Wednesday, December 31, 2014

10 Oil and Gas Stocks to Buy Now

RSS Logo Portfolio Grader Popular Posts: 9 Oil and Gas Stocks to Buy NowBiggest Movers in Energy Stocks Now – CHK KOG CLD PXDHottest Technology Stocks Now – GTAT N WDAY AMAT Recent Posts: Biggest Movers in Healthcare Stocks Now – LCI STJ CYH SIRO Biggest Movers in Financial Stocks Now – ENV KCG MFC CIM Biggest Movers in Technology Stocks Now – CGNX ADVS SYNA HIMX View All Posts 10 Oil and Gas Stocks to Buy Now

This week, 10 oil and gas stocks are improving their overall rating on Portfolio Grader. Each of these rates an “A” (“strong buy”) or “B” overall (“buy”).

Chesapeake Midstream Partners () is making progress this week as its rating of C (“hold”) from last week increases to a B (“buy”) rating this week. Chesapeake Midstream Partners owns, operates, develops, and acquires natural gas, natural gas liquids, and oil gathering systems, as well as other midstream energy assets in the United States. .

Diamondback Energy, Inc. () is progressing from last week’s rating of B (“buy”) as the company improves to an A (“strong buy”) this week. .

PVR Partners, L.P. () improves from a C to a B rating this week. PVR Partners owns and operates a network of natural gas pipelines and processing plants that provide gathering, transportation, compression, processing, dehydration and related services to natural gas producers. The current dividend yield is 2.2%. .

This week, Carrizo Oil & Gas, Inc.’s () ratings are up from a B last week to an A. Carrizo Oil & Gas is engaged in the exploration, development, production and transportation of natural gas and oil, mainly in the United States. .

U.S. Energy Corp. () earns a B this week, jumping up from last week’s grade of C. U. S. Energy explores for oil and natural gas. .

EnLink Midstream LLC () is seeing ratings go up from a B last week to an A this week. At present, the stock has a dividend yield of 2.2%. .

This is a strong week for Frontline (). The company’s rating climbs to B from the previous week’s C. Frontline owns a fleet of very large crude carriers and Suezmax tankers that transport crude oil and oil products between ports. .

Advantage Oil & Gas () gets a higher grade this week, advancing from a C last week to a B. Advantage Oil & Gas is actively engaged in the business of oil and gas exploitation, development, acquisition and production. .

Cross Timbers Royalty’s () ratings are looking better this week, moving up to an A from last week’s B. Cross Timbers Royalty is an express trust in the United States. The stock’s dividend yield is 3%. .

This week, Niska Gas Storage Partners () pushes up from a C to a B rating. Niska Gas Storage is an independent owner and operator of natural gas storage assets in North America. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Sears Reports Wider Loss, May Close More Stores

Sears Holdings Corp. Ahead of Earnings Figures Daniel Acker/Bloomberg via Getty Images HOFFMAN ESTATES, Ill. -- Sears' first-quarter loss widened as the beleaguered retailer's sales declined amid its ongoing struggle to attract shoppers. Sears Holdings, which operates Kmart and its namesake stores, has been cutting costs, reducing inventory and selling assets to return to profit. At the same time, it's shifting away from its focus on running a store network into a member-focused business. The latest results show the heavy challenges that remain. Chairman and CEO Edward Lampert said in a statement Thursday that Sears (SHLD) is seeing progress in its shift to a member-focused business, with first-quarter member sales comprising 74 percent of eligible sales -- the highest level ever. The executive said the biggest drag on sales has occurred in the consumer electronics businesses at its Kmart and Sears stores. The Hoffman Estates, Illinois-based company lost $402 million, or $3.79 a share, for the period ended May 3. That compares with a loss of $279 million, or $2.63 a share, a year ago. Excluding certain items, it lost $2.24 a share. Revenue fell 7 percent to $7.88 billion partly because there were fewer Kmart and Sears stores open. The results also accounted for weaker Sears Canada revenue and the spinoff of Lands' End in April. Sears said last week that it is considering selling its Canadian operations. Sales at domestic Sears stores open at least a year edged up 0.2 percent in the quarter. Excluding the impact of consumer electronics, the figure rose 0.8 percent. At Kmart stores open at least a year, sales declined 2.2 percent. Stripping out the impact of the consumer electronics business and its grocery and household goods category, the metric slipped 0.4 percent at Kmart. Sales at stores open at least a year is a key indicator of a retailer's health. It excludes results from stores recently opened or closed. One bright spot was online sales, which increased 26 percent. Lampert combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But it has faced mounting pressure from nimbler rivals, including Walmart Stores (WMT) and Home Depot (HD). Sears caters to low to middle income shoppers, and is wrestling with a slow economic recovery that hasn't benefited all Americans equally. Many of its customers are juggling stagnant wages with higher costs of living like health care and food. Sears has closed about 80 stores year to date and said it may close more during the rest of the year. The company's stock fell $2.66, or 7.3 percent, to $33.90 in early premarket trading more than three hours before the market open.

Tuesday, December 30, 2014

3 Stocks Under $10 Moving Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Hated Earnings Stocks You Should Love

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Rocket Stocks to Buy for May Gains

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Gastar Exploration

Gastar Exploration (GST), an independent energy company, is engaged in the exploration, development and production of oil, condensate, natural gas and natural gas liquids in the U.S. This stock closed up 5.4% to $6.62 in Tuesday's trading session.

Tuesday's Range: $6.30-$6.82

52-Week Range: $2.17-$7.13

Tuesday's Volume: 1.26 million

Three-Month Average Volume: 1.01 million

From a technical perspective, GST spiked sharply higher here right above its 50-day moving average of $6.15 with above-average volume. This move is quickly pushing shares of GST within range of triggering a major breakout trade. That trade will hit if GST manages to take out some near-term overhead resistance levels at $6.85 to its 52-week high at $7.13 with high volume.

Traders should now look for long-biased trades in GST as long as it's trending above its 50-day at $6.15 or above more near-term support at $5.93 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.01 million shares. If that breakout hits soon, then GST will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $8 to $9.

Fortuna Silver Mines

Fortuna Silver Mines (FSM) explores for, extracts and processes silver and gold properties in Latin America. This stock closed up 6.9% to $5.15 in Tuesday's trading session.

Tuesday's Range: $3.91-$4.15

52-Week Range: $2.56-$4.79

Tuesday's Volume: 206,000

Three-Month Average Volume: 279,558

From a technical perspective, FSM spiked sharply higher here back above its 50-day moving average of $4.06 with decent upside volume. This move pushed shares of FSM into breakout territory, since the stock took out some near-term overhead resistance at $4.08. Market players should now look for a continuation move higher in the short-term if FSM manages to take out Tuesday's intraday high of $4.15 with strong volume.

Traders should now look for long-biased trades in FSM as long as it's trending above Tuesday's low of $3.91 or above its 200-day at $3.72 and then once it sustains a move or close above Tuesday's intraday high of $4.15 with volume that hits near or above 279,558 shares. If that move starts soon, then FSM will set up to re-test or possibly take out its 52-week high at $4.79.

BioDelivery Sciences International

BioDelivery Sciences International (BDSI), a specialty pharmaceutical company, develops and commercializes therapeutics in the areas of pain management and oncology supportive care. This stock closed up 4.2% to $8.85 in Tuesday's trading session.

Tuesday's Range: $8.46-$8.95

52-Week Range: $3.86-$10.20

Tuesday's Volume: 429,000

Three-Month Average Volume: 570,250

From a technical perspective, BDSI spiked sharply higher here right off its 50-day moving average of $8.57 with decent upside volume. This move briefly pushed shares of BDSI into breakout territory, since the stock flirted with some near-term overhead resistance levels at $8.84 to $8.87. Shares of BDSI tagged an intraday high of $8.95, before the stock closed at $8.85. Market players should now look for a continuation move to the upside in the short-term if BDSI manage to take out Tuesday's high of $8.95 with strong upside volume flows.

