Saturday, May 31, 2014

Top Healthcare Equipment Companies To Invest In Right Now

Just days after announcing cuts of up to 300 employees at its South Milwaukee facility that it acquired from Bucyrus, heavy-equipment manufacturer Caterpillar (NYSE: CAT  ) laid off 460 workers at its Decatur, Ill., plant, again citing mining industry weakness.�The Decatur plant is a manufacturing facility that runs a foundry, overhaul, and remanufacturing, and where the South Milwaukee layoffs have been deemed temporary, these are said to be permanent. All told, the company wants to eliminate about 2,000 jobs.

A deep hole
Caterpillar identifies�coal, iron ore, gold, copper, and oil and natural gas as primary users of its equipment, so it's easy to see why the equipment maker is taking it on the chin. Mining companies are abandoning the coal industry in droves.

Rio Tinto (NYSE: RIO  ) recently announced its intention to sell off its Australian coal assets while also seeking "strategic alternatives" for its copper and gold mines. Despite global financial turmoil, gold is incongruously slipping as a safe haven, as billionaire investor George Soros recently pointed out.

Top Healthcare Equipment Companies To Invest In Right Now: Ecolab Inc (ECL)

Ecolab Inc. (Ecolab), incorporated in 1924, develops and markets products and services for the hospitality, foodservice, healthcare and industrial markets. The Company provides cleaning and sanitizing products and programs, as well as pest elimination, equipment maintenance and repair services primarily to customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care, commercial facilities management and vehicle wash sectors. The Company business segments include United States Cleaning & Sanitizing segment, United States Other Services segment, International segment, Water Services segment, Paper Services segment and Energy Services segment. In April 2013, it acquired Champion Technologies and its related company Corsicana Technologies. In August 2013, Ecolab Inc. sold all the capital equipment design and build business of its Mobotec air emissions control business to The Power Industrial Group.

In March 2011, the Company purchased the assets of O.R. Solutions, Inc. In December 2011, it merged with Nalco Holding Company. In December 2011, the Company acquired Esoform. In December 2011, the Company acquired the InsetCenter pest elimination business in Brazil. In March 2012, it acquired Econ Industria e Comercio de Produtos de Higiene e Limpeza Ltda. On December 1, 2012, the Company's Vehicle Care division was purchased by a wholly owned subsidiary of Zep Inc.

United States Cleaning & Sanitizing Segment

The United States Cleaning & Sanitizing segment consists of six business units, which provide cleaning and sanitizing products and programs to United States markets. The Institutional Division sells specialized cleaners and sanitizers for washing dishes, glassware, flatware, foodservice utensils and kitchen equipment (warewashing), for on-premise laundries (typically used by hotel and healthcare customers) and for general housekeeping functions, as well as food safety products and equipment, dish! washer racks and related kitchen sundries to the foodservice, lodging, educational and healthcare industries. The Institutional Division also provides pool and spa treatment programs for hospitality and other commercial customers, as well as a range of janitorial cleaning and floor care products and programs to customers in hospitality, health care and commercial facilities. The Institutional Division develops and markets various chemical dispensing device systems, which are made available to customers, to dispense its cleaners and sanitizers. In addition, the Institutional Division markets a lease program consisted of dishwashing machines, detergents, rinse additives and sanitizers, including full machine maintenance.

The Food & Beverage division addresses cleaning and sanitation at the beginning of the food chain to facilitate the processing of products for human consumption. The Division provides detergents, cleaners, sanitizers, lubricants and animal health products, as well as cleaning systems, electronic dispensers and chemical injectors for the application of chemical products, primarily to dairy plants, dairy farms, breweries, soft-drink bottling plants, and meat, poultry and other food processors. The Food & Beverage Division is also a developer and marketer of antimicrobial products used in direct contact with meat, poultry, seafood and produce during processing in order to reduce microbial contamination. The Food & Beverage Division also designs, engineers and installs clean-in-place (CIP) process control systems and facility cleaning systems for its customer base.

Ecolab�� Kay business unit supplies cleaning and sanitizing chemical products and related items primarily to regional, national and international quick service restaurant (QSR) chains and to regional and national food retailers (supermarkets and grocery stores). Its products include specialty and general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted clea! ning tool! s and equipment, which are primarily sold under the Kay and Ecolab brand names. Kay supports its product sales with employee training programs and technical support designed to meet the needs of its customers.

Both Kay�� QSR business and its food retail business utilize a corporate account sales force, which establishes relationships and negotiates contracts with customers at the corporate headquarters and regional office levels and a field sales force, which provides program support at the individual restaurant or store level. Customers in the QSR market segment are primarily supplied through third-party distributors. The Healthcare Division provides infection prevention and other healthcare related offerings to acute care hospitals, surgery centers, dental offices and veterinary clinics. The Healthcare Division�� infection prevention products (hand hygiene, hard surface disinfectants, instrument cleaners, patient drapes, fluid control and equipment drapes) are sold primarily under the Ecolab and Microtek brand names to various departments within the acute care environment (Infection Control, Environmental Services, Central Sterile and Operating Room).

The Textile Care Division provides chemical laundry products and dispensing systems, as well as related programs, to large industrial and commercial laundries. The Textile Care Division�� customers include free-standing laundry plants used by institutions, such as hotels, restaurants and healthcare facilities, as well as industrial and textile rental laundries. Products and programs include laundry cleaning and specialty products, related dispensing equipment, plus water and energy management. The Vehicle Care Division provides vehicle appearance products, which include soaps, polishes, sealants, wheel and tire treatments and air fresheners. Products are sold to vehicle rental, fleet and consumer car wash and detail operations. Brand names utilized by the Vehicle Care Division include Blue Coral, Black Magic and Rain-X.

United States Other Services Segment

The United States Other Services segment consists of two business units: Pest Elimination and Equipment Care. The Pest Elimination Division provides services designed to detect, eliminate and prevent pests, such as rodents and insects, in restaurants, food and beverage processors, educational and healthcare facilities, hotels, quick service restaurant and grocery operations and other institutional and commercial customers. Equipment Care Division provides equipment repair and maintenance services for the commercial food service industry. Repair services are offered for in-warranty repair, acting as the manufacturer�� authorized service agent, as well as after warranty repair. In addition, Equipment Care operates as a parts distributor to repair service companies and end use customers.

International Segment

The Company conducts business in approximately 74 countries outside of the United States through wholly owned subsidiaries or, in the case of Venezuela, through joint ventures with local partners. In other countries, selected products are sold by the Company�� export operations to distributors, agents or licensees. Its International operations are located in Europe, Asia Pacific, Latin America and Canada, with smaller operations in Africa and the Middle East.

Water Services and Paper Services Segments

The Water and Process Services business consist of two segments: Water Services, which focuses on customers across industrial and institutional markets, and Paper Services, serving the pulp and paper industries. It serve customers in the aerospace, chemical, pharmaceutical, mining and primary metals, power, food and beverage, medium and light manufacturing and pulp and papermaking industries as well as institutional clients such as hospitals, universities, commercial buildings and hotels. The Paper Services segment offers a portfolio of programs that are used in all principal steps of the papermak! ing proce! ss and across all grades of paper, including graphic grades, board and packaging, and tissue and towel.

It provides water treatment capabilities to a range of industries. The water treatment applications include cooling water applications, boiler water applications, raw water/potable water preparation, wastewater applications and water reuse and recycling. Its cooling water treatment programs are designed to control the main problems associated with cooling water systems, such as corrosion, scale and microbial fouling and contamination in open recirculating, once-through and closed systems. Its three dimensional (3D) TRASAR technology for cooling water is automated system for simultaneous control of corrosion, scale and microbial fouling and contamination. It also provides pulp and papermaking applications.

Energy Services Segment

The Energy Services Division provides on-site, technology-driven solutions to the global drilling, oil and gas production, refining, and petrochemical industries. In addition to recovery, production and process enhancements, it delivers a range of water treatment offerings to refineries and petrochemical plants. The Energy Services Division is divided into an Upstream group composed of its Adomite, Oil Field Chemicals and Enhanced Oil Recovery businesses and a Downstream refinery and petrochemical processing service business.

