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What Is Series A Funding and How Do You Get It?
Series A funding is the first round of capital after a seed round that a startup company raises from professional investors in order to grow the business. Starting a company takes money — sometimes a lot of it. And after small business owners gather money from friends and family, dip into personal savings and take out a small business loan, they may turn to bankers and venture capitalists. Those investors are looking for high margins and companies with the potential for enormous returns.
A fledgling tech or manufacturing startup will need to attract those investors in order to cover its increasing costs and set the company on the path to greater revenue and profit. Companies often complete Series A, B and C financing to achieve their goals. As you learn more about Series A funding and get interested in investing in a company or have a startup for which you’re planning financing rounds, it may make sense for you to speak with afinancial advisorwho can provide hands-on guidance.
What Are Funding Rounds
To understand Series A funding, we first need to explain the concept of funding rounds for a startup.
A startup company never begins with all of the money it needs in one place. Instead, typically a company will raise money at benchmark levels. When the company meets certain goals it will have proven its viability, which will make it eligible for the money that it needs to keep expanding. This system is called funding rounds.
This involves a few different concepts:
• Pre-Seed Round
The pre-seed round is when a startup company raises the money it needs to begin any operations. This money, like with many small businesses, typically comes from family, friends and personal savings.
During this round the founder has nothing to pitch but himself and his idea, which is why it’s uncommon to see professional investors get involved. Nevertheless, angel investors may occasionally step in at this stage to help a particularly promising company get started. Founders will use pre-seed money to generate their proof-of-concept.
• Seed Round
The seed round is the first stage at which most professional investors get involved. This is typically the stage at which angel investors consider a company. Certain venture capitalists will also look for seed round companies, hoping to invest early in a project’s life cycle, as will incubators and other business development programs.
Occasionally family and friends with deep pockets will participate in the seed round, but not often. A company that is on track for funding rounds typically needs millions of dollars over the long run, and even at the seed stage, it will need hundreds of thousands. That kind of money rarely comes from personal investment.
A founder will use seed round funding to begin building her company. This is the money that she will use to turn the lights on and start trying to make her product. Any production at this stage, however, still typically focuses on proof-of-concept. This is where a startup will try to prove that they can make their product, that it will work, and that it can find amarket.
• Series Funding
Once a company has established that it can build a working product it will typically enter series rounds of funding, which most often includes Series A, B and C.
The founder doesn’t yet need to have turned a profit – most investors won’t expect that until much later on – but by now, he will need to prove that his idea is solid. Essentially, this is the stage at which the company has demonstrated that it only needs time and money to succeed.
A startup will use series funding to progress from the proof-of-concept stage all the way through operation and revenue. At this stageventure capitalistsand other professional investors typically make up all or virtually all of a company’s investment.
• Runway
Runway refers to the gap between rounds, both in terms of time and operating capital. For example, a startup company might refer to having 18 months of “runway” between seed funding and Series A funding. This will mean that its seed investors anticipate it will take the company 18 months to develop a proof of concept sufficient for Series A financing.
A startup might also refer to having $500,000 of “runway” left. This is a more common use of the term and means that the company has $500,000 to spend to get it to its next round of financing.
What Is Series A Funding?
Series A funding is the first round of “series” financing for a startup company.
This is the first round of funding that a company will receive after its seed round, when it has proven its concept and begins full operations. To receive Series A funding, a company will typically have met the following benchmarks:
• It will have a team with the necessary skills (both business and technical) to create the company’s product.
• It will have created a proof of concept that the company’s underlying product or service can be built, will function as intended and has a viable market.
• It will have created and tested a business model.
• It will have established financial recordkeeping so that future investors can see how the company spent its seed and pre-seed funding.
Note that this is not always the case. Some investors may require more and will want to see an established user base or otherwise marketed product before proceeding to Series A funding. However, most often a company actually creates its business at the Series A round. At this stage the startup will begin operations, creating and marketing its product. This funding round is about turning the company from proof-of-concept into a functioning business.
Most importantly, Series A is when a company will hone its business model and demonstrate its path to profitability. Most startups will not use Series A funding to generate that profit, however. Instead this stage is typically about expansion and creating a viable business model that can scale upwards with future rounds of funding.
Who Invests in Series A Funding?
Typically Series A funding comes from professionals such as venture capitalists, angel investors and hedge funds. It is rare to see family and friends invest in Series A funding because of the scale of money involved. By this stage, a company needs enough money to hire its staff and attorneys, pay for its office space and handle all the other elements required to make a company publicly viable.
What Do Investors Get For Series A Funding?
All funding comes at a cost. Investment funding that is raised through pre-seed, seed and series financing always involves the investor receiving shares of ownership in thestartupin exchange for their money.
Most investors in a company receive what is known as “common stock.” This means that the shareholder receives dividends and voting rights on par with most other stockholders in the company with no preferences. Series A funders, along with pre-seed and seed investors, typically receive what is known as Series A, or “preferred,” shares.
Series A stocks can differ from company to company, but share some or all of the following traits:
• Higher dividend payments than common stock.
• Preferred dividend payments over common stock (these shareholders get paid first).
• Preferred voting rights on company decisions.
A company can create as many series of shares as it likes and will typically differentiate classes of stock by dividends and voting rights. In practice, however, it’s rare to see more than Series A, Series B and Common stock.
Bottom Line
Series A funding is the first round of series financing for a startup company. At that stage, bankers and venture capitalists will invest in a company that has a proven business concept, an organized team and a game-plan for profitability. Investors in Series A funding typically receive preferred stock shares.
Tips for Startup Founders
• Get your taxes in order.Unfortunately, paying business taxes is more complicated than paying regularincome taxes. How much you have to pay will depend on how your business is structured, whether it is a C corporation, S corporation orLLC. Each comes with its own advantages and disadvantages. Make sure you read up on which is right for your business. If you are running a small business there are lots of potentialtax creditsyou should be aware of. For example, the Small Business Health Care Tax Credit is available to business owners who pay for the health care of their employees. Tax credits are also available for starting greener businesses as well.
• Get expert advise. You may be wondering how to invest some of the money you raise in Series A funding. Getting professional help may serve you well. But finding the right financial advisor whofits your needsdoesn’t have to be hard.SmartAsset’s free toolmatches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals,get started now.
Photo credit: ©iStock.com/feellife, ©iStock.com/Farknot_Architect, ©iStock.com/valentinrussanov
The postWhat Is Series A Funding and How Do You Get It?appeared first onSmartAsset Blog.
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Fed remains unchanged on rates, pledges to 'sustain the expansion'
The Federal Reserve did not move on rates at the conclusion of its policysetting meeting June 19, but committed itself to acting “as appropriate to sustain the expansion.”
The Fed elected to keep the benchmark interest rate within its target range of 2.25% to 2.5%, but new economic projections show more Fed officials seeing the case for a rate cut — or two — by the end of 2020.
The Federal Open Market Committee made a number of changes to its policy statement, removing the word “patient” in favor of language promising to “closely monitor the implications of incoming information for the economic outlook.” Some market participants had viewed theword “patient”as having a bias toward rate hikes, since the central bank had previously messaged that it was on pause, and not full stop, on efforts to normalize interest rates.
The Fed said it still sees a “sustained expansion of economic activity, strong labor market conditions, and inflation near” the committee’s 2% target, but added that “uncertainties about this outlook have increased.”
Fed Chairman Jerome Powell also saw his first dissent since becoming head of the central bank; St. Louis Fed President James Bullard voted against the decision to hold rates steady, instead preferring a 25-basis point cut in today’s decision.
The Fed also released a fresh print of economic projections, which included new “dot plots” that map out policysetting members’ preferred rate paths through the next three years.
The median dot reflected no rate changes through the rest of 2019, and one 25-basis point rate cut in 2020. The previous dot plots in March (before trade tensions escalated and economic data softened) also had the median dot calling for no rate changes by the end of 2019, but projected a rate hike in 2020.
The new dot plots show Fed officials tilting closer toward a rate cut by the end of 2020. Nine members now see a case for up to two rate cuts in that same window of time. For comparison, the March dot plot reflected only seven members seeing a case for a rate cut by the end of 2020 — and none projected more than a single 25-basis point cut.
The June update shows some members still taking a hawkish stance. Three Fed officials see a case for at least one rate hike by the end of 2020, with one of those three officials predicting three rate hikes.
The economic projections also saw a tick down in future expectations for inflation. In March, the median Fed official projected the economy touching 2% on core personal consumption expenditures (the central bank’s preferred measure of inflation) by the end of 2019 and hitting that target again in 2020 and 2021.
The median Fed official now expects the Fed to miss its target for core PCE in 2019 and 2020, hitting 1.8% and 1.9% by the end of those years, respectively.
Inflation has been a conundrum for the Fed ever since it set its 2% symmetric inflation target in 2012. Since the Fed adopted that target, the central bank’s preferred measure for inflation - core personal consumption expenditures - have only touched or breached 2% once, raising the question of how the Fed can stimulate persistent undershooting of its target.
On the labor market front, the Fed said the labor market “remains strong,” despite adisappointing jobs reportsince thelast policysetting meeting in May.
That jobs report showed a sharp miss on expectations for added payrolls in addition to tepid wage growth pointing to a labor market that may be running below full employment.
Still, the Fed continues to bring down its expectations for the unemployment rate, suggesting that policy members continue to see room for more tightening in the labor market.
In the updated economic projections, the median Fed official projected a 3.6% unemployment rate by the end of 2019, a tick down from the March prediction of 3.7%. Fed officials appear to find this trend structural, as the median member also brought down the longer-run expectation for unemployment from 4.3% in March to 4.2% in the projections released today.
But as the Fed statement noted, the “strong” labor market conditions are part of the “uncertainties” that have increased in recent weeks.
The Fed’s next policysetting meeting will be July 30-31.
—
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter@bcheungz.
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Easy Come, Easy Go: How Blue River Resources (CVE:BXR) Shareholders Got Unlucky And Saw 77% Of Their Cash Evaporate
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Long term investing works well, but it doesn't always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who heldBlue River Resources Ltd.(CVE:BXR) for five whole years - as the share price tanked 77%. And it's not just long term holders hurting, because the stock is down 57% in the last year. Furthermore, it's down 40% in about a quarter. That's not much fun for holders.
See our latest analysis for Blue River Resources
With zero revenue generated over twelve months, we don't think that Blue River Resources has proved its business plan yet. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, investors may be hoping that Blue River Resources finds some valuable resources, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Blue River Resources has already given some investors a taste of the bitter losses that high risk investing can cause.
Blue River Resources had liabilities exceeding cash by CA$1,151,852 when it last reported in January 2019, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived -25% per year, over 5 years, it looks like some investors think it's time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how Blue River Resources's cash levels have changed over time.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. You canclick here to see if there are insiders selling.
Blue River Resources shareholders are down 57% for the year, but the market itself is up 1.4%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 25% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. If you want to research this stock further, the data on insider buying is an obvious place to start. You canclick here to see who has been buying shares - and the price they paid.
Blue River Resources is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Better Buy: MercadoLibre vs. iQiyi
It's a tale of two regions for growth investors these days. Latin America is still a hotbed for the right stock, but China remains a cold market for most of its former dot-com darlings. We're seeing that play out if we pitMercadoLibre(NASDAQ: MELI)againstiQiyi(NASDAQ: IQ). The leading online marketplace through Latin America is hitting new all-time highs, with MercadoLibre stockmore than doublingso far in 2019.
Things aren't going as well for iQiyi shareholders. The operator of China's leading streaming video platform may be trading higher year to date, but the shares are still trading 60% lower than they were when they peaked last June. Both companies are dominant in their industries within their geographical strongholds, but which one is the better investment at this point? Let's size them both of up to see which one makes the better case to be in your portfolio.