Traders should now look for long-biased trades in BDSI as long as it's trending above Tuesday's low of $8.45 or above some more near-term support at $8.12 and then once it sustains a move or close above $8.95 with volume that hits near or above 570,250 shares. If that move gets started soon, then BDSI will set up to re-test or possibly take out its next major overhead resistance levels $9.50 to its 52-week high at $10.20.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.


RELATED LINKS:



>>5 Stocks Poised for Breakouts



>>5 Car Stocks to Trade for Gains in May



>>3 Stocks Spiking on Big Volume

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.


Monday, December 29, 2014

Weekly CFO Sells Highlight

According to GuruFocus Insider Data, the recent CFO sales were: Chicago Bridge and Iron Company, Covidien PLC, Carnival PLC, and Google Inc.

Chicago Bridge and Iron Company (CBI): Executive Vice President and CFO Ronald A Ballschmiede sold 18,471 Shares

On 02/24/2014, Executive Vice President and CFO Ronald A Ballschmiede sold 18,471 shares at an average price of $80.38. The price of the stock has increased by 5.82% since. Chicago Bridge and Iron Company has a market cap of $9.13 billion and its shares were traded at around $85.06. The company has a P/E ratio of 20.60 and P/S ratio of 0.82 with a dividend yield of 0.26%. Over the past 10 years, Chicago Bridge and Iron Company had an annual average earnings growth of 24.30%. GuruFocus rated Chicago Bridge & Iron Company the business predictability rank of 2.5-star.

Chicago Bridge and Iron Company announced their 2013 fourth quarter results with revenues of $3 billion and gross profit of $339.2 million; the net income was $196.78 million. The 2013 total revenue was $11.1 billion, a 1.02% increase from the 2012 total revenue. The 2013 gross profit was $1.2 billion, a 72% increase from the 2012 gross profit. The 2013 net income was $454.12 million.

On 03/03/2014, President and CEO Philip K Asherman sold 75,000 shares at an average price of $82.81. The price of the stock has increased by 2.71% since. On 03/27/2014, Director Marsha C Williams sold 6,500 shares at an average price of $82.99. The price of the stock has increased by 2.49% since. On 03/26/2014, Executive Vice President Edgar C Ray sold 102,068 shares at an average price of $84.36. The price of the stock has increased by 0.83% since.

Covidien PLC (COV): EVP and CFO Charles J Dockendorff sold 90,730 Shares

On 03/28/2014, EVP and CFO Charles J Dockendorff sold 90,730 shares at an average price of $72.5. Covidien PLC has a market cap of $32.68 billion and its shares were traded at around $72.50. The company has a P/E ratio of 21.10 and P/S ratio of 3.28 with a dividend yield of 1.60%. Over the past 10 years, Covidien Plc had an annual average earnings growth of 6.60%.

Covidien PLC announced their 2013 fourth quarter results with revenues of $2.6 billion and gross profit of $1.56 billion; the net income was $398 million. The 2013 total revenue was $10.2 billion, a 4% increase from the 2012 total revenue. The 2013 gross profit was $6.1 billion, a 3% increase from the 2012 gross profit. The 2013 net income was $1.7 billion.

On 02/28/2014, President and Chief Executive Jose E Almeida sold 50,000 shares at an average price of $72. The price of the stock has increased by 0.69% since. On 02/18/2014, Vice President Coleman N Lannum Iii sold 3,200 shares at an average price of $71.4. The price of the stock has increased by 1.54% since. On 02/13/2014, Vice President and Controller Richard G Jr. Brown sold 4,000 shares at an average price of $71. The price of the stock has increased by 2.11% since.

Carnival PLC (CUK): CFO David Bernstein sold 11,673 Shares

On 01/21/2014, CFO David Bernstein sold 11,673 shares at an average price of $40.80. The price of the stock has decreased by 6.94% since. Carnival PLC has a market cap of $30.68 billion and its shares were traded at around $37.97. The company has a P/E ratio of 27.40 and P/S ratio of 1.91 with a dividend yield of 2.63%. Over the past 10 years, Carnival Plc had an annual average earnings growth of 0.30%.

Carnival PLC announced their 2013 fourth quarter results with revenues of $3.66 billion and gross profit of $1.04 billion; the net income was $66 million. The 2013 total revenue of Carnival PLC was $15.46 billion and the gross profit was $4.8 billion; the net income was $1.08 billion.

On 01/21/2014, CEO Costa Crociere Michael Olaf Thamm sold 4,346 shares at an average price of $42.61. The price of the stock has decreased by 10.89% since. On 03/24/2014, See remarks 1994 B Shares Lp Ma sold 304,954 at an average price of $40.09. The price of the stock has decreased by 5.29% since. On 03/24/2014, Chairman of the Board and 10% Owner Micky Meir Arison sold 525,348 shares at an average price of $40.09. The price of the stock has decreased by 5.29% since.

Google Inc (GOOG): SVP and CFO Patrick Pichette sold 742 Shares

On 03/13/2014, SVP and CFO Patrick Pichette sold 742 shares at an average price of $1208.25. The price of the stock has decreased by 7.29% since. Google Inc has a market cap of $376.43 billion and its shares were traded at around $1120.15. The company has a P/E ratio of 29.10 and P/S ratio of 6.35. Over the past 10 years, Google Inc had an annual average earnings growth of 32.50%. GuruFocus rated Google Inc the business predictability rank of 2.5-star.

Google Inc announced their 2013 fourth quarter results with revenues of $16.86 billion and gross profit of $9.42 billion; the net income was $3.38 billion. The 2013 total revenue was $59.8 billion, a 19% increase from the 2012 total revenue. The 2013 gross profit was $33.97 billion, a 15% increase from the 2012 gross profit. The 2013 net income was $12.92 billion.

On 03/14/2014, CEO and 10% Owner Lawrence Page sold 16,670 shares at an average price of $1179.37. The price of the stock has decreased by 5.02% since. On 03/25/2014, Executive Chairman of Board Eric E Schmidt sold 26,204 shares at an average price of $1159.28. The price of the stock has decreased by 3.38% since.

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Sunday, December 28, 2014

The Week Ahead: Souring Sentiment Will Help Stocks

Last Monday's loss of more than 1% in the S&P 500 and the 2014 new daily closing low got the market's attention but the bulls quickly took over as stocks closed the week well above the worst levels.

The financial media continues to parade a host of bullish analysts ignoring that a few had been predicting horrible crashes over the past six months. The individual investor has become a bit more cautious as according to AAII, just 38.9% are now bullish as opposed to 55% the day after Christmas. It would appear that most have moved to the correction camp as the number of bears is still low at 21.5%.

Though this reading makes a correction less likely over the short term, it is still too high. At last August's lows, when the Spyder Trust (SPY) was at $163, only 29% bullish. Friday's weaker than expected Consumer Sentiment reading from the University of Michigan may help to dampen some investor bullishness.

The poor monthly jobs report was quickly discounted by most economists but if we get another weak jobs report in February, it would be harder to ignore. Friday's Housing Starts showed a decline of 9.8% in December but it will probably take several disappointing economic reports to dampen the high level of bullishness.

chart
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One of the more surprising developments of the past month or so has been the strong performance by some of the European country ETFs. Leading the pack is Spain as the iShares MSCI Spain (EWP) is up about 10% since the December 18 taper lows but did give up some ground last week.

This is quite a bit better than the 9.2% gain of the iShares MSCI Italy (EWI) or the 8.9% rise in the iShares MSCI Austria (EWO). All three have done significantly better than the Spyder Trust (SPY), which is up 3.6%. The French and German country ETFs have not yet moved above their late 2013 highs.

