Friday, February 21, 2014

Hedge funds hot for oil and Apple

energy stocks comparison

Valero Energy and Talisman Energy, two hedge fund favorites, have moved in opposite directions over the past few months.

NEW YORK (CNNMoney) Investors in oil stocks haven't had much to brag about as of late. Just don't tell that to Wall Street's big money players.

The top 50 hedge funds increased their exposure to the energy industry more than any other sector in the fourth quarter of last year, according to research from FactSet.

Energy bet may not have paid off: The funds plowed over two billion dollars into Whiting Petroleum (WLL), Valero Energy Corporation (VLO, Fortune 500), Talisman Energy (TLM), and Cameron International (CAM, Fortune 500).

While it's unclear when exactly the funds bought the stocks -- or whether they still even own them -- the performance of these companies has been a mixed bag.

Shares of Talisman have fallen about 7% since the first trading day of the fourth quarter, but Valero is up roughly 45% since then.

The Energy Select Sector SPDR ETF (XLE) is up about 5% over that period. But that's lagged the more than 9% gain for the S&P 500.

Also among hedge funds' favorites: Apple (AAPL, Fortune 500).

The tech giant was the recipient of $1.8 billion of hedge fund money in the fourth quarter. Icahn Associates, Coatue Management and Citadel Advisors each invested $500 million in Apple.

Following Icahn into Apple? Activist investor Carl Icahn of Icahn associates bought another $1 billion in Apple shares this year. But he recently dropped his proposal for Apple to return more cash to shareholders with a $150 billion stock buyback after CEO Tim Cook said the company was already repurchasing a sizable chunk of Apple's stock.

Shares of Apple have rallied over 11% since the start of the fourth quarter

Another tech darling for some hedge funds was Twitter (TWTR), which went public last November. However, ownership was concentrated mainly in two funds, Lansdowne Partners, and Gilder, Gagnon, Howe & Co. The stock is still up sharply from its IPO price, but it has pulled back in recent weeks following its first earnings report.

The top hedge funds were also hot on railroad company Union Pacific (UNP, Fortune 500) and cell phone tower owner Crown Castle International (CCI). The funds plowed $1.1 billion into Crown Castle, which made news in the quarter when it bought the rights to towers owned by AT&T (T, F! ortune 500) for $4.8 billion.

Top Warren Buffett Companies To Watch In Right Now

Dumping Netflix and Comcast. Oops? Which stocks did hedge funds hate on in the fourth quarter?

Carl Icahn sold half of his position in Netflix (NFLX) in October, a decision he may now regret. Shares of the video subscription service have soared over 35% since the start of the fourth quarter.

But don't cry for Icahn. He turned a handsome 460% profit on the sale.

Comcast (CMCSA, Fortune 500)was also a stock that several hedge funds sold. Shares have fallen a bit in recent weeks after the cable company announced its planned acquisition of Time Warner Cable (TWC, Fortune 500). But the stock is still up 15% since the beginning of the fourth quarter. So hedge funds may have bailed on Comcast too soon. To top of page

Thursday, February 20, 2014

Wealthier Americans need $2.3M for retirement

Not everyone is shivering in their boots, worried they don't have enough money saved for retirement.

Many affluent Americans (94%) are confident in their ability to have an ideal retirement lifestyle, according to new data from a survey of 482 adults who have more than $1 million in investments.

These wealthy Americans say they will need, on average, $2.3 million to fund their retirement.

The online survey was conducted last spring by Pollara for BMO Private Bank. About two-thirds of survey participants say they earned their wealth mostly on their own. Only 3% say their wealth came from an inheritance.

STORY: Six things you need to know to be able to retire

MORE: More retirement stories at retirement.usatoday.com

STORY: Active second careers: Becoming personal trainers

"What is the ideal retirement? I don't think there is one," says Terry Jenkins, president and CEO of BMO Private Bank. "It's an incredibly personal experience. Some people want to hang it up and play golf. Others want to ease into retirement by continuing to work on a part-time basis. Others want to spend time with family, travel and do things they've always wanted to do but never had the opportunity.

"It's important to match up your life goals with your financial goals, and your financial adviser has to work on both sides of that equation," he says.

Jenkins advises people to err on the conservative side when it comes to spending, especially if they're retiring at age 60, because their money might need to last for another 20 years or more. "Have a plan so you know how conservative you need to be," he says.

Nick Ventura, CEO of Ventura Wealth Management in Ewing, N.J. says when it comes to an ideal retirement, some people donate their time to charity and live in a house that is already paid off, and they can control expenses really well.

On the other hand, there are people who join an expensive golf club, travel frequently and give away money to grandkids and great-grand! kids, and they end up spending a lot, he says. Sometimes, grandparents pick up grandkids' college tuition bills, Ventura says. "All of the sudden, they are outspending the ability of their money to earn money."

That's where careful financial planning comes in, he says. "Planning should be a lifelong process. Initial planning for retirement should include a game plan for what you will do with your time in the first year, first 5 years, first 10 years of retirement. This makes the retirement process much easier to budget and manage."

Mark Fried, president of TFG Wealth Management in Newtown, Pa., says, "The most interesting thing I find about the new wealthy class in America is the fact that they have a tremendous opportunity to create a legacy for their family for generations to come if they do the proper planning. I would say that many of these folks are only just realizing what they have accomplished not only creating a significant nest egg but having the ability to create a lasting legacy."

In the new survey data, affluent Americans with children say that 36% of their wealth will be left to their children. They say they've given their kids some instructions:

• 85% say their kids are prepared to handle their inheritance.

• 70% have spent time talking to their kids about managing money, with 21% saying they've spent lots of time, 49% saying some time, 27%, not much time, and 3%, no time.

• 43% say their kids will be better off than they were, 22% say they'll be about the same, and 35% say their kids will be worse off, with most blaming the economy.

Previously released data from this survey showed that:

• Wealthy Americans planned to donate an average of $8,845 to charities in 2013.

• Affluent women planned to be more generous ($12,478) than high-net-worth men ($6.685).

• 48% planned to donate more to charities last year than they did before the beginning of the recession five years ago.

Wednesday, February 19, 2014

U.S. Equity Funds Up 32% in ’13: Lipper

Last year was certainly a good one for the markets, with the Dow Jones up 26.5% and the NASDAQ’s 38.32% boost. Overseas, Japan’s Nikkei 225 price-only index posted a 38.81% return.

As a result, mutual funds posted stellar results as well. Domestic equity funds jumped 32.34% on average in 2013, while world equity funds improved 16.82%, Lipper experts said during a conference call on Thursday.

As Lipper reported at year end, equity funds posted their sixth-consecutive quarter of positive returns, despite the Federal Reserve’s tapering announcement, in the fourth quarter. During the period, equity funds improved 7.08% in the period, and 85 of Lipper’s 95 equity and mixed-equity fund classifications posted positive returns.

U.S. diversified equity funds rose 8.76% in the fourth quarter, while world equity funds improved 5.55%. Mixed-asset funds rose 4.57%, and sector equity funds gained 3.40%. On the down side, precious-metals equity funds dropped 13.90%, dedicated short-bias funds declined 12.36%, and commodities/precious-metals funds sank 7.98%.

Though they had negative returns for the year (-11.08%), India Region Funds soared by 13.66% in the final three months of 2013. European region funds recorded gains of 8.31% in the fourth quarter.

For the first quarter in five, large-cap funds improved 10.15%, while multi-cap funds posted a Q4 return of 9.39%. Lipper says there was “no clear winner” in the style groups, with value-oriented funds rising 9.49%, growth-oriented funds 9.40% and core-oriented funds 9.31%. Large-cap growth funds soared 10.73%, helped by the strong performance and heavy weighting in the information technology, consumer discretionary and health care sectors.

Fund Flows

Lipper’s preliminary Q4 2013 data also shows that investors were net purchasers of fund assets during the period. They added about $40.8 billion to the conventional funds business (excluding ETFs) and about $154 billion for the full-year 2013. Non-U.S. equity funds attracted $31.5 billion versus $8 billion for domestic funds in the final three months of the year.

Investors were net purchasers of large amounts of conventional equity funds ($39.3 billion) and money market funds ($39.5 billion) in the fourth quarter but were net redeemers of taxable fixed income funds (-$20.2 billion) and municipal bond funds (-$17.9 billion).

For 2013, U.S. diversified equity funds had positive flows of nearly $51 billion. Sector equity funds drew some $23 billion, and world equity funds attracted more than $111 billion of assets. Taxable fixed-income products had inflows of close to $25 billion last year, while municipal-debt funds lost roughly $60 billion in assets.

 

Tuesday, February 18, 2014

Five new vehicles to watch at Detroit auto show

The 25th annual North American International Auto Show starting Monday in Detroit will feature introductions from virtually every major automaker. Some unveilings, such as the new editions of the Ford F-Series pickup and Chrysler 200 midsize sedan, are sure to command huge attention. Others will be less dramatic: refreshes or new versions of existing vehicles or niche products.

All together, they'll also show more of the sea change underway in the auto industry. Virtually every new vehicle will be lighter and get better fuel economy than the one they replace.

Here are five key vehicles to look fo:

• Ford F-Series pickup. It would be hard to overstate the importance the new F-150 pickup. It has been nation's best selling vehicle of any kind for the past 32 years, with 763,402 sold in 2013 alone. It also generates the lion's share of Ford Motor profits.

In the past, new pickups have tended to be evolutionary — a bed that's easier to step into, added car-like luxuries in the cabin, a new powertrain among the choices.

But this year, Ford, with the production version of the huge Atlas concept that it lowered from the ceiling of Joe Louis Arena last year, is expected to announce innovations that could shake the field.

Ford already showed it's willing to take risks, such as adding turbocharged V-6 for the the current generation to a pickup world dominated by V-8s. It paid off — the gas savers are now top sellers.

The new truck is expected to have much lighter construction, more new gas-saving engine choices and high-tech updates.

• Chrysler 200. The intensely competitive midsize sedan market is the USA's largest, accounting for about one in four new-vehicle sales. The revived Chrysler has been rebuilding its truck and crossover SUV lineup, but if it is to succeed as a full-line maker, it needs to field a worthy contender in a field dominated by the likes of Toyota Camry and Honda Accord — something it has not had for many years.