Image source: iQiyi.
When China's leading search engine spun off iQiyi 15 months ago it seemed like a great way for investors to buy into one ofBaidu's(NASDAQ: BIDU)fastest-growing businesses, and in many ways, iQiyi has lived up to its potential. Revenue rose 43% inits latest quarter, fueled by a 64% surge in the membership services revenue that now accounts for half of its business. iQiyi continues to be a streaming service that most of China enjoys as a free ad-supported platform, but with ad revenue flat over the year -- and now no longer the biggest top-line contributor -- the emphasis is correctly placed on its 96.8 million largely paying subscribers.
Two knocks on iQiyi are that it's far away from profitability and that its guidance last time was disappointing. There's a lot of red ink at iQiyi as it invests in premium content to grow its subscriber base, and its operating loss nearly doubled in the first quarter. Analysts aren't holding out for a profit until at least 2022. iQiyi's outlook for revenue growth to decelerate to a modest 12% to 18% in the current quarter is also a concern. However, with iQiyi nearly back to its $18 IPO price investors can cheat the system by buying into a platform that is more prolific than it was early last year for the same price as institutional investors did 15 months ago.
It may seem harder to find something bad to say about MercadoLibre given the stock hitting fresh all-time highs late last week, but buying into the online marketplace isn't without its risks. High inflation in some of the countries it operates can result in lumpy financials, and there's naturally going to be geopolitical risks in some of the more unstable areas where MercadoLibre is popular.
However, MercadoLibre's momentum is a lot stronger than iQiyi these days. Revenue growth is accelerating for the third of the past four years. MercadoLibre did see its profit shrink substantially in 2017 with an outright loss in 2018, but it's on track to return to profitability this year -- and build on that dramatically in the years to come.
Net revenue rose 48% inMercadoLibre's first quarter, stronger than iQiyi. Net revenue actually soared 93% in local currencies, but that's the inflation and forex concerns bubbling up again. MercadoLibre surprised investors with a profit for the quarter, a welcome contrast to the widening deficit at iQiyi.
Picking a winner isn't as easy as it seems. MercadoLibre clearly has every argument in its favor, and iQiyi is rightfully out of favor given its bottom-line funk and the sharply decelerating revenue growth. It also doesn't help that stateside investors are largely steering clear of Chinese growth stocks given the U.S. trade tariff tensions with the world's most populous nation.
I thinkbothstocks will beat the market at this point, but if I had to pick a near-term winner, I would have to go with iQiyi. It has a dominant market position in a booming industry, and there's a lot to like in its ability to convert freeloaders into paying customers. Its subscriber count has soared 58% over the past year. MercadoLibre already has a lot of its current success discounted in its buoyant share price. iQiyi is the one with more near-term upside, especially if its guidance proves conservative and the relations between U.S. and China improve to the point where stateside investors tiptoe back into the dynamic world of Chinese growth stocks.
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Rick Munarrizhas no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu and MercadoLibre. The Motley Fool recommends iQiyi. The Motley Fool has adisclosure policy. |
Fed sees case building for interest rate cuts this year
By Howard Schneider and Jason Lange
WASHINGTON (Reuters) - The U.S. Federal Reserve on Wednesday signalled interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.
Even as the U.S. central bank left its benchmark interest rate unchanged for now, the shift in sentiment since its last policy meeting was marked.
The bulk of Fed policymakers slashed their rate outlook for the rest of the year by roughly half a percentage point, and Fed Chairman Jerome Powell said others agree the case for lower rates is building; the Fed dropped its pledge to be "patient" before rate moves in a sign it was poised to act; and Powell stopped referring to weak inflation as "transient."
Although economic growth is expected to continue, Powell said policymakers' concerns congealed in the few weeks since the Fed last met in early May, with the unpredictable outcome of President Donald Trump's trade dispute with China and other countries at the top of their minds.
Trump slapped new tariffs on China on May 5, took other steps that upended markets, and yet of late has sent hopeful signals of progress in the dispute when he meets Chinese officials next week - difficult terrain for the Fed to navigate.
The U.S. president has repeatedly accused Powell's Fed of undermining his administration's efforts to boost economic growth and has repeatedly demanded that rates be cut.
"Seven weeks ago we had a great jobs report and came out of the last meeting feeling that the economy and our policy was in a good place," Powell said. "News about trade has been an important driver of sentiment in the interim."
"We are quite mindful of the risks to the outlook and are prepared to move and use our tools as needed," he said in a press conference following release of a policy statement in which the central bank said it "will act as appropriate to sustain" a nearly 10-year economic expansion.
'ACT AS NEEDED'
Fresh economic projections released by the Fed show nearly half of the 17 policymakers now show a willingness to lower borrowing costs over the next six months, and seven see rates likely to warrant being lowered by a full half a percentage point - near what bond investors have anticipated.
Though the baseline economic outlook remains "favorable," Powell said, risks continue to rise, including the drag that rising trade tensions may have on U.S. business investment and signs that economic growth is slowing overseas.
"Ultimately the question we are going to be asking ourselves is, 'are these risks going to be continuing to weigh on the outlook?'" Powell said.
"We will act as needed, including promptly if that's appropriate, and use our tools to sustain the expansion," he said, adding that if the Fed does ease monetary policy by cutting rates, it may also halt a gradual slimming of its massive balance sheet.
Interest-rate futures surged in response to the dovish remarks, and traders are now betting heavily on three rate cuts by the end of the year. U.S. stocks turned higher, with the benchmark S&P 500 index up about 0.3% from the previous day's close. In the Treasury market, expectations the U.S. central bank would be cutting rates before long drove the yield on 2-year notes, often a proxy for Fed policy, to the lowest in a year and a half at around 1.75%.
"I think the big surprise was how many folks moved into the cut camp on the Fed side. You had seven members that are now looking for two cuts in 2019," said Jacob Oubina, senior U.S. economist at RBC Capital Markets.
"Maybe this goes to the point that the China trade situation is such a critical pivot for whether the Fed cuts or not."
MISSED TARGETS
The new economic projections showed policymakers' views of growth and unemployment were largely unchanged from March. But they now project headline inflation to be just 1.5% for the year, down from the previous projection of 1.8%.
They also expect to miss their 2% inflation target next year as well, a blow for a central bank that has missed that goal for years.
Policymakers "expressed concerns" about the pace of inflation's return to 2%, Powell said. Wages are rising, he added, "but not at a pace that would provide much upward impetus" to inflation.
The long-run federal funds rate, a barometer for the state of the economy over the long term, was cut to 2.50% from 2.80%.
St. Louis Fed President James Bullard, who had argued that rates should be cut, dissented in Wednesday's policy decision.
(Reporting by Howard Schneider, Jason Lange and Ann Saphir; Editing by Paul Simao) |
Women's World Cup 2019: FIFA says wrong to remove Iran women's advocates
Fans were escorted out of a match for wearing shirts advocating for Iranian women to be able to attend their own matches. (Photo by Elsa/Getty Images) FIFA announced it was wrong of local officials to boot people from a Women’s World Cup match in France for wearing T-shirts advocating for women to be allowed in Iranian soccer stadiums, per a statement released Tuesday. Two fans were removed from Canada’s 2-0 win over New Zealand on Saturday in Grenoble for the shirts. FIFA reviewed the incident and vowed to see it won’t happen again during the World Cup. Fans wear shirts in support of Iranian women Stadium security spotted two fans in T-shirts advocating for Iranian women’s right to attend soccer matches and escorted them out of the stadium. The shirts read “Let Iranian Women Enter Their Stadiums,” per Grant Wahl of Sports Illustrated and FOX Sports TV. The shirts included messages about hijabs, per BBC . 🇮🇷| 2 fans were escorted from the #NZLCAN game in Grenoble for wearing t-shirts expressing opposition to the exclusion of Iranian women from football. We expect swift clarification from the tournament organisers. Thanks to our Aussie colleague Petr Kuzmin for making us aware. pic.twitter.com/eXVjFHzMUy — FansEurope (@FansEurope) June 16, 2019 Women have been prohibited from attending men’s games and other sporting events in Iran since the 1979 Islamic revolution. It is the only country to ban women from stadiums. Women around the world have been fighting in recent years to end the discrimination, led by the Open Stadiums movement . In March 2018 , more than 30 women were detained for trying to watch a match in Tehran. That October a limited number of women were allowed to watch the national team play Bolivia in Tehran from inside the stadium for the first time in 35 years . It was mostly national soccer players and relatives of the players, per the Center for Human Rights in Iran . Story continues FIFA denounces move, calls it social not political FIFA reviewed the incident and released a statement Tuesday afternoon, three days after the incident, blaming local officials and vowing to do better . It said it viewed the message as a “social, not political” one and therefore should have been allowed. “To be clear, FIFA believes that the message to allow women into football stadiums in Iran is a social, not political, matter and so the message on the front of the T-shirts worn by two fans is not against the FIFA rules, which rules always need to be applied with a sense of proportion. “As such, in this specific case, the fans should not have been asked to remove their T-shirts or to leave the stadium by local security, even if there were other messages on the back of their shirts. “FIFA will do its best to ensure that any similar situations do not occur at future matches during the competition.” FIFA added promoting gender equality is a priority it remains “fully cognizant of” during the Women’s World Cup. More from Yahoo Sports: CP3, Harden relationship deemed ‘unsalvageable’ From mid-major to NBA draft: Morant's historic rise Coach K on Zion’s NBA potential: 'He’s a gift from God' Why D-Wade supported son at Miami Pride |
You Might Like Marlborough Wine Estates Group Limited (NZSE:MWE) But Do You Like Its Debt?
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Investors are always looking for growth in small-cap stocks like Marlborough Wine Estates Group Limited (NZSE:MWE), with a market cap of NZ$58m. However, an important fact which most ignore is: how financially healthy is the business? Since MWE is loss-making right now, it’s crucial to understand the current state of its operations and pathway to profitability. The following basic checks can help you get a picture of the company's balance sheet strength. Nevertheless, potential investors would need to take a closer look, and I recommend youdig deeper yourself into MWE here.
Over the past year, MWE has maintained its debt levels at around NZ$6.4m including long-term debt. At this constant level of debt, the current cash and short-term investment levels stands at NZ$215k to keep the business going. Additionally, MWE has generated NZ$324k in operating cash flow over the same time period, leading to an operating cash to total debt ratio of 5.1%, signalling that MWE’s debt is not covered by operating cash.
With current liabilities at NZ$6.7m, it seems that the business arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.65x. The current ratio is calculated by dividing current assets by current liabilities.
With debt reaching 47% of equity, MWE may be thought of as relatively highly levered. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. However, since MWE is presently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
MWE’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. Though its lack of liquidity raises questions over current asset management practices for the small-cap. Keep in mind I haven't considered other factors such as how MWE has been performing in the past. I recommend you continue to research Marlborough Wine Estates Group to get a more holistic view of the stock by looking at:
1. Historical Performance: What has MWE's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Fed leaves interest rates unchanged, signals no cuts in 2019
A splitFederal Reserveleft interest rates unchanged during its two-day meeting this week, and despite outward pressure from both the markets andPresident Trump, signaled there will be no cuts in 2019.
Policymakers at the U.S. central bank -- who dropped the word "patient" from the statement, in a nod to those worried about the evolving economic outlook -- said they expect one rate cut next year and one rate hike in 2021.
"In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective," the FOMC statement said.
Wall Street was closely watching the decision, as traders clamored for an interest rate cut. Trump also suggested on Tuesday that he could strip Powell of his chairmanship if the Fed did not acquiesce and lower borrowing costs, saying "let's see what he does" when asked whether he still wants to demote Powell.
"I think the law is clear I have a four-year term, and I intend to serve it out," Powell said during a post-statement press conference.