As I have been reporting since November, there has been continued improvement in the economic data from the Eurozone. Manufacturing is an important part of these developed economies and the chart of the Eurozone Purchasing Mangers Output Index shows that it has moved sharply into positive territory.

chart
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From a historical perspective, changes in this trend are rarely reversed, suggesting that these economies will improve further in 2014. According to Markit their Eurozone PMI hit a 2-1/2-year high last month, with Spain's PMI showing the sharpest increase. On Thursday, we get new data for both the US and Eurozone.

Last Tuesday's Retail Sales data was also a pleasant surprise as it was stronger than expected in December. This points to a strong 4th quarter GDP reading, and the chart shows a strong uptrend (line b) since the 2008 highs, line a, were overcome.

With Monday's Martin Luther King holiday, we have a shortened trading week and investors will need to wait until Thursday for the next round of economic data.

In addition to the jobless claims on Thursday, we get the PMI Manufacturing Index, Existing Home Sales, and Leading Indicators. In last week's column, I focused on the LEI and provided a long-term chart.

chart
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The bond market is typically focused on the economic data and the technical improvement in the iShares 20+ Year Treasury Bond ETF (TLT) in 2014, is hinting of lower long-term rates. On the chart, I have drawn the quarterly pivot levels, which were featured in Friday's column.

The green and red arrows note the several times over the past year when TLT had a weekly close above or below its quarterly pivot. For example, in the 1st quarter, TLT stayed below the pivot but opened the second quarter above its pivot (point 1).

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The rally in TLT peaked in early May, and at the end of the month, it closed back below its pivot (point 2). This coincided with the completion of the reverse head-and-shoulders bottom formation in the 10-year T-note yields, which also signaled that rates were moving higher.

After the first week of trading in 2014, TLT closed back above its pivot, line 5. The breakout in the OBV above its resistance at line a is also a positive technical sign for TLT. The OBV has been forming higher lows, line b, since the August lows.

The ETFs that track shorter-term yields do not show the same bottom formations and TLT has strong resistance at $108.74. It is possible that the rise in TLT is warning that we may see further weak economic reports in the weeks ahead but if it triggers a deeper market correction, it should be a better buying opportunity.

What to Watch
Those who focus on the fact that the S&P 500 is pretty much at the same level it was at the close of 2013 are missing the big picture as there has been plenty of movement amongst the sectors. The Semiconductor Holders (SMH) is up almost 1% already in 2014 while the Sector Select Energy (XLE) is down 2.7%. Even worse is the S&P Retail Index, which is down over 5%.

The action was choppy last week but there are other industry groups, like the homebuilders, that need only a couple of strong consecutive closes to complete their corrective patterns. We are in the thick of earnings and the market has not been forgiving as it is punishing some stocks that reported better than expected earnings.

Even though the market dropped in late trading, there was some improvement in the technical market outlook last week. This suggests that the major averages could still push to new highs after the current period of consolidation is completed.

The majority of market-tracking and sector ETFs that I follow are positive as they are trading well above their quarterly pivots. A full table was published Friday (1st Quarter ETF Levels to Watch), and it would take a weekly close below their quarterly pivots to weaken their outlook. The pivot resistance levels from the table can be used for upside targets.

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Even though I think the short-term outlook has improved, one has to be a very selective buyer as there are some individual stocks that have too high a risk at current levels. The five-day moving average of the S&P 500 stocks above their 50-day MAs is at 65.36%, which is quite close to the mean at 64.92%.

Top Portfolio Products: SAC Capital Hedge Fund Closes With a Bang

This week, the disgraced SAC Capital Advisors hedge fund shut down after posting 20% gains. New products introduced this week included three ETFs from First Trust and nine new funds from BMO. A social impact partnership among Bank of America Merrill Lynch, New York state and Social Finance Inc. closed.

In addition, Flexible Plan Investments announced that its second Principled Investing Give Back distribution has increased the number of organizations to which it gives by more than 20%.

Here are the latest developments of interest to advisors:

1) SAC Capital Advisors Hedge Fund Gains 20%, Shuts Down

The hedge fund run by Steven Cohen, SAC Capital Advisors, ended its life with gains of more than 20% for the year, according to the figures reported to investors on Dec. 30. That's despite the firm's guilty plea to insider trading in November and its bowing to a penalty of $1.2 billion.

While Cohen himself never faced criminal charges, one of the conditions of the plea deal was for him to stop managing money for outsiders and wind down the hedge fund. SAC Capital has already settled with the SEC for $616 million. Cohen still faces an SEC civil action that charges him with failing to properly supervise his employees.

As the firm moves back to family office status, it has also divested itself of SAC Re, its reinsurance group; in December it was announced that the unit would be bought by Hamilton Reinsurance Group.

2) First Trust Announces Launch of Three ETFs

First Trust Advisors L.P. has announced that it will launch three ETFs, the First Trust High Income ETF (FTHI), the First Trust Low Beta Income ETF (FTLB) and the First Trust Nasdaq Rising Dividend Achievers ETF (RDVY).

FTHI seeks to provide current income, with a secondary investment objective of capital appreciation, while FTLB seeks to provide current income. Both will invest in large-cap equities listed on U.S. exchanges, favoring high-dividend-paying common stocks. They will also use an options strategy in which they will write (sell) U.S. exchange-traded covered call options on the S&P 500 Index seeking to generate additional cash flow in premiums on the options that may be distributed to shareholders on a monthly basis. FTLB may use a portion of the options premiums to buy U.S. exchange-traded put options on the S&P 500 Index. This hedging strategy will seek to provide this fund with downside protection and reduce the fund’s price sensitivity to declining markets.

RDVY seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Nasdaq US Rising Dividend Achievers Index. The index is made up of 50 companies with a history of raising their dividends and that exhibit the characteristics to potentially continue doing so in the future.

Rob Guttschow and John Gambla are senior portfolio managers of FTHI and FTLB. All three are expected to begin trading Tuesday.

3) New York, Merrill, Social Finance to Fund Job Services for ex-Prisoners

Bank of America Merrill Lynch has partnered with New York State and Social Finance Inc. to create a social impact partnership that will use $13.5 million raised from private and institutional investors to fund a 5½-year program focused on comprehensive reentry employment services to 2,000 formerly incarcerated individuals in New York City and Rochester, N.Y.

The "pay for success" program model provides funding (for such programs, the funding is often in the form of fixed income or private equity offerings, and generically termed “social impact bonds”) for selected nonprofits with a successful track record, and enables governments to save money and pay only for positive results. If a pay-for-success program meets identified success metrics, private and institutional investors have the potential to earn positive financial returns.

This particular social impact investment opportunity was available only to qualified high-net-worth and institutional clients of Merrill Lynch and U.S. Trust, as well as other investors identified by Social Finance. The proceeds of the project will finance programs delivered by the Center for Employment Opportunities (CEO), a provider of training and employment service programs to formerly incarcerated individuals in New York. 4) Flexible Plan's Principled Investing Give Back Program Delivers 20% Increase

Flexible Plan Investments, Ltd. has announced that the second distribution of Principled Investing Give Back payments have been made to 86 religious organizations elected through Faith Focused Investing and 10 charities elected through For A Better World on behalf of clients invested in these strategies. This is more than a 20% increase in organizations from the first year.

Launched in 2011 and with its second year of distributions, Flexible Plan's Give Back program provides clients who invest in either strategy the option to direct FPI to pay out, in the investor's name or anonymously, 10% of its net advisory fees collected to a client-designated charity, church or religious institution. Principled investing, also known as socially responsible investing (SRI), has become an increasingly popular investment option. Flexible Plan, with its For A Better World and Faith Focused Investing strategies, adds the "pay it forward" concept and give-back program. Clients can use active management to seek to achieve their investment goals without compromising their principles while giving back to the organization of their choosing.