The Adomite group offers a range of product solutions. It supplies chemicals for the cementing, drilling, fracturing and acidizing phases of well drilling and stimulation. The Oilfield Chemicals business provides solutions to the oil and gas production sector. It focuses in crude oil and natural gas production, pipeline gathering/transmission systems, gas processing, and heavy oil and bitumen upgrading. TIORCO business globally markets custom-engineered chemical solutions. Its services include reservoir screening, target validation, laboratory and reservoir simulation work, secondary flood optimization! , tertiar! y recovery flood design and implementation and when needed, a produced water treatment solution. It provide total water management solutions to customers��refining and chemical processing needs, including boiler treatment, cooling water treatment and wastewater treatment.

Advisors' Opinion:
  • [By Ben Levisohn]

    Another important component of overcrowding is that current volatility tends to be low, and underestimates the amount of risk in the stock, Zlotnikov says. He offers a list of low-beta stocks that screened for overcrowding characteristics. They include Walt Disney (DIS), Ecolab (ECL), Walgreen (WAG), McKesson (MCK) and Madison Square Garden (MSG), among others.

  • [By Mani]

    Ecolab Inc. (NYSE:ECL) has generated consistently strong earnings growth over the past two decades. Its robust and durable competitive advantages derive from its heavy R&D focus, innovative products, and sizable highly-trained sales force.

Top Healthcare Equipment Companies To Invest In Right Now: Arkansas Best Corporation (ABFS)

Arkansas Best Corporation, through its subsidiaries, provides freight transportation services and solutions. The company�s Freight Transportation segment offers aggregate, national, inter-regional, and regional transportation of general commodities; motor carrier freight transportation services; business-to-business air transportation services for exporting freight out of the United States and import into the United States; ocean transport services; global customizable supply chain solutions; and integrated warehousing services. Its Premium Logistics and Expedited Freight Services segment provides expedited freight transportation services to commercial and government customers; and premium logistics services that involve the deployment of specialized equipment to meet line haul requirements, such as temperature control, hazardous materials, geofencing, specialized government cargo, security services, and life sciences. This segment also offers domestic and international f reight transportation with air, ocean, and ground service. The company�s Truck Brokerage and Management segment provides third-party transportation brokerage and management services by sourcing various equipment types, including truckload, flatbed, intermodal, temperature-controlled, and specialized equipment coupled with carrier- and customer-based Web tools. Its Emergency and Preventative Maintenance segment offers roadside assistance and maintenance management services for commercial vehicles through a network of third-party service providers. The company�s Household Goods Moving Services segment provides third-party transportation, warehousing, and delivery services to the consumer, corporate, and military household goods moving markets. As of December 31, 2012, the company operated approximately 3,700 tractors and 20,000 trailers that were used in its line haul and local pickup and delivery operations. Arkansas Best Corporation was founded in 1935 and is headquartered in Fort Smith, Arkansas.

Advisors' Opinion:
  • [By Sean Williams]

    What: Shares of trucking company Arkansas Best (NASDAQ: ABFS  ) revved up the engine, and jumped as much as 17% after announcing its ABF Freight Systems employees had ratified a five-year collective bargaining agreement.

  • [By Dan Caplinger]

    But one reason why trucking stocks have done so well is that investors are starting to see the potential for consolidation in the industry. Long-beleaguered YRC Worldwide (NASDAQ: YRCW  ) apparently made an offer to buy out peer Arkansas Best (NASDAQ: ABFS  ) in May, and although Arkansas Best rebuffed the bid, it still points to the efficiency gains that smaller trucking and logistics companies could gain from combining forces.

  • [By Jon C. Ogg]

    Arkansas Best Corp. (NASDAQ: ABFS) was raised to Strong Buy from Market Perform at Raymond James.

    Boise Cascade LLC (NYSE: BCC) was raised to Buy from Neutral at D.A. Davidson.

Top 10 Solar Companies To Own In Right Now: MagneGas Corp (MNGA)

MagneGas Corporation, incorporated on December 09, 2005, is an alternative energy company that creates and produces hydrogen based alternative fuel through the gasification of liquid waste. The Company has developed a process which transforms various types of liquid waste through a plasma arc machine. The result of the product is to carbonize the waste for normal disposal. A byproduct of this process is to produce an alternative to natural gas sold in the metalworking market. The Company produces gas bottled in cylinders for the purpose of distribution to the metalworking markets as an alternative to acetylene. In addition, the Company markets, for sale or licensure, its plasma arc technology. Through the course of the Company's business development, the Company has established a retail and wholesale platforms to sell its fuel for use in the metalworking and manufacturing industries. In August 2012, the Company purchased a 3.5 acre site in Tarpon Springs, FL.

The Company focuses on producing and selling fuels and equipment for the metalworking fuel market. The Company has distributors in Pennsylvania, Alabama, Michigan and Florida. The Company also has a retail operation in Florida selling fuel directly to end users. The Company has obtained approval from the Department of Transportation to deliver fuel in Florida and has several customers purchasing fuel directly. The Company has two products: the fuel called MagneGas and the machines that produce that gas known as Plasma Arc Flow refineries. The Company produces MagneGas for the metalworking market from a feedstock of virgin ethylene glycol (automotive anti-freeze) which is purchased in bulk from outside suppliers. The fuel is hydrogen based and can be used to replace natural gas. It is sold as a replacement for acetylene in the metalworking market. The Plasma Arc Flow technology can gasify many forms of liquid waste such as ethylene glycol, sewage and sludge. Plasma Arc Flow refineries are configured in various sizes ranging from 50kil! owatts (KW) to 500KW depending on the application.

Advisors' Opinion:
  • [By James E. Brumley]

    Truth be told, had MagneGas Corporation (NASDAQ:MNGA) shares not surged 400% - and subsequently tumbled - in early January, it might not even be worth looking at now. MNGA did surge then, however, so what we've seen unfurl over the past few days can't be ignored now... as it suggests this small hydrogen supplier stock is about to take flight in a more controlled and longer-lasting way than it did at the beginning of the year.

  • [By James E. Brumley]

    You're welcome. Back on March 12th when yours truly penned some bullish thoughts on MagneGas Corporation (NASDAQ:MNGA), nobody cared, largely because nobody had heard of the company, and there was no particular reason anybody had to find MNGA. Now less than a full week later, this once-obscure name is all the rage; no less than 21 different market-centric websites have made mention of the stock's explosive growth over the past few days. MagneGas has been proverbially put on the map, with shares surging 90% (as of right now) since the first exploration last Wednesday. So, like I said, you're welcome.... if you got in on the 12th, or even more realistically, got in on the 14th when MNGA finally crossed above the ceiling at $0.94 I was talking about a little less than a week ago.

  • [By James E. Brumley]

    If the names Axxess Unlimited Inc. (OTCMKTS:AXXU) and MagneGas Corporation (NASDAQ:MNGA) ring a bell, it might be because yours truly posted some bullish thoughts on both names earlier this week. Although neither small cap stock had done everything they needed to do in order become a fully bullish trade at the time, both MNGA and AXXU have cleared those hurdles in the meantime. So, in case you forgot (or in case you missed the first look), an updated review of Axxess Unlimited and MagneGas is merited.

Top Healthcare Equipment Companies To Invest In Right Now: Dynavax Technologies Corporation(DVAX)

Dynavax Technologies Corporation, a clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious diseases. The company's lead product candidate includes HEPLISAV, a Phase 3 investigational adult hepatitis B vaccine designed to provide protection with fewer doses than current licensed vaccines. It also develops Universal Flu vaccine, a Phase 1b clinical trial vaccine for influenza prevention; SD-101, a Phase Ib clinical trial hepatitis C therapy; DV-601, a Phase Ib clinical trial hepatitis B therapy; AZD1419, a preclinical asthma therapy; and DV1179, a Phase 1 trial autoimmune and inflammatory disease therapy. Dynavax Technologies Corporation has strategic alliance with GlaxoSmithKline plc to discover, develop, and commercialize DV1179 and other endosomal toll-like receptor inhibitors for diseases, such as lupus, psoriasis, and rheumatoid arthritis; and develop a TLR8 inhibitor for the treatment of multiple autoimmune and i nflammatory diseases, as well as has research and license agreement with AstraZeneca to discover and develop TLR9 agonist-based therapies for the treatment of asthma and chronic obstructive pulmonary disease. The company was founded in 1996 and is based in Berkeley, California.

