Large Companies Seeing Purchasing Opportunities After Market Drops

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) August 16, 2011 --

US stock indices rose yesterday, winning back losses from last week amid $21.5 billion worth of purchases and acquisitions, as well as reevaluations of assets to the lowest levels in about two years. These and other positive aspects helped the Standard & Poor's 500 index continue its best three-day rally since 2009. Stock in Motorola Mobility Holdings Inc jumped 56% after Google Inc (GOOG) agreed to purchase the company for $12.5 billion. Stock in Bank of America Corp (BAC) rose 7.9% after it was announced that the bank plans to pull out of the international credit card business by selling it for $8.6 billion to the Canadian TD Bank group and closing its branches in the UK and Ireland. Exxon Mobil Corp’s (XOM) capitalization increased 3.2%, reflecting the growth of energy companies after the increase in oil prices.

The S&P 500 Index added 2.2% to reach 1,204.49 as of 4:00PM in New York and grew a total of 7.5% in three days. The Dow Jones Industrial Average rose by 213.88 points, or 1.9%, to 11,482.90.

DT Trading analysts report that, according to a joint announcement by both companies, Google Inc is acquiring the Motorola company and its shareholders will receive $40 per share in cash. Compensation being offered to Motorola shareholders is being calculated at a 63% premium to Motorola Mobility’s closing price on the New York Stock Exchange on August 12. Both parties have confirmed the deal; Google’s shares fell 1.2% to $557.23.

Following the 2008 financial crisis, the fund Paulson & Co., headed by 55-year old millionaire John Paulson (not to be confused with former US Treasury Secretary Henry Paulson), turned out to be far from the only firm that managed to rake in a nice profit from the substandard lending crisis. DT Trading analysts note that Paulson’s biggest hedge fund this year lost 31% and sold shares of Citigroup Inc (C) and Bank of America Corp (BAC) in the second quarter of this year.

According to an assessment by the US Securities and Exchange Commission, Paulson & Co. owned 33.5 million shares of Citigroup as of June 30, compared with 41.3 million shares it owned in the first quarter. The hedge fund also held 60 million shares of Bank of America at the end of the second quarter, compared with 124 million shares in the first quarter.

Paulson, who had banked on the economy recovering by the end of 2012, shortened his bullish positions after this year’s losses and told his clients in June that he was decreasing his shares in Bank of America, which had fallen sharply by18% in the second quarter and 29% altogether since the beginning of the year. Stock in the financial sector, including Citigroup and Bank of America, which were some of the largest instruments included in the hedge fund’s investment portfolio in the first quarter of this year, were what made Paulson bet on a swift economic recovery.

At the beginning of the year, Paulson told investors that US economic growth should continue in 2011 and that over the last 20 years, the average duration of growth after each of the two previous recessions was 32 quarters. Paulson is likely still trying to disentangle himself from the prognosis he made. His fund Advantage Plus, which makes money off of profits from corporate events such as acquisitions and bankruptcies, lost 11% in the first week of August. Paulson needs to somehow earn another 45% in the remaining months of this year in order to recoup his losses and at least break even according to the credit line provided to the fund by his clients.

DT Trading Analytical Department

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