5) BMO Announces Nine Additional Funds

BMO Global Asset Management has announced the launch of nine funds. Four of the new funds seek to provide capital appreciation while mitigating risk; the other five are target date funds.

They are: BMO Small-Cap Core Fund (BSCNX); BMO Pyrford Global Equity Fund (BGENX); BMO Multi-Asset Income Fund (BMANX); BMO Global Natural Resources Fund (BNRYX); BMO Target Retirement 2015 Fund (BRTDX); BMO Target Retirement 2025 Fund (BRTFX); BMO Target Retirement 2035 Fund (BRTKX); BMO Target Retirement 2045 Fund (BRTPX); and BMO Target Retirement 2055 Fund (BRTSX).

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Read the Dec. 19 Portfolio Products Roundup at ThinkAdvisor.

Saturday, December 27, 2014

Treasurys hold gains after TIPS auction

NEW YORK (MarketWatch) — Treasury prices gained on Thursday after a strong auction of $13 billion in inflation-protected securities and a mixed round of economic data.

The benchmark 10-year note (10_YEAR) yield, which rises as prices fall, traded down 1.5 basis point on the day at 2.789%, after climbing as high as 2.841% in morning trade.

The 5-year note (5_YEAR) yield fell 1 basis point to 1.370%, and the 30-year bond (30_YEAR)  yield traded down 2.5 basis points at 3.890%.

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Ten-year Treasury inflation-protected securities, or TIPS, yielded 0.574%, down about 3 basis points on the day, after a sale of the debt, according to Tradeweb. TIPS, unlike nominal Treasurys, protect against inflation by increasing principal alongside rising costs, though the sector has underperformed this year as inflation remains muted.

However, the auction saw strong demand Thursday, with the debt selling at 0.560%, well below where the broader market was trading at the time. The ratio of bids to the amount of debt sold was 2.59 times, higher than the average of 2.55 times in the last six sales. Direct bidders, which include domestic money managers, purchased a relatively large share of the debt, taking down 21.5% of the notes, compared to a recent average of 8.1%. Indirect bidders, including foreign central banks that often buy real yields, took down another 46.7%, compared to the recent average of 53.5%.

The recent move higher in TIPS yields helped set up the auction for a strong result, according to Gemma Wright-Casparius, senior portfolio manager at Vanguard Inflation Protected Securities Funds. "Forward real yields have normalized toward pre-crisis levels. Much of that has to do with the positive slope of the yield curve," she said.

Nomura Securities gave the auction a grade of A+.

Treasurys had bounced around in morning trading as mixed economic data were released. Weekly jobless claims, a gauge of people applying for unemployment benefits, dropped by the most in nearly three months, beating Wall Street expectations. Claims fell by 21,000 to a seasonally adjusted rate of 323,000 last week. However, the Philadelphia Fed's manufacturing index slowed to 6.5 in November from 19.8 in October, missing economists' expectations of 14.5.

Treasurys weakened after the report on jobless claims but recovered after the Philly Fed data. Investors also digested the Markit manufacturing PMI index, which rose to 54.3 in November from 51.8 in October, as well as a 0.2% drop in wholesale prices.

Click to Play China's baby bump to open investment opportunities

The rising middle class in China is welcoming the government's easing of the one-child policy. Shao Yu of Oriental Securities tells the WSJ's Wei Gu what sectors of the economy will get a boost from the potential baby boomlet.

The yield differential between shorter-term and longer-term Treasurys has widened in recent days in what's known as a steepening yield curve. The gap between the 5-year note yield and the 10-year note yield hit its highest level in over two years on Wednesday at 1.43 percentage points, although it retreated from those highs Thursday, according to Tradeweb.

The yield curve steepened Wednesday after minutes from the Federal Open Market Committee's meeting in October disclosed discussion among Fed officials about how to shift the market's focus from its asset purchase program to short-term rates, which are likely to remain low well into the future. "The markets were setting up for thinking that [the Fed] will start tapering sooner, but they'll push out the guidance as low and long as possible to pull the markets back from the ledge," said Michael Collins, senior investment officer at Prudential Fixed Income.

Summers Take Away

After Larry Summers Fed chairman consideration withdrawal announcement, global markets rallied and, MoneyShow's Jim Jubak, also of Jubak's Picks thinks there is a lesson to be learned from this.

A losing team changes coaches and suddenly starts to win. A company replaces its CEO and its stock suddenly moves up. Lawrence Summers withdraws his name from consideration to replace Ben Bernanke as chairman of the Federal Reserve in January and global financial markets rally.

The Standard & Poor's 500 stock index ended the day yesterday up 0.57%. The German DAX closed up 1.22% and Hong Kong's Hang Seng finished up 1.47%. The 10-year US Treasury traded to yield 2.86%.

There's certainly an element of personal judgment in these moves. Summers has a reputation for intellectual brilliance and arrogance that led to well-reasoned worries that he would not be able to build consensus at the Fed.

But mostly, the markets' move upwards is relief that someone who had come—rightly or wrongly—to embody the possibility that the Fed would move aggressively to normalize its balance sheet and interest rates, won't be in charge of the US central bank.

Summers worried global financial markets, not just because he might have moved more quickly to end the Fed's buying of Treasuries and mortgage-backed securities than Bernanke would have if he had remained in charge of the Fed, but also because Summers might have pushed to raise short-term interest rates, now at 0% to 0.25%, to something like a more normal 1%.

Global financial markets may not like the idea that the Fed is about to start tapering off its buying program. But the markets are really, really afraid that the Fed won't hold short-term rates at their current extraordinarily low levels until 2015 as it has promised.

The take away lesson from the markets' reaction to the Summers withdrawal is how close to the surface the markets' worry about an early Fed tightening is. The real threat to the markets, this reaction says, is not tomorrow's Fed decision to taper or not to taper, but an easy tip in market psychology is to worry about tightening—even on very little or no objective evidence that the Fed is about to move in that direction any time soon.

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 did not own shares of any company mentioned in this post as of the end of June. For a complete list of the fund's holdings as of the end of June see the fund's portfolio here.

Thursday, December 25, 2014

Tiffany's Gem of a Quarter

The following video is from Tuesday's Investor Beat, in which host Chris Hill and analysts Jason Moser and Matt Koppenheffer dissect the hardest-hitting investing stories of the day.

Shares of Tiffany shine after the jeweler reports higher-than-expected quarterly earnings. Same-store sales were up 20% in Japan and 8% overall. Shares of the luxury retailer hit an all-time high on the news. Should investors be excited? In this installment of Investor Beat, our analysts discuss this story, as well as four stocks that made big moves on Tuesday's market and two stocks they will be watching with great interest this week.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

How to Vet Your Investing Ideas

It's easy for an investor to fall for a good story. Strong headlines, new technologies, burgeoning industries -- these can easily lead to great stock ideas. But they can also lead to big losers. So how can an individual investor buy into the good ones and dodge the losers? That's where "due diligence" comes in. Study the company, read SEC filings, learn about management -- it's not rocket science, but it can be daunting and it can take some time.

One common shortcut is to see what the "smart people" are saying. Just be sure that the smart people you look to have your best interests in mind. Talking heads on TV are not working for you. Brokers usually make money on frequent trades, which is not in your interest. Even financial advisors often have the wrong incentives in place, and can easily steer you wrong. If you're trusting someone else to vet your ideas, you want to make sure that they work only for you, and that their compensation is aligned with your success.

If that's the case, it can help to begin by seeing what they have to say. Then it's on you to follow up and make your own decisions.