Advisors' Opinion:
  • [By Rich Smith]

    Berkeley, Calif.-based Dynavax Technologies (NASDAQ: DVAX  ) has a new chief executive officer.

    On Tuesday, the vaccine manufacturer announced that current CEO Dr. Dino Dina will retire on May 1, and will be succeeded by Eddie Gray, who comes from GlaxoSmithKline, where the doctor had served as president of Pharmaceuticals, Europe, since 2008.

  • [By Max Macaluso, Ph.D.]

    Shares of biotech�Dynavax Technologies� (NASDAQ: DVAX  ) �plunged 30% this morning after the company provided an update on its experimental hepatitis B vaccine Heplisav. According to its press release, the company met with the Food & Drug Administration, and the regulatory agency has stated that Dynavax simply doesn't have enough data to confirm the safety of the vaccine.

Top Healthcare Equipment Companies To Invest In Right Now: Acadia Healthcare Company Inc (ACHC)

Acadia Healthcare Company, Inc., incorporated on October 24, 2005, is a provider of inpatient behavioral healthcare services in the United States. The Company's principal business is to develop and operate inpatient psychiatric facilities, residential treatment centers, group homes, substance abuse facilities and facilities providing outpatient behavioral health services in the United States. In January 2014, the Company announced that it has completed the acquisition of inpatient psychiatric facilities in Seattle, Washington, and Riverside, California.

In December 2011, the Company closed three outpatient facilities and a 24-bed substance abuse facility acquired from PHC on November 1, 2011. The Company's facilities and services consists of acute inpatient psychiatric facilities; residential treatment centers, group homes, therapeutic group homes and foster care; substance abuse centers; outpatient community-based services, and other behavioral services, including specialized educational services and call centers.

Acute Inpatient Psychiatric Facilities

The Company�� acute inpatient psychiatric facilities provide a high level of care in order to stabilize patients that are either a threat to themselves or to others. The acute setting provides 24-hour observation, daily intervention and monitoring by psychiatrists. The Company's facilities, which offer acute care services provide evaluation and crisis stabilization of patients with severe psychiatric diagnoses through a medical delivery that incorporates structured and intensive medical and behavioral therapies with 24-hour monitoring by a psychiatrist, psychiatric trained nurses, therapists and other direct care staff. As of December 31, 2011, the Company operated 10 facilities that provided acute care services in addition to other services.

Residential Treatment Centers/Group Homes

The Company�� residential treatment centers treat patients with behavioral disorders in a non-hospit! al setting. The facilities balance therapy activities with social, academic and other activities. The Company provides residential treatment care through a medical model residential treatment facility, which offers intensive, medically-driven interventions and individualized treatment regimens designed to deal with moderate to high level patient acuity. Treatment is provided by an interdisciplinary team coordinating psychopharmacological, individual, group and family therapy, along with specialized accredited educational programs in both secure and unlocked environments. As of December 31, 2011, the Company operated 14 facilities that provided residential treatment care, in addition to other services.

The Company's group home programs provide family-style living for youths in a single house or apartment within residential communities where supervision and support are provided by 24-hour staff. The Company also operates therapeutic group homes that provide treatment services for seriously, emotionally disturbed adolescents. The Company also manages therapeutic foster care programs, which are considered the least restrictive form of therapeutic placement for children and adolescents with emotional disorders. As of December 31, 2011, the Company operated three facilities that provided group home and therapeutic group home services.

Outpatient Community-Based Services

The Company's community-based services are provided for two age groups: children and adolescents (seven to 18 years of age) and young children (three months to six years of age). Community-based programs are designed to provide therapeutic treatment to children and adolescents who have a clinically-defined emotional, psychiatric or chemical dependency disorder while enabling the youth to remain at home and within their community. Community-based programs developed for these age groups provide an array of therapeutic services to children. As of December 31, 2011, the Company operated eight facilities that! provided! community-based services.

Substance Abuse Centers

The Company�� Substance abuse centers (or SACs) provide a continuum of care for adults with addictive disorders and co-occurring mental disorders. The Company's detox, inpatient, partial hospitalization and outpatient treatment programs give patients access to the least restrictive level of care. As of December 31, 2011, the Company operated two SACs.

Specialized Education Services and Other Behavioral Services

The Company's education programs provide an educational experience to children and adolescents having special education needs. In some states, the Company provides educational services on an extended school year basis. The Company also has charter schools that utilize teaching methods that address therapeutic needs particular to learning and behavioral deficits of the students. The Company's education services also include vocational education and training that may allow those residents to become employable in entry level positions in the communities in, which they reside. GED preparation courses are also offered for students who require assistance in developing test-taking skills and who would benefit from tutoring services. As of December 31, 2011, the Company operated 11 facilities that provided educational services.

The Company also offers a variety of other behavioral health services for specialized populations who need specific treatment methods. Programs include at risk infant and children clinics, sexually maladaptive behavior (SMB) programs, programs for adolescent females, programs for the mentally retarded and developmentally disabled youth and programs for severe and persistently mentally ill youths.

Call Center Operations

The Company provides management , administrative and help lines services. The Company provides these servicesthrough contracts with railroads and a call center contract with Wayne County, Michigan.

The Company ! competes ! with UHS, Aurora Behavioral Health Care (Aurora) and Ascend Health Corporation (Ascend).

Advisors' Opinion:
  • [By Roberto Pedone]

    Acadia Healthcare (ACHC) develops and operates a network of behavioral health facilities, providing premier psychiatric and chemical dependency services to its patients. This stock closed up 6.5% at $36.87 in Wednesday's trading session.

    Wednesday's Volume: 792,000

    Three-Month Average Volume: 360,986

    Volume % Change: 124%

    From a technical perspective, ACHC soared higher here right above its 50-day moving average at $34.12 with strong upside volume. This move pushed shares of ACHC into breakout territory, since the stock took out its former 52-week high at $36. Shares of ACHC have been uptrending strong over the last six months, with shares soaring higher from its low of $24.93 to its intraday high of $37. During that move, shares of ACHC have been making mostly higher lows and higher highs, which is bullish technical price action.

    Traders should now look for long-biased trades in ACHC as long as it's trending above its 50-day at $34.12 and then once it sustains a move or close above Wednesday's high of $37 with volume that's near or above 360,986 shares. If we get that move soon, then ACHC will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45.

  • [By Tom Lydon]

    Top holdings based on the index include Acadia Healthcare Companies (ACHC), Amsurg Corporation (AMSG), Brookdale Senior Living (BKD), Clarcor (CLC) and Community Health Systems (CYH).

EMC: This Stock Can Help You Profit from Enterprise Cloud Growth

EMC (EMC) is one of the leading companies in data storage solutions. It also extends its hands at various other solutions such as data warehousing, business intelligent, and virtualization. It was surprised to see that some of its products like EMC Atmos, Vblock, Mozy and Syncplicity have gained enough traction in the market while the business moving to cloud of late.

Solid Performance

EMC has displayed a decent performance in the second-quarter as it revenue surged 6% to $5.61 billion year-on-year basis. Also it was good to notice that EMC's domestic revenue rose 4% to $3 billion that contributes approximately 53% of the total revenue. EMC also attained 8% growth in international revenue that came in at $2.7 billion, driven by its information infrastructure business, pivotal and VMware (VMW).

VMware is a pioneer in virtualization software and a subsidiary of EMC. EMC holds around 80% stake of VMware. VMware registered revenue growth of 11% in its latest quarter from the year ago period and posted an income of $244 million, a 28% jump. This strong growth has indeed contributed generously to the top and bottom line of EMC.