The U.S. central bank voted 9-1 to keep the benchmark federal funds rate steady at 2.25 percent to 2.5 percent, where it's been since a rate hike in December. St. Louis Federal Reserve President James Bullard was the one dissenting vote; he had suggested at the beginning of June the Fed needed to cut rates due to muted inflation, the inverted yield curve and ongoing uncertainty about trade.
According to a "dot plot" of FOMC members' expectations, eight members favor one rate cut this year; eight prefer for rates to stay unchanged; and one wants a rate hike.
Despite Powell's comments, traders currently are pricing in a 100 percent chance of a rate cut during the FOMC's July meeting.
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"Still, while many market participants see these projections as confirmation of at least one rate cut either this year or next, the Fed could still take a wait-and-see approach for some time," said Ben Ayers, Nationwide's senior economist. "Economic growth has slowed but remains solid, while the ultra-low unemployment rate points to tight labor market conditions. The key continues to be the path for inflation, as well as inflation expectations across the economy."
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River in UK ‘has more plastic than the Great Pacific Garbage Patch’
Microplastics were found in every sample (Getty) Microplastic pollution is everywhere in British rivers, with one river having more of the tiny plastic particles than the notorious ‘great Pacific garbage patch’. Research by Greenpeace found tiny particles (smaller than 5mm) in every river under test, from south-west England to Northern Ireland. The highest concentrations were in the River Mersey, where 875 pieces were captured in half an hour. This makes the waterway, at the time it was sampled, proportionally more polluted than the great Pacific garbage patch, considered by scientists to be one of the most plastic-polluted expanses of water on Earth, Greenpeace said. Steve Backshall, wildlife expert and TV presenter, said: 'Greenpeace's study has discovered that the River Mersey is even more polluted than the Great Pacific Garbage Patch - surely this will galvanise us all into doing something about this. 'Plastic pollution isn't just a domestic issue, its impacts are seen on wildlife and humans all over the world. Read more from Yahoo News UK: Torrential rain and thunderstorms lash UK Fifth suspected murder in six days as London violence continues Jeremy Corbyn to back second referendum 'For the sake of nature and for the sake of future generations we need to stop producing so much of it - it's the only way forward.' A spokesman for the Environment Department (Defra) said: 'The UK is a global leader in tackling plastic pollution and is already making great strides - banning microbeads in rinse-off personal care products, taking fifteen billion plastic bags out of circulation with our 5p carrier bag charge, and announcing plans to introduce a deposit return scheme for single use drinks containers. 'We know there is more to do, which is why we are funding ground-breaking research into how microplastics enter waterways and working with the water industry to find new methods to detect, measure and remove microplastics from wastewater.' The research also found that microbeads, tiny spherical pieces of plastic often used in cosmetic and household products, were found in five rivers despite being partially banned in 2017. Scientists and campaigners, including Harry Potter star Bonnie Wright, sampled points along the rivers Exe, Thames, Severn, Great Ouse, Trent, Mersey, Aire, Derwent, Wear, Conwy, Wye, Clyde and Lagan. Analysis of the samples by Greenpeace scientists at the University of Exeter using an infrared detector found microplastics were in 28 out of 30 locations tested. |
If You Had Bought Bank of Princeton (NASDAQ:BPRN) Stock A Year Ago, You'd Be Sitting On A 11% Loss, Today
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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized byThe Bank of Princeton(NASDAQ:BPRN) shareholders over the last year, as the share price declined 11%. That's well bellow the market return of 4.6%. Because Bank of Princeton hasn't been listed for many years, the market is still learning about how the business performs. The silver lining is that the stock is up 1.4% in about a week.
View our latest analysis for Bank of Princeton
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unhappily, Bank of Princeton had to report a 12% decline in EPS over the last year. Remarkably, he share price decline of 11% per year is particularly close to the EPS drop. Given the lower EPS we might have expected investors to lose confidence in the stock, but that doesn't seemed to have happened. Instead, the change in the share price seems to reduction in earnings per share, alone.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Thisfreeinteractive report on Bank of Princeton'searnings, revenue and cash flowis a great place to start, if you want to investigate the stock further.
While Bank of Princeton shareholders are down 11% for the year (even including dividends), the market itself is up 4.6%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 9.7% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It is all well and good that insiders have been buying shares, but we suggest youcheck here to see what price insiders were buying at.
If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Have Insiders Been Buying Sona Nanotech Inc. (CNSX:SONA) Shares?
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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares inSona Nanotech Inc.(CNSX:SONA).
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
View our latest analysis for Sona Nanotech
Over the last year, we can see that the biggest insider purchase was by Harold Megann for CA$95k worth of shares, at about CA$0.25 per share. That means that an insider was happy to buy shares at around the current price of CA$0.28. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.
In the last twelve months insiders paid CA$271k for 1.1m shares purchased. In the last twelve months Sona Nanotech insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably donotwant to miss thisfreelist of growing companies that insiders are buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Sona Nanotech insiders own about CA$2.2m worth of shares. That equates to 15% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
The fact that there have been no Sona Nanotech insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Sona Nanotech and we see no evidence to suggest they are worried about the future.I like to dive deeperinto how a company has performed in the past. You can accessthisinteractive graphof past earnings, revenue and cash flow for free.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
MIT is turning AI into a pizza chef
Never mind havingrobots deliver pizza-- if MIT and QCRI researchers have their way, the automatons will make your pizza as well. They'vedevelopeda neural network, PizzaGAN (Generative Adversarial Network), that learns how to make pizza using pictures. After training on thousands of synthetic and real pizza pictures, the AI knows not only how to identify individual toppings, but how to distinguish their layers and the order in which they need to appear. From there, the system can create step-by-step guides for making pizza using only one example photo as the starting point.
The result is a system that isn't perfect (it's better at ordering synethetic pizza images than real ones), but it's still reasonably accurate. The scientists found that PizzaGAN could determine the right order 88 percent of the time, albeit using pizzas with just two toppings. It would likely have a harder time with a fully decked-out pie.
You won't see pizza bots in the near future, since it'd take a while to teach robots to prepare and cook pizza all on their own. The lessons learned here could be valuable going forward, though, and not just in the cooking realm. They could be useful for hamburgers and other layered dishes, not to mentionfashion AIthat could show how you'll look with that jacket or scarf. In that regard, pizza is just a (very tasty) starting point for an AI that could do a whole lot more. |
'Kindergarten Cop' Villain Is Unrecognizable In Mugshot After Public Intoxication Arrest
"Kindergarten Cop" star Richard Tyson was behind bars after getting busted for harassment and public intoxication ... and his mugshot is pretty amazing. According to law enforcement, Tyson, who played Cullen Crisp in the 1990 Arnold Schwarzenegger flick, was arrested Wednesday morning in Mobile, Alabama. Cops say Tyson was involved in a dispute with another person around 2:45 AM. He was eventually booked on misdemeanor charges of harassment or harassing communications and public intoxication. 58-year-old Tyson was booked just before 5 AM, and cops tell us the actor shortly bonded out for $1,000. Interestingly enough, Tyson is also the brother of former Mobile County District Attorney John Tyson, Jr. According to Tyson's mugshot, the actor is also sporting a pretty awesome mullet, which probably fits in just fine in Alabama. Tyson, who also appeared in "Black Hawk Down," is famous for his role as the villain in "Kindergarten Cop," but he's been steadily working in Hollywood over the years and has a ton of projects currently in production. He has also been a favorite actor of the Farrelly brothers over the years, and appeared in "Kingpin", "Me, Myself & Irene" and "There's Something About Mary". According to his IMDB page, Tyson also regularly performs Shakespeare works onstage, and also is looking to direct and produce his own films while continuing to seek interesting and challenging roles to play. Tyson, who originally hails from Mobile, Alabama, was previously married to Tracy Kristofferson, the daughter of famous actor Kris Kristofferson. The two split in 2017, and have one daughter. |
Blockchain Firm Algorand Raises $60 Million in New Token Sale
Blockchaincompany Algorand has raised over $60 million in atoken saleon financial services platform CoinList, according to a company press release on June 19.
The Algorand Foundation — a firm that implements an open source public ledger andcryptocurrencypayment system utilizing the Byzantine Agreement message-passing protocol — has reportedly raised $60 million in a sale of its native Algos token.
The recent equity funding was on top of the $66 million the company raised over the past year from investors such as venture capital firms Union Square Ventures and Pillar Venture Capital.
During the recent token sale, Algorand’s native asset Algos was worth $2.40 per token. As the foundation aims to grow the total number of Algos tokens to 10 billion in its first five years of operation, investors are putting the network’s market capitalization at $24 billion.
Ether (ETH), the native token of theEthereumnetwork and the largest altcoin by market capitalization, has a market cap of just over $28 billion at press time.
As previouslyreported, Algorand intends to launch its mainnet product this June, along with its token. In aninterviewthis January, the project’s co-founder Silvio Micali spoke about his belief that blockchain technology has future potential for creating a borderless global economy. At the time, Micali stated:
“Only a true decentralized system, where the power is really so spread that is going to be essentially practically impossible to attack them all and when you don’t need to trust this or that particular node, is going to bring actually the security we really need and deserve.”
This week, Algorand alsoannouncedthat its node repository has been open sourced and is now publicly available, along with the release of analytics tools for applications and details on its bug bounty program, among other features.
In late January, CoinList CEO, Andy Brombergprojectedthat cryptocurrency markets in 2019 are “going to be quiet for a little bit” while firms focus on building the crypto space. Bromberg said:
“[In 2019] it feels like people are focused on building... I think the market is going to be quiet for a little bit, while people focus on actually creating things. It feels like a little bit of a Mesopotamia, ‘cradle of civilization’ moment, where everyone has the ingredients they need, needs to focus in and start to build out those empires, and create what the future is going to look like, and that’s what this year is going to be about.”
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The Bonso Electronics International (NASDAQ:BNSO) Share Price Is Up 107% And Shareholders Are Boasting About It
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It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you canmakemore than 100%. To wit, theBonso Electronics International Inc.(NASDAQ:BNSO) share price has flown 107% in the last three years. That sort of return is as solid as granite.
View our latest analysis for Bonso Electronics International
Because Bonso Electronics International is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Bonso Electronics International actually saw its revenue drop by 34% per year over three years. So we wouldn't have expected the share price to gain 28% per year, but it has. It's a good reminder that expectations about the future, not the past history, always impact share prices.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Balance sheet strength is crucual. It might be well worthwhile taking a look at ourfreereport on how its financial position has changed over time.
Bonso Electronics International shareholders are down 20% for the year, but the market itself is up 4.6%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 6.7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Shareholders might want to examinethis detailed historical graphof past earnings, revenue and cash flow.
But note:Bonso Electronics International may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Does Sprott Resource Holdings Inc. (TSE:SRHI) Have A Particularly Volatile Share Price?
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If you own shares in Sprott Resource Holdings Inc. (TSE:SRHI) then it's worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.
See our latest analysis for Sprott Resource Holdings
Zooming in on Sprott Resource Holdings, we see it has a five year beta of 1.28. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. If this beta value holds true in the future, Sprott Resource Holdings shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Beta is worth considering, but it's also important to consider whether Sprott Resource Holdings is growing earnings and revenue. You can take a look for yourself, below.
Sprott Resource Holdings is a noticeably small company, with a market capitalisation of CA$44m. Most companies this size are not always actively traded. It takes less money to influence the share price of a very small company. This may explain the excess volatility implied by this beta value.