The redesigned 200! is Fiat-based and all-new from the road up. The new Chrysler, about to be fully merged with Fiat, needs to show a 200 with enough style and innovation to stand out in that tough field

• Hyundai Genesis. When Hyundai introduced the first Genesis sedan at the same Detroit auto show in 2008, the idea seemed laughable. Hyundai offering a luxury car priced above $40,000? But the quiet, powerful, smooth car was well received, and Hyundai needs to build on that as it strives to be seen as more than a value brand.

The company has already shown some teaser drawings, and it appears to be putting its emphasis on style, a key selling point in premium vehicles beyond just more luxury features.

• Honda Fit. The existing Fit, Honda's smallest car, has won wide acclaim as dependable, thoughtfully laid out and fun to drive. But the new generation will face a growing list of new competitors in the subcompact segment, ranging from Chevrolet Spark to the redesigned Kia Rio.

Fit needs to show more of the nifty new features — such as its rear seats that flip around multiple ways to create more hauling configurations — that made it a winner.

• Lexus RC-F. Lexus sees room for a sporty, youth-oriented coupe that could burnish its image among younger buyers moving into a premium car, and has come up with the RC. The RC-F — the performance version of the coupe — will have its global debut in Detroit.

It will be V-8 powered, but Lexus is withholding performance details until the show. It has revealed images, however, and the car will stand out, with styling details such as the unique arrangement of the four exhaust pipes in the rear, and its aggressive treatment of the signature Lexus "spindle" grille.

Saturday, February 15, 2014

Save of the Day: Made in America deals

CLEVELAND, OH -- In my continued search to find the best deals to save you time and money, and partly tied to our support for our Olympic team, we celebrate Made In America deals today.

I'm always searching for companies and product made in the U.S. or with ties to our community. Today, four of my favorite U.S. brands have some major sales lined up.

You'll find my top picks below. Want more deals? Follow @MattGranite on Twitter.

Matt Granite is a consumer reporter with Gannett's WKYC station in Cleveland. His 'Save of the Day' report offers tips to consumers on how to save money and features daily deals.

We do not receive any financial compensation for mentioning any deal or company. The only purpose of this segment is to save you money.

Buy 1, Get 1 Free Fiesta Dinnerware Settings At Macy's+ Extra 15% Off
[http://www.offers.com/macys/2139537/]
**Hands-down my favorite deal today!

$200 Off KitchenAid 5qt Stand Mixer + Free Shipping
[http://www.offers.com/kohls/1238005/]
Was: $449.99
Now: $249.99
**Mail in rebate required for coupon price.

Up To 72% Off 7 For All Mankind Jeans + Free Shipping
[http://www.offers.com/6pm/662452/]
**Nice selection of major jean deals for men and women.

$30 Off Men's Carhartt Active Jackets + $10 Shipping
[http://www.offers.com/cabelas/2139455/]
Was: $100.00
Now: $69.88

Friday, February 14, 2014

Top 10 International Companies To Own In Right Now

With shares of Wal-Mart (NYSE:WMT) trading around $80, is WMT an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let�� analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock�� Movement

Wal-Mart operates retail stores in various formats around the world. The company aims to price items at the lowest price every day. Wal-Mart operates in three business segments: the Walmart U.S. segment, the Walmart international segment, and the Sam�� Club segment. It manages retail stores, restaurants, discount stores, supermarkets, super centers, hypermarkets, warehouse clubs, apparel stores, Sam�� Clubs, neighborhood markets, and other small formats, as well as Walmart.com and SamsClub.com. Through its retail channels, Wal-Mart is able to provide a variety of products and services at affordable prices to consumers and companies worldwide.

Wal-Mart executives are feeling the heat from an investigation by the U.S. Department of Justice over possible violations of the Foreign Corrupt Policies Act. Reuters reports that Wal-Mart is paying for lawyers for as many as 30 executives targeted by the DoJ over suspicion of bribery and other misconduct in Mexico, Brazil, China, and India.

Top 10 International Companies To Own In Right Now: Claim Post Resources Inc (CPS.V)

Claim Post Resources Inc., a junior exploration company, engages in the acquisition, exploration, and development of mineral resource properties in Canada. The company primarily focuses on exploring and developing base metals and gold properties located in the Abitibi Greenstone Belt Region near Timmins in Ontario, Canada. It holds a 100% interest in the Kamiskotia property comprising 1,195 claim units located in the Godfrey, Turnbull, Jamieson, Robb, Cote, Massey, Mountjoy, and Bonar townships; and a 100% interest in the Dayton Porcupine claims consisting of 49 patented claims in Deloro and Ogden townships, as well as has an option to earn up to 100% interest in the Racetrack Project comprising 103 claim units and 12 patented claims located in Ogden township. Claim Post Resources Inc. was founded in 2005 and is headquartered in Toronto, Canada.

Top 10 International Companies To Own In Right Now: Kips Bay Medical Inc.(KIPS)

Kips Bay Medical, Inc., a development stage medical device company, focuses on developing, manufacturing, and commercializing external saphenous vein support technology or eSVS MESH for use in coronary artery bypass grafting, or CABG surgery in the United States. Its eSVS MESH is nitinol meshes sleeve that, when placed over a saphenous vein graft during CABG surgery, is designed to improve the structural characteristics and long-term performance of the vein graft. The company was founded in 2007 and is based in Minneapolis, Minnesota.

Hot Bank Companies To Watch For 2014: Five Oaks Investment Corp (OAKS.N)

Five Oaks Investment Corp., incorporated on March 28, 2012, focused on investing in, financing and managing a leveraged portfolio of Agency and Non-Agency residential mortgage-backed securities, or RMBS, residential mortgage loans and other mortgage-related investments. The Company invests in both Agency RMBS and Non-Agency RMBS.

As of December 31, 2012, the Company�� portfolio consisted of Agency RMBS and Non-Agency RMBS. The Company is managed by Oak Circle Capital Partners LLC.

Top 10 International Companies To Own In Right Now: Golden Predator Royalty&Dev Co (GPD.TO)

Americas Bullion Royalty Corp. engages in the exploration and development of gold properties primarily in Yukon, Canada. Its principal projects include Brewery Creek, Grew Creek, and Clear Creek projects located in Yukon, as well as exploration landholdings comprising approximately 1,200,000 acres. It also has property interests in western Canada, the western United States, and Mexico. The company was formerly known as Golden Predator Corp. and changed its name to Americas Bullion Royalty Corp. in February 2013. Americas Bullion Royalty Corp. was founded in 2009 and is headquartered in Vancouver, Canada.

Top 10 International Companies To Own In Right Now: SodaStream International Ltd.(SODA)

SodaStream International Ltd. engages in the development, manufacture, and marketing of home beverage carbonation systems and related products. Its home beverage carbonation systems enable consumers to transform ordinary tap water into carbonated soft drinks and sparkling water. The company offers a range of soda makers; exchangeable carbon-dioxide (CO2) cylinders; beverage-grade CO2 refills; reusable carbonation bottles; and various flavors comprising fruit, carbonated soft drink, and enhanced flavors to add to the carbonated water. It also sells additional accessories for its products, including bottle cleaning materials and ice cube trays manufactured by third parties. The company sells its products under the SodaStream and Soda-Club brand names through approximately 50,000 retail stores in 42 countries, as well as through the Internet; and distributes its products directly in 12 countries and indirectly through local distributors in other markets. It operates in Europe , North and Central America, Israel, South Africa, Australia, New Zealand, and east Asia. The company was formerly known as Soda-Club Holdings Ltd. and changed its name to SodaStream International Ltd. in March 2010. SodaStream International Ltd. is headquartered in Airport City, Israel.

Advisors' Opinion:
  • [By Blake Bos]

    In the following video, Motley Fool consumer-goods analyst Blake Bos tells investors about a new patent from Green Mountain Coffee Roasters (NASDAQ: GMCR  ) , that may mean it's getting into the game of home soda machines, a space currently dominated by SodaStream (NASDAQ: SODA  ) . Blake gives us a picture of the key things that will need to happen for Green Mountain to be successful in this endeavor, and tells us why he isn't necessarily worried about SodaStream just yet. In fact, for SodaStream, this could even have a positive effect.

Top 10 International Companies To Own In Right Now: Webjet Ltd(WEB.AX)

Webjet Limited, through its subsidiaries, operates as an electronic manager, marketer, and credit card merchant of travel and related services utilizing the Internet and other mediums. It offers airline tickets and travel packages to customers in Australia, New Zealand, Asia, the United States, and Europe. The company is based in Melbourne, Australia.

Top 10 International Companies To Own In Right Now: ABAXIS Inc.(ABAX)

Abaxis, Inc. develops, manufactures, markets, and sells portable blood analysis systems for use in veterinary or human patient-care setting to provide blood constituent measurements for clinicians worldwide. The company offers point-of-care blood chemistry analyzer, which consists of a compact portable analyzer and a series of single-use plastic discs, called reagent discs, containing all the chemicals required to perform a panel of up to 14 tests on human patients and 13 tests on veterinary patients. It markets the blood analysis system under the Piccolo Xpress and Piccolo Classic names in the medical market; and under the VetScan VS2 and VetScan Classic names in the veterinary market. The company also provides VetScan HM5, VetScan HM2, VetScan HMII, and VetScan HMT hematology instruments for veterinary applications. In addition, its products include VetScan VSpro, which assists in the diagnosis and evaluation of suspected bleeding disorders, toxicity/poisoning, evaluatio n of disseminated intravascular coagulation, hepatic disease, monitoring therapy, and the progression of disease states. Further, the company offers VetScan VSpro fibrinogen test to provide in-vitro determination of fibrinogen levels in equine platelet poor plasma from a citrated stabilized whole blood sample; and i-STAT 1 that delivers blood gas, electrolyte, basic blood chemistry, and hematology results. Additionally, its products comprise Canine Heartworm Rapid Test to detect dirofilaria immitis in canine whole blood, serum, or plasma; Canine Parvovirus Rapid Test Kit to detect canine parvovirus antigen in feces; and VetScan Giardia Rapid Test to detect giardiasis, a gastrointestinal infection caused by the protozoan parasite Giardia. Abaxis sells its products through direct sales force and independent distributors. The company was founded in 1989 and is headquartered in Union City, California.

