Yesterday when the Philly Fed number disappointed and the 10-year note yields moved down and the S&P took off to the upside, the 9:00 buy program showed us exactly what was going on. When we see buy programs on the half hour it usually means that mutual funds have stock to buy. The buying is executed electronically, buying baskets of stock on the half hour. When the big buy program hit at 9:00 and another buy program at 9:30 and 10:00 we knew there was a larger agenda and we pointed it out right away. After rallying, the ESZ stalled and eventually sold off a few handles and then immediately bounced into new highs. The Pit Bull says when it goes slow and the ESZ13 trades in a narrow range or what we call chop, it is actually the buyers accumulating futures. It's really hard to fight a tape when it's like that. Right now the S&P is still going up, but we do think that it may be nearing a threshold at the 1800 to 1850 level. Most traders we talk to think the S&P will correct in the first quarter and that a taper could come either at the end of December or going into the first Fed meeting in January. As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow. OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits MrTopStep can be followed on Twitter at twitter.com/MrTopStep For LIVE futures chat, more information on the 10-handle rule and futures educational content CLICK HERE FOR A SEVEN-DAY FREE TRIAL.
Friday, January 31, 2014
Thursday, January 30, 2014
3-D printing stocks: Fad or for real?
NEW YORK (CNNMoney) Shares of companies in the 3-D printing business have been on a tear this year. And the 3-D stocks continued to rally Tuesday despite a conservative outlook from industry leader 3D Systems . 3D Systems (DDD) reported record sales for the third quarter on "unprecedented" demand for its printers, which includes the consumer-friendly $1,300 Cube.
Earnings were in-line with expectations, but the company lowered its guidance for full-year profits. Still, the stock bounced back from losses in the early morning and was up more than 1% in midday trading. Shares of competitors Stratasys, ExOne and voxeljet moved higher as well.
3D Systems CEO Avi Reichental said earnings may suffer in the short term as the company ramps up manufacturing capacity and spends more money to develop new products. He said in a statement that the company is prioritizing "market share expansion ahead of earnings per share."
Top 5 Oil Stocks For 2015
That strategy may make sense. While 3-D printing has existed on an industrial scale for decades, it has only recently become accessible for small businesses and consumers. And the business has become highly competitive.
Investors have piled into 3-D printing stocks this year as the technology has been used to produce everything from action figures to medical devices. But the outlook from 3D Systems does highlight concerns about the young industry's growing pains.
Printing a 3D robot There are now four publicly-traded companies that make 3-D printers and accessories, including two that went ! public earlier this year.
Germany's voxeljet (VJET)was the latest to hit the market. The company provides on-demand 3-D printing for industrial and commercial customers, among other services. Less than two weeks after its IPO, voxeljet shares have surged 140%.
ExOne (XONE), which makes industrial 3-D printers, has nearly doubled since its initial public offering in February.
Shares of Stratasys (SSYS) have surged 30% this year, due in part to its acquisition of MakerBot in August. MakerBot was one of the first companies to sell desktop 3-D printers.
So consumers and investors have plenty of pure play 3-D printing company to choose from ... and other tech companies are gearing up to join the fray as well.
Hewlett-Packard (HPQ, Fortune 500) CEO Meg Whitman announced earlier this month that the company will enter the 3-D printing market sometime next year. 
Sunday, January 26, 2014
One Stock Type Stands Out
A recent investor conference highlighted the type of company that MoneyShow's Jim Jubak thinks will do well in the current environment and continue to improve in the future.
Okay, I think we're starting to get an idea for what might be the ideal kind of stock for the economy as we're looking at it, and if you look at the analyst state that Cummins—that's symbol (CMI), they're a diesel engine manufacturer—recently held on September 16, you get a sense of what that is. What they said hit a very good chord with Wall Street. You had people raising their target prices by $20 and $30 a share. Cummins trades at $135, so that's not quite as big as if you were talking about a $20 increase on a $50 stock, but still pretty impressive.
What Cummins said that really, I think, has resonated with Wall Street and investors is that, "Hey, we're going to be able to grow faster than GDP." I think this is the big challenge, and for Cummins, it's going to do it in two ways. One is, they're going to find, they're investing in new products, so they're coming out and that's going to give them better margins, new sales, and the others are taking market share.
What I think you're looking at if you're trying to figure out where you might want to put your money, if you can find another stock like Cummins, great, but Cummins is the model, and the reason is that you're looking at growth in the US, 2%, in Europe, a recovery to maybe 1%. You see growth falling in China, India, Brazil, all of those markets are not doing all that well, and it doesn't seem like it's a short term problem. It's not going to be fixed in one quarter, so if you'd really like somebody that's growing better than 2% or 4% or 5%, you've really got to find somebody who's investing in R&D. And that's what Cummins is doing, they're coming out with new products all the time, lower emissions to sell diesel engines into countries which are sort of tightening down on the emissions that diesels can put out. They've got a new line of natural gas powered engines coming out for buses, et cetera, so product innovation, as well as, they seem to be able to lower their costs and so they're gaining share from competitors. Those two things enabled them to grow faster than the market, and I think that's actually the kind of stuff you're looking for in this particular economy, and that is going to be rewarded by investors who know what this economy is like.
This is Jim Jubak for the MoneyShow.com video network.
Saturday, January 25, 2014
Bank of America trading practices examined
The June 14 filing on the securities industry regulator FINRA website, first reported by Reuters on Saturday, does not accuse the North Carolina-based bank of any wrongdoing.
But the filing states that the U.S. Attorney's office in North Carolina "is investigating whether it was proper for the swaps desk to execute futures trades prior to the desk's execution of block future trades on behalf of counterparties. ..."
The filing also states that the Commodity Futures Trading Commission "is conducting a parallel investigation into the trading issue."
The investigations involved formal probes by prosecutors or regulatory agencies that are considered more serious than preliminary inquiries, according to the filing, provided to FINRA by the bank.
Bank of America decline to comment on the filing, which was included in a FINRA background report on Eric Alan Beckwith, who previously worked at the bank's Merrill Lynch broker-dealer division in New York.
Beckwith could not be reached for comment.
Reuters reported that the regulatory filing appears to provide context for a Jan. 8 FBI warning that said Wall Street traders may be front-running government-owned mortgage giants Fannie Mae and Freddie Mac in the interest-rate swaps market.
Front-running refers to a technique in which a trader with knowledge of a large pending trade order by a client or other market participant executes her or his own trade first. Such tactics often generate profits generated by market movements after the larger trade is executed.
The investigation cited in the FINRA filing appears to be part of a broader international crackdown on suspected trading abuses. Prosecutors and regulators in the United States and abroad are probing suspected manipulation of foreign exchange rates, suspected! metal price trading abuses and rigging of other financial benchmarks.
The ongoing probes have produced roughly $3.1 billion in penalties paid by banks that acknowledged traders had manipulated the the London interbank offered rate. Libor is used to set the rates on trillions of dollars of mortgages, car loans, student loans and some complex financial derivatives.
Friday, January 24, 2014
Best Growth Companies To Own In Right Now
On Wednesday, FedEx (NYSE: FDX ) reported adjusted EPS of $2.13, which excluded $1.18 per share of business realignment and aircraft impairment charges. This result exceeded analyst expectations by about 9%, but FedEx provided relatively downbeat earnings guidance for the upcoming fiscal year.
FedEx has been managing through a drop-off in demand for its priority delivery services, especially internationally. On the other hand, FedEx Ground is benefiting from the strong growth of e-commerce, and the company is cutting costs in the Express business to better align with demand.
FedEx's cost improvements will probably lead to robust profit growth over the next few years even if the current weak demand environment persists. Moreover, the company will be well-positioned for the next uptick in global GDP growth. Given that FedEx trades at a very reasonable valuation -- just 16 times trailing earnings -- it is likely to deliver strong returns for investors over the next several years.
Best Growth Companies To Own In Right Now: Thoratec Corporation(THOR)
Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. The company?s primary product lines include ventricular assist devices, such as HeartMate II, an implantable left ventricular assist device consisting of a rotary blood pump to provide intermediate and long-term mechanical circulatory support (MCS); and HeartMate XVE, an implantable and pulsatile left ventricular assist device for intermediate and longer-term MCS. Its ventricular assist devices also comprise Paracorporeal Ventricular Assist Device, an external pulsatile ventricular assist device, which provides left, right, and biventricular MCS approved for bridge-to-transplantation (BTT), including home discharge, and post-cardiotomy myocardial recovery; and Implantable Ventricular Assist Device, an implantable and pulsatile ventricular assist device designed to provide left, right, and biventricular MCS approved for BTT comprising hom e discharge, and post-cardiotomy myocardial recovery. The company also provides CentriMag, an extracorporeal full-flow acute surgical support platform that offers support up to 30 days for cardiac and respiratory failure. In addition, it offers PediMag and PediVAS extracorporeal full-flow acute surgical support platforms designed to provide acute surgical support to pediatric patients. The company sells its products through direct sales force in the United States, as well as through a network of distributors internationally. Thoratec Corporation was founded in 1976 and is headquartered in Pleasanton, California.
Advisors' Opinion:- [By Todd Campbell]
Competing for heart pump market share
Abiomed's products provide circulatory support for up to six hours and are designed for use in cardiac cath labs or during heart surgery, but competitors Thoratec (NASDAQ: THOR ) and Heartware (NASDAQ: HTWR ) target the intermediate- and long-term-use market instead. - [By Brian Pacampara]
What: Shares of medical device company Thoratec (NASDAQ: THOR ) sank 12% today after its quarterly results missed Wall Street expectations. �
Best Growth Companies To Own In Right Now: Eastern Insurance Holdings Inc.(EIHI)
Eastern Insurance Holdings, Inc., through its subsidiaries, provides workers compensation insurance and reinsurance products in the United States. The company?s Workers Compensation Insurance segment provides traditional workers compensation insurance coverage products, including guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies, deductible policies, and alternative market products to employers. This segment distributes its workers? compensation products and services through its independent insurance agents primarily in Pennsylvania, Delaware, North Carolina, Maryland, Indiana, and Virginia. Its Segregated Portfolio Cell Reinsurance segment offers alternative market workers compensation solutions comprising program design, fronting, claims administration, risk management, segregated portfolio cell rental, asset management, and segregated portfolio management services to individual companies, groups, and associations. Eastern Insurance Holdings, Inc. is headquartered in Lancaster, Pennsylvania.