Since Sprott Resource Holdings has a reasonably high beta, it's worth considering why it is so heavily influenced by broader market sentiment. For example, it might be a high growth stock or have a lot of operating leverage in its business model. In order to fully understand whether SRHI is a good investment for you, we also need to consider important company-specific fundamentals such as Sprott Resource Holdings’s financial health and performance track record. I urge you to continue your research by taking a look at the following:
1. Financial Health: Are SRHI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
2. Past Track Record: Has SRHI been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look atthe free visual representations of SRHI's historicalsfor more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
YouTube reportedly considers moving all children's content to YouTube Kids
Welcome toSmall Humans, an ongoing series at Mashable that looks at how to take care of – and deal with – the kids in your life. Because Dr. Spock is nice and all, but it’s 2019 and we have the entire internet to contend with.
YouTube is reportedly considering major changes after a long string of terrible headlines involving everything frompedophilestogun-wielding Disney characters.
The company might remove all children's content from YouTube and show it exclusively in the YouTube Kids app, a newWall Street Journalarticlesays.
The other option under discussion involves entirely turning off auto-playing recommended videos on children's content. This is the systemthat leads viewersfrom a seemingly harmless video to extreme content and conspiracy theories.Read more...
More aboutYoutube Kids,Algorithms,Small Humans,Tech, andKids |
CBDCs of the World: The Benefits and Drawbacks of National Cryptos, According to Different Jurisdictions
This month alone, at least three separate countries have reported on their prospective central bank-issueddigital currencies(CBDCs): The Republic of the Marshall Islands (RMI)announcedthe creation of a specially dedicated nonprofit organization to support its digital currency that is already being developed. Meanwhile, the central bank of Russia said it wasconsidering its own cryptocurrency(albeit not in the near future), while the National Bank of Ukrainereleased a reporton the matter.
The concept of CBDCs has been steadily drawing the attention of numerous jurisdictions worldwide, but will it prove to be an efficient solution? It is time to delve deeper into the idea of state-backed cryptocurrencies and go through some major examples.
CBDCs, or national digital currencies, are digital assets that are issued and controlled by a federal regulator.
By design, CBDCs are fully regulated by the state. They don’t aim to become decentralized like most cryptocurrencies — instead, they simply represent fiat money, only in a digital form. Each CBDC unit acts as a secure digital equivalent of a paper bill and is normally powered by blockchain or some other form of distributed ledger technology (DLT).
Consequently, if a central bank issues a CBDC, it becomes not only its regulator but its clients’ account holder as well, therefore taking on the role of conventional, brick-and-mortar banks. Alternatively, a central bank can issue a digital currency in a decentralized manner, similar to how physical cash is distributed.
CBDCs could be seen as central banks’ response to the growing popularity of cryptocurrencies, some of which, however, deliberately attempt to bypass regulators’ purview. CBDCs, in turn, aim to take the best from cryptocurrencies, namely the convenience and security, and combine those features with the time-tested characteristics of the conventional banking system, in which money circulation is regulated and reserve-backed.
Indeed, according to a2019 reportissued by the Bank for International Settlements (BIS) — an organization based inSwitzerlandand comprises 60 of the world’s central banks — as much as 70% of financial authorities worldwide are conducting research into CBDC-issuance. However, concrete plans for implementation and motivations vary significantly depending on the country.
The BIS survey studied 63 central banks worldwide, 41 of which are based in emerging market economies, and 22 of which are in advanced economies — together representing almost 80% of the world’s population and more than 90% of its economic output. Of these, 70% were found to be already — or soon to be — engaged in theoretical CBDC research.
Notably, the general perception of a CBDC has been shifting toward positive. For instance, the head of the International Monetary Fund (IMF), an entity whichonce denouncedthe Republic of the Marshall Islands for its plan to issue a state-backed cryptocurrency,has recently declaredthat the international community should “consider” endorsing the idea.
“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy,” IMF Managing Director Christine Lagarde declared, noting, however, that she is “not entirely convinced” on the concept, yet.
Status: Adopted
Release date: 2015
In 2015,Tunisiabecame the first country in the world to issue ablockchain-based national currencycalled eDinar, also known as Digicash or BitDinar.
The asset was created with the participation of Monetas, a Switzerland-based software company (its CEO has gained notoriety due to theTezos scandal), which has put the digital version of Tunisia’s dinar on blockchain rails.
Similarly to cash money, eDinar’s distribution and issuance is under the purview of a governmental body: La Poste, or La Poste Tunisian (LPT). Monetas CEO Johann Gevers commented on the launch:
“The Monetas deployment in Tunisia is the first application for a full ecosystem of digital payments. With the La Poste Tunisienne Android application powered by Monetas, Tunisians can use their smartphones to make instant mobile money transfers, pay for goods and services online and in person, send remittance, pay salaries and bills, and manage official government identification documents.”
There are transaction fees featured in the eDinar system — albeit they are insignificant, as the maximum amount is capped at just 1 dinar ($0.34), which is typical for conventional cryptocurrencies.
Now, the North African country seems to be contemplating the next step: In April, El Abassi, the governor at Banque Centrale de Tunisie — the local central bank —announcedthat it had created a working group that was studying the issuance of a sovereign bitcoin (BTC) bond.
Abassi added that bitcoin and blockchain technology offers central banks an efficient tool to combat money laundering, manage remittances, fight cross-border terrorism and limit informal economies.
Status: Adopted
Release date: 2016
Senegalis also one of the earliest adopters of a national digital currency,having issuedits blockchain-based eCFA — named after the CFA franc, the Senegalese paper-based fiat currency — in December 2016.
Like a regular CBDC, eCFA is fully dependent on the central banking system and can only be issued by an authorized financial institution. The currency was created jointly by local bank Banque Régionale de Marchés (BRM) and eCurrency Mint Limited, an Ireland-based startup that assists central banks in creating their own digital fiat currencies.
The eCFA has been designed to be distributed alongside paper money as legal tender. In a shared statement, BRM and eCurrency Mint declared:
“The eCFA is a high-security digital instrument that can be held in all mobile money and e-money wallets. It will secure universal liquidity, enable interoperability and provide transparency to the entire digital ecosystem in WAEMU.”
Indeed, if proven efficient, the eCFAcould be extendedto other West African Economic and Monetary Union (WAEMU) member states, including Côte d’Ivoire, Burkina Faso, Benin, Togo, Mali, Niger and Guinea-Bissau.
Status: Adopted
Release date: 2019 (expected)
The Republic of the Marshall Islands (RMI) — a small island country in the Pacific Ocean with a population of roughly 53,000 people — is a presidential republic in free association with theUnited States, which is why it has historically used the U.S. dollar as its official currency.
However, in March 2018, itintroducedanother legal tender: its own cryptocurrency succinctly dubbed Sovereign (SOV). The digital asset was first introduced in late February the same year, when the government — the country has no central bank — passed the Declaration and Issuance of the Sovereign Currency Act. David Paul, minister-in-assistance to the president of the Marshall Islands,toldReuters at the time:
“As a country, we reserve the right to issue a currency in whatever form it is, whether in digital or fiat form.”
Further, Pauladdedthat SOV is made collaboratively withIsraelifintech startup Neema and will be publicly released through an initial coin offering (ICO), with a seperate presale. Neema CEO Barak Ben-Ezertold the pressthat SOV “is completely decentralized and the government cannot control the money supply” after the ICO.
As Peter Dittus, chief economist for SOV,told Cointelegraph, the decision to develop a national digital currency is backed by several reasons.
First, Dittus says, developing countries such as RMI struggle with the high costs of remittances, and having a crypto legal tender creates a situation in which the solution to costly payments is integrated into the monetary system itself. Additionally, a central bank-managed fiat currency is costly to implement and to run, wherein “for a small country the costs clearly outweigh the benefits.”
In September 2018, however, the SOV projectwas criticizedby major financial organizations, including the IMF and the U.S. Treasury Department. Specifically, the IMF warned about the potential risks of using a cryptocurrency as legal tender, stating that:
“The potential benefits from revenue gains appear considerably smaller than the potential costs arising from economic, reputational,AML/CFT, and governance risks.”
Further, in November, the RMI President Hilda Heinenarrowly surviveda no confidence vote that was prompted by her plans to introduce the national digital currency, among other things.
Nevertheless, in January 2019, the team behind SOVannouncedthat a national cryptocurrency for the Marshall Islands was still being actively developed and that it intends to launch SOV sometime this year.
In early June, the RMIestablishedthe SOV Development Fund, a nonprofit organization to support the government in the implementation of a national cryptocurrency.
According to its press release, the fund will be fully independent, with a board of seven directors, of whom two will be appointed by the government and two nominated by SFB Technologies — the firm that is developing SOV’s blockchain infrastructure.
The remaining directors will be selected unanimously by the aforementioned four from among international experts in blockchain, banking and monetary policy.
In a video presentation to the Blockchain for Impact Summit at the United Nations Headquarters in New York, the minister in assistance to the president, David Paul, said, “We are designing SOV in a way that will not place any burden on the government’s finances. The currency funds itself.”
Status: Adopted
Release date: 2018
In February 2018, the government ofVenezuelalauncheda national cryptocurrency called Petro (PTR), or sometimes Petromoneda.
Petro was first announced in December 2017 via national television, when President Nicolas Maduro declared that his government was planning to issue a cryptocurrency backed by the country’s oil, gold and mineral reserves. In January, heelaborated, stating that 100 million petros backed by an equivalent number of barrels of oil was going to be issued in the near future. According to Maduro, a number of fiat currencies — including the Russian ruble, the Chinese yuan, Turkish lira and the euro — are freely convertible with Petro.
Notably, the currency was designed to dodge the U.S. sanctions that hinder the local economy — or, as Maduro put it: to fight the financial “blockade” erected by the U.S. President Donald Trump’s administration. In response, the U.S. hasissued an orderto effectively restrict American investors from participating in the ICO for Petro, which started on Feb. 20, 2018.
In March, Nicolas Maduro claimed that a total of $5 billion was raised during the presale period — which would make it one of the largest ICOs to date, putting the $2 billionTelegramICO and $4.2 billion token sale ofEOSbehind it. However, as Steve Hanke, an applied economist at Johns Hopkins University, haspointed out, those claims “aren’t believable” because no independent audits have verified them.
Further, Petro allegedly has ties with Russia, as, according to anonymous sources cited in aTime article, the cryptocurrency has been receiving Russian support since 2017, particularly due to the appeal of bypassing Western sanctions also imposed on the country. As the Russian state bank allegedly told the publication, “People close to Putin, they told him this is how to avoid the sanctions.” However, in March, those claimswere deniedby Konstantin Vyshkovsky, the head of the Russian Finance Ministry’s State Debt Department.
Meanwhile, Maduro continues to integrate Petro into the troubled, hyperinflated economy. For instance, he has announced the launch of aPetro-funded crypto bankto support initiatives from the youth and students, while Venezuelan Minister of Habitat and Housing Ildemaro Villarroeldeclaredthat Petro will be used to fund the construction of houses for the homeless.
Moreover, even the pension bonuseshave been convertedinto Petro, which triggered a protest led by seniors who did not believe in the oil-backed coin. According to alocal labor organizer, paying pensions in Petros violates Venezuelan law.
In November 2018, after a series of delays, Petrowas finally launched. Soon, crypto enthusiasts pointed out that its white paper seems to be a blatant copy ofDash’s documentationavailable on GitHub.
As of press time, Petro is still not listed on any major cryptocurrency exchange. According to local and South American experts cited by tech media publicationWired, Petro is a “stunt” and a “smoke curtain” to cover up hyperinflation.
Despite the questionable progress with a national cryptocurrency and, more importantly, a larger economic crisis in his country, in January 2019, Maduro was sworn in for asecond term.
He has previouslydeclaredthat the country was preparing to launch yet another, “even more powerful” cryptocurrency called Petro Gold, this time backed by the country’s reserve of precious metals, meaning that Venezuela might have to witness more cryptocurrency-related experiments from the Maduro government.