Everyone knows Amazon.com is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Wednesday, December 24, 2014

U.S. Economic Growth at Its Fastest in a Decade

GDP Paul Sancya/APFord F-150s move along the production line in Dearborn, Michigan. WASHINGTON -- The U.S. economy grew at a sizzling 5 percent annual rate in the July-September period, the fastest in more than a decade, on the strength of higher consumer spending and business investment. The resurgence in growth last quarter provided the latest evidence that the U.S. economy is steadily strengthening and outshining most others around the world. When the U.S. stock market opened for trading, the Dow Jones industrial average traded above 18,000 for the first time. In midmorning trading, the Dow was up 75 points to 18,035. In its report Tuesday, the Commerce Department sharply revised up its estimate of third-quarter growth from a previous figure of 3.9 percent. Much of the increase came from consumer spending on health care and business spending on structures and computer software. Consumer Spending, Income Also Up It was the fastest quarterly growth since the summer of 2003, and it followed a 4.6 percent annual growth rate in the April-June quarter. The government separately reported Tuesday that consumer spending rose at the fastest pace in three months in November, while income posted the best gain in five months. Both were encouraging signs for growth. Most analysts think the economy is slowing to an annual rate of around 2.5 percent in the current October-December quarter. And they foresee growth around 3 percent in 2015. That would still be the strongest expansion since the economy grew 3.3 percent in 2005, two years before the Great Recession began. The 2007-2009 downturn, the worst since the 1930s, cost millions of people their jobs. Since then, the economy has struggled to regain full health. Even after the recession officially ended in June 2009, the economy has turned in tepid growth averaging 2.2 percent annually. Strong Jobs Report But many economists think growth is set to accelerate as more businesses have grown confident about hiring. The country is on track to have its healthiest year for job growth since 1999. In November, employers added 321,000 jobs, the sharpest one-month increase in three years. With more people working and having money to spend, solid gains are expected in consumer spending, which accounts for about 70 percent of the economy. For the third quarter, consumer spending grew at a 3.2 percent rate, the best showing this year and a full percentage point higher than the estimate the government made a month ago. That upward revision was driven by higher spending on health care. Business investment spending rose at a 7.2 percent annual rate, 2.1 percentage points more than the government's previous estimate. Much of the new strength came from investment in structures and computer software. The estimate released Tuesday was the government's third and final look at third-quarter growth in the gross domestic product -- the value of all goods and services produced in the United States. Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. More from The Associated Press
•All They Want for Christmas Is a Drone •Natural Gas Price Down 29% in a Month •Shippers Absolutely, Positively Trying to Get Those Gifts Out

Tuesday, December 23, 2014

Fannie Mae, Freddie Mac to Send Billions More to Treasury

Sherrod Brown Says Freddie Mac Revamp Won't Pass This Year Andrew Harrer/Bloomberg via Getty Images Government-controlled mortgage finance firms Fannie Mae and Freddie Mac said Thursday they will pay U.S. taxpayers $6.8 billion after reporting a third-quarter profits that modestly rose from the second quarter. Once they have made the latest payments in December, the two companies will have returned $225.5 billion to taxpayers in exchange for about $188 billion in taxpayer aid they received after being placed under the government's wing at the height of the financial crisis. Fannie Mae, the bigger of the two and the nation's largest source of mortgage funds, earned a net income of $3.9 billion in the third quarter, up from $3.7 billion in the second quarter. The increase was driven by higher net interest income, an increasing portion of which is derived from guaranty fees, and about $1.2 billion in settlement payments from Goldman Sachs (GS) and HSBC (HSBC) related to Fannie's investments in private-label mortgage securities sold by the two banks before the credit crisis. Slowing home-price appreciation was a drag on Fannie's profit growth. Based on its own home price index, Fannie estimated that U.S. home prices increased just 1.2 percent in the third quarter and are up just 5.3 percent in the year to date, after gaining 8.2 percent in 2013. On a year-over-year basis, Fannie's net income was down from $8.7 billion a year earlier. Freddie Mac, meanwhile, generated net income of $2.1 billion versus $1.4 billion in the second quarter. Like Fannie, Freddie also posted higher net interest income and benefited from $1.2 billion in legal settlements in the same litigation, which had been brought by the U.S. Federal Housing Finance Agency, which regulates both companies. Freddie's profit fell dramatically from a year earlier, when one-time tax benefits drove its net income to nearly $30.5 billion. Neither Fannie Mae or Freddie Mac lends money directly to home buyers. Rather, the two companies buy mortgages from lenders and repackage them into securities they sell to investors with a guarantee. Their businesses collapsed during the financial crisis and the two were seized by the U.S. government in 2008. Under their bailout terms, the two firms must turn their profits over to the Treasury as dividends on the government's controlling stake. Fannie Mae's dividend to the U.S. Treasury was larger than the $3.7 billion it paid in the prior quarter, while Freddie's was up from $1.9 billion. Sluggish Housing Market Impact Those dividends swelled in early 2014 and late 2013 due to one-off events like legal settlements. However, in a sign that the sluggish housing market is affecting its bottom line, Fannie Mae reported credit-related income of $836 million, the lowest since having negative credit-related income in the third quarter of 2012. This was "due primarily to a slower rate of home price appreciation compared with the second quarter of 2014," Fannie Mae said in a statement. Private shareholders in Fannie Mae and Freddie Mac have sued the government over the dividend policy, claiming Washington is expropriating the value of their preferred shares. A federal court dismissed a suit by one of the largest shareholders in September, but other legal challenges could drag on for years. Fannie Mae and Freddie Mac have been a minor cash cow for the Treasury in recent years, paying back all their bailout funds and more. But their obligation to turn over all their profits to the Treasury has helped keep them undercapitalized, analysts say, and a severe downturn in the housing market could eventually lead them to require further bailouts. The Obama administration has argued for replacing the firms with a new entity, but lawmakers might not address housing reform even after Tuesday's congressional elections, in which Republicans seized control of the Senate.

Sunday, December 21, 2014

BofA, CBS Lead 11 Dividend Stocks Increasing Payouts

Twitter Logo RSS Logo Jim Woods Popular Posts: Riding the Rails With 10 Dividend Stocks Increasing Payouts3 Chinese Stocks That Will Be Better Than AlibabaElectric Cars and the 3 Biggest Speed Bumps for Tesla Recent Posts: BofA, CBS Lead 11 Dividend Stocks Increasing Payouts Riding the Rails With 10 Dividend Stocks Increasing Payouts Electric Cars and the 3 Biggest Speed Bumps for Tesla View All Posts BofA, CBS Lead 11 Dividend Stocks Increasing Payouts

This week's bevy of dividend stocks increasing payouts contained two very familiar names.

IncreasingDividends BofA, CBS Lead 11 Dividend Stocks Increasing PayoutsStalwart banking icon Bank of America (BAC) was the really big boy on the block boosting its payout, and it did so in grand fashion on Wednesday. The increased dividend has been long-awaited, especially considering the extreme circumstances surrounding bank stocks since the 2008 financial crisis and subsequent taxpayer bailout.

All told, 11 dividend stocks increased payouts this week (yield as of 8/8):

Bank of America raised its quarterly dividend 400% to 5 cents per share from 1 cent. BofA's new dividend will be paid on Sept. 26 to shareholders of record as of Sept. 5. The stock goes ex-dividend Sept. 3.
BAC Dividend Yield: 1.32%.