Growth Prospects

Later, a new company, Pivotal, was established as an amalgamation of various divisions and products from EMC and VMware. Pivotal's product portfolio will have Pivotal Labs, Cloud Foundry, Greenplum, Gem Fire, Cetas, Greenplum and Vfabix Suit (product of VMware). This strategic move was initiated so that EMC can concentrate on emerging market opportunities such as cloud application, security applications system and large scale data management system, which are its core business areas.

Also the investment of $105 million in Pivotal by General Electric (GE) made the stock more attractive to pick as this strategic investment will certainly boost its growth in the future and increase shareholder's value as EMC is recording steady growth in global market. Its revenue grew 12% in Asia Pacific and Latin America, while North America revenue was up by 4% and significant 6% rise was observed in the EMEA regions. Also EMC's revenue grew 18% in the BRIC nations.

Fundamentals

EMC projects total revenue of $23.5 billion for fiscal 2013 and is expecting a rise of 25.5% rise in non-GAAP operating margin. Also, Non-GAAP net income of $4 billion is expected for fiscal 2013. It expects cash flow of $6.8 billion from operating activities, and the free cash flow target is $5.5 billion.

EMC is determined to repurchase a total of $6 billion worth of shares by 2015 and this should have a positive effect on the EPS. Also Looking at the growth trajectory of EMC, the company should be able to at least match its estimates going forward. Moreover, its strategic investment in businesses such as XtremIO, ViPR and Pivotal should also help EMC in attaining its targets and increase its profitability in the coming years.

Competition

Its potential peer like NetApp (NTAP) that specializes in IT-enabled business solutions such as data security, cloud solutions, and data management systems posted weak performance in the recently declared quarter. Also its growth prospects do not look very enticing as it registered net revenue of $1.71 billion, a marginal increase of 0.8% from the previous quarter.

Also its operating expense increased 7.7% to $827.8 million from the year-ago quarter, which had an impact on its earnings that dipped 7.7% to $204.4 million. In addition to this, NetApp's operating margin also declined to 11.9% as compared to 13% in the year ago quarter.

Also, NetApp is very expensive at current levels. The company trades at a price-to-earnings multiple of almost 29x, while in comparison, EMC trades at a trailing P/E of 20. With quarterly revenue growth slowing down and earnings dropping, the valuation looks rich and investors are advised to stay away from NetApp.

Brocade Communications (BRCD) is another company that provides solutions similar to EMC, but it is a smaller player. Brocade earns 50% of its total revenue from its core service of storage area networks (SAN). However, it faced a 7% decline in revenue in the second quarter from the prior year period. This can be concerning for investors. With major players like Cisco (CSCO), Brocade faces fierce competition for its core business and the company might be in for tough times.

It looks like the company's management is aware of this and that's why they have been selling shares. Wall Tyler, a vice president at Brocade, recently sold around 97,000 shares. Given the recent revenue decline and probability of stiff competition, it is not surprising that an insider sold shares.

Conclusion

EMC's stake in VMware and the constant adoption of the cloud are expected to drive its growth in the future. Moreover, as seen above, the company is cheaper than peers such as NetApp and has a lucrative share repurchase plan in place. So, investors should consider putting their money in this stock if they are looking for a play on the cloud.

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Friday, May 30, 2014

Video Chuck Royce Q&A - Absolute Returns with Less Volatility

In stark contrast to last year's virtually correction-free bull market, 2014 has already seen two pullbacks large enough to give investors pause. Chuck Royceand Chris Clark discuss the current environment and how we as a firm have attempted to guard against the market's volatile behavior.View the video here.Chris Clark: Chuck, it seems that there's been a tonal shift in the market over the past sort of 12 to 14 months. What do you see as sort of the evolution of investor preferences in this recent time period?Chuck Royce (Trades, Portfolio): It's been rather dramatic, and it all started around May 1 of last year, May 2, when the ten-year bond reached its yield low of 1.5%. It rallied from there, and went up to almost 3%. There's been a dramatic shift in what the market seems to favor. The market is now favoring more traditional, more higher-quality companies. That's been good for us. We have a quality theme that runs throughout many of our products.CDC: 2013 was a year that was somewhat unusual, given the prior years, in that there was no significant correction. In 2014, we've already had two corrections of roughly 8%. What do you think is going on in the market, and is this a healthy pattern or does this bode poorly for the future for stock returns?CMR: It's a very healthy pattern. Last year was a straight-line market, and markets were up sharply. This year is going to be rockier—I think a more normal environment. We made a high in early March. Markets have come down since, and I think that's been a very positive experience, especially for our style of investing.CDC: One of the things that we've been very excited to see is our ability to preserve capital in this most recent down period, which has been pretty sharp. What do you attribute that to?CMR: It goes back to a premise of our firm. The premise is that we're in the risk management business. We want to deliver returns with less volatility.CDC: And why do you think we might have struggled with that prior to this sort of normalization that's tak! ing place in the yield curve and in interest rates?CMR: It's clear now, with hindsight, although I'm not sure it was clear then, that that kind of market, with its intense monetary stimulation, favored inferior companies. The inferior company did very well.CDC: Chuck, some market commentators have sort of expressed the view that we're seeing shades of the year 2000 in the current market experience. Do you think that there are some legitimate comparisons between now and that time period? And what do you think about some of the speculative influences that clearly have manifested themselves in the first quarter?CMR: I think there is some truth. We've had a speculative market here. We've had a speculative market in inferior companies and in highly speculative specialized areas, internet areas, certainly the social network area in particular, and in biotech. Those have had extraordinary runs, and other companies have lagged.CDC: How have we guarded against the typical experience of the market? These sectors have run very hard, and then they have corrected. So how have we behaved in this time period, and how have we protected our shareholders from this volatility?CMR: Our primary protection was not to get involved in these highly speculative securities. We're always looking at the risk factors around a company. So we're benefiting right now in the kind of "all other" category, where we are protecting shareholders' money in this decline.CDC: Obviously the concept of tapering that was introduced to your point back in May of 2013 is very high on investors' fears in terms of what could derail economic activity, what could derail the stock market, etc. What do you think is the significance of tapering, and how are we approaching our investments as it relates to what inevitably will be a higher interest-rate environment?CMR: I do think it's inevitable. I think it's very healthy. I'm sort of rooting for this to get going again, but I think the pace has been actually a very healthy one, and I think the market respons! e has bee! n minimal. So I do think we're entering into a very strong period for active management, which is going to be encouraged by normal interest rates.Important Disclosure InformationThe thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.Please read the prospectus carefully before investing or sending money. You may obtain aprospectus on our website by clicking here. The prospectus includes investment objectives, risks, fees, charges, expenses, and other information that you should read and carefully consider before investing.Also check out: Chuck Royce Undervalued Stocks Chuck Royce Top Growth Companies Chuck Royce High Yield stocks, and Stocks that Chuck Royce keeps buying

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Apple Tablet Dominating Key Emerging Market (AAPL)

Apple (AAPL) has been making moves to establish a more global presence in recent years, and it appears as if  those efforts are paying off.

A recent article from Digitimes showed that Apple controls nearly 65% of China’s table market, while Lenovo came in second place with just 76% by comparison. It seems that that iPad mini and its lower price point caught on with the Chinese consumer, making the upcoming low-cost iPhone even more exciting.

Apple will hold an event tomorrow to announce the latest iPhone model and shed light on yet another highly anticipated device from the tech bellwether. It will also mark the first time that Apple will utilize a lower cost mobile device to target an emerging market, which could help boost sales.

Apple shares were up $7.95, or 1.57%, at Monday’s close. The stock is down just over 5% on the year.