Top 10 International Companies To Own In Right Now: Tribune Co (TRBAA.PK)

Tribune Company, incorporated on March 19, 1968, is a media and entertainment company engaged in newspaper publishing, television and radio broadcasting and entertainment through its subsidiaries. The Company�� operations are divided into two industry segments: publishing and broadcasting and entertainment. In publishing, the Company�� daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press. The company�� broadcasting group operates 23 television stations, WGN America on national cable and Chicago�� WGN-AM.

Broadcasting

The Company�� broadcasting owns and operates 23 major-market television stations and reaches more than 80% of United States television households. The group is anchored by WGN America, which can be seen in more than 70 million United States households via cable and satellite services. 13 Tribu ne stations are affiliates of The CW. Seven are FOX affiliates.

Publishing

The Company�� newspapers include the Los Angeles Times and Chicago Tribune. Tribune Media Services specializes in entertainment listings and syndication, providing news and information for print, broadcast and interactive media.

Tribune Digital

Tribune Digital manages the operations of Tribune�� daily newspapers and their associated Websites, plus all aspects of the Company�� classified advertising operations, as well as Websites for Tribune�� TV stations. Its national classified sites include CareerBuilder.com, Cars.com and Apartments.com.

Top 10 International Companies To Own In Right Now: Telik Inc (TELK)

Telik, Inc. (Telik), incorporated in 1988, is a clinical-stage drug development company focused on discovering and developing small molecule drugs to treat cancer. The Company discovers its product candidates using the Company�� drug discovery technology, Target-Related Affinity Profiling (TRAP). TELINTRA, its principal drug product candidate in clinical development, is a small molecule glutathione analog inhibitor of the enzyme glutathione S-transferase P1-1 (GST P1-1). TELCYTA, its other product candidate, is a small molecule cancer drug product candidate designed to be activated in cancer cells.

Clinical Product Development

TELINTRA is the Company�� lead small molecule product candidate in clinical development for the treatment of blood disorders, including cancer. It has a mechanism of action and acts by inhibiting GST P1-1, an enzyme that is involved in the control of cellular growth and differentiation. Inhibition of GST P1-1 results in the activation of the signaling molecule Jun kinase, a regulator of the function of blood precursor cells. Preclinical tests show that TELINTRA is capable of causing the death or apoptosis of leukemic or malignant blood cells, while stimulating the growth and development of normal blood precursor cells. TELINTRA has been studied in Myelodysplastic Syndrome (MDS) using two formulations. A liposomal formulation was developed for intravenous administration of TELINTRA and was used in Phase I and Phase II studies in MDS patients. The results from the Phase II intravenous liposomal TELINTRA clinical trials demonstrated that TELINTRA treatment was associated with improvement in all three types of blood cell levels in patients with all types of MDS, including those in intermediate and high-risk groups. An oral dosage formulation (tablet) was subsequently developed and results from a Phase I study with TELINTRA tablets showed clinical activity and the formulation to be well tolerated. In June 2011, the Company initiated a Phase II clinical ! trial to evaluate TELINTRA tablets. In October 2011, the Company initiated an additional Phase IIb clinical trial to evaluate TELINTRA tablets. '

The activity and safety profile of tablet formulation allowed the Company to complete a Phase II trial of TELINTRA tablets in MDS. The primary objective of the Phase II TELINTRA tablet study was to determine the efficacy of TELINTRA. A multivariate logistic regression analysis was conducted to identify MDS disease prognostic factors associated with erythroid improvement response rates, including prior MDS treatment, age, gender, the international prognostic scoring system (IPSS), risk, Eastern Cooperative Group performance status, years from MDS diagnosis, MDS World Health Organization subtypes, anemia only versus anemia plus other cytopenias, dose schedule and starting dose. Results from this study show that TELINTRA is the first GSTP1-1 enzyme inhibitor shown to cause clinically reductions in red blood cell transfusions, including transfusion independence in low to intermediate-1 risk MDS patients, as well as improvement in platelet count and white blood cell levels in certain patients. TELINTRA, administered orally twice daily, appeared to be convenient and flexible for chronic treatment administration.

TELCYTA is a small molecule drug product candidate that the Company is developed for the treatment of cancer. TELCYTA binds to GST. TELCYTA has been evaluated in multiple Phase II and Phase III clinical trials, including trials using TELCYTA as monotherapy and in combination regimens in ovarian, non-small cell lung, breast and colorectal cancer. Results from these clinical trials indicate that TELCYTA monotherapy was generally well-tolerated, with mostly mild to moderate side effects, particularly when compared to the side effects and toxicities of standard chemotherapeutic drugs. When TELCYTA was evaluated in combination with standard chemotherapeutic drugs, the tolerability of the combinations was similar to that expected of each! drug alo! ne.

Clinical activity including objective tumor responses and/or disease stabilization was reported in the TELCYTA Phase II trials; however, TELCYTA did not meet its primary endpoints in the Phase III studies. Positive results from a Phase I-IIa multicenter, dose-ranging study of TELCYTA in combination with carboplatin and paclitaxel as first-line therapy for patients with non-small cell lung cancer, or NSCLC, were published in a peer reviewed publication. Clinical data demonstrated positive results of TELCYTA in combination with carboplatin and paclitaxel in the treatment of first-line lung cancer followed by TELCYTA maintenance therapy. As of December 31, 2011, the Company had an on-going investigator-led study at a single site of TELCYTA in patients with refractory or relapsed mantle cell lymphoma, diffuse B cell lymphoma, and multiple myeloma.

Preclinical Drug Product Development

The Company has a small molecule compound, TLK60404, in preclinical development that inhibits both Aurora kinase and VEGFR kinase. Aurora kinase is a signaling enzyme whose function is required for cancer cell division, while VEGF plays a key role in tumor blood vessel formation, ensuring an adequate supply of nutrients to support tumor growth. These lead compounds prevented tumor growth in preclinical models of human colon cancer and human leukemia by inhibiting both Aurora kinase and VEGFR kinase. A development drug product candidate, TLK60404, has been selected.

The Company, using its TRAP technology has discovered TLK60357, a novel, potent small molecule inhibitor of cell division. TLK60357 inhibits the formation of microtubules that are necessary for cancer cell growth leading to persistent G2/M cancer cell cycle block and subsequent cell death. This compound demonstrates potent broad-spectrum anticancer activity against a number of human cancer cells. This compound also displays oral efficacy in multiple, standard preclinical models of cancer. TLK60596, a potent VG! FR kinase! inhibitor, blocks the formation of new blood vessels in tumors. Oral administration of TLK60596 to animal models of human colon cancer reduced tumor growth.

Monday, February 10, 2014

LinkedIn Stock Makes a Great Connection for Investors LNKD

Facebook Logo Twitter Logo RSS Logo Louis Navellier Popular Posts: Ring in the New Year Right – 3 Best Booze Stocks to Buy Now6 New Year's Resolutions for InvestorsBoeing Stock Continues to Soar for Investors Recent Posts: LinkedIn Stock Makes a Great Connection for Investors LNKD While The Dollar Dives, Multinational Stocks Rise 4 Reasons Markets May Be Even Better in 2014 View All Posts

Welcome to the Stock of the Day!

Today is a big day for social media, now that word is out that online video advertising is expected to double to $8.1 billion by 2016. But while competitor Twitter (TWTR) took flight on the news, LinkedIn (LNKD) stock remains in the red.

What is weighing on LNKD shareholders? Is this a buying opportunity? Find out today.

Company Profile

LinkedIn is a social networking website that contends with the likes of Facebook (FB) and Twitter by catering to professionals looking to advance their careers. But while LinkedIn competes with Facebook and Twitter for user attention, its business is quite different—as career and job markets become increasingly Internet-based, LinkedIn’s services will become even more useful.

For example, many companies are offering applicants the opportunity to simply upload their LinkedIn data to a hiring application to save time. With over 225 million users in more than 200 countries, LinkedIn brought in $972 million in FY 2012.

Analyst Buzz

What sent LNKD shares lower was that a Citigroup (C) analyst cautioned that the number of job postings on LinkedIn grew more slowly in the fourth quarter than in the third quarter. The analyst, Mark May, believes that LinkedIn will at best match the consensus sales estimate for hiring solutions revenue. Investors reacted to these remarks but it’s clear that much of the analyst community disagrees with May.

Currently, the consensus estimate is that LinkedIn will earn 32 cents per share on $384.17 million in total sales for the fourth quarter. This represents 45.5% annual earnings growth and 52.4% sales growth. So all eyes will be on the social media giant when it reports earnings later this month.

Looking Ahead

In any event, I’m considering LNKD a great long-term position. Looking ahead to FY 2014, analysts forecast 41.6% annual earnings growth and 41.2% sales growth. In just the past week, the analyst community has revised both this year’s and next year’s consensus EPS estimates up 5% and 4% respectively. And this is head and shoulders above the competition.

The rest of the Internet Information Providers industry is headed towards an average of 25.9% earnings growth for FY 2014. Then again, a recent Pew Research Center study said as much, as 22% of its participants replied that they use LinkedIn, vs. 21% for Pinterest and 18% for Twitter.

Current Ratings

Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. For the past 12 months LNKD has stayed in buy territory. That’s because this company has solid fundamentals. LinkedIn has figured out how to maximize sales growth, operating margin growth, as well as how to top analyst estimates consistently.

Of the eight fundamental metrics I graded this stock on, LNKD receives A- or B-ratings on four. The exceptions are cash flow (C-rated) and return on equity (D-rated), and earnings growth, but I imagine these will firm up in the company’s next earnings announcement. So LNKD receives a C for its Fundamental Grade.

Top 5 Undervalued Stocks To Buy For 2015

Meanwhile, institutional buying pressure (as indicated by its B-rated Quantitative Grade) remains strong.

Bottom Line: As of this posting I consider LNKD a B-rated Buy.

Would you like to check the fundamentals backing up one of your stocks? For more stock grades, please visit my Portfolio Grader website!

Friday, February 7, 2014

Retailers: Damaged Goods?

I'm a contrarian value investor at heart and I love trolling the bargain bins; my curiosity is more aroused by the stock that plunges 50% than the one that surges 50%, explains Steve Mauzy, editor of Daily Profit.