Financial services technology and operations firm Broadridge Financial Solutions (BR) reconfigured its quarterly dividend by 28.6%, upping the payout to 27 cents per share from 21 cents. The new dividend will be paid on Oct. 1 to shareholders of record as of Sept. 15. The stock will go ex-dividend on Sept. 11.
BR Dividend Yield: 2.69%

Construction and industrial materials maker Carlisle Cos. (CSL) constructed a 13.6% increase in its quarterly payout, increasing the dividend to 25 cents per share. The new dividend payment will be sent on Sept. 1 to shareholders of record of Aug. 18. Shares go ex-dividend Aug. 14.
CSL Dividend Yield: 1.23%

The other iconic firm that boosted its dividend signal this week was CBS Corp. (CBS). The company, which owns the most-watched U.S. television network, increased its quarterly dividend 25% to 15 cents per share from 12 cents. The enhanced dividend is payable Oct. 1 to shareholders of record on Sept. 10. In addition to the increased dividend, CBS also doubled its share buyback program from $3 billion to $6 billion.
CBS Dividend Yield: 1.01%

Cogent Communication (CCOI) is a provider of Internet access services, and this week the company increased the download data on its dividend by 76.5%. The new dividend of 30 cents per share vs. the prior 17 cents will be paid on Sept. 19 to shareholders of record as of Aug. 29. The stock will go ex-dividend Aug. 27.
CCOI Dividend Yield: 3.54%

Financial products firm Manulife Financial Corp. (MFC) restated its quarterly dividend and added another 19.2% to its payout. The new dividend of 15.5 cents vs. the prior 13 cents is slated form payment on Sept. 19 to shareholders of record as of Aug. 19. The stock will go ex-dividend on Aug. 15.
MFC Dividend Yield: 3.12%

Frozen food and specialty products maker Pinnacle Foods (PF) cooked up an 11.9% boost in its quarterly dividend to 23.5 cents per shares from 21 cents. The new dividend is payable Oct. 7 to shareholders at the dinner table by Aug. 29. The stock will goes ex-dividend Aug. 27.
PF Dividend Yield: 3.06%

Russian mobile and online payment services company Qiwi (QIWI) has the misfortune of being caught up in geopolitical tensions. Yet despite the country's government stirring up the bellicosity in Ukraine, the company decided to boost up its dividend payment by 50%. The new dividend of 48 cents per share vs. the previous 32 cents is slated to be sent Aug. 19 to shareholders of record as of Aug. 18. The stock will go ex-dividend on Aug. 14.
QIWI Dividend Yield: 3.67%

Midstream energy services firm Semgroup Corp. (SEMG) turned up the energy on its payout, increasing its quarterly dividend to 27 cents per share from 24 cents. The new dividend represents a 12.5% increase, which will be paid out on Aug. 28 to shareholders of record as of Aug. 18. The stock's ex-dividend date is Aug. 14.
SEMG Dividend Yield: 1.37%

While CBS was the behemoth broadcaster boosting dividends this week, the sector also saw diversified TV company Sinclair Broadcast Group (SBGI) raise its quarterly payout. The 10% dividend increase to 16.5 cents from 15 cents is scheduled for Sept. 15 to shareholders of record as of Aug. 29. The stock will go ex-dividend on Aug. 27.
SBGI Dividend Yield: 2.05%

Natural gas pipeline company Spectra Energy Partners, LP (SEP) upped its quarterly dividend 1.8% to 56.625 cents per share from 55.625. The new payout will be made Aug. 29 to shareholders of record as of Aug. 18. The LP's ex-dividend date is Aug. 14.
SEP Dividend Yield: 4.24%

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

Saturday, December 20, 2014

Top Portfolio Products: NASDAQ OMX Adds Two ETF Listings

New products and changes introduced over the last week include an ETF from Calamos and ETNs from Barclays listed by NASDAQ OMX, the adoption of three Cushing funds by MainStay Investments, the introduction of a practice acquisition group by Pensionmark Retirement Group and a fixed target annuity from Guardian.

Also, Franklin Templeton introduced preferred pricing for Canadian investors, HuaAn Asset Management Co. Ltd. launched an ETF in China based on the DAX index and Envestnet completed the acquisition of Klein Decisions Inc.

Here are the latest developments of interest to advisors:

1) NASDAQ OMX Lists Calamos ETF, Barclays ETNs

NASDAQ OMX announced that it has listed the Calamos Focused Growth ETF (CFGE) and Barclays Inverse U.S. Treasury Composite ETNs (TAPR).

CFGE features a portfolio consisting of stocks in which Calamos has the greatest confidence of sustained growth. The portfolio selection process stresses company fundamentals, including a global presence, strong revenue and earnings growth, solid returns on invested capital and lower debt-to-capital levels. The fund also utilizes active management, blending investment themes with fundamental research.

The TAPR ETNs are designed to help investors position for rising U.S. dollar Treasury yields by tracking the Barclays Inverse U.S. Treasury Futures Composite Index, which tracks the sum of the returns of periodically rebalanced synthetic short positions in equal face values of each of the 2-year, 5-year, 10-year, long-bond and ultra-long U.S. Treasury futures contracts.

2) MainStay Adopts Three Cushing Funds

MainStay Investments, a New York Life company, has announced that it has finalized the adoption of three Cushing funds.

The MainStay Cushing MLP Premier Fund (CSHAX) invests primarily in MLPs focused on the midstream energy sector, which generally includes businesses engaged in the transportation and storage of natural resources.

The MainStay Cushing Royalty Energy Income Fund (CURAX) invests primarily in U.S. and Canadian royalty trusts and exploration and production MLPs.

Both CSHAX and CURAX seek current income and capital appreciation utilizing proprietary research to seek to identify investments with the most attractive distribution yields and distribution growth prospects.

The MainStay Cushing Renaissance Advantage Fund (CRZAX) invests thematically in energy, industrial, manufacturing and transportation companies positioned to benefit from increasing U.S. production of crude oil and natural gas and lower relative domestic energy costs.

3) Guardian Adds Fixed Target Annuity

The Guardian Insurance & Annuity Company, Inc. (GIAC), a wholly-owned subsidiary of The Guardian Life Insurance Company of America, has announced the introduction of the Guardian Fixed Target Annuity. This single-premium fixed deferred annuity offers customers the ability to select from multiple guaranteed interest periods and provides flexible renewal and withdrawal options to help generate income for retirement.

The new annuity does not have any market value adjustments on withdrawals made before maturity. In addition, a client will know the end value of his or her investments based on the interest rate applied and the time until maturity.

4) Franklin Templeton Adds Preferred Pricing for Canadian Investors

Franklin Templeton Investments Corp. has announced the introduction of Series M, which offers Canadian investors a new option for high-net-worth pricing in a fee-based model. This new fee-for-service series offers preferred pricing for a selection of mutual funds across a range of asset classes.

Series M allows advisors and investors to build a portfolio from 13 different investment options, covering a variety of asset classes, as well as competitive management fees and a fixed rate administration fee.

6) Pensionmark Retirement Group Introduces Practice Acquisition Group

Pensionmark Retirement Group has introduced its practice acquisition group (PAG), which addresses the needs of retirement-focused advisors who are interested in selling all or a portion of their practice today or in creating a formal intention to buy at a later predefined target date and price.

In addition to practice acquisitions and letters of intent, PAG has also defined strategies for business succession planning and for partial buyouts, where an advisor may want to just transition the retirement or other portion of their practice.

7) HuaAn, STOXX Announce ETF in China Modeled on DAX

HuaAn Asset Management Co. Ltd. and STOXX Limited have announced the HuaAn Germany DAX 30 ETF, which has as its underlying index the German DAX and is listed on the Shanghai Stock Exchange.

The DAX measures the development of the 30 largest and most liquid companies on the German equities market and represents around 80% of the market capitalization authorized in Germany.

7) Envestnet Announces Acquisition of Klein Decisions

Envestnet Retirement Solutions (ERS), a majority-owned subsidiary of Envestnet, Inc., announced that it has completed the acquisition of Klein Decisions Inc.