Thursday, May 29, 2014

Can Turnarounds Save J.C. Penney, Sears and Best Buy?

www.searsmedia.com Some of the country's most troubled retailers had moments of resilience in May. Shares of Best Buy (BBY) rose 6 percent last week after posting better than expected profitability in its latest quarter. The week before that it was shares of J.C. Penney (JCP) soaring 11 percent after posting a surprising spike in comparable-store sales. It was the fourth week in a row that the department store operator's stock had closed higher, rising nearly 30 percent in that time. Sears Holdings (SHLD) hasn't had a bull-affirming pop lately. Last week's quarterly report was a disaster. However, the parent company of Sears and Kmart is still trading higher than it was at the end of 2011, even though it's been posting huge losses along the way. The three retailers may seem to be finding their way. Margins are improving at Best Buy. Comps are ticking higher at Best Buy. Sears is selling off assets to fortify its finances. However, all three chains are still struggling. Penney Dreadful J.C. Penney is working on a turnaround, but it's not the first time that the meandering department store chain has tried to fix its past mistakes. Ron Johnson was brought in as CEO in the fall of 2011, having worked merchandising magic at Target (TGT) before helping kick off Apple's (AAPL) wildly successful Apple Store concept. Johnson thought that the key to making J.C. Penney was a "town hall" makeover where name brand "mini-stores" would populate its selling space. Shifting from sales to everyday low pricing was supposed to wean shoppers off of discounting. It didn't work. Less than two years later, Johnson was gone. A former CEO returned. Sales continued to slide, but then sales started to stabilize last year. Comparable-store sales rose 6.2 percent during the first quarter of this year. That's great, but let's not forget that same-store sales slipped 16.6 percent the year before and 20.1 percent the year before that. Add it all up, and a typical J.C. Penney store is still selling nearly 30 percent less than it was three years ago. Buy Buy Birdie Best Buy's problem is declining sales. It surprised the market by growing its earnings per share in its fiscal first quarter, but sales continued to slide. Things aren't going to get any better in the near term. Best Buy warns that same-store sales will keep going the wrong way through at least the next two quarters. Best Buy also had its own CEO shuffle a couple of years ago, and Hubert Joly seems to be making the best of a rough situation where physical media is being replaced by digital delivery and folks are flocking online for the devices to play the new digital media. Despite the strides that Joly has made, things will continue to be challenging until sales pick up again. That could happen as soon as this holiday shopping season, but that doesn't seem likely given Best Buy's recent sales momentum. Tears for Sears Sears Holdings has been a mess for years, and CEO Eddie Lampert's combination of Sears and Kmart hasn't helped. Instead of helping lift Kmart up to the performance level of Sears, we've seen the ] opposite. It's not easy to grow when you're cutting costs without passing on those savings to shoppers. Third-party studies show that Kmart can't compete on pricing with its two larger discount department store rivals, and the once-storied Sears chain, with notorious displays, has buckled under joint ownership. Sears Holdings has been able to sell off assets to raise money, but profitability has been elusive. Analysts see the red ink continuing for years. Unless something dramatic happens, it will eventually run out of money, real estate or other assets to unload. Its situation is more dire than what's happening at J.C. Penney and Best Buy, but none seems to have the necessary ingredients for a sustainable turnaround.

Buy This Pure-Play Silver Producer For 43% Upside

Different market sectors carry different risks. In the precious metals sector, and for mining companies in particular, there are geopolitical risks not normally associated with investments closer to home.

If you purchase shares of Bed Bath & Beyond (Nasdaq: BBBY), you don't need to worry about guerrilla fighters coming in and stealing your stores at gunpoint.

But in the mining sector, this threat is real. I'm referring to is known as nationalization or expropriation.  

Nationalization occurs when a government takes assets held by individuals or private companies and converts them into public or government property. Sometimes compensation is offered. Often it is not.

When Fidel Castro came to power in Cuba in 1959, he gradually nationalized all foreign-owned private companies. After a great deal of protest from former owners, the Cuban government eventually paid out $1.3 million to U.S. interests. It was a paltry sum, barely a fraction of what had been taken.

When Salvador Allende became president of Chile in 1970, his government finalized the nationalization of Chile's copper mining industry. The practice continued when Augusto Pinochet came to power in 1973. Chile's mining industry remains largely under state control.

For investors in precious metals, the threat of nationalization is a real concern. In StreetAuthority's latest special report, "The 11 Most Shocking Investment Predictions of 2014," you will learn why the silver industry in one South American country is under siege. You'll also learn what company our expert commodity analysts think is in the best position to profit if nationalization occurs.

Not all mining companies face this threat. The one I'd like to talk about today bases all of its operations a little closer to home -- in Mexico.

While Mexico has certainly experienced more than its share of drug violence over the past decade, its overall economy has enjoyed enormous growth. The Mexican government hasn't meddled with private companies since 1982, when the banking system briefly fell under state control due to a debt crisis. The country's rich mining resources have been left alone, and I see no cause for concern in the immediate future.

First Majestic Silver (NYSE: AG) operates five producing mines and owns six more in various stages of exploration and development.       

     
   
  © First Majestic Silver  
  First Majestic's La Guitarra mine has contributed to the company's growing production.

 

The company is a pure-play silver producer experiencing strong growth in production. Production in 2013 is estimated to clock in at 11.3 million to 11.7 million ounces. However, the company estimates that it will produce 16 million ounces by end of 2014, which would be a one-year growth rate of 42%.

The company is planning to ramp up production at several mines in the near future. Of course, growth doesn't come for free. The company has consistently issued new shares to raise capital, and the share count has slowly grown from 99 million outstanding shares in 2010 to 117 million today.

As a pure silver producer, First Majestic's revenues are closely tied to the price of silver. Although silver is notoriously volatile, its price hasn't been this low since October 2010.

The current low prices for silver allow for a lot of upside. Should silver prices realize even a modest increase to around $27, and if First Majestic is able to meet production estimates for 2014, share prices could gain up to 43% over the next 12 months.

Risks to Consider: First Majestic does not pay a dividend and is therefore more suitable for speculative growth investors. The company has been slowly increasing the number of outstanding shares in order to fund new projects.  Increased share counts dilute the value of existing shares. In addition, silver prices are notoriously volatile.

Action to Take --> I wouldn't bet the farm (or my kid's college fund) on this stock. But for speculative investors who can stomach volatility, First Majestic's stunning growth rate, combined with the potential upside in silver prices, make the stock an attractive buy at today's prices.

P.S. -- The next big commodities play is unfolding right now... This disruptive energy technology will bring about major changes in our country... and one company is leading the charge. To learn more about this opportunity, click here.

Wednesday, May 28, 2014

Americans Worry About Finances, but Just 1 in 3 Work With Advisor

Americans say their financial health is a top priority, yet only a minority work with a financial advisor or have a financial plan, a recent poll funded by Northwestern Mutual finds. Plus, some 60% say their financial planning needs improvement.

Of the roughly 2,100 Americans surveyed earlier this year, 43% say their physical health is their most important concern, while 38% say their personal financial situation is a “top priority.” (These priorities come in ahead of the desire to spend time with family and friends, 31%, and focus on their careers, 15%.)

Despite these responses, 66% of those surveyed do not have a financial plan in place. Of the 31% of adults that say they have financial plans, slightly more than half developed such plans with a financial advisor. Furthermore, only three out of every 10 adults is working with a financial advisor, the survey says.

"People recognize the need for improvement, yet most are choosing to make important financial decisions entirely on their own," said Greg Oberland, president of Northwestern Mutual in a statement about the group’s 2014 Planning and Progress Study. 

"In the same way that most people wouldn't hesitate to see a doctor, or even work with a personal trainer, we believe more Americans need to see their finances in a similar light,” Oberland explained. “While finance is obviously different than health, both are highly complicated and have long-term implications. As a result, expert advisors are critical."

Of the roughly 30% of adults working with advisors, the majority, nearly 70%, consider themselves disciplined planners and feel “very financially secure.”

Adults who are 60 and older are three times as likely as those ages 18 to 29 to use an advisor: 41% versus 13%, the poll shows. In addition, individuals with $100,000 or more of investable assets are three times more likely to be working with an advisor than others.

According to the study, a large majority of American adults, 70%, think the U.S. economy will experience future crises, and that a financial plan can help them weather the ups and downs, 52%. Only two in five, though, believe their financial plans can withstand market cycles.