Advisors' Opinion:- [By Lauren Pollock]
ProAssurance Corp.(PRA) agreed to acquire Eastern Insurance Holdings Inc.(EIHI) for about $205 million, expanding the insurance company’s casualty insurance offerings. Eastern Insurance is a domestic casualty insurance group specializing in workers’ compensation products and services, among other things. ProAssurance plans to pay $24.50 in cash for each outstanding Eastern share, a 16% premium over Monday’s closing price.
Top Communications Equipment Stocks To Buy Right Now: MEDIFAST INC(MED)
Medifast, Inc., through its subsidiaries, engages in the production, distribution, and sale of weight management and disease management products, and other consumable health and diet products in the United States. The company?s product lines include weight and disease management, meal replacement, and vitamins. It also operates weight control centers that offer Medifast programs for weight loss and maintenance, customized patient counseling, and inbody composition analysis. The company markets its products under the Medifast and Essential brand names, including shakes, appetite suppression shakes, women?s health shakes, diabetics shakes, joint health shakes, coronary health shakes, calorie burn drinks, calorie burn flavor infusers, antioxidant shakes, antioxidant flavor infusers, bars, crunch bars, soups, chili, oatmeal, pudding, scrambled eggs, hot cocoa, cappuccino, chai latte, iced teas, fruit drinks, pretzels, puffs, brownie, pancakes, soy crisps, crackers, and omega 3 and digestive health products. Medifast Inc. sells its products through various channels of distribution comprising Web, call center, independent health advisors, medical professionals, weight loss clinics, and direct consumer marketing supported via the phone and the Web; Take Shape for Life, a physician led network of independent health coaches; and weight control centers. The company was founded in 1980 and is headquartered in Owings Mills, Maryland.
Advisors' Opinion:- [By Holly LaFon] ast produces, distributes and sells weight and health management products with the brand names Medifast, Take Shape for Life, Hi-Energy Weight Control Centers and Woman�� Wellbeing.
Its return on assets in the third quarter of 2011 was 19.6%, which has been increasing in the past several years. The average return on assets for the specialty retail industry is 10.48% for the trailing 12 months.
The company�� total assets amounted to $94 million in 2010, which increased from $62.8 million in 2009. Net income also increased to $19.6 million in 2010 from $12 million in 2009.
Boston Beer Inc. (SAM)
Boston Beer Inc. is the largest brewer of handcrafted beers in America. Boston Beer is a growing company that recently saw a large increase in its return on assets. It increased from 19.3% in 2010 to 29.7% in 2011, and was negative as recently as 2008. The average return on assets for the beverages industry in the trailing 12 months is 9.47%.
In 2011, the company�� total assets increased to $272.5 million from $258.5 million in 2010. Net income increased to $66 million from $50 million.
Alliances Resources Partners (ARLP)
Alliance Resources Partners is a coal producer and marketer primarily in the eastern U.S. Its ROA has been increasing since 2008 and increased to 22.5% in 2011 from 21.4% in 2010. The average return on assets for the oil, gas & consumable fuels industry in the trailing 12 months is 24.47%.
In 2011, its total assets increased to $1.7 billion from $1.1 billion in 2010. Its net income increased to $389 million from $321 million.
Factset Research Systems Inc. (FDS)
Factset researches global market trends and develops analytical tools for investors. Of all of GuruFocus��5-star predictable companies, it has the highest return on assets at 27%. ROA has been increasing over the past several years. The average return on assets for the software industry for the trailing 12 m
- [By Ben Levisohn]
Shares of Nutrisystem have gained 20% to $18.05 at 1:34 p.m., while Weight Watchers (WTW) has risen 3.6% to $39.42. Medifast (MED), however, has dropped 1.9% to $24.94.
- [By Jon C. Ogg]
Medifast Inc. (NYSE: MED) saw its stock down 5% in evening trading on Tuesday after the weight loss player had soft sales and guided expectations lower. Shares were still indicated down about 5%, but volume has not yet started.
Best Growth Companies To Own In Right Now: Crocs Inc.(CROX)
Crocs, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children. The company primarily offers casual and athletic shoes, and shoe charms. It also designs and sells a range of footwear and accessories that utilize its proprietary closed cell-resin, called Croslite. The company?s footwear products include boots, sandals, sneakers, mules, and flats. In addition, it provides footwear products for the hospital, restaurant, hotel, and hospitality markets, as well as general foot care and diabetic-needs markets. Further, the company offers leather and ethylene vinyl acetate based footwear, sandals, and printed apparels principally for the beach, adventure, and action sports markets; and accessories comprising snap-on charms. The company sells its products through the United States and international retailers and distributors, as well as directly to end-user consumers th rough its company-operated retail stores, outlets, kiosks, and Web stores primarily under the Crocs Work, Crocs Rx, Jibbitz, Ocean Minded, and YOU by Crocs brand names. As of December 31, 2010, it operated 164 retail kiosks located in malls and other high foot traffic areas; 138 retail stores; 76 outlet stores; and 46 Web stores. Crocs, Inc. operates in the Americas, Europe, and Asia. The company was formerly known as Western Brands, LLC and changed its name to Crocs, Inc. in January 2005. Crocs, Inc. was founded in 1999 and is headquartered in Niwot, Colorado.
Advisors' Opinion:- [By Dividends4Life]
Memberships and Peers: NKE is a member of the S&P 500 and a member of the Broad Dividend Achievers��Index. The company's peer group includes: Crocs Inc. (CROX) with a 0.0% yield, Deckers Outdoor Corporation (DECK) with a 0.0% yield and Wolverine World Wide Inc. (WWW) with a 0.4% yield.
- [By Alex Planes]
Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Crocs (NASDAQ: CROX ) fit the bill? Let's look at what its recent results tell us about its potential for future gains.
- [By Rich Bieglmeier]
According to Yahoo finance, Crocs, Inc. (CROX) will release its third quarter financial results on Monday, October 21, 2013; however, the company's investor's relations page makes no note of any impending announcements. That being said, CROX normally reports Q3 EPS around October 24th. So, next Thursday-ish instead of Monday is possible.
- [By William L. Watts]
Shares of Crocs Inc. (CROX) �rose nearly 17% after Chief Financial Officer Jeff Lasher said in an interview that Blackstone Group LP (BX) �will invest $200 million in the shoe company and that Chief Executive John McCarvel will retire by late April.
Best Growth Companies To Own In Right Now: Nordstrom Inc.(JWN)
Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It offers a selection of brand name and private label merchandise. The company sells its products through various channels, including Nordstrom full-line stores, off-price Nordstrom Rack stores, Jeffrey? boutiques, treasure & bond, and Last Chance clearance stores; and its online store, nordstrom.com, as well as through catalog. Nordstrom also provides a private label card, two Nordstrom VISA credit cards, and a debit card for Nordstrom purchases. The company?s credit and debit cards feature a shopping-based loyalty program. As of September 30, 2011, it operated 222 stores, including 117 full-line stores, 101 Nordstrom Racks, 2 Jeffrey boutiques, 1 treasure & bond store, and 1 clearance store in 30 states. The company was founded in 1901 and is based in Seattle, Washington.
Advisors' Opinion:- [By Doug Ehrman]
As brick-and-mortar retailers continue to look for ways to level the playing field in terms of customers' data�relative to their online brethren like Amazon.com, they're experimenting with an increasing number of technologies. A recent New York Times article detailed how Nordstrom (NYSE: JWN ) recently ended such a test with Euclid Analytics that used customers' smartphones to track their movements within stores; in-store signs detailing the practice drew negative customer feedback, leading to the end of the experiment.
- [By Rich Duprey]
Not that the actual service Kmart is providing is unique, mind you. Wal-Mart (NYSE: WMT ) offers a free ship-to-store feature, as do J.C. Penney,�Radio Shack, Toys R Us,�Nordstrom� (NYSE: JWN ) , and a number of other retailers. Actually, so committed to customer service is Nordstrom that it's even had employees drive items to a customer's house at no charge to ensure they get it.�
- [By Jake L'Ecuyer]
Top Headline
Nordstrom (NYSE: JWN) reported upbeat third-quarter net income.Nordstrom's quarterly net income declined to $137 million, or $0.69 per share, from $146 million, or $0.71 per share, in the year-earlier period.
Best Growth Companies To Own In Right Now: CNO Financial Group Inc. (CNO)
CNO Financial Group, Inc., through its subsidiaries, engages in the development, marketing, and administration of health insurance, annuity, individual life insurance, and other insurance products for senior and middle-income markets in the United States. The company markets and distributes Medicare supplement insurance, interest-sensitive and traditional life insurance, fixed annuities, and long-term care insurance products; Medicare advantage plans through a distribution arrangement with Humana Inc.; and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care. It also markets and distributes supplemental health, including specified disease, accident, and hospital indemnity insurance products; and life insurance to middle-income consumers at home and the worksite through independent marketing organizations and insurance agencies. In addition, the company markets primarily graded benefit and simplified issue life insurance products directly to customers through television advertising, direct mail, Internet, and telemarketing. It sells its products through career agents, independent producers, direct marketing, and sales managers. CNO Financial Group, Inc. has strategic alliances with Coventry and Humana. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in May 2010. CNO Financial Group, Inc. was founded in 1979 and is headquartered in Carmel, Indiana.
