Armour is up 16% to a three month high following earnings. The earnings were inline, but revenue for the quarter grew 5%, or 4% excluding currency changes, to $1.365 billion ahead of expectations. International revenue jumped 47% offsetting a 4% decline in North America. International business contributed 23% of total revenue. Footwear sales increased 9% to $246 million, helping to make up for a 2% decline in apparel, to $952 million. Gross margins declined by 1.5 percentage points, to 43.2%, a sign that discounting was behind the higher sales. Inventory remains highs, guidance for the next quarter was not good, but a large percent of the outstanding shares are short so the stock goes up.

Xerox (XRX) under pressure. The stock is down 2% not far from a 52 week low after the third largest shareholder,  Darwin Deason sues to block Xerox's plan to turn over control to Fujifilm Holding Corp. Deason is calling the deal a one-sided transaction that leaves Xerox investors virtually powerless. In the complaint, the lawsuit states, "improper and fraudulently concealed 'crown jewel' lock-up agreement that Xerox entered into with Fuji 17 years ago, that was never disclosed to Xerox's shareholders before the signing of the Xerox/Fuji transaction." Carl Icahn, Xerox's second-biggest investor, also opposes the deal saying it "dramatically undervalues" the Xerox.