That said, I troll carefully. Some sectors tend to produce damaged goods that are even too dinged and dented for my liking.

Through experience, I've learned to avoid betting on a turnaround in an airline (most of the major airlines have been bankrupt at least once), a sit-down casual restaurant, a niche software developer. Once dinged and dented, no amount of putty and burnishing restores the luster.

I also generally avoid retail turnarounds. I've been asked a few times for my opinion on J.C. Penney (JCP) and Sears Holdings (SHLD).

I understand a contrarian's interest. J.C. Penney's share price is down 85% in the past two years; Sears' share price is down 55%. Both are iconic retail names whose history can be measured in centuries.

Contrarian interest is further piqued because of celebrity-investor interest. George Soros owns a 6.6% stake in Penney. Sears is run by investor Edward Lampert, who owns 25 million shares—nearly 25% of the retailer's outstanding shares.

I'm still not on board. In 2007, Penney recorded $19.9 billion in revenue. That same year, Sears recorded $53 billion. Over the trailing 12 months, Penney recorded $11.9 billion in revenue; Sears recorded $37.6 billion. Each successive year brings in fewer dollars.

But what about these are iconic names? Fair enough, but, at one time, everyone was familiar with W.T. Grant, Caldor, Woolworth, Foley's, Service Merchandise, and Montgomery Ward.

A recognizable retailing brand simply doesn't ensure a high level of customer loyalty. Should a retailer fail to anticipate consumer trends, or to price competitively, consumers have no qualms about patronizing the competition.

A turnaround is further hindered by plentiful, fierce competition. The retail sector is easy to enter, and many do. Within a five-mile radius of most suburban homes, a consumer will find a plethora of retail outlets to satisfy nearly all her needs.

Plentiful, fierce competition means retailers must continually evolve. Older retailers like Penney and Sears are rarely thought leaders, and hence, always behind the evolutionary curve.

Retailing also allows any investor to easily kick the tires. When I walk into Sears, I see an antiquated retailing concept. When I walk into Sears' subsidiary, K-Mart, I see dilapidation. J.C. Penney, to me, is a poor imitation of Kohl's (KSS).

Time is another obstacle. Even if energetic, progressive managers take the reins, time works against them. Customers are quick to leave, but slow to return. And when customers are quick to leave, vendors are usually quick to demand more immediate payment terms.

Fewer dollars flowing in, and more dollars flowing out, is a forbidding combination. Returning to 2007, Sears generated $1.4 billion in cash flow from operations.

Over the trailing 12 months, Sears' operations generated a negative $694 million. Penney offers a similar cash-burning tale: Operating cash flows were a positive $1.3 billion in 2007, and a negative $1.6 billion over the trailing 12 months.

When a retailer hemorrhages cash, the ensuing bloodbath frequently leads to irreparably damaged goods. In my opinion, J.C. Penney and Sears are irreparably damaged.

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Thursday, February 6, 2014

Does Merck Belong in Your Portfolio?

With shares of Merck (NYSE:MRK) trading around $53, is MRK an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Merck is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures. The company consists of four operating segments: the Pharmaceutical, Animal Health, Consumer Care, and Alliances segments, and one reportable segment in the Pharmaceutical segment. Merck aims to provide valuable healthcare products and services to consumers, animals, and companies in need worldwide. Look for the company to see rising profits as it advances the products and services of the healthcare field.

Merck will work with three other drugmakers to find the most-promising combination treatments for its top pipeline prospect, an immune system-based cancer medicine. The collaboration boosted Merck's shares after the company reported fourth-quarter earnings that fell short of estimates. Earnings excluding certain items were 88 cents a share, 1 cent below the average of 15 analysts' estimates compiled by Bloomberg. The Whitehouse, New Jersey-based company also forecast 2014 profit of $3.35 to $3.53 a share, compared with $3.48 projected by analysts.

T = Technicals on the Stock Chart Are Strong

Merck stock has been in a range over the last several years. However, the stock is currently surging higher and looks set to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Merck is trading above its rising key averages which signal neutral to bullish price action in the near-term.

MRK

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Merck options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Merck options

23.05%

93%

90%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

March Options

Flat

Average

April Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Merck’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Merck look like and more importantly, how did the markets like these numbers?

2013 Q4

2013 Q3

2013 Q2

2013 Q1

Earnings Growth (Y-O-Y)

6.02%

-32.14%

-48.28%

-7.14%

Revenue Growth (Y-O-Y)

2.32%

-34.99%

-9.38%

-9.04%

Earnings Reaction

-0.21%*

-2.55%

-0.59%

-2.78%

Merck has seen rising earnings and revenue figures over the last four quarters. From these numbers, the markets have been optimistic about Merck’s recent earnings announcements.

* As of this writing

P = Excellent Relative Performance Versus Peers and Sector

How has Merck stock done relative to its peers, GlaxoSmithKline (NYSE:GSK), Novartis (NYSE:NVS), Pfizer (NYSE:PFE), and sector?

Merck

GlaxoSmithKline

Novartis

Pfizer

Sector

Year-to-Date Return

6.61%

-3.33%

-2.25%

0.42%

1.36%

Merck has been a relative performance leader, year-to-date.

Conclusion

Merck provides essential healthcare products to consumers, animals, and companies around the world. The company reported fourth quarter earnings that fell short of estimates. The stock been in an up-and-down trend over the past few quarters, but is currently surging higher. Earnings and revenue figures have been rising over the last four quarters, which has left investors optimistic about recent earnings announcements. Relative to its peers and sector, Merck has been a relative year-to-date performance leader. Look for Merck to OUTPERFORM.

Wednesday, February 5, 2014

IBM: A Wide-Moat Cannibal Is on Sale

 When Mohnish Pabrai met Charlie Munger in 2007, he said to Mohnish that an investor could improve his results dramatically by following three recommendations: checking out what other great investors are doing, buying the cannibals and looking at spin-off situations.

The cannibals are those companies that buy back tons of their own shares. As a result, equity holders increase their ownership at the company. Because the number of available outstanding shares in the market decreases, it's also a way to improve EPS and unlike dividends, it's also a non-taxable form for investors of reinvesting company's proceeds; if share buybacks are done below intrinsic value, results are accretive for stake holders.

My interest in IBM started once Berkshire Hathaway (BRK.A)(BRK.B) bought a huge stake in Big Blue, acquiring more than 68 million shares since first quarter of 2011, a 5.5% stake, at an average price of USD$170.

After BRK's position was disclosed, Warren Buffett went on CNBC to explain plainly his reasons for placing such a huge bet on IBM, which were essentially those that complete the three-legged stool of Berkshire criteria for long-term holdings (wide moat, high ROIC business, management in place, staying power). In summary:

- Buffett did not speak to IBM's management prior to the buy, but he had been reading its annual reports for 50 years while it was under the reigns of both Lou Gerstner, who rescued the company from bankruptcy, and Sam Palmisano, who left the company in 2012. In October 2011, he and the board blessed Ms. Virginia Rometti as his successor. Ms. Rometti, who was at that time executive VP, held a remarkable acumen of the company throughout her 30-year trajectory, leading the integration of Price WaterhouseCooper Consulting.

- IBM has been tracing and executing a Roadmap for years; the company duly reports to shareholders how and when it is going to execute its strategy.

- Buffett checked with BRK's subsidiaries and IT managers about IBM, and he found out about its stickiness; it's pretty difficult to get out of it once it is part of your IT systems. IBM has been able to build close relationships with its customers, so Buffett thinks IBM has the staying power he asks for his long-term holdings. IBM is a business service and consulting company, not a pure tech play.

- Buffett liked IBM's prudent and friendly shareholder's capital allocation through dividends and huge stock buybacks.

Two Years Later, Mr. Market Has Changed Its Mind About Big Blue

Buffett bought IBM at close to 52-week highs in 2011 at an average price of US$170 per share. Almost two and a half years later, IBM's shares are languishing close to 52-week lows around US$180 per share, clearly trailing Mr. Market as a whole.

Sell Side Is bearish on IBM

One of the most prominent sell-side institutions, which has downgraded IBM twice in the last six months, is Credit Suisse. It is pretty skeptical about IBM's future prospects, and it is convinced that Big Blue is set to underperform.

Credit Suisse downgraded IBM on August 2013, and it recently cut the objective share price to US$160 per share. Its reasoning was based on poor organic revenue growth, shrinking market share, cash flow conversion issues and balance sheet debt load.

If we check the evolution during the last quarters, we can highlight these figures:

 

Revenues

Gross M

Op Margin

CFO

FCF (*)

Shares Out(***)

EPS(**)

2010

99,87

46,05%

19,74%

19,54

16,3

1287

11,67

2011

106,91

46,9%

19,80%

19,84

16,6

1213

13,44

2012

104,50

48,1%

20,95%

19,58

18,18

1155

15,25

2013

99,8

48,6%

19,6%

17,48

15,02

1103

16,28

Revenues / Cash flow from operations / Free cash flow, figures in billions

(*) IBM FCF estimations = CFO- change in GF receivables-capex

(**) EPS, IBM operating-non GAAP earnings per share reference,

(***) Non diluted shares outstanding, figures in millions.

At first glance, we can see that revenues CAGR are almost flat, and that increments in bottom-line EPS basically came from margin expansion and buybacks; all in all it seems that IBM is having a pretty hard time trying to expand its revenues, although investors have seen operating EPS increasing at a CAGR of 11.73% for the last three years.

So, while pundits are totally right in pointing out stagnant revenues, IBM managed to significantly increase EPS since 2010.

We will try to offer a closer picture of IBM's segments' evolution.