Advisors' Opinion:- [By Jonas Elmerraji]
Up first is CNO Financial Group (CNO), a mid-cap financial stock that's rocketed close to 60% higher since the calendar flipped over to January. Yup, it's been a great year for the market, but it's been a far better one for investors who own CNO. But that strong performance isn't showing any signs of slowing yet. In fact, CNO looks primed for even more upside in the fourth quarter.
That's because CNO is currently forming a bullish pattern called an ascending triangle. The ascending triangle pattern is formed by a horizontal resistance level above shares -- in this case at $14.75 -- and uptrending support to the downside. Basically, as CNO bounces in between those two technical price levels, it's getting squeezed closer and closer to a breakout above that $14.75 resistance level. When that breakout happens, it's time to become a buyer.
ACCO's price action isn't exactly textbook. After all, the pattern is coming in at the bottom of a downtrend, not after an uptrend. But ultimately, that doesn't change the trading implications of a move through that $7.50 level.
Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Ascending triangles and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.
That $7.50 resistance level is a price where there has been an excess of supply of shares; in other words, it's a place where sellers have been more eager to step in and take gains than buyers have been to buy. That's what makes a breakout above it so significant. The move means that buyers are finally strong enough to absorb all of the excess supply above that price level.
Don't be early on this trade.
Best Growth Companies To Own In Right Now: Waste Management Inc.(WM)
Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. The company also owns, develops, and operates waste-to-energy and landfill gas-to-energy facilities in the United States. Its collection services involves in picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site; and recycling operations include collection and materials processing, plastics materials recycling, and commodities recycling. In addition, it provides recycling brokerage, which includes managing the marketing of recyclable materials for third parties; and electronic recycling services, such as collection, sorting, and disassembling of discarded computers, communications equipment, and other electronic equipment. Further, the company e ngages in renting and servicing portable restroom facilities to municipalities and commercial customers under the Port-o-Let name; and involves in landfill gas-to-energy operations comprising recovering and processing the methane gas produced naturally by landfills into a renewable energy source, as well as provides street and parking lot sweeping services. Additionally, it offers portable self-storage, fluorescent lamp recycling, and medical waste services for healthcare facilities, pharmacies, and individuals, as well as provides services on behalf of third parties to construct waste facilities. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.
Advisors' Opinion:- [By Sean Williams]
Today, I plan to introduce the first of 10 selections to the Basic Needs Portfolio: Waste Management (NYSE: WM ) .
How it fits in with our theme
Waste Management fits the theme of the portfolio in actually more ways than one. Obviously, trash collection is a basic necessity that's needed regardless of whether the economy is booming or in a recession. The amount of trash we generate may fluctuate slightly based on the health of the economy, but hauling it away remains a basic need that creates consistent cash flow for Waste Management.
Best Growth Companies To Own In Right Now: Checkpoint Systms Inc.(CKP)
Checkpoint Systems, Inc. manufactures and markets identification, tracking, security, and merchandising solutions for the retail and apparel industry worldwide. The company operates in three segments: Shrink Management Solutions, Apparel Labeling Solutions, and Retail Merchandising Solutions. The Shrink Management Solutions segment provides shrink management and merchandise visibility solutions. It offers electronic article surveillance systems, such as EVOLVE, a suite of RF and RFID-enabled products that act as a deterrent to prevent merchandise theft in retail stores; and electronic article surveillance consumables, including EAS-RF and EAS-EM labels that work in combination with EAS systems to reduce merchandise theft in retail stores. This segment also provides keepers, spider wraps, bottle security, and hard tags, as well as Showsafe, a line alarm system for protecting display merchandise. In addition, it offers physical and electronic store monitoring solutions, incl uding fire alarms, intrusion alarms, and digital video recording systems for retail environments; and RFID tags and labels. The Apparel Labeling Solutions segment provides apparel labeling solutions to apparel retailers, brand owners, and manufacturers. It has Web-enabled apparel labeling solutions platform and network of 28 service bureaus located in 22 countries that supplies customers with customized apparel tags and labels. The Retail Merchandising Solutions segment offers hand-held label applicators and tags, promotional displays, and queuing systems. The company serves retailers in the supermarket, drug store, hypermarket, and mass merchandiser markets through direct distribution and reseller channels. Checkpoint Systems was founded in 1969 and is based in Thorofare, New Jersey.
Advisors' Opinion:- [By John Udovich]
Small cap Checkpoint Systems, Inc (NYSE: CKP) fights shoplifting or retail theft and other forms of�"shrink��that costs retailers over $112 billion worldwide last year (according to a study funded by the company), meaning it might be an interesting stock to take a closer look at and to compare its performance with that of SPDR S&P Retail ETF (NYSEARCA: XRT) and PowerShares Dynamic Retail ETF (NYSEARCA: PMR). Just how bad can shoplifting or shrink be for a retailer? Troubled retailer J.C. Penney Company, Inc (NYSE: JCP) has just reported that shoplifting took a full percentage point off the department store chain's profit margins during the quarter. Moreover and given that tens of millions of Americans are now facing higher health insurance costs thanks to Obamacare (which will likely impact consumer discretionary spending),�retailers�will need to find ways to shore up their margins and bottom lines by preventing�retail theft with solutions from company�� like Checkpoint Systems.
- [By Rich Smith]
Three months after settling upon a new chief executive officer, it looks like Thorofare, N. J.-based Checkpoint Systems (NYSE: CKP ) will soon have itself a new CFO as well.
Best Growth Companies To Own In Right Now: Buffalo Wild Wings Inc.(BWLD)
Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants in the United States. The company provides quick casual and casual dining services, as well as serves bottled beers, wines, and liquor. As of July 26, 2011, it had 773 Buffalo Wild Wings locations in 45 states in the United States, as well as in Canada. The company was founded in 1982 and is headquartered in Minneapolis, Minnesota.
Advisors' Opinion:- [By AnnaLisa Kraft]
A chicken-wing upstart
But with success comes competition.�McDonald's (NYSE: MCD ) is debuting its own Mighty Wings nationally, chicken wings seasoned similarly to Popeye's New Orleans style with cayenne and chili pepper. The huge quantity of wings that McDonald's will need likely driving up prices from $1.44 a pound most recently will of course, affect the entire space including Yum! Brands, AFCE, and chicken focused Buffalo Wild Wings (NASDAQ: BWLD ) �� - [By Chris Katje]
Redhook and Buffalo Wild Wings (BWLD) will launch Game Changer Ale in July, as part of a new alcohol menu at all of the restaurant chain's locations. Buffalo Wild Wings CEO Sally Smith had this to say, "Draft beer is another cornerstone of our brand. We continue to create new opportunities to enhance the draft beer experience for our guests, increase our beer sales and improve our draft beer margins."
- [By Chris Hill]
Bikinis Sports Bar & Grill has trademarked the term "breastaurant." Are restaurants like these a threat to "non-breastaurants" like Buffalo Wild Wings (NASDAQ: BWLD ) ? In this installment of MarketFoolery, our analysts discuss what it all means for investors.
- [By Mick Weinstein]
��The bull case for Buffalo Wild Wings (BWLD) .
Best Growth Companies To Own In Right Now: TrueBlue Inc.(TBI)
TrueBlue, Inc. provides temporary blue-collar staffing services in the United States. It supplies on demand general labor to various industries under the Labor Ready brand; skilled labor to manufacturing and logistics industries under the Spartan Staffing brand; and trades people for commercial, industrial, and residential construction, and building and plant maintenance industries under the CLP Resources brand. The company also provides mechanics and technicians to the aviation maintenance, repair and overhaul, aerospace manufacturing, and assembly industries, as well as to other transportation industries under the Plane Techs brand; and temporary drivers to the transportation and distribution industries under the Centerline brand. It primarily serves small and medium-size businesses. The company was formerly known as Labor Ready, Inc. and changed its name to TrueBlue, Inc. in December 2007. TrueBlue, Inc. was founded in 1985 and is headquartered in Tacoma, Washington.
Advisors' Opinion:- [By idahansen]
The entire demand labor industry should do well as the US Department of Labor just reported that 169,000 more jobs were added to the American economy. The more work there is, the more demand there is for the services of staffing solutions firms such as Labor SMART, Paychex (NASDAQ: PAYX), TrueBlue (NYSE: TBI), and Robert Half International (NYSE: RHI).
- [By Travis Hoium]
What: Shares of staffing agency TrueBlue (NYSE: TBI ) jumped 10% today after the company reported earnings.
So what: Revenue jumped 19%, to $422.3 million, and beat estimates of $420.2 million from Wall Street. Adjusted earnings per share were also up 19%, to $0.31, outpacing estimates by $0.05.�
Best Growth Companies To Own In Right Now: Sara Lee Corporation(SLE)
Sara Lee Corporation engages in the manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. Its packaged meat products include hot dogs and corn dogs, breakfast sausages, sandwiches and bowls, smoked and dinner sausages, premium deli and luncheon meats, bacon, beef, turkey, and cooked ham. It also offers frozen baked products, which comprise frozen pies, cakes, cheesecakes, pastries, and other desserts. In addition, Sara Lee provides roast, ground, and liquid coffee; cappuccinos; lattes; and hot and iced teas, as well as refrigerated dough products. The company sells its products under Hillshire Farm, Ball Park, Jimmy Dean, Sara Lee, State Fair, Douwe Egberts, Senseo, Maison du Caf
Wednesday, January 22, 2014
El-Erian resignation raising questions about Pimco
Bloomberg News Less than 24 hours after news broke that Mohamed El-Erian is resigning as chief executive of Pacific Investment Management Co., the financial advice industry remains abuzz with speculation about what happened at the fifth-biggest U.S. money management firm.