Klein's behavioral and financial analysis-based participant advice solutions strengthen ERS's product and service offerings for retirement advisors.

Read the July 11 Portfolio Products Roundup at ThinkAdvisor.

 

Thursday, December 18, 2014

Always Consider the Sovereign When Investing in Foreign Countries

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In December 2001, Argentina suffered what was then the largest sovereign default in history as it failed to make payments on nearly $100 billion of its debt. After decades of military dictatorship, the country was suffering through spiraling inflation, heavy debts on infrastructure projects that were never finished and the state takeover of private debts. Getting relief was almost impossible as the markets were already spooked by the Russian and Brazilian financial crises that were followed by the US Dot-Com bust.  Argentine authorities were hamstrung trying to maintain a hard currency peg to the US dollar.

A series of dominoes started falling. The default ultimately resulted in widespread riots and protests as bank depositors could no longer access their money, the International Monetary Fund cut off support after Argentina failed to meet several conditions of its bailout and President Rodriguez Saรก was ultimately forced to resign from office. Since that mess the country was able to mostly restructure its debt; and strong economic growth in the mid-2000s helped make the Argentina more or less prosperous again. But markets can have a long memory, and Argentina has been virtually locked out of access to global credit with a bond rating deep in junk territory.

Its lucked turned from bad to okay over the past 13 years, but another turn for the worse is looming.

A group of investors headed up by Paul Singer of NML Capital acquired a large chunk of old Argentine debt some years back and is now working to force the Argentine's to repay the bonds under their original terms. While that would amount to tilting at windmills for most investors, Singer has successfully forced the governments of Peru and the Republic of the Congo to make bondholders whole following defaults. And he's made a great deal of headway forcing Argentina's hand, recently winning a lower court ruling that the country must pay $1.5 bi! llion that it owes on the bonds, which the Supreme Court upheld by refusing to hear an appeal.

In the grand scheme of things, $1.5 billion isn't a make-or-break proposition for Argentina; its economy is the second-largest in South America and it holds about $29 billion in foreign reserves with an estimated $16 billion in liquid reserves. But if NML Capital is successful in forcing a payment, it likely won't be the only claimant on those old bonds, as other holders will be likely to demand payment in full as well. If that were to happen, Argentina's liability could balloon to between $15 billion and $20 billion.

Argentina is now basically stuck between a rock and a hard place. It's due to make an interest payment to its other bond holders on Monday, June 30, but the courts have said that if that payment is made, NML must also be paid. If NML isn't paid, US banks will be barred from handling the government's other debt payments. At that point, the country will once again be in default.

Under normal circumstances, this probably wouldn't be that big of a deal. Argentina hasn't issued any new bonds since 2001 and, for all intents and purposes, it is still basically in default, so it really wouldn't change much for the country or its investors. There also isn't likely to be any sort of cascade effect such as we saw with the European sovereign debt crisis, though a fresh round of default news will surely rattle nerves, since Argentine bonds aren't very widely held.

The real danger here is the precedent it sets.

Argentina was essentially trying to prioritize its payouts, making good on debt from creditors who had already agreed to a restructuring of the debt, while freezing out NML and others who were holding out for the original bond terms to be met. If you or I are down on our luck, we can call on a bankruptcy court for protection while we work to settle our debts, and the court can essentially pick and choose who gets paid what. There's no such protection! for sove! reign states, so bond contracts usually stipulate that any disputes must be through American or British courts. As a result, when another nation inevitably finds itself in dire financial straits, this recent US court ruling has the potential to encourage other bondholders to play hardball when trying to restructure debts.

In theory at least, foreign states now have little leverage in negotiating debt restructurings unless they are willing to face a full-blown default. So while there aren't likely to be many immediate consequences from the current crisis outside of Argentina, it does underscore why, when investing in foreign sovereign debt, you must take into account the overall economic health of the countries you're considering.

After running up 173 percent over the trailing year, Buenos Aires' benchmark Merval Index has dropped from 8,291 to its current level of 7,982 after dipping as low as 7,235. That's despite the fact that there are many terrific Argentinean companies which rely primarily on export markets that won't be terrifically impacted by the sovereign debt crisis. However, given these debt woes and the volatility they present, investors will simply be better off finding growth opportunities in other nations.

Tuesday, December 16, 2014

Lululemon (LULU) รข€“ The Downward Dog

On April 15, I sent out a note (here) asking, "Would you short this company?"

My conclusion was simple: it was time to short LULU.

That was at $52.50. Here's what's happened since:

LULU Performance

Yesterday, with the stock down 16% I found myself tempted to cover. But then I began reading the rather sharp words Chip Wilson had for the Board (here):

I am concerned that the board is not aligned with the core values of product and innovation on which lululemon was founded and on which the company thrived.

I have found a palpable imbalance in board representation, which is heavily weighted towards short-term results at the expense of product, culture and brand and longer-term corporate goals. I believe this is impacting the company's prospects. My vote today sends a signal to the financial community that the company must address this imbalance if lululemon is to fully recover.

And I tried to rationalize why the Company would publish such an apathetic response (here):

Contrary to Mr. Wilson's assertions, lululemon's Board members are aligned with the Company's core values and possess the necessary expertise to successfully lead lululemon forward.

After some contemplation, I came to another rather simple conclusion: the Company is headed for a rather long Shavasana and there's no compelling reason to cover the short. So I press on.

Addendum: An angry Chip Wilson is a frightening thought; he is, after all, the single largest shareholder with nearly 28% of the stock (source).

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Monday, December 1, 2014

Why Is Everyone Selling Razors Online? Are They a Deal?

close-up of man shaving Getty Images For all of the things I buy in life, razors seem like the last thing I'd want to buy online. I have a Gillette Mach 3 Turbo razor handle that I bought about 10 years ago, and I buy a 24-pack of razors at Costco (COST) that lasts for a year or more. Yet razors seem to be sold everywhere online. And online sellers are about $1 cheaper per razor than most stores -- unless you find a heck of a sale (as I did at CVS (CVS)) or you shop at a warehouse store such as Costco. But the catch -- and I'm sure the shaving companies set it up this way -- is that you have to own the correct handle, which can cost up to $25. Why does a site such as Dollar Shave Club, with its funny videos, or 800razors, with its plain website, or any other online store sell something that's as easy to get as an impulse buy at the supermarket? Two reasons: Razors aren't as inexpensive as they used to be. And they're locked up behind a theft-proof plexiglass case. Locked Away At the Safeway (SWY) and CVS stores I went to, razors were in case that a clerk must open. You can't just grab a package and head to the checkout. At Safeway, the Gillette razors were locked in a cabinet, behind a counter, along with cigarettes and the baby formula Similac. Apparently, all of these items were shoplifted so often that stores started keeping them under lock and key. That's one less incentive to buy them at your local store. Try finding a store clerk on a busy afternoon to unlock a case of razors -- as if you were buying a tablet or e-book reader at Target (TGT) -- so you can shave. Why Prices Are So High But the bigger reason for the existence of razors online is the same as it is for most things: a lower price. Procter & Gamble's (PG) Gillette owns 76 percent of the shaving market, and Energizer's (ENR) Schick owns 16 percent, says Phil Masiello, founder and CEO of 800razors.com. With such a stranglehold, those companies can charge a premium. "We got into this because we were outraged at the prices we were paying for razors," Masiello says. Another way to raise prices is to promote a shaving handle or blade that does things you never thought you needed before. Some have rolling balls or vibrate and are powered by a battery to provide a closer and easier shave. Big companies also have big advertising budgets, which is something online sellers don't. Lower costs in advertising can result in lower costs for the product. The convenience of buying online is another major selling point for online businesses, says Michael Dubin, co-founder and CEO of Dollar Shave Club. "The entire men's grooming and skin care market has exploded because American men are paying more attention to how they care for themselves behind the scenes," Dubin wrote in an email interview. "Our unique opportunity exists at the intersection of our ability to provide excellent products that make life better in the bathroom and a technical platform that makes life easier outside it." Gillette almost has a monopoly in drugstores, for example, so going after its major competitor there didn't make sense. Online is a better place to shop by price. We Compared Prices So You Don't Have to To get prices down, competitors sell what are basically knockoffs of popular selling blades. Shaving is subjective, with some preferring five blades to three. For comparison purposes, we tried to find five-blade razors, though some of the most common razors sold in stores have three blades. We priced the most popular razors on the market. It's also assumed that shoppers already own the handle for the blades they're buying, though the online blades may initially cost more overall because you'll need to buy a handle.