Status: Adopted
Release date: 2019
In April 2018, theIraniangovernment performed a major crackdown on cryptocurrencies, with local banks beingbannedfrom all crypto dealings. Days after, an officialdeclaredthat an experimental model of a domestic digital currency had been prepared.
Indeed, similarly to Venezuela, Iran might be hoping to use its cryptocurrencyto bypass Western sanctions: In May 2018, Mohammad Reza Pourebrahimi, the head of the Iranian Parliamentary Commission for Economic Affairs, referred to cryptocurrencies as a promising way for Iran and Russia to avoid U.S. dollar transactions, as well as a possible replacement of SWIFT (since all Iranian bankshave been delistedfrom the global interbank payment system).
Additionally, Iran has reportedly been negotiating with Switzerland,South Africa,France,the United Kingdom, Russia, Austria,Germanyand Bosnia to conduct financial transactions using cryptocurrency.
In January 2019, four local banksdevelopeda gold-pegged cryptocurrency called PayMonamid rumorsthat Iran was going to issue its state-backed cryptocurrency.
According toreports from local media, the crypto asset has been developed in conjunction with three private banks — Parsian Bank, the Bank Pasargad and Bank Mellat — and one state-owned financial institution, Bank Melli Iran. Iran Fara Bourse, a Teheran-based over-the-counter (OTC) exchange for securities and other financial instruments, will reportedly list the new cryptocurrency.
The director of Kuknos, a blockchain company responsible for the technical side of the project, said that the new crypto asset is the way to tokenize assets and excess properties of the banks. One billion PayMon tokens will be released initially, as per the plan.
Interestingly, the launch of PayMon came less than a week after Iran’s central bank published a draft on future cryptocurrency regulations.According to Aljazeera, the authorities plan to partly reverse the ban on digital currencies but will introduce limits on the amount of cryptocurrencies that an individual can hold.
Status: Pilot
Release date: 2019-2020 (expected)
In January 2019, theUnited Arab Emiratesand Saudi Arabiaannouncedan agreement to collaborate on the creation of a cryptocurrency for cross-border trading,confirming previous reports.
The project is part of the Strategy of Resolve, a larger agreement between the two countries comprised of seven joint initiatives. According to the UAE official news agencyEmirate News Agency, the cryptocurrency “will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of blockchain technology and facilitating cross-border payments.”
Related:Safe Space: A Guide to Special Economic Zones for Crypto, From China to Switzerland
The initiative reportedly seeks to protect customer interests, create standards for technology and consider the cybersecurity risks, while also determining the impact of centralized currencies on monetary policies, the agency reported.
In February, Saudi Arabian financial news portal Argaamreportedthat six unnamed commercial banks from Saudi Arabia and the UAE had joined the digital currency project dubbed Aber, with a scheduled implementation during the next 12 months. The article alsonoted:
“The currency's official issuance is conditional on the outcomes of the ‘proof-of-concept’ stage. The Saudi Arabian Monetary Authority (SAMA) and the UAECB will decide on the feasibility of the currency’s practical applications.”
Status: Pilot
Release date: Unknown
In November 2017, the Central Bank of Uruguay (BCU)presenteda six-month pilot plan for the issuance and use of the digital version of the Uruguayan peso. The institution stressed that it “is not a new currency, it is the same Uruguayan peso that, instead of having a physical support, has a technological support."
According to the scheme — the starting date of which has not been specified — a total of 10,000 mobile phone users of Antel, the state-owned telecommunications company, would be able to download an app with an integrated digital wallet. The first issue of digital tokens will consist of 20 million Uruguayan pesos, the press release notes.
Other players participating in the pilot scheme, apart from the BCU and Antel, are RGC, the system provider; IBM, for storage support, circulation and control; IN Switch, for user management and transfers; and RedPagos, for ticketing.
The head of the BCUelaboratedon the plan, adding that Uruguay "is very much in the vanguard" of digital currency development:
"It will be a process of trial and error, success and failures. […] This must have the same soundness as normal currency, but sooner or later it will be implemented in Uruguay."
However, there has not been any major update to the pilot scheme for more than 12 months.
Status: Pilot
Release date: Unknown
Singaporeshares a similar experience with Uruguay in terms of issuing a CBDC, as its project has also been stuck in the experimentation phase.
In June 2017, the Monetary Authority of Singapore (MAS)released a reportregarding the so-called Project Ubin, a blockchain-powered plan to put a “tokenized form of the Singapore Dollar (SGD) on a DLT.” The project is a collaboration between the central bank and blockchain consortium R3, which is focused on the development of a blockchain pilot to facilitate cross-border payments.
However, in January 2018, Ravi Menon, the managing director of the MAS, suddenly criticized the idea of CBDCs, specifically in the public context. In an interview with theFinancial Times, he questioned the reasoning behind central banks issuing digital currencies to the nonbank public.
“If there’s any sense of nervousness about the banks, you will have a bank run; everybody is going to go into the central bank [with their deposits]. [...] And, if people placed their deposits with central banks, who’s going to extend credit?”
As with Uruguay, there have not been any updates on the Ubin project since.
Status: Pilot
Release date: Unknown
The Bank of Thailand (BOT) has been notably bullish on the concept of CBDCs. In November last year, the central bank’s governor, Veerathai Santiprabhob,arguedthat it will take three to five years for countries to switch from using cash to using digital currencies. However, the official noted that digital currency would not replace fiat money right away “because of complication, a readiness of people and an efficiency of technology.”
Meanwhile, the BOT has been studying the prospect of releasing its own CBDC. The project details first surfaced in June 2018, when Santiprabhob revealed details that the central bank had teamed up with a number of local banks to develop a “new way of conducting interbank settlement” using a CBDC.
According to the BOT, releasing its own cryptocurrency would reduce the transaction costs and validation time “due to less intermediation process needed compared to the current systems.”
In May 2019, more details werepublished. Thus, the CBDC project, dubbed Inthanon, has been developed by blockchain consortiumR3and global IT company Wipro Limited to be used for interbank settlements in Thailand, according to thelatest press release. Specifically, the solution will reportedly be used by the BOT and eight local commercial banks.
Status: Research
Release date: Unknown
According to thelatest reports, the head of Russia’s central bank, Elvira Nabiullina, has said that, while the launch of a CBDC is being explored, it won’t be released in the near future.
Specifically, Nabiullina suggested that the robustness of blockchain technology should be ensured before any prospective CBDC issuance:
"If we are talking about a national currency that works as a whole in the country — that is, not about private assets — of course, this requires the technology to provide reliability and continuity. Technologies must be mature, including distributed ledger technologies."
Further, Nabiullina discussed CBDCs in the context of cash-free societies, arguing that, while some countries have made significant progress and become almost cashless at this point, in other jurisdictions, cash remains in high demand:
“It’s not so much because people want to perform some dubious operations. People often value their privacy, anonymity. Of course, the spread of non-anonymous digital currencies indicate in some sense society’s readiness."
In April, the country’s central bank released a policy brief on CBDCs, in which it argued that they could represent a less risky and more liquid type of asset that could potentially reduce transaction costs in the economy. However, the paper stressed CBDCs’ lack of anonymity as a potential disadvantage in comparison to cash.
Russia’s authorities have also been working on the so-called CryptoRuble, a national stablecoin. However, the project has been accompanied by contradicting statements from various officials, and, as Cointelegraph previouslyreported, there are reasons to believe that a ruble-pegged stablecoin might not turn out to be very stable in the end.
Status: Research
Release date: Unknown
Sweden’s central bank, Riksbank, has been conducting research since 2017 into a project called e-Krona, a potential DLT-based currency that could be used as a “complement to cash.” In September that year, Riksbankpublished the first reporton e-Krona, followed byan action plan.
The papers note that Riksbank “has not yet taken a decision on whether to issue an e-Krona and the aim is not for an e-Krona to replace cash.”
However, Riksbank's reports on e-Krona mention thedropping popularity of cashin the country as one of the main reasons for studying the CBDC concept. For instance, the latest survey conducted by the central bank in 2018foundthat only 13% of Swedish residents paid for their most recent purchase in cash, while the corresponding figure for 2010 was 39%.
Essentially, Riksbank believes that e-Krona could operate under two systems: a value-based one and a registered-based one. The latter version would have digital currency balances stored in accounts on a central database — potentially underscored by blockchain — while a value-based e-Krona would be stored separately on “deposited currency accounts.”
Status: Research
Release date: Unknown
The People’s Bank of China (PBoC) has been researching the concept of CBDC for quite some time, with a specific institute named Digital Currency Research Lab established for this very purpose. However, it seems that the country is in no hurry to issue a national digital currency. In March 2018, governor of the PBoC, Zhou Xiaochuan, expressed the bank’scautious positionregarding the matter of blockchain technology:
“If it spread too rapidly, it may have a big negative impact on consumers. It could also have some unpredictable effects on financial stability and monetary policy transmission.”
Zhou also declared that digital currency will ultimately diminish cash circulation, while stressing that the PBoC “must prevent substantial and irreparable damages” to the domestic economy. Nevertheless, according toChina Daily, he also claimed that the development of digital currency is “technologically inevitable.”
In June 2018, the Digital Currency Research Lab at the PBoCfiled a new patentfor a digital wallet that would allow users to track their transaction histories.
Three months later, it opened a new fintech research center in Nanjing, the capital of China’s eastern Jiangsu province. The establishment will focus on the PBoC’s testing of its developed digital currency prototype, according to reports.
Status: Research
Release date: Unknown
Although there are few details on a South African CBDC at this point, the local central bankpublisheda tender last month that mentions the issuance of “electronic legal tender — a central bank digital currency issued and backed by the South African Reserve Bank (SARB).”
The tender — which has been closed at this point — was reportedly created to assist the SARB in studying CBDCs.
The CBDC would be issued at one-to-one parity with the South African rand and accepted by businesses and the government, the paper mentioned. It also should be able to facilitate person-to-person transfers of value without clearing and settlement, the tender said, while consumers must be able to use the CBDC without using a bank account.
Status: Research
Release date: Unknown
While it is too early to say ifEUcountries could be joining the ranks of jurisdictions that have adopted the concept of CBDCs, in May 2019, a European Central Bank (ECB) officialhighlightedthe benefits of state-backed digital currencies.
More specifically, Vitas Vasiliauskas — chairman of the board of the Bank of Lithuania and a member of the governing council of the ECB — discussed whether CBDCs should be wholesale, retail or both.
He stressed that CBDCs should serve as a medium of exchange, a means of payment and a store of value, reflecting qualities of the current forms of central bank money, but not a conventional reserve account or a private crypto asset. In the event of a release of a retail CBDC, it would be available to the general public, while access to the wholesale one would be open to financial institutions only.
Among the potential benefits of the CBDC, Vasiliauskas named increased efficiency of payments and securities settlements, as well as the reduction of counterparty credit and liquidity risks. The interest-bearing retail CBDC could purportedly improve the transmission of monetary policy and strengthen the pass-through of the policy to deposit and lending rates. However, Vasiliauskas further warned:
“The amount of cash in circulation is declining in some countries. This could mean that one day, even if it seems like a distant prospect — every single person will have to have an account with a private entity just to make payments. Unfortunately, this may lead to increased levels of financial exclusion.”
A retail CBDC would thus ensure that people continue to have access to the central bank’s money, Vasiliauskas said, and could eventually have positive effects on financial stability. In the meantime, he believes that one of the key issues the EBC should consider is the CBDC’s adherence to Anti-Money Laundering (AML) requirements and the way it can apply these standards to anonymous forms of CBDCs.
It is worth noting that despite the potential benefits of having a CBDC, some jurisdictions have ultimately decided against the idea.
