Posted on September 15, 2019
A fresh September morning to you all!
Today we look at a lesser known, New York based investment bank, whose biggest deals may be ready to hatch in the months ahead.
The firm is Moelis & Co. (NYSE:MC), a $2 billion outfit by market cap whose stock has languished for the last year and got more publicity for its pharaonic management team and outrageous 85 hour work week than for the deals it managed to patch together before or since.
And while it’s not our business to judge the youthful junior partners of any maniacally profit-mad business, we would encourage those still in the office at 3 a.m. on a regular basis to lay off the cocaine and Adderall and stick to a cheaper substitute, like Elmer’s glue.
That aside, Moelis’ profile – and stock price – could be in for a boost, as they take the lead on an upcoming buyout of the London Stock Exchange and make a second go of the Saudi ARAMCO IPO.
Nothing’s a sure bet, but with the stock 50% off its highs, the fundamentals AND technicals beckoning – along with the possibility of some sizzle from the current star-studded deal flow – Moelis could be ready for a pop.
Let’s start with the fundamental picture.
On the whole, that’s nothing that should terrify an investor looking to take a long position.
Technically, though, the outlook is even brighter.
Have a look at the daily chart –
The technical lowdown’s like this –
We would add that the break higher also occurs after all the salient moving averages have unfurled and are trending lower, a prerequisite in our playbook for any advance to commence.
Initially, we see Moelis moving toward the $42 level as the two above named deals start to garner more media attention and Wall Street turns a spotlight on the company – and her dividend, in particular.
And with that in mind, we’ve structured the following trade –
A Jew and His Money recommends you consider selling the MC April 17th 35 PUT for $3.40 and buying the MC April 17th 30 PUT for $2.20, for a credit of $1.20. Use those same funds to purchase the April 17th 40 CALL for $1.75. Total debit on the affair is $0.55.
With kind regards,
Hugh L. O’Haynew