Even as speculation ranges from whether the highly regarded and high-profile economic strategist was forced out or simply burned out, the general consensus is that Mr. El-Erian's departure will not hurt Pimco's reputation or asset management prowess.
“The news was an incredible surprise, and we have a number of clients with investments in Pimco funds,” said Richard Konrad, managing partner at Value Architects Asset Management.
“But at the same time, the issue of talent within the Pimco organization is unquestionable,” he added. “Even without [Mr. El-Erian], the essence of the firm remains, along with a track record that has been established over many years.”
(See which Pimco portfolio manager made the list of Morningstar Inc.'s fund managers of the year.)
Pimco's parent company, Allianz SE, announced late yesterday that Mr. El-Erian, 55, will be stepping down from his dual roles as chief executive and co-chief investment officer in mid-March.
Douglas Hodge, the firm's operating chief, will become CEO, and money managers Andrew Balls and Daniel Ivascyn will become deputy investment chiefs, overseeing the firm's $1.97 trillion in assets alongside Bill Gross, who will remain CIO.
Mr. El-Erian did not respond to direct requests for comment, nor did Pimco's in-house spokesman.
Without more details from either the company or Mr. El-Erian, the market is left with speculation that automatically begins with the horrible 2013 experienced by a firm regarded as a formidable fixed-income operation.
By Morningstar's calculations, Pimco's open-end mutual fund lineup suffered more than $30 billion in net outflows last year. That compares with $62.7 billion worth of net inflows in 2012.
Pimco's taxable bond funds, representing the largest share of the firm's mutual fund business, suffered net outflows of more than $44 billion last year. The fixed-income funds had $55.4 billion in net inflows in 2012.
Performancewise, the Pimco funds on average finished the year in the 63rd percentile, which compares to the 43rd percentile in 2012, and the 42nd percentile in 2011.
“I wasn't surprised by the resignation announcement because even though [Mr. El-Erian] is obviously a smart guy, it's pretty clear that Bill Gross is leading things,” said Gerard Klingman, president and founder of Klingman and Associates.
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“I would say, it's no big shock and it's no big loss for Pimco, because I don't think his role was that crucial and I don't think he was spending a lot of time on strategic planning,” he added. “It is certainly possible that he was forced out, but I can only speculate on that point.”
Mr. El-Erian will stay on the international executive committee of Allianz and advise the management board of Europe's biggest insurer on global economic and policy issues, reporting directly to CEO Michael Diekman, according to the company's statement.
Mr. El-Erian “will soon be no longer a part of Pimco and will be operating essentially in an advisory capacity,” according to Todd Rosenbluth, director of mutual fund research at S&P Capital IQ.
“Leadership changes happen when high-profile fund companies struggle, and 2013 was a rough year for Pimco, so I'm sure everything was reviewed,” he added.
Mr. Rosenbluth cited the $3.5 billion Pimco Global Advantage Strategy Fund (PGSAX) and the $2.3 billion Pimco Global Multi-Asset Fund (PGMAX) as the funds most closely associated with Mr. El-Erian.
The Advantage Strategy Fund declined by 3% last year and finished in the 53rd percentile of the world bond category. The Global Multi-Asset Fund fell 8.9% last year and finished in the 94th percentile of the tactical allocation category.
“He was part of Pimco's investment committee that set strategy, and for a firm that sets strategy from the top down, that is an important role,” Mr. Rosenbluth said. “It's hard for me to find a good comparison across the fund industry of somebody at that level stepping down.”
Jeff Tjornehoj, head of Americas research at Lipper Inc., interpreted Mr. El-Erian's departure as a formalizing of a professional evolution.
“It sounds as if he's moving into a role of very much what he has been doing, as the economist on staff,” he said. ! “He ! will now be more like a one-man think tank.”
In terms of Mr. El-Erian being forced out or being asked to fall on the sword, Mr. Tjornehoj believes that would be oversimplifying matters.
“I don't see how anyone could pin the outflows and the performance issues on El-Erian,” he said. “I'm sure he's been a significant voice at Pimco, but he's not alone there.”
Whether Mr. El-Erian was asked to leave or not, Theodore Feight, owner of Creative Financial Design, believes it was an opportunistic move.
“I can understand why he's leaving because the next few years, the bond industry will be in strife,” he said. “Once a company starts losing assets, it has an effect on what a company can do.”
Tuesday, January 21, 2014
The Least Candid Companies
While many investors may think corporate communication is unclear, some companies are far more candid than others. In fact, According to corporate communications consulting firm Rittenhouse Rankings, clear and transparent language in investor letters is indicative of reliable performance.
Generally, investors assess a company's performance by studying key financial metrics. But another useful strategy, according to Rittenhouse Rankings, is to study the language rather, than just looking at the numbers. By reviewing the language in the letters to shareholders, Rittenhouse Rankings evaluates how transparent a company is with the public. According to the report, some companies, including Cigna and Hewlett-Packard, have released letters that are confusing and lack details that would allow shareholders to better understand the company.
Click here to the 10 least candid companies
Rittenhouse Rankings reviews annual letters to shareholders in order to assess candor and FOG, or “fact-deficient, obfuscating, generalities.” Companies benefit in the study by demonstrating their candor and are penalized for including so-called FOG language. FOG language provides little, unclear or non-specific information about a business, and it is usually jargon.
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In an interview with 24/7 Wall St., Rittenhouse Rankings President Laura Rittenhouse said that companies that are less transparent with their shareholders may have problems communicating candidly within the company as well. “If the CEO is communicating to the owners with this degree of obfuscation, it's likely [he or she is] communicating this way internally," explained Rittenhouse. As a result, employees do not know what to do, she said.
The least candid companies not only produced a large amount of unspecific jargon in their shareholder letters, but, notably, they also often failed to demonstrate leadership and vision. The average company in the top 10 scored more than 3.5 times as many points in the category than the bottom 10. Top companies also received nearly three times as many points for leadership than the least candid companies.
Rittenhouse Rankings' data do not take into account several other documents that might be used as a means for analyzing candor. Among these are SEC filings and public comments by senior management. However, the shareholder letter in a public company's annual report is an important opportunity for the CEO to articulate to all investors the most important highlights of past, present and future operations of the company. If this letter is deficient, it may point to a flaw in management's ability to disclose the information most critical to shareholders.
In order to assess candor and FOG, the 2012 Rittenhouse Rankings Culture & Culture Survey reviews annual letters to shareholders written by the CEO. Companies then receive points for demonstrating accountability, leadership, strategy and vision, among other factors. These points are then totaled and compared to the amount of FOG — or "fact-deficient, obfuscating, generalities" — these letters contain. Companies with the highest ratios of FOG to statements that show candor receive the lowest grades. The shareholder letters used by Rittenhouse Rankings for all the 10 least candid companies are from 2011. The companies included in the survey initially were selected in 2000, based on four criteria: capitalization, financial performance, Fortune 500 reputation and industry representation. Companies are replaced in the study if they cease to exist, or do not publish a shareholder letter.
Saturday, January 18, 2014
Why Cubs, Incapital Chairman Tom Ricketts Really Likes ‘Sustainable Investing’
What's more fun—bonds or professional baseball? When asked about the amount of time spent running the day-to-day operations of his Chicago-based investment firm, Incapital, Tom Ricketts doesn't hesitate.
“I’m actually pretty busy with that baseball team over your shoulder,” Ricketts quips, pointing to a television screen running a highlight reel.
The chairman of both Incapital and the Chicago Cubs (after leading his family’s acquisition in 2009), nonetheless still has a strong hand in the firm, and begins by noting its role as “a pioneer in offering corporate bonds through brokerage firms to investors.”
“We’ve now moved on to distribute additional products such as brokered deposits and UITs,” he adds.
Today, Incapital underwrites and distributes fixed income securities and structured notes through more than 700 broker-dealers, institutions, advisors and wealth managers.
When asked about the firm’s legacy of innovation and how it’s sidestepped the regulatory issues so many other firms have experienced when introducing “great, new products” to the market, only to subsequently go bust, Ricketts simply claims that “Each and every product we’ve offered has been thoroughly thought through from the standpoint of the investor at every level.”
That simplicity translates to everything the firm does.
“We’re very consistent in our messaging; we tell investors not to time the market or put all their eggs in one basket, rather, follow a roadmap and don’t overact to market events.”
Sounds basic enough, but coming from a major league baseball owner seems to give it added heft.
His latest passion are community investment notes, a form of SRI that doesn’t tangle with screens, arguments over sacrificed returns and opportunity costs like equity-based socially responsible investing.
“For everyone looking for SRI, here it is,” he emphatically states (for Ricketts anyway). “It’s like buying a bank CD or as simple as buying any other financial instrument. It’s not luck, but rather by design that they’re safe, have low transaction costs and low friction.”
Arguing that there are no “real, tangible opportunity costs, “it’s a way to do social good and enjoy returns.”
When asked about his “skin in the game” with the product he is promoting, he says his broker calls when the notes mature and he simply rolls them over.
“It’s very direct, and with none of the complaints heard on the equity SRI side. The notes are used for affordable housing, to help start businesses and for micro lending in other countries. They have extremely low default rates.”
As to his other love, the Cubs, and the renovations currently happening at famed Wrigley Field, he mentions the intricacies (delicately put) of dealing with Chicago politics—and waiting for the right opportunities to move the renovation process ahead.
Speaking of waiting, he concludes it’s something fixed income investors can’t afford to do.
“Sure, in the current environment, you might want to shorten your ladder, but the key is to not just do nothing. You can’t park it somewhere and get zero percent.”