The reasons vary: For instance,Japaneseofficialsexplainedthat their society wasn’t ready to give up cash, as it forms a substantial part of the local economy. The U.K. had to halt its CBDC-related research due to the country’slooming withdrawal from the EU, whileSouth Koreanofficials even argued that a CBDC is an expensive concept that might destabilize the market and “cause a moral hazard.”
Overall, the actual economic implications of issuing a state-backed cryptocurrency remain largely unknown, as even the jurisdictions that have adopted CBDCs have yet to launch them in a fully fledged form. However, given the steadily increasing amount of countries that have been studying the concept, a CBDC might soon arrive, prompting others to follow suit or give up the idea altogether.
• Santander Loses Appeal Against Brazilian Crypto Exchange, Fine Upheld
• Australia’s Central Bank: Cryptos Will Not Receive Wide Acceptance in the Near Future
• Italy’s Banks to Use Blockchain to Boost Settlements and Improve Transparency
• Global Banking Giant HSBC Launches Tokenization-Based Receivables System for India |
How Much Are Bionano Genomics, Inc. (NASDAQ:BNGO) Insiders Spending On Buying Shares?
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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sellBionano Genomics, Inc.(NASDAQ:BNGO), you may well want to know whether insiders have been buying or selling.
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia Universitystudyfound that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
See our latest analysis for Bionano Genomics
Over the last year, we can see that the biggest insider purchase was by Director Christopher Twomey for US$61k worth of shares, at about US$6.13 per share. That means that an insider was happy to buy shares at above the current price of US$2.65. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders paid US$101k for 16339 shares purchased. In the last twelve months Bionano Genomics insiders were buying shares, but not selling. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at thisfreelist of companies. (Hint: insiders have been buying them).
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Based on our data, Bionano Genomics insiders have about 1.5% of the stock, worth approximately US$426k. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.
It doesn't really mean much that no insider has traded Bionano Genomics shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Bionano Genomics insiders are doubting the company. Therefore, you should should definitely take a look at thisFREEreport showing analyst forecasts for Bionano Genomics.
But note:Bionano Genomics may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Boeing is moving space division headquarters to Florida
TITUSVILLE, Fla. (AP) Boeing says it is moving the headquarters of its space and launch division to Florida. The company said Tuesday that it was moving the space division headquarters from Arlington, Virginia, to Titusville on Florida's Space Coast. Boeing official Leanne Caret says it makes sense to move Boeing's space headquarters to Florida, where so much space history has taken place and the company is working on several future launches. Florida's Space Coast is home to the Kennedy Space Center, Cape Canaveral Air Force Station and Patrick Air Force Base. Company officials say the move won't affect space operations in other states, such as Alabama, California, Colorado, Louisiana and Texas. Boeing spokesman Daniel Beck says the company isn't saying how many jobs will move to Florida, but the number will be small. |
Barbie maker Mattel 'is insolvent' and can't be 'salvaged': Bratz doll creator
MGA Entertainment founder and CEO Isaac Larian told us how he really felt about toymaker Mattel (MAT).
“The message to Mattel is very clear — they are in big, big trouble. Frankly why I gave up on the merger talks — we were considering a hostile takeover — because after further research Mattel is in such a situation right now I don’t think they can be salvaged,” Larian, the creator of Bratz and LOL dolls, said in an interview with Yahoo Finance. “There is too much water under the bridge and unfortunately, they are going to go the same way as Toys R Us.”
“Mattel is insolvent,” added Larian.
On Wednesday, Larian pulled his latest undisclosed offer to buy struggling Mattel, which he reportedly made several weeks ago. The toy mogul cited an uncooperative Mattel management team and what he believes is a deeply troubled brand. Larian did say he would be interested in buying Mattel’s brands on the cheap in bankruptcy should that day arrive.
Mattel’s shares dropped more than 4% on the news.
“The reality is we have made strong progress on our ongoing strategic transformation plan, including significant improvements in our profitability and operating income, while laying the groundwork to drive long-term shareholder value,” said a Mattel spokesperson. The spokesperson pointed to Mattel’s three consecutive quarters of lower losses as signs of progress.
Mattel has continued to contest Larian’s latest statements and said they are simply not accurate. To their point, Mattel did end the first quarter with $380 million in cash. It also has a $1.6 billion untapped credit line secured in December 2017, according to its latest quarterly filing.
So technically speaking, Mattel is not insolvent as it stands today.
Indeed, Larian’s outburst isn’t coming out of nowhere, provided one has followed his interaction with Mattel executives this past year. Larian first offered to buy Mattel in May 2018, but was quickly rebuffed by then CEO Chris Sinclair.
Since then, new Mattel CEO Ynon Kreiz and his executive team have embarked on a $650 million cost-cutting plan. The company has also opened a movie studio in an effort to develop content around its top brands similar to rival Hasbro (HAS).
Despite the efforts, Mattels’ sales and profits continued to be under severe pressure in the first quarter. The company also ended the first quarter with $2.8 billion in long-term debt, some of which will come due over the next several years.
The saving grace here in Larian’s eyes: The Barbie brand isn’t worthless. But Larian contends the storied doll brand isn’t worth what many people believe.
Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter@BrianSozzi
Read the latest financial and business news from Yahoo Finance
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What Kind Of Shareholder Owns Most Stratus Properties Inc. (NASDAQ:STRS) Stock?
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If you want to know who really controls Stratus Properties Inc. (NASDAQ:STRS), then you'll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
Stratus Properties is not a large company by global standards. It has a market capitalization of US$224m, which means it wouldn't have the attention of many institutional investors. In the chart below below, we can see that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about STRS.
Check out our latest analysis for Stratus Properties
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Stratus Properties does have institutional investors; and they hold 43% of the stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Stratus Properties's earnings history, below. Of course, the future is what really matters.
It would appear that 14% of Stratus Properties shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
It seems insiders own a significant proportion of Stratus Properties Inc.. It has a market capitalization of just US$224m, and insiders have US$34m worth of shares in their own names. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You canclick here to see if those insiders have been buying or selling.
With a 28% ownership, the general public have some degree of sway over STRS. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
Of coursethis may not be the best stock to buy. So take a peek at thisfreefreelist of interesting companies.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
CORRECTED-US STOCKS-Wall Street climbs after Fed signals potential rate cuts
(In fourth paragraph, corrects month to June, not May)
* Dow up 0.24%, S&P up 0.24%, Nasdaq up 0.21%
By Noel Randewich
June 19 (Reuters) - Wall Street rose on Wednesday after the Federal Reserve held interest rates steady, as expected, and signaled potential cuts later this year.
Saying it "will act as appropriate to sustain" economic expansion, the central bank signaled rate cuts of as much as half a percentage point over the remainder of 2019.
"We think the Fed delivered. It did no harm. It walked right up to a cut without doing it today. It'll likely be coming in July absent some big trade news or other news," said John Augustine, chief investment officer at Huntington Bank in Columbus, Ohio.
Buoyed by growing confidence the Fed will cut rates, and by hopes of an end to the U.S.-China trade war, U.S. stocks have climbed in recent weeks. The S&P 500 has gained about 6% in June and is about 1% away from its record high close set in April.
The financial sector was up 0.1%, with bank stocks dipping 0.1%.
All three major indexes rose following the announcement.
At 2:17 p.m. ET the Dow Jones Industrial Average was up 0.24% at 26,530.35 points, while the S&P 500 was up 0.24% at 2,924.75.
The Nasdaq Composite was up 0.21% at 7,970.94.
The healthcare sector rose 0.9%, helped by gains in UnitedHealth Group Inc, Pfizer Inc and Allergan Plc.
Allergan jumped 5.8% after the drugmaker said its constipation drug, jointly developed with Ironwood Pharmaceuticals Inc, improved symptoms in patients suffering from irritable bowel syndrome with constipation.
Adobe Inc surged 4.5% after the Photoshop software provider beat analysts' estimates for quarterly profit and revenue. (Reporting by Noel Randewich; Additional reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru Editing by Alistair Bell and Lisa Shumaker) |
Nomura (NMR) Announces Share Repurchase Worth $1.4 Billion
Nomura Holdings, Inc.NMR recently announced that it will reduce its stake in its affiliate — Nomura Research Institute — after admitting that the latter was involved in a market-sensitive information leak. Per a statement issued on Tuesday, Japan’s biggest brokerage company will use the proceeds from this reduction to buy back shares worth nearly 150 billion yen ($1.4 billion). The news was first reported by Bloomberg.Nomura’s stake in NRI will now be 23.1%, down from 36.6%.Simultaneously, the company has withdrawn a proposal to nominate its chairman to key board roles in an effort to strengthen governance just days before its annual shareholder meeting, which is scheduled on Jun 24.Last month, the Financial Services Agency (“FSA”) issued a "business improvement order" against Nomura after the company confirmed that some damaging information related to listing and delisting of stocks had been leaked. An employee at NRI, who was on a Tokyo Stock Exchange panel, was looking at the overhaul of the exchanges’ section of listed stocks. He probably leaked information about the potential changes to a chief strategist at the firm’s main securities unit. Later on, employees at Nomura shared that information with institutional clients.Following the FSA’s order, Nomura said that its CEO, Koji Nagai, would take a 30% pay cut for three months to take responsibility for the same. However, Nagai still pledged to remain the CEO.Per a statement issued recently, Nomura withdrew its proposal to re-elect chairman Nobuyuki Koga as the head of compensation and nominating committees. In fact, the company has been asking shareholders to vote in favor of outside director Hiroshi Kimura for these positions.Notably, proxy advisory firms Glass Lewis and Institutional Shareholder Services (“ISS”) are also urging shareholders to vote against Koga. Glass Lewis said that oversight of executive performance and pay “is likely more complicated and less rigorous when an inside director chairs the committee.”The ISS also recommends that shareholders vote against the re-election of Nagai because Nagai “should be held responsible for the information leakage incident.”Shares of Nomura have lost 8.9% on the NYSE over the past six months against 8.5% growth recorded by the industry it belongs to.
Currently, Nomura carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the finance space are Hilltop Holdings Inc. HTH, Cadence Bancorporation CADE and M&T Bank Corporation MTB. Each of these stocks currently carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Over the past 60 days, Hilltop Holdings witnessed an upward earnings estimate revision of 11.5% for the current year. Its share price has increased 19.6% in the past six months.Cadence Bancorporation’s Zacks Consensus Estimate for earnings in 2019 has been revised 8.8% upward over the past 60 days. Its shares have gained nearly 14.2% in the past six months.Over the past 60 days, M&T Bank witnessed a marginal upward earnings estimate revision for the current year. Its share price has rallied 18.3% in the past six months.This Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.Click here to see these breakthrough stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportM&T Bank Corporation (MTB) : Free Stock Analysis ReportNomura Holdings Inc ADR (NMR) : Free Stock Analysis ReportHilltop Holdings Inc. (HTH) : Free Stock Analysis ReportCadence Bancorp (CADE) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Great white shark lured to fisherman's boat in Jaws-like incident off Jersey Shore
A man in New Jersey spotted a great white shark while out fishing on Monday - and caught the whole thing on camera. In what he called the best day ever on the water, boat captain Jeff Crilly lured the shark towards his boat, Big Nutz Required II , with a bag of food. The incident happened as Mr Crilly was sailing in the Manasquan inlet off the coast of New Jersey, known as the Jersey Shore, with his brother Scott. In a video later posted to Facebook, the shark leaps up to the boat, giving the two-man crew a shock. We saw like v-waves, little ripples, in the back of the slick. Were like theres something in there, Jeff later told Pix 11 . The shark would be from tail, here at the end of the boat its head would be inside the boat
easily. Despite the seemingly immediate danger, the brothers laughed and yelled this thing is huge! as the shark approaches them. The cheers veer into nerves, with a chorus of Holy s***! as the animal appears to get closer. Mr Crilly says he thinks the shark was about 16 to 18 feet long. This is the coolest f****** thing Ive ever seen! the narrator of the video, presumed to be Mr Crilly, says as the shark leaps towards his boat. Once in a lifetime. Later, he told the Asbury Park Press "We've fished for sharks a lot and never seen anything like that. We were amazed by how big it was," he added. Last month, a great white shark was spotted in the nearby Long Island Sound. Those who spotted it said it was their first sighting of the animal ever. |
Exclusive: U.S. tells India it is mulling caps on H-1B visas to deter data rules - sources
By Neha Dasgupta and Aditya Kalra
NEW DELHI (Reuters) - The United States has told India it is considering caps on H-1B work visas for nations that force foreign companies to store data locally, three sources with knowledge of the matter told Reuters, widening the two countries' row over tariffs and trade.