"Remember that financial planning is not a 'set-it-and-forget-it' exercise, and while it's encouraging that many Americans are engaged on a regular basis, I'm hopeful those numbers will increase as more people see the benefits of a disciplined approach to long-term planning," Oberland added. 

That Shifty S.O.B. Pied Piper Of Bonds

How many red faces in the bond crowd? Long Treasuries were supposed to zip up to a 4.5% yield with 10-year paper at 3.5%. Bunches of "smart" money shorted 30-year Treasuries with impunity. What happened, fellas?

The bull run in fixed income is easy to explain. So far, the economy limps along. Retailers like Wal-Mart post sluggish numbers and capital goods activity doesn't kick in. So, we've got a depressed GDP sector along with negative exports. The Fed still tells everyone who can read that deflation is the serious issue for the country as well as unemployment.

Everyone waits for home starts to recover but they don't, despite attractive terms on 30-year mortgages, below 4.25%. Historically, this is a bargain. Yes, home prices have risen substantively but so have rentals. I find the rental-to-buy ratio for housing a peripheral coincident indicator.

For better or worse, the history of interest rates during the entire postwar period is etched into my brain. There is no normal rate for the country. Treasuries key off budget deficits, inflation, the growth rate for GDP and trade surpluses or deficits.

The bond crowd forever is hypersensitive to any change in these variables. It can riffle into new alignment in a month or two, with volatility equivalent to a 10% move in the S&P 500, up or down. Treasuries with long duration levitated 10% year-to-date.

Does anyone but me remember when Federal agency 5-year notes yielded 15% in 1982? I'm a prisoner of apperceptive mass on Treasuries going back 60 years. The trendline for 10-year and 30-year paper ranges around 5%. For LIBOR we are talking nearly 4%, not next to zero.

I'd chance equities rather than inventory Treasuries so far below historic trendlines. Yield disparity between 10-year Treasuries and BB corporates stands under 300 basis points, down from 500 a couple of years ago.

The high yield bond sector contains all the prisoners of yield starvation who have given in. To hell with all this yield compression. We need income. Let's buy some low rated corporate bank debt packages, too. After all, they yield 4% and are a play on rising LIBOR somewhere lurking in the bushes.

Such rationalization invariably comes home to roost, uncomfortably. I'm inventorying over a dozen preferred stocks selling at or below their $25 call price and yielding 6.5%. The problem is almost all preferred stocks are issued by financial houses – banks, brokers and insurance underwriters. They're all below investment grade.

In the financial meltdown of 2008 – '09, Bank of America's Bank of America's preferreds touched down at $5 a share. They became one decision pieces of paper. If the bank stayed in business the paper was golden, destined to tick at $25, the current quote.

But, anyone who looks at preferred stocks other than pure equity is due for an unpleasant surprise sooner or later. Consider that Fannie Mae Fannie Mae defaulted on its huge issue of preferred stock during the banking crisis. Much of this paper was held by institutions in their pension funds.

If the U.S. Treasury had allowed a default on federal agency paper, losses would have run into trillions, literally decimating institutional portfolios, creating gut wrenching actuarial issues for pension funds in corporate, state and municipal sectors.

Even now, trouble is brewing in New Jersey, New York City and possibly New York State. Governors and mayors all across the country thirst to defer pension fund allocations for years ahead. Governor Cuomo posts IOU's into his state funds. New Jersey is deferring past due funding while Mayor de Blasio has agreed to contract settlements with the teachers union that cost the city billions next couple of years.

The rally in municipal paper, especially New York State and New York City issues, reflects the financial health of the stock market and earnings for Wall Street's banks and brokerage houses, a cyclical phenomenon. How long can the state and city live off capital gains taxes posted by the top 1%? Some AA, 20-year maturities I hold have risen over 20%, past couple of years. Enough is enough!

I never expected the latest surge in yield flattening. Yes, the Fed has disenfranchised savers who earn zilch on money market funds. The flight into the dollar goes on. Where can the Chinese go with their export earnings? If Germany sets the example we could see 10-year Treasuries at a 1% yield. Even poor Greece which was unbankable 4 years ago, floated 5-year paper yielding 4.75%, the deal wildly oversubscribed. Our 5-year paper yields 0.7%, practically confiscatory.

The bull market case for the fixed income sector is too much invested capital still seeks a home there. Pension funds fear putting the lion's share of cash flow into equities. This is understandable considering everyone is using unrealistically high discount rates on pension fund obligations.

Tuesday, May 27, 2014

Glencore Xstrata $8.47 Billion Write-Down Is No Big Surprise

Not even the size of London-listed Glencore Xstrata's $8.47 billion asset impairment came as much of a surprise to observers of the mining industry. The amount, which includes a $7.7 billion goodwill impairment charge related to the acquisition of Xstrata, was at the high end of what analysts were expecting, but apparently Glencore wanted to get the bad news out and behind it.

Big mining firms wrote down more than $50 billion in assets in 2012, led by Rio Tinto PLC (NYSE: RIO), which wrote down $14 billion and fired its CEO. Mergers and acquisitions in the mining business totaled more than $1 trillion in the past decade, and the 5% write-down is really not so bad, all things considered.

Glencore paid $44.6 billion for Xstrata in a deal that closed in May of this year, and based on the impairment charge, the company overpaid by $7.7 billion. Glencore also took a $452 million charge on an Australian nickel mine, and a $324 million charge against its stake in Russian aluminum mining giant Rusal.

The culprit, as with all the other write-downs, is primarily low commodity prices. In addition to write-downs, the miners are combating the lower prices by reducing production and killing off or delaying new projects.

Glencore did not suspend its $0.054 quarterly dividend and the company's CEO said that the company would provide a full update of its plans at its September 10 investor day presentation.

Overpaying for an asset by nearly $8 billion might put some CEOs in the unemployment line. But Glencore's chief, Ivan Glasenberg, owns a big chunk of the company's shares and he is unlikely be looking for a new job any time soon. But if the bleeding from the Xstrata acquisition cannot be stopped, even Glasenberg may be in trouble.

Citigroup Sees Big Drop in Trading Revenue, Shares Gain

Citigroup’s (C) CFO John Gerspach spoke at a Deutsche Bank conference today and offering some insights into where the company is heading.

Bloomberg News

In his comments, Gerspach said that Citi’s second-quarter trading revenue would drop by as much as 25% from a year ago, called loan demand “choppy,” and said that the banking giant’s “real goal” is to return more capital to shareholders.

Citigroup wasn’t the only bank making comments today. JPMorgan Chase (JPM) investment banking chief Daniel Pinto said marker revenue would be flat, while Bank of America (BAC) jumped after it said it had submitted a new capital-return plan to the Fed.

Nomura’s Bill Carcache thinks the return of excess capital by the bug banks will be “elusive:”

We think it may take years for banks to return the excess capital they hold today and expect excess capital accretion to continue over the near term, particularly with expected payout ratios around 50-80% for the 2014 CCAR period (2Q14-1Q15). In our view, getting the green light from regulators to pay out 100% of earnings will mark an important first step on the road to getting excess capital released. Most investors with whom we've spoken since our recent launch don't see that happening next year. At the earliest, we think it will take at least two years before the current generation of regulators allows some excess capital to leave the system. Even then, we believe the risk is high that a significant portion will remain trapped for a prolonged period. Uncertainty over when excess capital will be released makes us reluctant to give the banks full credit for it at this time.

Shares of Citigroup have gained 0.7% to $47.60 at 2pm today, while JPMorgan Chase has gained 1% to $55.07 and Bank of America has jumped 3% to $15.16.