Friday, January 17, 2014
GTSI: Why Net-Net Investing Is So Hard
I picked GTSI (GTSI) for the Ben Graham: Net-Net Newsletter in June of last year. The model portfolio bought 128 shares of GTSI at $5.02 a share. It also paid a $7 commission which – spread over the 128 shares bought in the account – works out to a total cost of $5.07 a share.
The purchase of real GTSI shares was made in a real brokerage account after the newsletter issue picking the stock came out. So, that isn't the problem with net-net investing. Anyone who read the newsletter could've bought GTSI shares. And they wouldn't have had to pay any more than $5.07 a share – including commissions. In fact, because the model portfolio made such a small purchase – the per share cost would probably be lower for most investors. And GTSI spent a lot of time under that $5.07 total cost shown in the model portfolio. In fact, investors had plenty of opportunities to buy GTSI – after the newsletter came out – at prices between $4.00 and $5.00 a share. The lowest price shown in the last 52 weeks is $3.82 a share. You probably couldn't have gotten anything like that. But no one would've had any trouble buying shares at around $4.50 quite regularly if you kept faith in the stock.
Okay. So the usual complaint about net-net stocks – that you can pick them but you can't really accumulate them in an actual portfolio – doesn't apply here. That wasn't the problem.
What was the problem?
GTSI now trades at $7.74 a share. There is a buyout offer at $7.75 a share.
Before we go any further, I should point out for those interested in GTSI as a stock that currently trades – and not just as a case study of net-net investing – this $7.75 a share buyout is not a done deal. There is a lawsuit alleging breach of fiduciary duties, etc. And the buyout offer of $7.75 a s! hare is lower than the $8.70 intrinsic value appraisal I gave for the stock back in June 2011 when I picked it for the newsletter. Those are the facts. Draw whatever conclusions you want from them. I have nothing more to say about GTSI as it stands today – this article is a look back at the Ben Graham: Net-Net Newsletter's investment in GTSI which began one year ago. For more information on GTSI, you should:
· Read all of GTSI's SEC filings
· Read all of Whopper Investments' posts on GTSI
· Read all of Frank Voisin's posts on GTSI
Now back to the previously scheduled post mortem…
There is a buyout offer at $7.75 a share.
If that goes through, investors who got GTSI at the same price as the model portfolio – including commissions – will make 53% on the stock. And they'll have held it for about a year (longer if they wait for the buyout to go through, shorter if they sold on the announcement).
Let's call it a 50% profit in one year.
How many readers of the Ben Graham: Net-Net Newsletter actually made that profit?
That's what makes net-net investing so hard.
The Ben Graham: Net-Net Newsletter has far more past picks in the red than in the green. Now, true they aren't in the red by 50%. But there are a couple big losers. One of which might end up permanently impaired within the next year or so. More on that stock when it's turn for a "one year later" treatment comes up later this year (around August I think).
So what is the hard part about net-net investing?
The waiting. With no catalyst in sight – no wonderful future to visualize – you were going to be holding a bad business. Indefinitely. That's scary.
GTSI was an ugly business. It never earned very good returns on capital. And it probably never will – in any form. But it was cheap. GTSI sold – at quite a few times in the past year – at below its likely liquidation value.
There were three assets that might hav! e value i! n liquidation – together – at more than the company's market cap:
1. Cash
2. Receivables
3. Stake in EyakTek
The third one refers to a private – scandal-ridden – company GTSI had a stake in.
Here's what I wrote about EyakTek back in the June 2011 Ben Graham: Net-Net Newsletter:
GTSI owns 37% of a company called EyakTek. The biggest owner of EyakTek—as the name suggests—is Eyak. Eyak is an Alaska Native Corporation. That's a special kind of small business under federal government rules. Alaska Native Corporations— we're intentionally avoiding discussing the politics of this issue here—get super preferential treatment under federal government rules. They can behave like small businesses even when they get very, very big. And they have gotten very, very big. From 2000 to 2008 the amount of federal government spending going to these Alaska Native Corporations went from $500 million to $5.2 billion. The reason for this seems to be that non-native government contractors like GTSI started using these Alaska Native Corporations very aggressively to funnel business to themselves. There are rules limiting subcontracting of government contracts won by Alaska Native Corporations to big businesses like GTSI. Apparently, everybody—and based on what we've read in a U.S. Senate report investigating these Alaska Native Corporations, we do mean everybody—ignored these rules.
Which brings us to EyakTek. GTSI owns 37% of EyakTek. EyakTek is a small business that sells computers to the government. It's a very profitable business. EyakTek's earnings are around $20 million. GTSI's share of those earnings amounts to around $7 million a year. None of that is included in the stats we've been giving you on GTSI up to this point. The return on assets and equity numbers we provided counted only GTSI's operating income. Not its share of EyakTek's earnings. Which would amount to around $7 million a year. That works out to around 70 cents per ! GTSI shar! e. In theory, GTSI's EyakTek stake alone should be worth more than GTSI's $5 share price. Eyak—that's the other owner of EyakTek—made some moves in 2010 that suggest it too thinks EyakTek is worth a lot compared to GTSI's stock price. EyakTek offered to buy all of GTSI for $7 a share in cash. The offer was later raised to $7.50 a share. EyakTek dropped the offer the second GTSI got ensnarled in the SBA scandal.
All this suggests Eyak thinks EyakTek is worth a lot. Maybe more than GTSI trades for. Maybe GTSI's stake in EyakTek is worth close to the $7 EyakTek offered for GTSI. Here's the catch. GTSI obviously doesn't think so. GTSI had the option of allowing EyakTek to continue doing business after graduating from the small business designation made by the federal government. In other words, GTSI—by virtue of its 37% stake—could decide whether or not EyakTek should liquidate its business instead of trying to compete as a big contractor. The original LLC agreement that formed EyakTek gave GTSI a veto over EyakTek's continued existence in the case EyakTek graduated from being a small business. GTSI didn't vote for continued existence. So EyakTek should have liquidated. But it didn't. Instead EyakTek tried to buy all of GTSI. Since then—as GTSI's CEO put it—EyakTek and GTSI have "been in an adversarial relationship". Basically, GTSI has no visibility into EyakTek. They aren't on speaking terms. In fact, there was a sham meeting of the LLC owners where Eyak squashed GTSI's attempts to discuss any business other than the liquidation vote, GTSI didn't vote in favor, and then EyakTek kept operating as if the vote hadn't failed.
Enter the lawyers. And the arbitrator. And a lot of ugliness. But finally on last quarter's conference call, GTSI's CEO said EyakTek and GTSI are now in settlement talks and they hope to have a deal by the end of this quarter. Will they? Who knows?
What if GTSI sells out of EyakTek? What if EyakTek tries to buy all! of GTSI ! again?
It's hard to say. Think of it as a lottery ticket. For the purposes of this newsletter, we value GTSI at $8.69 a share. That assumes liquidation value for EyakTek. The upside on top of that in a buyout of GTSI's EyakTek stake could conceivably be several bucks per GTSI share. It could add $5 a share to what GTSI is worth. But it's such an odd, murky situation we don't even like hinting at that kind of number. Instead just think of GTSI as being worth $8.69 a share plus a lottery ticket. Not bad for a $5 stock.
First, let's clear up how the EyakTek story actually ended. GTSI was paid about $2.07 a share for its stake. This was about 3 times EyakTek's trailing earnings. So, maybe 4.5 times after-tax earnings. Something like that. The P/E ratio they got doesn't matter. Because of the nature of what EyakTek was – a loophole for doing business with the federal government – I always thought it was worth a miniscule multiple of its past earnings. GTSI carried its EyakTek investment on its books at $1.21 a share. And it got more than that. For my $8.70 appraisal of GTSI – I actually cut the value of GTSI's investment in EyakTek from $1.21 (under the equity method of accounting) to $1.09 a share to estimate the liquidating distribution GTSI might get if EyakTek was shut down. I figured they wouldn't settle for less than the liquidating distribution would be worth. And Eyak would offer GTSI more than what the liquidating distribution would be worth if they wanted to keep EyakTek in business.
As it turned out, GTSI got almost twice as much for its EyakTek stake as I assumed. Although, like I said, I had no clue what they would get – and if the relationship was poisonous enough between the two parties they might even end up getting close to nothing. Plus there'd be tons of litigation. It didn't turn out that way. They settled pretty quickly after I picked GTSI for the newsletter. I think it happened within the next quarter or so.
So if I was so con! servative! in valuing EyakTek, why was I so wrong in valuing GTSI? I put intrinsic value at $8.69 a share and yet it's being bought out for just $7.75 a share. Does that mean the buyout price is too low?
Maybe. I don't really think the buyout adds or subtracts much value from what GTSI shareholders already had. It's just an event. A way of getting the market price of the stock to reflect what shareholders already owned. It's not like the offer "created" value. Or like GTSI shareholders are getting a good deal. It's not a particularly good sale price. The buyers will do fine from a price perspective. The quality of what they're buying is where they will either end up making money or losing money – depending on what they do with it. But the buyers got a fine deal on price.
Before the deal was announced, GTSI shares were trading at $5.30. After the deal was announced, they were trading at $7.72 a share. So, the buyer and Mr. Market had two different appraisals of the company. I had a third – and that was about $8.70 a share. That was not an overly conservative appraisal. I would never have suggested buying shares of GTSI at $8.70 a share. Only that you might get a chance to sell them at $8.70 a share in the future. It was a best guess as to what the company was really worth in June 2011. And I'd stick by that estimate. My appraisal in June 2011 was 73% higher than GTSI's stock price at the time. The buyout offer – a year later, with some intervening events – turned out to be 54% higher than the June 2011 stock price.
This highlights the importance of Ben Graham's margin of safety principle. I was off by quite a bit. I appraised GTSI at 12% higher than what a control buyer actually offered. I was wrong. But Mr. Market was wronger. He guessed 35% lower than what a control buyer offered. And that was just in June 2011. Over the next year, Mr. Market would guess anywhere from 30% to 50% lower than what a control buyer would eventually offer for GTSI.