  GTS GBS Software Systems Financing (*) TOTAL
2010            
Revenues 38,2 18,22 22,48 17,97 2,23 99,12
% Revenues 38,54% 18,38% 22,68% 18,13% 2,25%  
Pre tax income 5,49 2,54 9,46 1,45 1,95 20,92
% Total income 26,24% 12,14% 45,22% 6,93% 9,32%  
Pre tax margin 14,37% 6,65% 24,76% 3,80% 5,10%  
2011            
Revenues 40,87 19,28 24,94 18,98 2,1 106,94
% revenues 38,22% 18,03% 23,32% 17,75% 1,96%  
Pre tax income 6,26 3 9,97 1,63 2,01 22,9
% Total income 27,34% 13,10% 43,54% 7,12% 8,78%  
Pre tax margin 15,32% 7,34% 24,39% 3,99% 4,92%  
2012            
Revenues 40,23 18,46 25,44 17,66 2,01 103,93
%revenues 38,71% 17,76% 24,48% 16,99% 1,93%  
Pre tax income 6,96 2,98 10,81 1,22 2,03 24,01
% Total income 28,99% 12,41% 45,02% 5,08% 8,45%  
Pre tax margin 17,30% 7,41% 26,87% 3,03% 5,05%  
2013            
Revenues 38,6 18,4 25,9 14,4 2 99,8
%revenues 38,68% 18,44% 25,95% 14,43% 2,00%  
Pre tax income 6,98 3,21 11,1 0,5 2,17 22,96
% Total income 30,40% 13,98% 48,34% 2,18% 9,45%  
Pre tax margin 18,08% 8,32% 28,76% -1,30% 5,62%  

(*) Financing pre-tax income margin, includes results from both external and internal revenues.

If we stick to the numbers above, we can identify Systems as a laggard for IBM's performance. In 2010 this division contributed 18.13% of total revenues and 6.93% in pre-tax income; in 2013 it accounted for only 14.4% of total revenues while pre-tax income was negative.

While it's remarkable that IBM's total revenues during 2013 have been $4 billion less than in 2012, 75% of lost revenues in 2013 are due to the Systems division; this IBM "leg" is the less profitable one, with operating margins of only 3% to 4%.

On the other hand, GTS (Global Tech Services) and GBS (Global Business Services) revenues are flat since 2010, although operating income has improved for the last four years because of better margins; operating income for Global Services division was roughly $8 billion in 2010 and $10.3 billion in 2013.

The trend for Software, which is the more profitable divisio,n is positive; revenues in 2010 accounted for 22.68% out of total. This division's outcome reached 45.22% of total operating profit, with a 24.6% operating margin, the figures for 2013 have been 25.05%, 48.34%  and 28.76%, respectively.

So far, operating income in the Software division was $9.46 billion in 2010 vs. $11.1 billion in 2013.

So, while it's crystal clear that IBM's organic growth has been deceptive as critics have been pointing out, most of it is due to its less profitable and capital intensive division. Alternatively, IBM execution has been rather successful in Global Business and Software units, partially because of productivity improvements.

IBM's management seems to be aware about this situation; recently IBM reached an agreement with Lenovo, in order to sell IBM's 86x server business for $2.3 billion. IBM will keep System z mainframes, Power Systems, Storage Systems, Power-based Flex servers and PureApplication.

This transaction seems to fit into IBM's strategy, which is divesting from non-core assets in order to re-invest in higher margin activities.

IBM's Cash Flow Problems

Cash flow seems to me like a temporary setback. IBM's CFO (Martin Schroeter) exposed his position in relation to FCF during the third-quarter results presentation:

"This quarter, we generated $2.2 billion of free cash flow, down $900 million year to year. There were three key drivers of the year-to-year decline, higher workforce rebalancing payments from the second quarter program, changes in sales cycle working capital, and our operational performance. Through the first three quarters of the year, we generated $6.6 billion, which is down $2 billion yearto- year." 

So, while the cash flow was partially affected by weaker operational performance, IBM's FCF was impacted by changes in working capital (receivables, excluding receivables from global financing, that are considered by IBM as "an investment that generates returns") and the cash payment for a workforce layoffs settlement that was shown up on previous quarter income statement.

Last but not least, during last quarter's earnings call, the CFO explained that free cash flow realization was in the range of 90% on a structural basis:

"But I would like to also spend a minute on free cash flow from a model perspective. From a model perspective we finished last year, if I were to look at free cash flow on a ratio basis, say, to net income on a free cash flow realization basis, we finished the year in the low-90s on a realization basis." (Source: International Business Machines Corp. (IBM) Q4 2013 Earnings Call)

We will check the figures provided by IBM, based on 2012's 10-K and recent press release of the full-year report for 2013.

 

FCF (*)

Shares Out(***)

EPS(**)

FCF per share

% cash conversion

2010

16,3

1287

11,67

12,66

108,48%

2011

16,6

1213

13,44

13,66

101,64%

2012

18,18

1155

15,25

15,74

103,21%

2013

15,02

1103

16,28

13,61

83,60%

The results for 2013 are lagging previous years, but it seems that with such a solid financial model, temporary issues should be fixed in 2014.

IBM's Debt Load

When I looked up at IBM financial documents, that's exactly what I thought, but actually IBM is a debt-free company. (Source) 

Non-global financing debt totals $12.2 billion, while cash and equivalents amount to $11.1 billion.

The amount of debt ($24.5 billion in 2012) tied to Global Financing Services, which is leveraged at a 7 to 1 debt-to-equity ratio, is used for financing creditworthy customers (bad debt expenses were close to meaningless in 2012 for a total amount of $50 million); these customers use the loans to contract IBM's services. So, less than 30% of total debt is tied up in IBM's core operational business, and it's offset by the cash held on the balance sheet.

For the most part, the (80%) debt rate is fixed, averaging an interest rate of 3.43% in 2012, according to 2012 annual report data.

Why IBM Is a Strong Company

In this post, I've tried to go through several warnings that analysts have raised. It's true that IBM's organic revenues are flat, but I think that they will overcome the challenge and be more concentrated in higher margin, lighter capital sectors.

IBM had some cash flow issues during the third quarter that harmed its cash generation, but I think it is temporary, rather than structural.

IBM has a fortress balance sheet, although it's not comparable to other companies like MSFT and AAPL holding a real cash hoard in their balances. On the other hand, IBM is much better at optimizing its balance sheet resources than its peers.

Now, I will expose some aspects of IBM's that Mr. Market seems to be ignoring or overseeing.

1) Recurring Revenues

Excerpt from IBM's 2012 annual report, page 23:

"Global Services is a critical component of the company's strategy of providing IT infrastructure and business insight and solutions to clients. While solutions often include industry-leading IBM software and systems, other suppliers' products are also used if a client solution requires it. Approximately 60 percent of external Global Services segment revenue is annuity based, coming primarily from outsourcing and maintenance arrangements."

Excerpt from IBM's 2012 annual report, page 24:

"Approximately two-thirds of external Software segment revenue is annuity based, coming from recurring license charges and ongoing post-contract support. The remaining one-third relates to one-time charge (OTC) arrangements in which clients pay one, up-front payment for a perpetual license."

So, around 85% of IBM's revenues and 90% of its profits are recurring in a very significant percentage. That results in a massive backlog of more than $140 billion and enables IBM as a company deeply embedded in the core IT systems of its customers.

Bears argue that cloud computing is a game changer for IBM, due to the fact that its recurring revenue base and customer stickiness depends primarily on IBM's capacity as a provider for IT infrastructure, servers and storage, and that may change with the migration to cloud computing shared infrastructures making a dent in IBM's profitability.

Actually IBM has been investing heavily in cloud computing systems for the last two years by acquiring several companies like Worklight, Cast Iron and Greenhat. But most the exciting IBM acquisition in the cloud space was announced in June 2013; IBM bought Softlayer for $1.3 billion. Softlayer was considered to be the biggest private player in IAAS, serving more than 21,000 customers.

IBM expects to reach sales of $7 billion in annual revenues in this area  and considers cloud computing as a fundamental asset in its vast integrated services offerings.

2) IBM's 2015 Roadmap Execution Is on the Way

IBM's operational EPS have been steadily growing at 11% CAGR since 2010, and operational non-GAAP EPS for 2013 is USD6.28. IBM forecasts EPS of USD18 per share in 2014 and USD20 in 2015. Big Blue needs some improvement on top-line revenues. During the last four years it has increased EPS, based almost solely in productivity improvements and huge share buybacks.

According to IBM's 2015 roadmap, there will be three major areas of improvement: incremental revenues from higher margin activities, productivity and cash returns to shareholders (dividends and share buybacks mostly).

As Warren Buffett pointed out, IBM is reliable when it comes to roadmap executions. In the last earnings call, the management seems to be fully commited to reach at least USD20 of EPS per share in 2015.

"As we enter 2014, we will continue to transform our business and invest aggressively in the areas that will drive growth and higher value. We remain on track toward our 2015 roadmap for operating EPS of at least $20, a step in our long-term strategy of industry leadership and continuous transformation." 

3) IBM's Shareholder Friendliness Is Remarkable

IBM is a cannibal. It repurchased shares for $15.37 billion in 2010, $15.04 billion in 2011, $11.99 billion in 2012 and $13.9 billion in 2013; non-diluted shares outstanding were 1.29 billion in 2010 and 1.10 billion at year-end 2013, so they bought back 14.3% of outstanding shares. Hence, IBM paid $56.3 billion in order to retire 184 million shares.

Assuming an average price of USD180 during that period, IBM used approximately 60% of the amount settled for repurchases for buying back shares. The remaining 40% went diluted via stock remuneration programs (mostly through restricted stock units or RSUs instead of stock options) and acquisitions; this dilution is partially offset by the proceeds received from employees when they exercised their stock grants and the deferred taxes derived from share-based compensation.

We can compare that to Microsoft (MSFT) and Cisco (CSCO) as a proxy for big tech corporation buybacks. The giant from Redmond according to its 2012 10-K, had 8593 million diluted average shares outstanding in 2010, 8506 million in 2011 and 8470 million in 2012. Mr. Softy repurchased shares during that period for $11.55 billion, $5.02 billion and $5.36 billion, respectively.

So MSFT bought back 123 million shares for a total amount of $21.93 billion, assuming an average price of USD25 per share. MSFT, as a matter of fact, used actually only $3.07 billion out of $21.93 billion for "friendly shareholder" practices. That's just 14.5% or 85.5% dilution! Otherwise, we could say that MSFT paid $21.93 billion out of shareholders' pockets to buy back 123 million shares at an average price of USD178.29!

We know we should look into M&A and sum up the proceeds from tax shelters and employees, but the dilution is staggering.