Wednesday, November 12, 2014

Obama's China climate deal: Job killer or worth the cost?

obama xi jinping handshake President Obama and Chinese President Xi Jinping after announcing a deal on climate change. NEW YORK (CNNMoney) President Obama's deal with China to have both countries make deep cuts in greenhouse gas emissions will cost the U.S. economy tens of billions of dollars a year, according to critics.

And advocates of the agreement say that even if those cost estimates are correct, it would be money well spent.

The case against the deal: "Our economy can't take the president's ideological War on Coal, which will increase the squeeze on middle-class families and struggling miners," said Senator Mitch McConnell, who is about to become Senate majority leader and comes from the coal belt state Kentucky.

Studies prepared on behalf of industry groups and the U.S. Chamber of Commerce say Obama's efforts thus far to cut greenhouse gasses will cost the economy between $40 billion to $52 billion a year.

The Chamber estimates that the economy will lose an average of 224,000 jobs a year through 2030 due to the weaker economy.

Cook: New Apple HQ 'greenest' on the planet   Cook: New Apple HQ 'greenest' on the planet

The case for the deal: The Environmental Protection Agency estimates that a failure to address climate change could cost the economy about $150 billion a year.

For instance, Hurricane Katrina in 2005 cost about $157 billion, while Superstorm Sandy in 2012 caused about $50 billion in damage. Last year's drought in the West and Great Plains cost $10 billion, while floods in Illinois and Colorado cost another $3 billion.

"Companies are concerned about direct impacts, such as extreme weather damaging facilities or disrupting power, and also indirect impacts, such as higher prices for commodities or insurance," said Janet Peace, vice president of markets and business strategy at the Center for Climate and Energy Solutions.

Peace added that 90% of the nation's largest companies now list climate change or extreme weather as a business risk, and said there's no benefit in delaying action to reduce greenhouse gases.

"The sooner we act, the less costly it will be," she said.

Part of the way the countries plan to cut greenhouse emissions is through more efficient cars and appliances. That can produce sa! vings that balance out the costs of cutting carbon emissions.

The White House estimates that new efficiency standards for appliances will save about $30 billion a year on average through 2030, while improved mileage rules for automakers will save $1.7 trillion through a combination of lower gas prices and reduced gas consumption.

Leonardo DiCaprio challenges UN on climate change

Is China's favorite climate excuse still valid?

Friday, November 7, 2014

Ron Muhlenkamp's Quarterly Memorandum To Investors

My first draft of this letter, which I wrote three weeks ago began with:

Europe has not solved its problems Nor has Japan; Nor has China; Nor has the U.S.

The rest of that draft is now obsolete.

Since mid-September, several items have changed—some economic, some market-related, some psychological.

Economically…

The International Monetary Fund (IMF) has lowered its estimate of world Gross Domestic Product (GDP) growth going forward. Germany (the strongest economy in Europe) has reported disappointing numbers, particularly in capital goods. It looks like Europe is back in recession. The U.S. Federal Reserve Bank (Fed) lowered its estimates of U.S. GDP growth for the next four years. Crude oil, which was trading in a range of $100-$110/barrel, fell to $82/barrel The surprise was an announcement by Saudi Arabia that they would not try to keep the price above $100/barrel. This is a change from their prior policy.

Markets…

Many hedge funds are having a poor year and are facing redemptions. CalPERS (California Public Employees' Retirement System) announced that they were withdrawing $25 billion from hedge funds. This drives "forced selling" by those funds. The difficulty is estimating the size of the forced selling. Ten-year U.S. Treasury bond yields fell from a range of 2.40%-2.6% to (briefly) below 2 percent. A huge move in a short period of time, the headline is "A Flight to Quality."

(Mostly) Psychological…

The battle against ISIS in the Middle East. Ebola and the Centers for Disease Control (CDC): It appears that the Center is not prepared for disease control.

All of this together resulted in stock market declines of 7-12% in a month, depending on which index you measure. The size of this "correction" was not unexpected, but the short time frame was unusual. On some days the forced selling appeared to feed on itself and bordered on panic liquidation. As I write this letter on 10/17, this selling has abated, at least for the time being. The good news is that we raised some cash coming into this period, and

Thursday, November 6, 2014

'The Flash' Trailer: 3 Things I Learned

As The Flash, Grant Gustin will confront a world newly overcome with superpowered meta-humans. Sources: YouTube, The CW.

Anyone wondering if Time Warner (NYSE: TWX  ) intends to build an integrated DC television universe got their answer yesterday when Stephen Amell, star of The CW hit Arrow, appeared in the The Flash trailer.

"Take your own advice.... Wear a mask," Amell says. Shortly after, we see Grant Gustin's awkward police scientist, Barry Allen, become the superhero known as The Flash. To me, it's a transformation that seems destined to have far-reaching consequences for fans of the DC universe and Time Warner investors. Here are three reasons why:

1. The DC television universe is overtly connected. Counting the pilot for The Flash, we now have three explicit crossovers with Arrow, which kicks off its third season on Wednesdays this fall. New episodes of The Flash will air Tuesdays in the same 8 p.m. timeslot. Proximity and shared resources makes it likely we'll see even more explicit stabs at creating a shared DC mythos. (Arrow co-creators Andrew Kreisberg and Greg Berlanti are also actively involved with The Flash, as is DC Chief Creative Officer Geoff Johns.)

Arrow star Stephen Amell appears in the pilot episode of The Flash. Credit: The CW.

2. The Flash will be a touchpoint for introducing more menacing meta-humans. Actor Tom Cavanagh plays S.T.A.R. Labs physicist Harrison Wells in the The Flash. In the trailer, he explains the vast repercussions of the superhero's birth. "A dimensional barrier ruptured, unleashing unknown energies into our world: anti-matter, dark energy, x-elements," Wells says. The message? Barry wasn't the only one transformed. Later in the trailer we see bank robber Clyde Mardon (played by Chad Rook) controlling the weather, making him the comic book villain fans will recognize as Weather Wizard and proving Wells' point.

In The Flash, S.T.A.R. Labs tracks mysterious, transformative energy crossing into our world. Credit: The CW.

3. More heroes are coming, soon. The Flash pilot also marks the second time we see a reference to Ferris Air in a CW show based on a DC Comics character, with the last appearance coming in the Arrow season one finale. There's a chance the show's creators are merely teasing fans here, but as fans themselves it's hard to imagine Kreisberg, Berlanti, and Johns not wanting to pay off the reference to Green Lantern at some point in either show. The mere possibility of an appearance should keep most of the core audience engaged.

Barry's first "test-run" is apparently set at a Ferris Air facility. Credit: The CW.

Regardless, Warners' integrated strategy comes at a good time since DC, unlike Marvel, is still in the early stages of expanding its live action universe. Anything that helps further the fan base for that world is bound be good for investors.

Now it's your turn to weigh in. What did you learn from The Flash trailer? Do you envision one or more explicit movie crossovers? Leave your take below, including whether you would buy, sell, or short Time Warner stock at current prices.

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