Monday, May 26, 2014

New FDIC Rules to Cut Mortgage Risk, Shoddy Underwriting

Foreclosure SalesJae C. Hong/AP WASHINGTON -- Six U.S. regulatory agencies released a reworked proposal on Wednesday that requires lenders maintain a stake in the loans they bundle and sell as securities, part of efforts to limit the type of underwriting practices which fueled the housing bubble. But it also expanded the range of mortgages that would be exempt from the requirement. The new rules, the latest version of a 2011 proposal, were required under the 2010 Dodd-Frank law and would force most banks and bond issuers to retain a portion of the loans on their books. Mortgages to borrowers who don't have to spend big chunks of their monthly income repaying the debt would be exempt from the "skin in the game" requirement. The regulators' new 500-plus page plan would exempt more loans than earlier proposals by eliminating a requirement that so-called "qualified residential mortgages," include a hefty down payment. Housing industry and consumer groups have lobbied for more than two years against that requirement, which they said would harm the housing market recovery. Regulators said they received more than 10,000 comments on the 2011 proposal. "Our goal as regulators is to provide clear rules that allow for robust markets that meet the needs of creditworthy borrowers in a safe and sound manner," said Paul Nash, a senior official at the at the Office of the Comptroller of the Currency. "I believe the rule, as reproposed today, helps accomplish just that," he said. The new rules are aimed at preventing banks from writing risky loans with impunity. In the years leading up to the 2007-2009 financial crisis, banks used shoddy underwriting standards under the assumption that they could sell loans to investors and avoid harm if the borrowers defaulted. Dodd-Frank called for lenders and bond issuers to hold 5 percent of those loans on their books, giving them more incentive to make better loans. Regulators originally said banks and bond issuers would have to keep "skin in the game," or hold part of securitized loans on their books, for all loans except mortgages that included a 20 percent down payment. Backlash After backlash from housing and consumer groups, regulators decided to drop the down payment requirement. Instead, they said Wednesday that mortgages that meet a minimum standard already adopted by the U.S. Consumer Financial Protection Bureau will be exempt from the risk retention rules. That standard includes loans that have no risky features such as interest-only payments or loan terms exceeding 30 years, and go to borrowers who don't have high debt loads. Industry and consumer groups said matching the risk retention exemption to the consumer bureau's existing standard would simplify the rules and provide consistency for lenders. "It is critical not to disrupt the marketplace for the funding and securitization of mortgages, and this proposal would go a long way toward that goal," said Richard Hunt, president of the Consumer Bankers Association. Critics said regulators bowed to lobby groups. Daniel Gallagher, a member of the U.S. Securities and Exchange Commission (SEC), one of the agencies charged with crafting the rules, said dropping the down payment weakened the rules. "Rulemakings are not referenda, and while independent regulatory agencies like the Commission must always be mindful of the points raised by commenters, ultimately, they must apply their experience and expertise regardless of the volume of negative comments," Gallagher said in a statement. Regulators did ask for public input on whether or not to later add a 30 percent, down-payment requirement, in addition to the CFPB's standard. The agencies will seek public comment for a 60-day period before holding a final vote on the new rule.

Parsley Energy Is Latest Fracking Company To Hit Pay Dirt In IPO

Another shale-energy company hit pay dirt with an initial public offering.

Parsley Energy Inc.(PE) opened higher Friday after the Midland, Tex.-based oil driller and some of its early shareholders sold more shares than planned at a higher price than expected in an IPO. The shares jumped 19% in morning trading.

Not that kind of parsley. Bloomberg News

Parsley and the existing holders sold 50 million shares for $18.50 each, raising $925 million before the potential sale of additional shares to underwriters. That topped Parsley's expectation for a 43.9 million-share offering fetching between $15 and $18 a share, according to a regulatory filing.

The stock was trading at $21.95 minutes after its debut Friday morning.

It's been a rather energy-heavy IPO calendar this year. That's little surprise given the strong showing for shares of such companies, particularly among those applying hydraulic fracturing—or fracking—to extract oil and gas from shale so-called rock formations. Parsley Energy drills shale formations in the Permian Basin area in Texas.

Producers focused on hot shale regions have been in vogue among investors of late, said Bill Costello, portfolio manager at Westwood Holdings Group Inc.(WHG), which manages about $19 billion.

"It's the flavor of the day," he said. "It's easy to understand—you're in one basin, in one play, it's repeatable."

It also helps, he said, that Parsley and similar companies "are very fast-growing."

Even before Parsley's debut, oil and gas "exploration and development" companies—essentially, the industry term for drillers—had raised $2.2 billion in U.S.-listed IPOs this year. That's 9% of the overall deal volume, the category's highest share since 2001.

Rice Energy Inc.(RICE) has rallied 44% since its $1.1 billion January IPO through Thursday. RSP Permian Inc.(RSPP) has gained 42% since debuting the same month. This year's other E&P IPO, EP Energy Corp.(EPE), is off 1.9% since it went public in January.

The drillers considered to be Parsley's closest peers include Diamondback Energy Inc.(FANG), which has seen its shares rally 38% so far this year through Thursday. Athlon Energy Inc.(ATHL), another similar company, is up 43% this year and 116% since its August IPO.

"Their acreage is definitely in the sweet spot," Westwood's Mr. Costello said of Parsley. He sought an allocation in the IPO. As for the prospect for further shale energy-industry IPOs this year, "we've exhausted some of it but I think there's more to come," he added.

Parsley Energy is trading on the New York Stock Exchange under the symbol “PE.”  Credit Suisse Group AG led the offering with Goldman Sachs Group Inc.

Sunday, May 25, 2014

Baron Funds Comments on Air Lease Corp

Shares of Air Lease Corp. (AL), an aircraft leasing company, were up in the first quarter on reports of strong sales and earnings in the fourth quarter. Air Lease offers a young, fuel-efficient fleet to satisfy strong demand for replacement of older aircraft and more lift capacity in emerging markets, particularly Asia. The company has secured an investment grade rating to keep financing costs low and as part of a $27 billion order book, has placed all deliveries through 2015.We believe Air Lease is well positioned for a long "runway" of profitable growth. (David Goldsmith)

From Baron Funds' first quarter 2014 letter to shareholders.

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Saturday, May 24, 2014

The World Is Full Of Small Conspiracies

Many people are fascinated by the belief – or at least the prospect – of world dominating conspiracies. The Illuminati seems to regularly have a pronounced position in such fantasies. We should also pay due homage to the Knights Templar, the Freemasons, and the Bilderberg Group. Of course, there are others. When it comes to world domination, of equal substance is Spectre, K.A.O.S, and, topping the list, Hydra.

Back to the real world… when it comes to world domination, however, no one, no group, no grand conspiracy has ever been successful. Simply put, there's no one in charge. Complicating any search for a grand conspiracy is the fact that at the core of so many secret organizations is the exotic and even the arcane.

The esoteric with promises of majesty (sometimes even immortality) can make the imagination soar. It can be intoxicating and motivating. Unfortunately, as Umberto Eco exemplifies in has literary masterpiece, Foucault's Pendulum, the most powerful secret – the true underpinnings of these grand conspiracies – is "a secret without content."

The lack of world dominating conspiracy in no way discounts the existence of conspiracies. It's just that these grand conspiracies for a plethora of reasons, such as the unquestionable inability to effectively run such an extensive and influential bureaucracy secretly, do not exist. Instead, what are pervasive in society are small conspiracies. From illegal conclusion among technology companies to insider trading rings, and from corporate and political payoffs to organized crime syndicates working cooperatively, the world is littered with small conspiracies.

Small conspiracies are rampant inside and between some organizations and sometimes common in the financial services arena. There are leadership substitutions and a broad range of governmental and corporate espionage. You can no doubt come up with a multitude of examples, and if you're having trouble, just turn on the news.

Now, if the malicious element – the illegality and injurious nature – that defines, in part, a conspiracy was stripped away, we have some brilliant networking resulting in collaborative business at its finest. It's this superb networking that's foundational and critical to success of any small conspiracy.

Taking a step back… in critically examining the way self-made millionaires and some accomplished professional criminals build social networks to achieve their agendas, there's actually a high correlation in the nature of the strategic thinking and processes they employ. So, if you're looking to excel, creating and managing a non-malevolent conspiracy (i.e., a legal and ethically sound conspiracy) might very well get you the professional outcomes you're looking for.

Friday, May 23, 2014

Matador Resources: Now That’s One Way to Derail a Stock

Now that’s one way to kill a stock’s upward progress.