The plan to restrict the popular H-1B visa programme, under which skilled foreign workers are brought to the United States each year, comes days ahead of U.S. Secretary of State Mike Pompeo's visit to New Delhi.
India, which has upset companies such as Mastercard and irked the U.S. government with stringent new rules on data storage, is the largest recipient of these temporary visas, most of them to workers at big Indian technology firms.
The warning comes as trade tensions between the United States and India have resulted in tit-for-tat tariff actions in recent weeks. From Sunday, India imposed higher tariffs on some U.S. goods, days after Washington withdrew a key trade privilege for New Delhi.
Two senior Indian government officials said on Wednesday they were briefed last week on a U.S. government plan to cap H-1B visas issued each year to Indians at between 10% and 15% of the annual quota. There is no current country-specific limit on the 85,000 H-1B work visas granted each year, and an estimated 70% go to Indians.
Both officials said they were told the plan was linked to the global push for "data localisation", in which a country places restrictions on data as a way to gain better control over it and potentially curb the power of international companies. U.S. firms have lobbied hard against data localisation rules around the world.
A Washington-based industry source aware of India-U.S. negotiations also said the United States was deliberating capping the number of H-1B visas in response to global data storage rules. The move, however, was not solely targeted at India, the source said.
"The proposal is that any country that does data localisation, then it (H-1B visas) would be limited to about 15% of the quota. It's being discussed internally in the U.S. government," the person said.
A spokeswoman for the U.S. Trade Representative's office (USTR) referred questions to the State Department, which did not immediately respond to a request for comment.
IT SECTOR
Most affected by any such caps would be India's more than $150 billion IT sector, including Tata Consultancy Services (TCS) and Infosys Ltd, which uses H-1B visas to fly engineers and developers to service clients in the United States, its biggest market. Major Silicon Valley tech companies also hire workers using the visas.
Shares in Indian IT firms fell in early trade on Thursday after the Reuters story. Wipro Ltd fell around 4%, while Infosys and TCS fell more than 2% each. The broader Nifty IT index's 1.8% fall was its biggest intraday percentage decline in over five weeks.
Stratfor analyst Reva Goujon on Twitter called the move "potentially another big blow to the U.S. tech industry amid US-China economic battle," a sentiment echoed on social media by some Indians and their supporters.
India's Ministry of External Affairs has sought an "urgent response" from officials on how such a move by the United States could affect India, said one of the two government officials, who declined to be named due to the sensitivity of the matter.
India's Ministry of External Affairs, as well as the commerce department that is typically involved in such discussions, did not respond to an e-mail seeking comment.
Since last year, the Trump administration has been upset that U.S. companies such as Mastercard and Visa suffer due to regulations in several countries that it says are protectionist and increasingly require companies to store more data locally.
India last year mandated foreign firms to store their payments data "only in India" for supervision, and New Delhi is working on a broad data protection law that would impose strict rules for local processing of data it considers sensitive.
While governments the world over have been announcing stricter data storage rules to better access data in their jurisdictions, critics say restricting cross-border data flows hurts innovation and raises companies' costs.
In March the USTR, in a press note, highlighted "key barriers to digital trade", citing data-flow restrictions in India, China, Indonesia and Vietnam, among others.
At a U.S.-India Business Council event last week, Pompeo said the Trump administration would push for free flow of data across borders, not just to help U.S. companies but also to secure consumers' privacy.
(Reporting by Neha Dasgupta and Aditya Kalra in New Delhi; Additional reporting by Jason Lange and David Brunnstrom in Washington, Peter Henderson and Elizabeth Culliford in San Francisco; Editing by Sanjeev Miglani, Alex Richardson and Leslie Adler) |
Can You Imagine How Chuffed Biomerica's (NASDAQ:BMRA) Shareholders Feel About Its 141% Share Price Gain?
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It hasn't been the best quarter forBiomerica, Inc.(NASDAQ:BMRA) shareholders, since the share price has fallen 11% in that time. But that doesn't change the fact that the returns over the last five years have been very strong. We think most investors would be happy with the 141% return, over that period. We think it's more important to dwell on the long term returns than the short term returns. Ultimately business performance will determine whether the stock price continues the positive long term trend.
See our latest analysis for Biomerica
Biomerica isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
For the last half decade, Biomerica can boast revenue growth at a rate of 2.2% per year. That's not a very high growth rate considering the bottom line. In comparison, the share price rise of 19% per year over the last half a decade is pretty impressive. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. Some might suggest that the sentiment around the stock is rather positive.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Balance sheet strength is crucual. It might be well worthwhile taking a look at ourfreereport on how its financial position has changed over time.
Biomerica shareholders are down 39% for the year, but the market itself is up 4.6%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 19% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. You could get a better understanding of Biomerica's growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Of courseBiomerica may not be the best stock to buy. So you may wish to see thisfreecollection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Is It Time To Consider Buying Skyworks Solutions, Inc. (NASDAQ:SWKS)?
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Let's talk about the popular Skyworks Solutions, Inc. (NASDAQ:SWKS). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Skyworks Solutions’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Skyworks Solutions
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.5% below my intrinsic value, which means if you buy Skyworks Solutions today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $83.66, then there’s not much of an upside to gain from mispricing. In addition to this, Skyworks Solutions has a low beta, which suggests its share price is less volatile than the wider market.
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -2.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Skyworks Solutions. This certainty tips the risk-return scale towards higher risk.
Are you a shareholder?SWKS seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping an eye on SWKS for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on SWKS should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Skyworks Solutions. You can find everything you need to know about Skyworks Solutions inthe latest infographic research report. If you are no longer interested in Skyworks Solutions, you can use our free platform to see my list of over50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Regulators Debate Cryptocurrency Legislation Ahead of G20 Summit
Cryptocurrency regulation will take a step forward during the upcomingV20 Summitwhere country representatives will assess the new course of legal action proposed by the international Financial Action Task Force (FATF).
FATF will release proposals on June 21 in hopes of setting new international standards for crypto businesses.
Legislatorssupport the summit, which will also bring together national blockchain associations and the world’s leading Virtual Asset Service Providers (VASPs).
Related:Brazilian Financial Authorities Announce Regulatory Sandbox For Blockchain
FATF standards for blockchain and cryptocurrency have set high expectations among legislators. Of special interest is its impact on long-lasting financial security issues, a subject addressed by Japanese Congressman, Naokazu Takemoto.
“The VASP industry recognizes the importance of clear regulation in preventing financial crime and mitigating corruption,” Takemoto said.
The event, which will run parallel to G20 Summit on June 28 and 29 in Osaka, Japan, takes a new dimension by being held at the only country to have a legal framework for cryptocurrencies.
The latest examples given by Japanese regulators includemeasuresto tighten restrictions on speculative trade and new obligations for exchanges, such as keeping a cryptocurrency protection fund.
Related:Rhode Island Looks to Adopt Blockchain For Government Use
While regulators agree on the need to control cryptocurrency businesses, too much regulation could backfire.
According Roger Wilkins, FTAF ex-president and former secretary Australian Department of the Attorney General, a common concern is that new regulations could push the public out of controlled platforms.
“What we are hearing from industry is that the new rules may have the opposite effect to which they were intended, effectively forcing crypto transactions off the controlled platforms, which are currently one of the best avenues we have in gaining visibility over financial crime,” Wilkins said.
Blockchain association representatives from China, South Korea, United Kingdom, Singapore and Australia will also be present at the event to review the new standard. Prior to that, the blockchain industry will know for sure if it will face real oppression from the international body.
In the mean time, legislators agree in the necessity for a balance in order to adapt and take advantage of the upcoming regulations. Nonetheless, is well-known that there’s no such thing as flexibility or non-compliance when it comes to followingFATF recommendations.
“As a former regulator, I recognise how important it is to identify a balanced solution that implements the recommendations of the FATF while also building the opportunity for business,” Wilkins said.
• Few Women Are Contributing Code to Major Crypto Projects, Report Finds
• Tezos Foundation Snags Former PwC Blockchain Expert As CFO |
Toddler left covered in 'burn marks' after spilling Daddies ketchup on herself
A squeezy bottle of Daddies Tomato Ketchup. An 18-month-old toddler was left covered in an horrific red rash over her body which ' looked like burn marks' after accidentally squirting tomato ketchup on herself. (SWNS) A toddler was left covered in a rash over her body which 'looked like burn marks' after accidentally squirting tomato ketchup on herself. Leanne Bullard's daughter, Alice, suffered an allergic reaction after spilling the sauce from a £1 squeezy bottle of Daddies Tomato Ketchup, which is made by Heinz . Mrs Bullard, 39, did not realise until she was bathing her daughter after dinner and noticed bright red marks on her skin on June 14. Fortunately the rash went down after a few hours and the youngster recovered. Alice Bullard after she spilled the Daddies ketchup on herself. You can clearly see the red blotches which were an allergic reaction to a preservative. (SWNS) She later discovered that her daughter had suffered a reaction to a preservative used in the tomato ketchup brand which she had bought at Iceland. Speaking about the incident she said: "On Friday evening I made the children pizza and chips for their tea. I'd bought Daddies' Tomato Ketchup in the plastic bottle. "It's not normally the brand I buy but I had run out and was in the shop and that was the only one they had so I picked it up. "Obviously I gave it to the kids with their tea and within half an hour - because Alice is only 18 months old - she had got it absolutely everywhere. Leanne Bullard, with daughter Alice who was left covered in an horrific red rash over her body which ' looked like burn marks' after accidentally squirting tomato ketchup on herself. (SWNS) "I got some baby wipes which are the same brand I always use that she had never had a reaction to and wiped it off her. "When I did wipe it off her, directly underneath where the tomato ketchup had been were red marks and patches. "It looked like she had been burnt, it looked like scolds. "I thought 'Oh my God, What's happened? What am I going to do?'" After complaining directly to parent company Heinz, Mrs Bullard was told that the sauce contained potassium sorbate, a preservative, was used exclusively in the squeezy bottles. Read more from Yahoo News UK: Torrential rain and thunderstorms lash UK Fifth suspected murder in six days as London violence continues Jeremy Corbyn to back second referendum She was also told the chemical was not in any other Heinz products - even those that also come in plastic containers. She is now keen for other parents to be aware their child may have a similar reaction. Story continues "Some children could have had a more severe reaction, it could have been a lot worse especially if it had reacted with Alice's throat or her airways. "That's quite scary for a parent." The mother-of-four said Alice is not allergic to anything else nor had she seen a reaction like this from any of her other children either. A spokesman for Heinz said: "We have confirmed with Leanne that Daddies Tomato Ketchup in glass bottles is made without potassium sorbate because of a different filling process, and it is not used in Heinz Tomato Ketchup. "Of course the details of these recipes are clearly labelled. "We have sent Leanne a voucher as a gesture of goodwill to enable her to replace the bottle.” Watch the latest videos from Yahoo UK |
Lenovo’s and Google's Smart Alarm Clock might make you hate mornings less
Like every red-blooded American, I hate waking up to go to work. The sound of my smartphone's alarm is worse than a jackhammer operated by a crying baby. And if someone happens to use the sound of my alarm as their ringtone, I instinctively want to dive tackle them.