Now, it co! uld be ar! gued that the really hard part of net-net investing is figuring out when some event like a buyout is going to happen. If GTSI hadn't been sold to a control buyer in the next year – but instead five or six years down the road, an investor's annual return in GTSI would've turned out very differently.
This is especially true because GTSI's actual business is mediocre. And that's a generous description. At best, holding GTSI just gets you long-term bond-like returns. Nothing better. Value does not build in a shareholder's favor at GTSI. There was a one-time gap between price and value – the value was anywhere from 50% to 100% higher than the stock price at various points over the last year. The issue was when you would get that 50% to 100% return.
In fact, this might even be more important than whether you bought GTSI at a little higher than the Ben Graham: Net-Net Newsletter did – say $5.30 a share – or a lot lower (say $4.00 a share). That was obviously important. But if you buy a net-net within one year of its being bought out – you're often going to do all right regardless of the exact price you pay.
There's a big gap between $5.30 a share and $4.00 a share (pretty much the range GTSI had been trading in before the announcement). But it's the gap between $7.75 a share and $5.30 a share that mattered most.
So time matters. But focusing too much on time could be a problem in net-net investing. In fact, I think it is. And we can demonstrate that with a little annual return math.
If you bought GTSI at a price of $5.30 a share right before the buyout happened – which is pretty much the highest price you could've paid in the last year – and then the buyout actually didn't happen for a full five years, what would your annual return be?
Well, $5.30 invested today that turns into $7.75 in five years is an annual return of 7.9% a year.
When you think of net-net investing, you probably think of big risks and big returns – and! there ar! e both. So you probably want more than 7.9% a year. But I actually don't expect the stock market to do any better than that for you over the next five years. So, getting stuck in GTSI for five years and bought out at $7.75 at the end of that period would've been pretty close to a market-matching investment. That's my view. We'll see. Maybe stocks will return 10% or 15% or 20% between 2012 and 2017. But I think it's a lot more likely they return about 8%. No more.
If GTSI had been bought out in four years, your annual return would be 10% a year. If it had been bought out in three years, your annual return would be 13.5%. If it had been bought out in two years, your annual return would be 20.9% a year. And if it had been bought out in one year – as it actually was – your annual return would be 46%.
All of this assumes you paid pretty much the highest price at which GTSI traded before the buyout. A price of $5.30 a share was actually higher than where the stock usually traded over the last year. Trust me – it was in the red for most of the time after I picked it for the newsletter.
And all of this assumes the potential buyout value of GTSI would neither grow or shrink over time. That's clearly wrong.
But over the last 10 years, the growth in GTSI's value – and yes, intrinsic value probably grew, I'd peg the very uneven growth at maybe 2% a year – was hardly enough to offset the risk of a permanent and catastrophic loss in the stock. Something from which an investor couldn't recover.
Historically, GTSI had done better than the last 10 years. And if Ben Graham's quote from the Roman poet Horace is to be believed – perhaps it is not only the stock that would rise again in people's perceptions but actual business conditions as well. It's very possible. Maybe GTSI could earn 6% a year on its book value one day. I doubt it could do much more over a full decade.
Over the last 20 years, GTSI's average return on equity was 6%.
! A 6% buil! d in intrinsic value hardly compensates a shareholder for the risk taken by owning a business like GTSI – a business which often has operating margins around 1%.
So, really we were always talking about a pretty simple proposition. The business may earn a return. Or it may not. What little return it manages to earn is unlikely to compensate shareholders beyond the risk they are taking holding the stock. This is not a buy and hold investment. It is nothing that will "snowball."
But the stock price was wrong. It did not value the company at anywhere near its value to a control owner. Mr. Market was probably leaving anywhere from a 50% to 100% upside on the table when he offered to sell GTSI to you in the past year.
So, the question was – how long would it take for this gap between price and value to close:
1 year: 46%
3 years: 14%
5 years: 8%
10 years: 4%
And that's what a lot of net-nets look like. You think a control buyer would pay 50% (or more) for the whole business – but you see no reason why he'd do that now. If he comes along in a year, you'll make 40%. If he comes along in a decade, you'll make 4%. All the while you'll be taking the risk of owning a lousy business.
Is it worth it?
In my experience, yes. It is worth it in theory. But, for the vast majority – I don't know if it's 95% of investors or 99% or 99.99%, but it's not 50% – net-net investing is an emotional impossibility.
I don't know how many readers of the Ben Graham: Net-Net Newsletter owned GTSI. One reader did email me about it. But he's an experienced net-net investor. Someone with the right psychological make up for this sort of thing. Certainly far ahead of most investors in terms of being able to own a mediocre business without an obvious catalyst slowly drift down in price for the better part of a year – and then, bang! Make a 40% return in one day.
So is net-net investing hopeless? Should you just give up?
If you think you really do like net-net investing – and you can imagine yourself owning things like GTSI, I do have two pieces of advice:
1. Put 100% of your focus on buying and 0% of your focus on selling
2. Put 100% of your focus on the downside and 0% on the upside
As my 12% misappraisal of GTSI shows – versus Mr. Market's 30% to 50% misappraisals – it's often not that hard to value a net-net better than the market. But valuing a net-net is not what makes you money. You have to buy a net-net and you have to hold a net-net.
Some people can value net-nets really well. But they don't actually end up buying them. Other folks buy and sell net-nets so rapidly they accumulate a long list of stocks they once owned that eventually got bought out – a year or three after they had already sold them.
You want to be there for the buyout.
Now, of course, many net-nets do not get bought out. And the truth is that if Mr. Market had changed his perception of GTSI such that the stock traded at $9 a share – there probably wouldn't have been any buyout at all.
That's fine.
Yes. It means you might have had to sell to realize a return. I'm not against selling net-nets. But I am against watching net-nets like a hawk. I don't think it's necessary. If you pick them right in the first place, a quick check up once a year is all the time you need to spend revisiting your already-owned net-nets. The rest of your time is better spent finding new ones.
And that's the hardest part of net-net investing.
Waiting.
It's really easy to find net-nets. It's a little bit difficult to actually have the stomach to buy them. And it's emotionally impossible for most people to actual! ly hold n! et-net long enough to get paid.
And here we've been talking about a stock you only needed to own for a year.
Folks like Ben Graham and Walter Schloss – great net-net investors – often held net-nets for closer to four years.
How'd they do it?
My theory is that they were always nibbling on a new net-net. Buying little bits of new stuff. Accumulating 100 net-nets. But never at once. So they could always focus on buying something cheap. And they didn't have to worry about selling so much.
They really did have faith that somehow price and value would converge. That they'd get paid one day for buying at two-thirds of intrinsic value.
That faith is the hardest part of net-net investing. I think it's easiest to have faith like that if you don't focus on it. If you focus instead on a process that keeps you finding new net-nets and minimizes the temptation to sell what you already own.
Visit Geoff at Gannon On Investing
Thursday, January 16, 2014
Taking the Temperature of Oil and Gas
The recent announcement from this company speaks volumes about the current condition of the global oil and gas industry, suggests MoneyShow's Jim Jubak, also of Jubak's Picks, but even more can be gleaned from pending announcements.
I've never owned shares of Baker Hughes (BHI) but I still follow the company closely. Its reports on drilling activity around the world are some of best ways to take the temperature of the global oil and gas production and services sectors.
The company's January 10 announcement that it was lowering its guidance for the fourth quarter on declines in drilling activity in North America and Europe/Africa/Russia, has certainly contributed to weakness in the oil services sector and in the shares of competitors such as Schlumberger (SLB). With Schlumberger scheduled to report fourth quarter earnings on January 17, and with Baker Hughes scheduled for January 21, the question now is, "Has the lowered guidance from Baker Hughes de-risked the stocks in the sector or will there be enough disappointment in the actual reports to push the sector down farther?"
What did Baker Hughes say on January 10?
It announced that the count for US onshore wells in the fourth quarter had fallen to 9,056 wells, down 19 wells from the 9.075 counted in the third quarter.
Drilling activity declined, the company said, "primarily" due to weather delays in the quarter.
That might be seen as comforting—since weather delays are temporary—but there are signs that the problems are longer lasting than weather.
Which is why I want to see what Baker Hughes and Schlumberger report in the next week.
On the basis of current data, some Wall Street analysts worry that even though global activity is at record levels, capital spending looks to be slowing. About eight weeks ago, the Wall Street consensus was that capital spending would show a 10% increase in the United States and 10% to 12% increase in the rest of the world. I'm starting to see Wall Street reports pegging capital spending growth at half that consensus rate.
The other problem that Baker Hughes noted is a decline in margins. Again, the company cited weather as delays in drilling schedules added to costs.
Maybe. But I'm also looking to see if margin issues aren't related to changes in drilling technology, especially in US shale geologies, that have reduced the number of rigs needed and lowered the per well cost.
That's not a huge issue right now, in my opinion, but I'm hoping that Baker Hughes and Schlumberger cast useful light on margins in the oil service sector. (Schlumberger is a member of my Jubak's Picks portfolio.)
Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Schlumberger as of the end of December. For a full list of the stocks in the fund see the fund's here.
Tuesday, January 14, 2014
ACT: Actavis’s Growth Potential Anything But Generic
Popular Posts: SIRI: Sirius XM’s Signal is Fading Fast3 International Stocks Poised to Soar in 2014BAC: Time For Caution in Bank of America Stock Recent Posts: 3 Energy Stocks for a Cold Planet ACT: Actavis’s Growth Potential Anything But Generic 47 Actions To Take On the Dow’s Big Dive View All Posts Welcome to the Stock of the Day.