Getty Images

Heading into today, Matador Resources (MTDR) had gained 40% so far this year, as the competitor to Anadarko Petroleum (APC) and EOG Resources (EOG) has boosted oil & gas revenue and oil production. Make that 32% after Matador Resources announced a secondary offering.

Wunderlich’s Irene Haas doesn’t understand what the big deal is:

Matador Resources Company announced on May 22, 2014 after the market close that it has commenced an underwritten public offering of 7.5 million of its common stock. This will enable Matador to keep a second rig in the Permian Basin for the rest of 2014, while keeping a 2-rig program in the Eagle Ford shale play. Part of the proceeds will be used for acreage acquisition and participation in non-operated wells in the Haynesville trend. In the interim, Matador intends to repay outstanding borrowings under its revolving credit facility. While the deal is slightly dilutive to NAV, earnings and cash flow, it enables the company to operate for the rest of 2014 without having to raise additional money while keeping the balance sheet clean. We reiterate our Buy rating on Matador.

Shares of Matador have dropped 5.9% to $24.62 at 2:08 p.m., while Anadarko Petroleum has dipped 0.2% to $101.36 and EOG Resources has gained 0.8% to $104.50.

First Eagle Global Fund First Quarter 2014 Commentary

Market Overview

In the first quarter of 2014, the MSCI World Index rose 1.3%, while in the U.S. the S&P 500 Index increased 1.8%. In Europe, the German DAX Index increased 0.04% and the French CAC 40 Index rose 2.2% during the quarter. The Nikkei 225 Index fell 9.0% over the period. Crude oil rose 3.2% to $102 a barrel, and the price of gold rose 6.5% to $1,284 an ounce by quarter-end. The U.S. dollar fell 2.0% against the yen and it remained relatively unchanged against the euro.

Our ongoing concern regarding weakness in the global financial architecture means we are alert to second order effects from the artificial suppression of interest rates. As we previously discussed, one of the key sources of disequilibrium in the global financial system has been the Chinese government's effort to tightly manage their exchange rate below fair value, thereby accumulating vast amounts of dollar reserves. Yet in recent weeks, China's exchange rate has actually weakened. We fear that the currency's moves reflect a softening in the Chinese economy beyond what policy makers expected. It is possible that the Chinese government worried that recent wage inflation was going to start to impinge on margins, profitability and economic growth. Furthermore, evidence of a slowdown in urbanization-related growth is manifested by the recent weakness in copper and iron ore pricing.

If our hypothesis about China is correct, it reinforces the notion that the core problem in the world financial architecture today is that neither the countries with a current account surplus, nor the current account deficit economies, can handle the equilibrium exchange rate or, conversely, the rise in interest rates that would be required for capital to be priced fairly. The political consequences would be too great.

A big driver of growth in China over the past decade has been fixed asset investment, and some amount of that manufacturing capacity would not have been added in the absence of a discounted exchange rate. The implication is the Chinese may have hit a political constraint on how much rebalancing they can tolerate.

The flip side of that is the current account deficits in reserve currencies like the U.S. dollar have resulted in excess debt. The U.S. economy cannot handle rates rising to say, 4%, because it would impose too big a debt service burden.

Thus, we have a continuation of this global financial repression for the forseeable future. The root cause of the malinvestment and excess debt has been easy money, which has become a widespread problem among both developing and developed economies because politically, no one wants to have neither a stronger exchange rate nor a tighter interest rate policy than competing countries. Every government is trying to maximize employment.

The excess assets and debt from easy money policy means there is a real risk of deflation were we to reprice currencies and interest rates to higher, more natural levels. But in the current political environment, there is no appetite for deflation. Thus financial repres - sion is indefinitely sustained. If unconventional policy is left in place too long, the feared deflationary risk could evolve and become more inflationary in nature as expectations could become unhinged. Inflation is ultimately a monetary phenomenon. So far, there has been limited evidence of that.

In an environment where individual bargains are harder to come by and macroeconomic imbalances remain, we are comfortable with our cash position of around 20% but we are not eager for our cash levels to go too far beyond those levels as we don't want to create a strategic allocation to a repressed asset that would outlast an ordinary bear market. The cash is deferred purchasing power that we would like to put to work under the right circumstances. It has built as a residual of a disciplined approach to buying and selling.

Portfolio Review

Some of our weaker performers in the second half of last year rebounded nicely during the first quarter. The largest contributors to performance for the quarter were AngloGold Ashanti, Newcrest Mining, Microsoft, HeidelbergCement and gold bullion. The gold rebound arguably reflected the spike in risk sentiment following Russia's incursion into Ukraine, lower yields in the Treasury market and a moderation of ETF-related selling. Microsoft rose as the company chose a new CEO, who was formerly head of cloud computing. This choice may affirm what we've said all along: Microsoft's strength is in its corporate franchise.

Top detractors during the quarter were Mitsubishi Estate, MS&AD Insurance Group, Wm Morrison Supermarkets, KDDI Corpo - ration and NKSJ Holdings. Wm Morrison is suffering from a more competitive retail environment in the U.K. with the expansion of hard discounters. In the case of Mitsibushi Estate and MS&AD, their weakness may reflect anticipation of more fiscal drag in the local Japanese economy as the consumption tax is set to be increased in April.

In this environment of low risk perception, we maintain our preference for defensive franchise businesses, but are willing to add asset-intensive companies in windows of relative distress. The core of our portfolio continues to be in what we feel are resilient busi - nesses with strong balance sheets and reasonable free cash flow yields. We still see high option value in cash despite its low yield. Our cash allocation should not be viewed as a negative directional view on the market, but rather a reflection of our patience during an environment of high prices. As always, we take a long-term view and focus on seeking to build a durable portfolio that mini - mizes capital impairments and compounds wealth over time.

We appreciate your confidence and thank you for your support.

Sincerely,

First Eagle Investment Management, LLC

The performance data quoted herein represents past performance and does not guarantee future results. Market volatility can dramatically impact the fund's short-term performance. Current performance may be lower or higher than figures shown. The investment return and princi - pal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Past performance data through the most recent month end is available at www.feim.com or by calling 800.334.2143. The average annual returns for Class A Shares "with sales charge" of First Eagle Global Fund give effect to the deduction of the maximum sales charge of 5.00%.

*The annual expense ratio is based on expenses incurred by the fund, as stated in the most recent prospectus.

There are risks associated with investing in funds that invest in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates.

Investment in gold and gold related investments present certain risks, and returns on gold related investments have traditionally been more volatile than investments in broader equity or debt markets.

The principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. All investments involve the risk of loss.

The holdings mentioned herein represent the following percentage of the total net assets of the First Eagle Global Fund as of March 31, 2014: AngloGold Ashanti 0.58%, Newcrest Mining 0.69%, Microsoft Corp. 1.82%, HeidelbergCement AG 1.34%, gold bullion 4.51%, Mitsubishi Estate 0.57%, MS&AD Insurance Group 0.68%, Wm Morrison Supermarkets 0.31%, NKSJ Holdings, Inc. 0.77%, KDDI Corporation 1.18%. The portfolio is actively managed and holdings can change at any time. Current and future portfolio holdings are subject to risk.

The commentary represents the opinion of the Global Value Team Portfolio Managers as of December 31, 2013 and is subject to change based on market and other conditions. The opinions expressed are not necessarily those of the entire firm. These materials are provided for informational purpose only. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Any statistics contained herein have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed. The views expressed herein may change at any time subsequent to the date of issue hereof. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The Index provides total returns in U.S. dollars with net dividends reinvested. The Index is unmanaged, and the results include reinvested dividends and/or distribu - tions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes.

First Eagle Global Fund

Investors should consider investment objectives, risks, charges and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the Funds and may be obtained by contacting your financial adviser, visiting our website at www.feim.com or calling us at 800.334.2143. Please read our prospectus carefully before investing. Investments are not FDIC insured or bank guaranteed, and may lose value.

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The All-In-One Screener Portfolio Tracking Tool
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