Cisco Systems allocated $19.52 billion for share buybacks during the same three-year period, and initial diluted shares outstanding were 5.848 vs. 5.404 million at year-end 2012. Therefore, excluding M&A, proceeds from stock awards and tax shelters, it bought back 444 million shares at an average price of USD44 per share. It's a much better deal for shareholders than MSFT, but not as good as IBM.

On the other hand, since 2000, IBM used $149 billion (including $123 billion in share repurchases) in rewarding shareholders, and only $33 billion on M&A. Therefore, IBM is focused on returning proceeds to shareholders and leaving less room to non-accretive acquisitions (i.e. HPQ buying Autonomy, or MSFT with almost a 100% goodwill impairment of $6.2 billion in Equantive).

Is Warren Buffett's Investment Thesis on IBM Still Intact?

"The stocks I'm talking about have got just as much chance of going down tomorrow as up tomorrow. But we like the businesses over a five or 10 years stretch." — Warren Buffett

From my perspective, IBM is suffering some temporary setbacks that will be fixed in the course of the next years, a wide moat built mostly on switching costs, an integral scope of services, a global footprint and a business model with a recurrent stream of cash flows.

IBM's shareholder friendliness is clearly above average and unparalleled in the big tech world, and its balance sheet is better than it seems at first glance.

This post is not about valuation. From my point of view, if IBM is able to reach USD20 in EPS in 2015, and using conservative P/E multiples between 13 and 15, shares would be eventually trading between $260 and $300 by then; if we consider IBM as a long term holding, a lower valuation would be welcome while IBM is "eating" itself, so that shareholders to get a bigger piece of equity cake.

 

Disclosure: this post is not a buying recommendation. LONG IBM. This article reflects the author's personal opinion and may contain mistakes or inaccuracies.


Also check out: Warren Buffett Undervalued Stocks Warren Buffett Top Growth Companies Warren Buffett High Yield stocks, and Stocks that Warren Buffett keeps buying

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IBM STOCK PRICE CHART 172.84 (1y: -15%) $(function() { var seriesOptions = [], yAxisOptions = [], name = 'IBM', display = ''; Highcharts.setOptions({ global: { useUTC: true } }); var d = new Date(); $current_day = d.getDay(); if ($current_day == 5 || $current_day == 0 || $current_day == 6){ day = 4; } else{ day = 7; } seriesOptions[0] = { id : name, animation:false, color: '#4572A7', lineWidth: 1, name : name.toUpperCase() + ' stock price', threshold : null, data : [[1360044000000,202.79],[1360130400000,201.02],[1360216800000,199.74],[1360303200000,201.68],[1360562400000,200.16],[1360648800000,200.04],[1360735200000,200.09],[1360821600000,199.65],[1360908000000,200.98],[1361253600000,200.32],[1361340000000,199.31],[1361426400000,198.33],[1361512800000,201.09],[1361772000000,197.51],[1361858400000,199.14],[1361944800000,202.33],[1362031200000,200.83],[1362117600000,202.91],[1362376800000,205.19],[1362463200000,206.53],[1362549600000,208.38],[1362636000000,209.42],[1362722400000,210.38],[1362978000000,210.08],[1363064400000,210.55],[1363150800000,212.06],[1363237200000,215.8],[1363323600000,214.92],[1363582800000,213.21],[1363669200000,213.44],[1363755600000,215.06],[1363842000000,212.26],[1363928400000,212.08],[1364187600000,210.74],[1364274000000,212.36],[1364360400000,210.89],[1364446800000,213.3],[1364792400000,212.38],[1364878800000,214.36],[1364965200000,212.66],[1365051600000,211.31],[1365138000000,209.41],[1365397200000,209.32],[1365483600000,209.22],[1365570000000,212],[1365656400000,212.92],[1365742800000,211.38],[1366002000000,209.26],[1366088400000,212],[1366174800000,209.67],[1366261200000,207.15],[1366347600000,190],[1366606800000,187.83],[1366693200000,191.61],[1366779600000,191.71],[1366866000000,193.95],[1366952400000,194.31],[1367211600000,199.15],[1367298000000,202.54],[1367384400000,199.63],[1367470800000,202.39],[1367557200000,204.51],[1367816400000,202.78],[1367902800000,203.63],[1367989200000,204.82],[1368075600000,203.24],[1368162000000,204.47],[1368421200000,202.47],[1368507600000,203.21],[1368594000000,203.32],[1368680400000,204.69],[1368766800000,208.44],[1369026000000,207.6],[1369112400000,208.65],[1369198800000,206.99],[1369285200000,206.16],[1369371600000,205.72],[1369717200000,207.78],[1369803600000,207.92],[1369890000000,209.36],[1369976400000,208.02],[1370235600000,208.95],[1370322000000,206.19],[1370408400000,202.74],[1370494800000,203.

Tuesday, February 4, 2014

This Year's Batch of Super Bowl Ads? Meh.

Hot High Tech Stocks To Own Right Now

#fivemin-widget-blogsmith-image-859302{display:none}.cke_show_borders #fivemin-widget-blogsmith-image-859302,#postcontentcontainer #fivemin-widget-blogsmith-image-859302{width:570px;height:411px;display:block} The Weird And Expensive World of Super Bowl Ads

NEW YORK -- Which Super Bowl ads will people discuss at the office a day after the biggest event of the year on American television? There were no crude jokes during the Super Bowl, the NFL championship and most-watched U.S. sporting event. Sexual innuendo was kept to a minimum. And uncomfortable scenes were missing. In short, there wasn't much shock value. Sure, RadioShack (RSH) poked fun at its image by starring '80s icons like Teen Wolf in its ad. And Coca-Cola (KO) struck an emotional chord by showcasing people of different diversities in its spot. As did Chrysler, with its "Made in America" message. But with a 30-second Super Bowl commercial fetching $4 million and more than 108 million viewers expected to tune in to Sunday night's game, advertisers tried to keep it family friendly with socially conscious statements, patriotic messages and light humor. After all, shocking ads in previous years haven't always been well received. (Think: GoDaddy.com's ad that featured a long, up-close kiss was at the bottom of the most popular ad lists last year.) "A lot of brands were going with the safety from the start," said David Berkowitz, chief marketing officer for digital ad agency MRY. Many advertisers played it safe by promoting a cause or focusing on sentimental issues. Chevrolet's (GM) ad showed a couple driving through the desert in remembrance of World Cancer Day. And Bank of America (BAC) turned its ad into a virtual video for singing group U2's new single "Invisible" to raise money for an AIDS charity. The song will be a free download on iTunes for 24 hours following the game and Bank of America will donate $1 each time it is downloaded to the Global Fund to Fight AIDS. Meanwhile, a Microsoft (MSFT) ad focused on how its technology helps people in different ways. The ad is narrated by Steve Gleason, a former prof football player who is living with ALS, a disease of the nerve cells in the brain and spinal cord that control voluntary muscle movement. He uses a Microsoft Surface Pro tablet running eye gazer technology to speak. And an Anheuser-Busch (BUD) "Hero's Welcome" ad was an ode to U.S. soldiers. The spot showed how Anheuser-Busch helped prepare big celebration that included a parade with Clydesdales as a surprise for a soldier returning from Afghanistan. Many advertisers took the safe route by playing up their Americana roots. Coca-Cola's ad showed scenes of natural beauty and families of different diversities. The tune of "America the Beautiful" could be heard in different languages in the spot. Chrysler also went with a U.S.A. theme. It had a two-minute ad starring music legend Bob Dylan discussing the virtues of having cars built in Detroit, a theme the car maker has stuck with in previous ads with rapper Eminem and actor Clint Eastwood. "Let Germany brew your beer. Let Asia assemble your phone. We will build your car," Dylan said in the ad. Barbara Lippert, ad critic for Mediapost.com, said the ads were an attempt to connect with viewers on a more personal level. "We want to be able to feel through all these screens and through all the hype there's a human element and in the end were all human," Lippert said. Jokes were also tamer. "A few years ago we had a lot of physical slapstick, this year there's a lot less of that," said Berkowitz, with digital ad agency MRY. Even advertisers that typically go with more crude humor toned it down. GoDaddy.com's ad, for instance, showed it helping a small-business owner quit her job. "Women were fed up and parents were fed up and advertisers listened," said Mediapost.com's Lippert. Other advertisers went with light humor as well. There were mini sitcom reunions: in an ad for Dannon Oikos, the "Full House" cast reunited. And "Seinfeld" alums Jerry, George and even Newman came back to Tom's diner in New York City for an ad for Jerry Seinfield's show "Comedians in Cars Getting Coffee." Late-night political satirist Stephen Colbert appeared in a pair of 15-second ads for Wonderful Pistachios. In one he predicted the nuts would sell themselves because "I'm wonderful, they're wonderful." He was back a few seconds later covered in bright green branded messages because the nuts hadn't sold out in 30 seconds. Another light-humored ad came from RadioShack, which featured 1980s pop culture figures including Teen Wolf, Chucky, Alf and Hulk Hogan, destroying a store and a voiceover that said: "The 80s called, they want their store back. It's time for a new RadioShack."

Sunday, February 2, 2014

Hot Gas Utility Stocks To Own For 2015

Last week, in looking ahead to Baker Hughes' (NYSE: BHI  ) Friday release of its first-quarter 2013 results, I offered the opinion:�"A perspective on a possible strengthening in the North American market will obviously be a subject of real importance for Baker's management to address during the company's conference call. "

Sure enough, during the call with analysts and investors, CEO Martin Craighead began with: "First, North America took a step in the right direction, with growth in both revenue and margins. The results were driven by strong activity in Canada, along with improved utilization in our pressure pumping business."