Company Overview
Actavis Plc is one of the world’s largest generic drugmakers. For the past three decades, this company was known as Watson Pharmaceuticals (WPI), but the company rebranded itself as Actavis in 2013. With a portfolio of over 190 pharmaceutical product families, Actavis has its name on everything from antibiotics to contraceptives to smoking cessation treatments.
In addition to making these products, the company also handles distribution, delivering right to the doors of pharmacies and physicians’ offices. Actavis also sells its generic products directly to retailers, hospitals and mail order agencies. This company has its strongest presence in the United States, Canada as well as Latin America.
Pipeline Buzz
One of the most exciting things in the works at Actavis is generic versions of biologic drugs, which are created by biological rather than chemical processes. Biologic drugs are at the cutting edge of modern medicine, so many treatments run at tens of thousands of dollars. The generic, potentially cheaper, versions of biologic drugs are called biosimilars, and to date they’re not available in the U.S. So right now there is a race between biotechs to develop and get their biosimilars approved. Considering that the global market for biosimilars is forecast to be between $11 billion to $24 billion by 2020, this is a lucrative opportunity, and I look forward to seeing where both companies go with this.
Looking Ahead
Today Actavis announced strong preliminary results for Q4 and FY 2013. According to management, this was a “transformational year” for Actavis, thanks to its $8.5 billion acquisition of Warner Chilcott and a series of successful product launches (including generic versions of Suboxone, Lidoderm and Cymbalta).
So the company expects fourth-quarter adjusted earnings to outperform its previous forecast of $2.95 to $3.05 per share. This also means that Actavis will likely top the Street estimate, which is calling for earnings of $2.97 per share. As it stands, the consensus analyst estimate translates into 87% annual earnings growth.
Actavis also revealed that thanks to its strong cash position it was able to pay down $655 million in debt during the fourth quarter. So when Actavis reports fourth-quarter results on February 20, I expect it to make headlines.
Current Ratings
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. One glance at ACT’s stock report page reveals that I’ve had this stock down as a buy for the past year or so. That’s thanks to the persistent institutional buying pressure backing up this stock: ACT receives an A for its Quantitative Grade.
Meanwhile, Actavis rates well on sales growth (A), analyst earnings revisions (A) and return on equity (B), but it could stand to firm up the other five fundamental metrics I graded it on (including operating margin growth, earnings growth and cash flow). However, I expect that many of these grades will imporve once the company reports Q4 results.
Bottom Line: As of this posting I consider ACT an A-rated Strong Buy.
Monday, January 13, 2014
Top 5 Bank Companies To Watch In Right Now
European stocks advanced for a fifth day, their longest rally this year, as data showed the U.K. avoided a triple-dip recession and as companies including British American Tobacco Plc (BATS) reported results.
BAT gained 1.2 percent after first-quarter sales surpassed projections. Vodafone (VOD) Group Plc climbed to an 11-year high after a report Verizon Communications Inc. may bid $100 billion for full control of Verizon Wireless. Unilever fell 3 percent after posting sales growth that missed projections.
The Stoxx Europe 600 Index added 0.8 percent to 296.88 at the close, its highest price since April 2. The measure has rallied 4.1 percent so far this week as company earnings beat forecasts and investors speculated the European Central Bank will cut interest rates. It has advanced 6.2 percent so far this year.
��he U.K. GDP numbers were somewhat better than feared and at least contributed to alleviate concern about a new recession in the U.K.,��said Espen Furnes, a fund manager who helps oversee $75 billion at Storebrand Asset Management in Oslo. ��he European (SXXP) earnings season so far has been a mixed bag. The comments on outlook have been muted but not outright negative. The markets see this as a temporary pause and expect an upswing in earnings in the second half.��
Top 5 Bank Companies To Watch In Right Now: Banco Bilbao Vizcaya Argentaria S.A. (BBVA)
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is a diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. The Company also has investments in some of Spain�� companies. During the year ended December 31, 2009, BBVA focused its operations on six major business areas: Spain and Portugal, Wholesale Banking and Asset Management, Mexico, The United States, South America and Corporate Activities. On August 21, 2009, through its subsidiary BBVA Compass, BBVA acquired certain assets of Guaranty from the United States Federal Deposit Insurance Corporation (the FDIC).
Spain and Portugal
The Spain and Portugal business area focuses on providing banking services and consumer finance to private individuals, enterprises and institutions in Spain and Portugal. The main business units included in the Spain and Portugal area Spanish Retail Network, which manages individual customers, high net-worth individuals (private banking) and small companies and retailers in the Spanish market; Corporate and Business Banking, which manages business with small and medium enterprises (SMEs), large companies, institutions and developers in the Spanish market, and Other units, which includes consumer finance, that manages renting and leasing business, credit to individual and to enterprises for consumer products and Internet banking; European Insurance that manages the insurance business in Spain and Portugal, and BBVA Portugal, that manages the banking business in Portugal. The Spanish Retail Network unit services the financial and non-financial needs of households, professional practices, retailers and small businesses. The Corporate and Business Banking unit offers a range of services and products to SMEs, large companies, institutions and developers with specialized branch networks for each segment.
The Company�� European Insurance unit�� activities are conducted through! various insurance companies that provide direct insurance, reinsurance and insurance brokering services in Spain and Portugal and market products for different types of customers (private individuals, SMEs, retailers, professional service firms and providers and self-employed individuals) through this unit�� branch offices. BBVA Portugal manages its banking business in Portugal.
Wholesale Banking and Asset Management
The Wholesale Banking and Asset Management area focuses on providing services to large international companies and investment banking, capital markets and treasury management services to clients. The business units included in the Wholesale Banking and Asset Management area are Corporate and Investment Banking, which coordinates origination, distribution and management of a complete catalogue of corporate and investment banking products (corporate finance, structured finance, syndicated loans and debt capital markets) and provides global trade finance and global transaction services with coverage of large corporate customers specialized by sector (industry bankers); Global Markets, which handles the origination, structuring, distribution and risk management of market products, which are placed through its trading rooms in Europe, Asia and the Americas; Asset Management, which designs and manages the products that are marketed through its different branch networks including traditional asset management, alternative asset management and Valanza (its private equity unit); Industrial and Other Holdings, which helps to diversify the area�� businesses with the aim of creating medium and long-term value through active management of a portfolio of industrial holdings and other Spanish and international projects, and Asia.
During the year ended December 31, 2009, it launched two products: BBVA Bonos Cash (BBVA Cash Bonds), a money market fund for retail customers, and BBVA Bonos Largo Plazo Gobiernos II (BBVA Long-Term Government Bonds), a public-debt fu! nd. In ad! dition it launched through this unit additional fixed-income long-term funds, including BBVA Bonos Corporativos 2011 and BBVA Bonos 2014, which were sold to HNWI customers.
Mexico
The business units included in the Mexico area are Retail and Corporate banking and Pensions and Insurance. BBVA Bancomer launched six new mortgage products for lending to home buyers in 2009. These products included: loans for home improvements, remodeling or additions to homes and financial discount which provides liquidity to construction companies. In Mexico, it operates its pensions business through Afore Bancomer, its insurance business through Seguros Bancomer, its annuities business through Pensiones Bancomer and its health insurance business through Preventis.
The United States
The business units included in the United States area are BBVA Compass and Other units: BBVA Puerto Rico and Bancomer Transfers Services (BTS). During 2009 this unit marketed and sold several new products, The ClearPoints credit card, Business Build-to-order Checking, Compass for your Cause and Money Market Sweep.
South America
The South America business area includes its banking, insurance and pension businesses in South America. The business units included in the South America business area are Retail and Corporate Banking, which includes banks in Argentina, Chile, Colombia, Panama, Paraguay, Peru, Uruguay and Venezuela; Pension businesses, which includes pensions businesses in Argentina, Bolivia, Chile, Colombia, Ecuador and Peru and Dominican Republic, and Insurance businesses, which includes insurance businesses in Argentina, Chile, Colombia, Dominican Republic and Venezuela.
Corporate Activities
The Corporate Activities area handles its general management functions. These mainly consist of structural positions for interest rates associated with the euro balance sheet and exchange rates, together with liquidity management and shareholde! rs��fun! ds.
Advisors' Opinion:- [By Lee Jackson]
Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) was raised to Outperform from Neutral by Credit Suisse.
Caterpillar Inc. (NYSE: CAT) was started as Equal Weight at Morgan Stanley
- [By John Udovich] A.F.P Provida SA. A Chile-based company�involved in the management of private pension funds, A.F.P Provida SA�� activities include the investment and collection of its clients��contributions, the management of individual capitalization accounts and the provision of life and disability benefits, payments of funeral expenses and senior retirement pensions. A.F.P Provida SA also has operations through its subsidiaries in Peru, Ecuador and Mexico. Under former dictator Pinochet,�Chile privatized its otherwise bankrupted social security program�and mandates its citizens to invest a certain portion of their wages with government-endorsed asset management firms like A.F.P Provida SA. Right now, A.F.P Provida SA has a trailing P/E of 6.33 along with a forward dividend of $10.89 for a 12% dividend yield, but there is also a big catch. Back in February, it was reported that Metlife Inc (NYSE: MET) would acquire the firm from Banco Bilbao Vizcaya Argentaria SA (NYSE: BBVA) in a deal valued at about $2 billion in order to add fee income in Latin America���meaning that juicy dividend is no longer a sure bet for investors. On Monday, small cap A.F.P Provida SA rose 0.28% to $90.80 (PVD has 52 week trading range of $82.60 to $112.79 a share) for a market cap of $2.01 billion plus the stock is down 9.1% since the start of the year, up 2.3% over the past year and up 205.7% over the past five years.