Another angle
Without taking hindsight issue with that statement, I'm forced to compare it to the assessment of the same subject on the same day by Schlumberger's (NYSE: SLB  ) CEO Paal Kibsgaard, who observed during his company's call that "... the main concern in North America land remains the pricing, where the downwards trend in drilling, wireline, and coiled tubing seen in the fourth quarter continued in Q1. In addition, we also saw further downward pricing pressure on a number of hydraulic fracturing bids during the quarter, adding further uncertainty to the North America land market outlook."�

Hot Gas Utility Stocks To Own For 2015: Microsemi Corporation(MSCC)

Microsemi Corporation engages in the design, manufacture, and marketing of analog and mixed-signal integrated circuits (IC) and semiconductors primarily in the United States, Europe, and Asia. Its products include individual components and IC solutions that offer light, sound, and power management for desktop and mobile computing platforms, LCD TVs, and other power control applications. These products are used in notebook computers, data storage, wireless local area network, LCD backlighting, LCD TVs, LCD monitors, automobiles, telecommunications, test instruments, defense and aerospace equipment, sound reproduction, and data transfer equipment. The company?s semiconductor products include silicon rectifiers, zener diodes, low leakage and high voltage diodes, temperature compensated zener diodes, transistors, subminiature high power transient suppressor diodes, and pin diodes used in magnetic resonance imaging (MRI) machines. It also manufactures semiconductors for commer cial applications, such as automatic surge protectors, transient suppressor diodes used for telephone applications, and switching diodes used in computer systems. In addition, the company provides electronic components and systems for the defense and aerospace markets; multi-band radio frequency integrated circuit solutions; and anti-tamper solutions to defense clients in securing systems against tampering, piracy, and reverse engineering. It markets its products directly, as well as through electronic component distributors and independent sales representatives to the defense and security, aerospace, enterprise and communication, and industrial and alternative energy markets. The company was formerly known as Microsemiconductor Corporation and changed its name to Microsemi Corporation in February 1983. Microsemi Corporation was founded in 1960 and is headquartered in Aliso Viejo, California.

Advisors' Opinion:
  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Microsemi (Nasdaq: MSCC  ) , whose recent revenue and earnings are plotted below.

  • [By Lauren Pollock]

    Microsemi Corp.(MSCC) agreed to pay almost $298 million to acquire Symmetricom Inc.(SYMM), a deal that will expand the power-management supplier’s exposure into the aerospace and defense industries while also immediately adding to earnings. Shares in Symmetricom soared.

  • [By Alex Planes]

    What: Shares of Microsemi (NASDAQ: MSCC  ) are holding onto a 7% gain as of this writing, after opening up by over 14% following a solid earnings report that some Wall Street analysts have taken as a sign that a bottom has been reached.

  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Microsemi (Nasdaq: MSCC  ) , whose recent revenue and earnings are plotted below.

Hot Gas Utility Stocks To Own For 2015: Creative Edge Nutrition Inc (FITX)

Creative Edge Nutrition Inc. (CENergy), formerly Laufer Bridge Enterprises Inc, incorporated on January 10, 2008, is engaged in the development, marketing and sales of nutraceuticals and health supplements. The Company�� product categories include lean, energy, essentials, mass, vitamins and apparel. In July 2012, it acquired Innovative Fulfillment Corp. In August 2012, the Company acquired SCD Enterprises, LLC. In September 2012, the Company acquired A-Z-Nutrition.com. In September 2012, the Company acquired Sci-Fit and Nature's Science product brands. In March 2013, it announced its entrance into the Medical Marijuana Sector through Hemp Protein Powder, Naturals Line, Hemp-plex and Chia-plex. In May 2013, Creative Edge Nutrition Inc acquired Canadian Nutrition Super Stores.

Metabolic Xtreme utilizes the technology and advancement in weight loss technology. Cenergy�� Amino Acid Complex is the supplement for athletes, bodybuilders and anyone who's trying to live a healthy lifestyle.

Advisors' Opinion:
  • [By Peter Graham]

    Small cap stocks CD International Enterprises Inc (OTCMKTS: CDII), Creative Edge Nutrition Inc (OTCMKTS: FITX) and Metrospaces Inc (OTCMKTS: MSPC) have all been the subject of recent as well as past paid for stock promotions. Of course, there is nothing wrong with properly disclosed stock promotions or investor awareness campaigns, but they can and do often backfire on unwary investors and traders alike. With that in mind, will investors and traders come out winners with these small caps or should they just be left to the promoters? Here is a quick reality check:

Hot Bank Stocks To Buy Right Now: Mustang Minerals Corp. (MUM.V)

Mustang Minerals Corp., a mineral exploration company, engages in the exploration and development of base and precious metal mineral properties. The company primarily explores for nickel, copper, and platinum group metals. It focuses on exploration and development of the Makwa Nickel Project and the Mayville Ni-Cu-PGM Project located in southeastern Manitoba. The company�s projects also include the Bannockburn Nickel, the East Bull Lake PGM, and the River Valley PGM situated in Ontario. Mustang Minerals Corp. was incorporated in 1997 and is headquartered in Toronto, Canada.

Hot Gas Utility Stocks To Own For 2015: Prudential Corp(PRU.L)

Prudential plc, together with its subsidiaries, provides retail financial products and services, and asset management services to individuals and businesses in Asia, the United States, and the United Kingdom. It offers life insurance, health and protection products, and mutual funds, as well as selected personal lines property and casualty insurance, group insurance, institutional fund management, and consumer finance. The company has distribution relationships with approximately 75 institutions in Asia; and distributes its insurance products primarily through an agency sales force together with selected banks, and mutual funds through banks and brokers. It also offers fixed annuities, variable annuities, life insurance, managed accounts, and investment products, as well as institutional products, including guaranteed investment contracts, medium term note funding agreements, and funding agreements through independent insurance agents; independent broker-dealers; regional broker-dealers; wirehouses; registered investment advisers; a small captive agency channel, consisting of approximately 100 life insurance agents; and banks, credit unions, and other financial institutions. In addition, it provides retail financial products and services, including long-term insurance, asset accumulation and retirement income products, retail investment and unit trust products, and fund management services through financial advisers, partnership agreements with banks and other financial institutions, and direct marketing. The company was founded in 1848 and is based in London, the United Kingdom.

Hot Gas Utility Stocks To Own For 2015: Otis Capital Corp (OOO.V)

Otis Gold Corp. engages in the acquisition, exploration, and development of precious metal deposits in Idaho, the United States. It explores for gold and silver properties. The company principally holds a 100% interest in the Kilgore gold project that consists of 162 federal lode mining claims located in Clark County, Idaho. Otis Gold Corp. is based in Vancouver, Canada.

Hot Gas Utility Stocks To Own For 2015: Invesco Plc(IVZ)

Invesco Ltd. is a publicly owned investment manager. The firm primarily provides its services to individuals, typically high net worth individuals. It also manages accounts for institutions. The firm manages separate client focused equity, fixed income, balanced portfolios. It also launches equity, fixed income, and balanced mutual funds for its clients. The firm invests in the public equity and fixed income markets across the globe. It invests in core, growth, and value stocks of small-cap, mid-cap, and large-cap companies. The firm employs a fundamental and quantitative analysis with a bottom-up stock picking approach to make its investments. It conducts in-house research to make its investments. Invesco Ltd. was founded in December 1935 and is based in Atlanta, Georgia.

Advisors' Opinion:
  • [By Sean Williams]

    Investment management firm Invesco (NYSE: IVZ  ) , which typically caters to high-net-worth individuals and offers a myriad of ETFs, rose 6.8% after reporting its first-quarter results. For the quarter, profits jumped nearly 15% to $0.49 per share as clients and investors flooded into its ETFs. Total cash inflows totaled $19.2 billion for the quarter -- a record for the company. It also didn't hurt that Invesco boosted its dividend by 30% to $0.225 per quarter. Even after today's move, at just 13 times forward earnings, there could still be room to run higher.

  • [By Zacks]

    Currently, shares of T. Rowe Price carry a Zacks Rank #2 (Buy). Among other investment managers, Invesco Ltd. (NYSE: IVZ) is scheduled to report December quarter end results on Jan 30, Legg Mason Inc. (NYSE: LM) on Jan 31 and Ameriprise Financial, Inc. (NYSE: AMP) on Feb 4.

Hot Gas Utility Stocks To Own For 2015: HENDERSON GROUP PLC ORD GBP0.125(HGG.L)

Henderson Group plc is an asset management holding entity. Through its subsidiaries, the firm provides services to institutional, retail clients, and high net worth clients. It manages separate client-focused equity and fixed income portfolios. The firm also manages equity, fixed income, and balanced mutual funds for its clients. It invests in public equity and fixed income markets, as well as invests in real estate and private equity. Henderson Group plc was founded in 1934 and is based in London, United Kingdom with additional offices in Jersey, United Kingdom and Sydney, Australia.

Hot Gas Utility Stocks To Own For 2015: Kleangas Energy Technologies Inc (KGET)

Kleangas Energy Technologies, Inc., incorporated on January 7, 2008, is a development-stage company. The Company is engaged in designing, manufacturing and selling oxy-hydrogen systems. These systems function by creating oxygen and hydrogen from distilled water through electrolysis and injecting these gases into the mixture of fuel and air used in gasoline and diesel internal combustion engines. In August 2013, the Company acquired a Patent Pending Oxy-Hydrogen Generator Technology for all types of gas and diesel internal combustion engines. In December 2013, the Company announced that it has completed the acquisition of Green Day Technologies, Inc.

The Company designs, develops and markets a range of technologies, including oxy-hydrogen on-demand generators, reverse fuel cells, hydrogen powered devices, welding and cutting systems and other products to deliver a clean gas. The Company�� technology can separate these two basic life giving elements or recombine them into a clean source of gas that can be implemented in a wide variety of applications

Advisors' Opinion:
  • [By Peter Graham]

    Small cap green stocks Essential Innovations Technology Corp (OTCBB: ESIV), Building Turbines Inc (OTCMKTS: BLDW) and Kleangas Energy Technologies Inc (OTCMKTS: KGET) have all been getting some attention lately in various investment newsletters ��either because they were sinking, because of paid promotions or a combination of both. However, there aren�� many green stocks out there that have actually produced some green for investors in the form of profits. With that in mind, here is a quick reality check about all three green small cap stocks to help you decide whether any have the potential for long-term success:

Hot Gas Utility Stocks To Own For 2015: Young Innovations Inc.(YDNT)

Young Innovations, Inc., together with its subsidiaries, engages in the development, manufacture, and marketing of supplies and equipment used by dentists, dental hygienists, dental assistants, and consumers primarily in the United States, as well as in Canada, Europe, South America, Central America, and the Pacific Rim. The company offers a range of dental products in two categories, including consumables and diagnostics. Its consumable products include preventive products consisting of prophylaxis angles and pastes, fluorides, hand pieces and components, and moisture control products; infection control products comprising surface disinfectants, evacuation system cleaners, gloves and masks, ultrasonic cleaning systems, and instrument disinfectants; disposable micro-applicators and bristle brush applicators; homecare kits and toothbrushes; and endodontic products, such as heat-softened gutta percha delivery systems and ultrasonic systems. The company?s diagnostic products comprise digital imaging systems, including PC-4000 integrated digital panoramic imaging system and 1000-DR digital conversion kit; film X-ray systems consisting of PC-1000 film-type panoramic X-ray system, factory-refurbished film machines, and cephalometric attachments; and dental X-ray supplies and accessories, including films, film cassettes and intensifying screens, processing chemicals, and darkroom supplies. It also provides a rental program in which a dental practice can install and pay for a PC-1000 film-type machine on a per image basis, as well as service and repair for its panoramic X-ray systems. The company markets its products primarily through a network of dental product distributors to dental professionals worldwide, as well as directly to dental providers, dental hygiene schools, veterans administration healthcare facilities, and military bases in the United States. Young Innovations, Inc. was founded in 1995 and is headquartered in Earth City, Missouri.