- [By Alexis Xydias]
Borrowed stock in BBVA (BBVA), Spain�� second-biggest bank, has fallen to 0.23 percent of the Bilbao-based company�� outstanding shares, from 2.41 percent two years ago, Markit data show. The stock surged 41 percent in the period.
- [By Jim Woods]
If you’re looking for an income-producing dividend stock to fill the void, consider the classic pure plays AT&T (T) and Verizon (VZ).
Banco Bilbao Vizcaya Argentaria (BBVA)
When it comes to suspending dividends, the Europeans don�� want to be left out. In October, Spain�� biggest financial institution, Banco Bilbao Vizcaya Argentaria (BBVA), cut its annual dividend by putting a cap on payouts for 2014 (and going forward) to 40% of profits.
Top 5 Bank Companies To Watch In Right Now: Banco Bradesco SA (BBD)
Banco Bradesco S.A. (the Bank), incorporated on November 5, 1943, is commercial bank. The Bank offers a range of banking and financial products and services in Brazil and abroad to individuals, large, midsized and small companies and local and international corporations and institutions. It operates in two segments: the banking, and the insurance, pension and capitalization bonds. Its products and services encompass banking operations, such as loans and advances and deposittaking, credit card issuance, purchasing consortiums, insurance, leasing, payment collection and processing, pension plans, asset management and brokerage services. The main services it offers through Bradesco Expresso are receipt and submission of account applications; receipt and submission of account applications; Social Security National Service (INSS) benefit payments; checking and savings account deposits, and receipt of consumption bills, bank charges and taxes. In May, 2011, the Bank acquired Banco do Estado do Rio de Janeiro S.A. (BERJ).
Banking
The Banking segment includes deposit-taking with clients, including checking accounts, savings accounts and time deposits; loans and advances (individuals and companies, real estate financing, microcredit, onlending BNDES funds, rural credit, leasing, among others); credit cards, debit cards and pre-paid cards; management of receipts and payments; asset management; services related to capital markets and investment banking activities; intermediation and trading services; custody, depositary and controllership services; international banking services, and purchasing consortiums.
The Bank offers a variety of deposit products and services to our customers through its branches, including Non-interest bearing checking accounts, such as Easy Account, Click Account, Academic Account and Cell Phone Bonus Account; traditional savings accounts; time deposits, and deposits from financial institutions. As of December 31, 2011, it had 43.4 million savings a! ccounts. It offers its customers certain additional services, such as identified deposits and real-time banking transfers. Its loans and advances to customers, consumer credit, corporate and agricultural-sector loans, totaled R$263.5 billion as of December 31, 2011.
The Bank�� loan portfolio consists of short-term loans, vehicle financings and overdraft loans on checking accounts. It also provides revolving credit facilities and traditional term loans. As of December 31, 2011, it had outstanding advances, vehicle financings, consumer loans and revolving credit totaling R$58.0 billion, or 22.0% of its portfolio of loans and advances. Banco Bradesco Financiamentos (Bradesco Financiamentos) offers direct-to-consumer credit and leasing for the acquisition of vehicles and payroll-deductible loans to the public and private sectors 'in Brazil. Supported by BF Promotora de Vendas Ltda. (BF Promotora), and using the Bradesco Financiamentos brand, the Bank operates through its network of correspondents in Brazil, consisting of retailers and dealers selling light vehicles, trucks and motorcycles, to offer financing and/or leasing for vehicles. Through Bradesco Promotora brand, it offer payroll-deductible loans to social security retirees and pensioners, public-sector employees, military personnel and private-sector companies sponsoring plans, and other aggregated products (insurance, capitalization bonds, cards, purchasing consortiums, and others).
As of December 31, 2011, the Bank had 63,156 outstanding real estate loans. As of December 31, 2011, the aggregate outstanding amount of its real estate loans amounted to R$15.9 billion, representing 6% of its portfolio of loans and advances. As of December 31, 2011, it had 69,491 microcredit loans outstanding, totaling R$62.8 million. Its BNDES onlending portfolio totaled R$35.4 billion as of December 31, 2011.
The Bank provides traditional loans for the ongoing needs of its corporate customers. It had R$85.8 billion of outstand! ing other! local commercial loans, accounting for 32.5% of its portfolio of loans and advances as of December 31, 2011. It offers a range of loans to its Brazilian corporate customers, including short-term loans of 29 days or less; guaranteed checking accounts and corporate overdraft loans; discounting trade receivables, promissory notes, checks, credit card and supplier receivables, and a number of other receivables; financing for purchase and sale of goods and services; corporate real estate financing, and investment lines for acquisition of assets and machinery. As of December 31, 2011, the Bank had R$11 billion in outstanding rural loans, representing 4.2% of its portfolio of loans and advances. The Bank conducts its leasing operations through its primary leasing subsidiary, Bradesco Leasing and also through Bradesco Financiamentos.
The Bank offers electronic solutions for receipt and payment management solutions, which include collection and payment services and online resource management enabling its customers to pay suppliers, salaries, and taxes and other levies to governmental or public entities. The global cash management concept provides solutions for multinationals in Brazil and/or domestic companies operating abroad. It manages third-party assets through mutual funds; individual and corporate investment portfolios; pension funds, including assets guaranteeing the technical provisions of Bradesco Vida e Previdencia, and insurance companies, including assets guaranteeing the technical provisions of Bradesco Seguros.
The Bank�� subsidiaries Bradesco S.A. CTVM and Agora S.A. CTVM (or Bradesco Corretora and Agora Corretora, respectively) trade stocks, options, stock lending, public offerings and forwards. They also offer a range of products, such as Brazilian government securities (under the Tesouro Direto program), BM&F trading, investor clubs and investment funds.
The Bank offers a range of international services, such as foreign exchange transactions, foreign tr! ade finan! ce, lines of credit and banking. As of December 31, 2011, its international banking services included New York City, a branch and Bradesco Securities Inc., its subsidiary brokerage firm, or Bradesco Securities United States, and its subsidiary Bradesco North America LLC, or Bradesco North America; London, Bradesco Securities U.K., its subsidiary, or Bradesco Securities U.K.; Cayman Islands, two Bradesco branches and its subsidiary, Cidade Capital Markets Ltd., or Cidade Capital Markets; Argentina, Banco Bradesco Argentina S.A., its subsidiary, or Bradesco Argentina; Banco Bradesco Luxemburgo S.A. its subsidiary, or Bradesco Europe; Japan, Bradesco Services Co. Ltd., its subsidiary, or Bradesco Services Japan; in Hong Kong, its subsidiary Bradesco Trade Services Ltd, or Bradesco Trade, and in Mexico, its subsidiary Ibi Services, Sociedad de Responsabilidad Limitada, or Ibi Mexico.
The Bank�� Brazilian foreign-trade related business consists of export and import finance. In addition to import and export finance, its customers have access to a range of services and foreign exchange products, such as purchasing and selling travelers checks and foreign currency paper money; cross border money transfers; advance payment for exports; accounts abroad in foreign currency; cash holding in other countries; collecting import and export receivables; repaid cards with foreign currency (individual), and structured foreign currency transactions through its foreign units.
Insurance, pension plans and capitalization bonds
The Bank offers insurance products through a number of different entities, which it refers to collectively as Grupo Bradesco Seguros. It offers life, personal accident and random events insurance through its subsidiary Bradesco Vida e Previdencia. It offers health insurance policies through Bradesco Saude and its subsidiaries for small, medium or large companies. It provides automobile, property/casualty and liability products through its subsidiary Bradesco Auto! /RE. It a! lso offers certain automobile, health, and property/casualty insurance products directly through its Website.
Advisors' Opinion:- [By Charles Sizemore]
And speaking of top dividend stocks with high capital gains potential, next on the list of are Brazilian banking groups Banco Bradesco (BBD) and Banco Itau (ITUB) — two monthly dividend stocks you must consider.
Top 5 High Tech Stocks To Own Right Now: Australia and New Zealand Banking Group Ltd (ANZ)
Australia and New Zealand Banking Group Limited (ANZ) provides a range of banking and financial products and services to retail, small business, corporate and institutional clients. The Company conducts its operations in Australia, New Zealand and the Asia Pacific region. It also operates in a range of other countries, including the United Kingdom and the United States. The Company operates on a divisional structure with Australia, International and Institutional Banking (IIB), New Zealand, and Global Wealth and Private Banking. As of September 30, 2012, the Company had 1,337 branches and other points of representation worldwide, excluding automatic teller machines (ATMs). In September 2012, it sold its remaining shareholding in Visa Inc. Advisors' Opinion:- [By Adam Haigh]
Komatsu Ltd. tumbled 8 percent in Tokyo after the world�� second-largest maker of construction equipment cut its full-year profit forecast by 26 percent. Industrial & Commercial Bank of China Ltd. gained 1.4 percent in Hong Kong, pacing an advance among Chinese lenders, after China�� central bank added funds to the financial system for the first time in two weeks. Australia & New Zealand Banking Group Ltd. (ANZ) climbed 1.4 percent to a record in Sydney after posting its highest profit and raising its dividend more than forecast.
Top 5 Bank Companies To Watch In Right Now: Federal National Mortgage Association Fannie Mae (FNMAT.OB)
Federal National Mortgage Association Fannie Mae is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.
The Company obtains funds to support its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��
Single-Family Business
Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business a lso works with its Capital Markets group to facilitate the ! p! urchase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.
The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. Its Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.
Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of owner ship interests, respond to requests for partial releases! of ! sec! urity,! and handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.
Multifamily Mortgage Business
Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this b usiness. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.
The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, m ultifamily mortgage servicing is performed by the l! enders wh! ! o sell th! e mortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.
Capital Markets
Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment con duit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.
Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portfol io. The Company�� Capital Markets group cre! ates sing! le-cla! ss and mu! lti-class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.
Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets group funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.
The Company competes with Freddie Mac, FHA and Ginnie Mae.