Hot Gas Utility Stocks To Own For 2015: Kelly Services Inc.(KELYA)

Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company offers trained employees who work in word processing, data entry, and as administrative support staff; staff for contact centers, technical support hotlines, and telemarketing units; substitute teachers; support staff for seminars, sales, and trade shows; technicians for the technology, aerospace, and pharmaceutical industries; maintenance workers, material handlers, and assemblers; and temporary and full-time placement services, as well as direct-hire placement and vendor on-site management services. It also provides scientific and clinical research workforce solutions; chefs, porters, and hospitality representatives; manual workers to semi-skilled professionals in trade, non-trade, and operational positions; engineering professionals for various disciplines, such as aeronautical, chemical, civil/structural, electrical/instrumentation, environmen tal, industrial, mechanical, petroleum, pharmaceutical, quality, and telecommunications; and employees for creative services positions. In addition, the company offers professionals for corporate finance departments, accounting firms, and financial institutions; talent management solutions; healthcare specialists and professionals for hospitals, ambulatory care centers, HMOs, and other health insurance companies; information technology specialists; legal professionals, such as attorneys, paralegals, contract administrators, compliance specialists, and legal administrators; and mid- to senior-level search and selection services, as well as consulting services. Further, it provides recruitment process and contingent workforce outsourcing, independent contractor solutions, payroll and business process outsourcing, career transition and organizational effectiveness, and executive search services. The company was founded in 1946 and is headquartered in Troy, Michigan.

Advisors' Opinion:
  • [By Dan Burrows]

    Staffing stocks like Manpower Group (MAN), Robert Half International (RHI) and Kelly Services (KELYA) have put up market-beating to market-crushing gains over the last year, boosted by accelerating strength in the job market.

Hot Gas Utility Stocks To Own For 2015: Morgan Stanley Emerging Markets Fund Inc. (MSF)

Morgan Stanley Emerging Markets Fund, Inc. is a closed-ended equity mutual fund launched and managed by Morgan Stanley Investment Management Inc. It invests in the public equity markets across the global emerging markets. The fund invests in stocks of companies operating across diversified sectors. It makes its investments in companies across all market capitalizations. The fund benchmarks the performance of its portfolio against the MSCI Emerging Markets Free Index. Morgan Stanley Emerging Markets Fund Inc. was formed on November 1, 1991 and is domiciled in the United States.

Advisors' Opinion:
  • [By George Putnam, Editor, New Generation Research, Inc.]

    Morgan Stanley Emerging Markets Fund (MSF) is not an index-based fund, and therefore, its portfolio managers have a lot of latitude.

    Among their top ten holdings are a range of consumer and technology holdings, such as Samsung Electronics and Taiwan Semiconductor, as well as financials. At current prices, the fund is trading at a roughly 10.5% discount to its net asset value (NAV).

Hot Gas Utility Stocks To Own For 2015: National Australia Bank Ltd (NAB)

National Australia Bank Limited provides products, advice and services. In Australia, it operates through National Australia Bank, MLC and UBank. In the United Kingdom, it operates through Clydesdale Bank. In New Zealand, it operates through Bank of New Zealand. In the United States, it operates through Great Western Bank. Segments include Business Banking, Personal Banking, Wholesale Banking, UK Banking and NZ Banking, MLC and NAB and Great Western Ban. As of April 5, 2012, the Company and its associated entities ceased to be a substantial holder in BlueScope Steel Limited. On May 17, 2012, it ceased to be a substantial holder in Spark Infrastructure Group and Sandfire Resources NL. As of August 24, 2012, the Company and its associated entities ceased to be holder in Tabcorp Holdings Limited. In September 2012, the Company and its associated entities have ceased to be a substantial holder in Incitec Pivot Limited, as of August 30, 2012. Advisors' Opinion:
  • [By Yoshiaki Nohara]

    Alacer Gold Corp. sank 4.1 percent in Sydney as the price of the precious metal declined. Honda Motor Co. (7267) lost 0.6 percent after Japan�� third-largest carmaker reported second-quarter profit that missed analysts��estimates amid slowing motorcycle sales in Southeast Asia. National Australia Bank Ltd. (NAB) retreated 2.3 percent as expenses climbed at the country�� largest lender by assets.

Hot Gas Utility Stocks To Own For 2015: Signature Bank (SBNY.O)

Signature Bank (the Bank) is a full-service commercial bank with 25 private client offices located in the New York metropolitan area serving the needs of privately owned business clients and their owners and senior managers. The Bank offers a variety of business and personal banking products and services through the Bank, as well as investment, brokerage, asset management and insurance products and services through its wholly owned subsidiary, Signature Securities Group Corporation (Signature Securities), a licensed broker-dealer and investment adviser. Through Signature Securities, it also purchases, securitizes and sells the guaranteed portions of the United States Small Business Administration (SBA) loans. The Bank offers a variety of deposit, escrow deposit, credit, cash management, investment and insurance products and services to its clients. As of December 31, 2011, the Bank maintained approximately 78,000 deposit accounts, 6,900 investment accounts, 8,600 loan a ccounts and 14,300 client relationships. In April 2012, it formed a new subsidiary, Signature Financial, LLC.

The Bank offers a range of products and services oriented to the needs of its business clients, including deposit products, such as non-interest-bearing checking accounts, money market accounts and time deposits; escrow deposit services; cash management services; commercial loans and lines of credit for working capital and to finance internal growth, acquisitions and leveraged buyouts; permanent real estate loans; letters of credit; investment products to help better manage idle cash balances, including money market mutual funds and short-term money market instruments; business retirement accounts, such as 401(k) plans, and business insurance products, including group health and group life products. It offers a range of products and services oriented to the needs of its high net worth personal clients, including interest-bearing and non-interest-bearing checking accounts, with optional features, such as debit/ a! u! tomated teller machine (ATM) cards and overdraft protection and, for its clients, rebates of certain charges, including ATM fees; money market accounts and money market mutual funds; time deposits; personal loans, both secured and unsecured; mortgages, home equity loans and credit card accounts; investment and asset management services, and personal insurance products, including health, life and disability.

Lending Activities

The Bank�� commercial and industrial (C&I) loan portfolio is consisted of lines of credit for working capital and term loans to finance equipment, company owned real estate and other business assets, along with commercial overdrafts. Its lines of credit for working capital are generally renewed on an annual basis and its term loans generally have terms of 2 to 5 years. The Bank�� lines of credit and term loans typically have floating interest rates, and as of December 31, 2011, approximately 61% of its outstanding C&I loan s were variable rate loans. As of December 31, 2011, funded C&I loans totaled approximately 15% of its total funded loans. The Bank�� real estate loan portfolio includes loans secured by commercial and residential properties. It also provides temporary financing for commercial and residential property. As of December 31, 2011, funded real estate loans totaled approximately $5.74 billion, representing approximately 80% of its total funded loans. It issues standby or performance letters of credit, and can service the international needs of its clients through correspondent banks. As of December 31, 2011, its commitments under letters of credit totaled approximately $235.7 million. Its personal loan portfolio consists of personal lines of credit and loans to acquire personal assets. As of December 31, 2011, its consumer loans totaled $11.8 million, representing less than 1% of its total funded loans.

Investment and Asset Management Products and Services

Investment and asset management products and servi! ces a! re! provid! ed through the Bank�� subsidiary, Signature Securities. Signature Securities is a licensed broker-dealer. Signature Securities is an introducing firm and, as such, clears its trades through National Financial Services, Inc., a wholly owned subsidiary of Fidelity Investments. Signature Securities is also registered as an investment adviser in New York, New Jersey, Pennsylvania and Florida. It offers an array of asset management and investment products, including the ability to purchase and sell all types of individual securities, such as equities, options, fixed income securities, mutual funds and annuities. The Bank offers transactional, cash management type brokerage accounts with check writing and daily sweep capabilities. It also offers retirement products, such as individual retirement accounts (IRAs) and administrative services for retirement vehicles, such as pension, profit sharing, and 401(k) plans to its clients. Signature Securities offers wealth management servi ces to its high net worth personal clients. Together with its client and their other professional advisors, including attorneys and certified public accountants, it develops a financial plan that can include estate planning, business succession planning, asset protection, investment management, family office advisory services, bill payment, art and collectible advisory services and concentrated stock services.

Sources of Funds

The Bank offers a variety of deposit products to its clients. Its business deposit products include commercial checking accounts, money market accounts, escrow deposit accounts, lockbox accounts, cash concentration accounts and other cash management products. Its personal deposit products include checking accounts, money market accounts and certificates of deposit. The Bank also allows its personal and business deposit clients to access their accounts, transfer funds, pay bills and perform other account functions over the Inte rnet and through ATM machines. As of December 31,! 2011, it! m! aintained! approximately 78,000 deposit accounts representing $11.70 billion in client deposits, excluding brokered deposits.

Insurance Services

The Bank offers its business and private clients an array of individual and group insurance products, including health, life, disability and long-term care insurance products through its subsidiary, Signature Securities. The Bank does not underwrite insurance policies. It only acts as an agent in offering insurance products and services underwritten by insurers.