That's where Google’s (GOOG,GOOGL) and Lenovo's new Smart Clock with Google Assistant comes in. Designed to make you hate your alarm a little less, the Smart Clock, available for $79, is a Google Assistant-powered, well, alarm clock for your bedroom.
I've been using theSmart Clockfor a few weeks, and while I certainly enjoy using it, I still find myself using my smartphone to set my morning alarm more often than I do the Clock. Still, its ability to access Google Assistant to check things like my schedule and the weather has proven more than helpful.
To be sure, its alarm is still nearly as annoying as every other alarm on Earth. But its ability to slowly increase its screen brightness to simulate the Sun rising makes waking up a little less painful.
The Lenovo Smart Clock combines the look and feel of a classic alarm clock with the kind of tech you'd find in a modern smart speaker. The device has a 4-inch, touchscreen display, with a body that tapers off toward its rear. Its frame is covered in a soft fabric and features two, large volume buttons on its top.
Around back is the power cable, a physical button to mute the Clock's microphone, and a full-size USB port. That's an important feature, as plugging in the Clock means you might not have enough outlets on your side of the bed. The USB port, however, will let you charge your phone or smartwatch while keeping the Clock plugged in. It's a small but appreciated addition.
The Smart Clock's most satisfying feature, though, is its touch-sensitive top panel. Remember those old cartoons where the main character would use his fist to smash his alarm clock when it went off? Well, you can basically do the same thing with the Lenovo Smart Clock.
When your alarm goes off, you can tap, or slam, the top of the Smart Clock to silence it or turn the alarm off entirely. You can also use voice commands to turn off the alarm, but Morning Dan, my sleepier, groggier counterpart, can't be trusted to get up on time for work if his alarm can be switched off by simply saying "Stop." So I turned off the microphone when I went to sleep.
Lenovo wisely chose to omit a camera from the Smart Clock to ensure that users don't accidentally stream videos of themselves from the bedroom to their contacts. And I should know.
While reviewing Amazon's (AMZN)Echo Show, which has a built-in camera for video chatting with contacts, I accidentally streamed video of myself from my bedroom to a second Echo Show in my office. Thankfully, the stream happened during off-hours, so no one saw that I was watching "Bob's Burgers" and eating a bowl of week-old pasta on my bed.
The Lenovo Smart Clock comes equipped with Google Assistant, which means you can use your voice to do things like check your schedule and the weather, as well as control your smart home devices and get the traffic report for your commute to work.
Telling the Clock to set an alarm is straightforward, as is asking it to read out your schedule. You can also use Google Routines with the Smart Clock, so, for instance, you can set your "Good Morning" routine to raise the curtains in your home, turn off the alarm, fire up your connected coffee maker, and more — all with one quick phrase. If you use the special Sunrise Alarm, your Smart Clock will slowly increase its screen brightness before the alarm goes off, to mimic the Sun rising.
Similarly, you can set your "Goodnight" routine to lock your doors, turn off your lights and television, and play calming music on your Smart Clock. It's an incredibly easy process, if you have enough connected devices in your home, that is.
As for music playback, don't expect the Smart Clock to blast out deep, robust beats. You're not going to get any real bass out of the Clock, and audio in general will sound tinny. It's fine for listening to music when you’re folding your clothes or tidying up your bedroom, but you certainly won't want to rely on the Clock as your main smart speaker.
I was also thrown off by the big difference in sound when raising the volume on the Smart Clock. It seemed to jump a good amount when I turned up music from the 6 setting to 7. A smoother transition between the two would be nice.
Lenovo also disabled the ability to cast video to the Smart Clock. That makes sense, though, since you're not likely to want to use the device's 4-inch screen to watch the latest episodes of your favorite shows or movies.
I use my phone way too much before I go to bed, so putting it down and using the Smart Clock to set my alarm and act as the last piece of tech I use before falling asleep is a fine proposition. And for a good number of people who aren't addicted to their smartphones, the Clock is sure to be a fine alternative to a traditional alarm clock.
It's worth noting, however, that the audio experience is lacking. So if you're looking for a true smart speaker to listen to music, you might want to look elsewhere. If you simply want a smarter alarm clock, though, the Lenovo Smart Clock is a solid bet.
More from Dan:
• Tim Cook on tech: ‘If you built a chaos factory, you can’t dodge responsibility for the chaos.’
• How Huawei’s loss could be Apple’s gain
• The coolest games of E3 2019
• What to do as soon as you lose your phone
Email Daniel Howley at dhowley@yahoofinance.com; follow him on Twitter at@DanielHowley.
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Is Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) A Risky Dividend Stock?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Is Banco Latinoamericano de Comercio Exterior, S.A ( NYSE:BLX ) a good dividend stock? How would you know? Dividend paying companies with growing earnings can be highly rewarding in the long term. If you are hoping to live on the income from dividends, it's important to be a lot more stringent with your investments than the average punter. With Banco Latinoamericano de Comercio Exterior yielding 7.5% and having paid a dividend for over 10 years, many investors likely find the company quite interesting. It would not be a surprise to discover that many investors buy it for the dividends. Before you buy any stock for its dividend however, you should always remember Warren Buffett's two rules: 1) Don't lose money, and 2) Remember rule #1. We'll run through some checks below to help with this. Click the interactive chart for our full dividend analysis NYSE:BLX Historical Dividend Yield, June 19th 2019 Payout ratios Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. Looking at the data, we can see that 341% of Banco Latinoamericano de Comercio Exterior's profits were paid out as dividends in the last 12 months. Unless there are extenuating circumstances, from the perspective of an investor who hopes to own the company for many years, a payout ratio of above 100% is definitely a concern. Remember, you can always get a snapshot of Banco Latinoamericano de Comercio Exterior's latest financial position, by checking our visualisation of its financial health . Dividend Volatility One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. For the purpose of this article, we only scrutinise the last decade of Banco Latinoamericano de Comercio Exterior's dividend payments. During this period the dividend has been stable, which could imply the business could have relatively consistent earnings power. During the past ten-year period, the first annual payment was US$0.60 in 2009, compared to US$1.54 last year. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year over that time. Story continues Companies like this, growing their dividend at a decent rate, can be very valuable over the long term, if the rate of growth can be maintained. Dividend Growth Potential Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. It's not great to see that Banco Latinoamericano de Comercio Exterior's have fallen at approximately 27% over the past five years. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend. Conclusion Dividend investors should always want to know if a) a company's dividends are affordable, b) if there is a track record of consistent payments, and c) if the dividend is capable of growing. We're a bit uncomfortable with its high payout ratio. Second, earnings per share have actually shrunk, but at least the dividends have been relatively stable. To conclude, we've spotted a couple of potential concerns with Banco Latinoamericano de Comercio Exterior that may make it less than ideal candidate for dividend investors. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Banco Latinoamericano de Comercio Exterior stock. If you are a dividend investor, you might also want to look at our curated list of dividend stocks yielding above 3%. We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
France sends top diplomat to Iran for talks to reduce tensions
PARIS, June 19 (Reuters) - French President Emmanuel Macron's top diplomatic adviser travelled to Iran on Wednesday to hold talks with local officials as part of European efforts to reduce tensions in the Gulf region, a presidency official said.
"The diplomatic adviser did indeed travel to Iran on June 19...to hold high-level talks with the objective of contributing to a de-escalation of tensions in the region," the official said, confirming information from two diplomatic sources.
The diplomat, Emmanuel Bonne, has been based in Iran in the past and is a Middle East expert. (Reporting by Jean-Baptiste Vey and John Irish Editing by Geert De Clercq) |
Can Trump Fire Fed Chair Jerome Powell? What History Tells Us
President Donald Trump has publicly attacked Federal Reserve Chairman Jerome Powell for months as the central bank continues to increase interest rates and pull back from pouring money into the economy by reducing its balance sheet. Trump is at odds with the chairman as he seeks to run his 2020 campaign on a platform of economic prosperity.
In numerous tweets, interviews, and other public remarks, the Trump suggested his handpicked Fed chairman was a problem, calling the bank’s actions “unnecessary and destructive” to the U.S. economy.
Trump’s longtime attacks on the U.S. central bank culminated on Tuesday when he again suggested he would consider firing Chairman Powell, as Fed leaders met in D.C. to determine whether to keep interest rates the same or reduce them. Trumphas threatenedto fire the chairman several times since late last year.
While there’s not much the president can do to about the Fed, Trump’s White House is still looking into options.
The law is not totally clear, but American presidents don’t have the explicit legal power to fire a Fed chairman. As an independent agency, the bank does not answer to the White House, but to Congress.
However, Trump has continuously pushed the boundaries of his presidential powers, and has faced a number of legal challenges as a result. The presidentbypassed Congresswhen he decided to declare a national emergency and use military funds to build a wall along the U.S.-Mexico border. Trump alsofired FBI director James Comeyin an attempt to halt the investigation into his 2016 campaign’s alleged collusion with Russia.
Still, White House lawyerslooked intothe president’s options for removing Chairman Powell as early as February of this year. While Trump’s top economic advisers told him removal of the Fed chair is not legally possible, his lawyers have reportedly provided him with a legal outline to demote Powell and strip him of his powers.
Section 10 of the Federal Reserve Actstatesthat “each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.” The Act doesn’t define what would constitute cause for removal, though it has generally referred to performance issues, not a difference in policy preferences.
Recent U.S. presidents have generally remained silent on matters related to Fed policy. No president has attempted to fire a Fed chair before, though President Lyndon B. Johnson—who wanted to keep interest rates low—is said to have assaulted then-Fed Chairman William McChesney Martin in 1965. According to Martin,Johnson said to him, “Boys are dying in Vietnam, and Bill Martin doesn’t care.”
Johnson later asked the Department of Justice whether he could remove a Fed board governor, butwas reportedly toldthat a disagreement over policies was not appropriate grounds for removal.
While Trump has launched his attacks on the chair, Powell has not backed down. In a March interview with60 Minutes, Powellsaidthat he intends to serve his full term. “The law is clear,” he said at the time.
Top Democrats including Senate Minority Leader Chuck Schumer warned the Trump administration against involving itself in matters of the Federal Reserve.
Though Congress would likely oppose the president’s attempts to remove Powell, it also has consistently failed to impose limitations on his power. The Democratic Party has been at odds with itself in recent months over whether or not to bring impeachment proceedings against the president following the release of former Special Counsel Robert Mueller’s Russia report.
Powell is scheduled to hold a news conference Wednesday at 2:30 p.m. ET to announce whether or not the agency will leave interest rates alone.
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Trans Mountain oil pipeline expansion may start in September
By Rod Nickel and Nia Williams
WINNIPEG, Manitoba/CALGARY, Alberta (Reuters) - Construction to expand the Trans Mountain oil pipeline could begin in September, assuming the next regulatory steps go smoothly, the project's chief executive said on Wednesday.
The C$7.4 billion ($5.56 billion) project was stalled a year ago after a Canadian court ruled the federal government, which also owns Trans Mountain, failed to adequately consult indigenous groups. Prime Minister Justin Trudeau on Tuesday reapproved the expansion, cheering the oil industry but angering environmental groups.
Expanding Trans Mountain would ease congestion on pipelines that move Alberta crude, lifting Canadian prices.
"If things go according to plan, I can see shovels in the ground as early as September," said Trans Mountain Chief Executive Ian Anderson on a conference call. "... Getting started is the most critical thing."
Construction looks to take 30 to 34 months, he said. Oil could flow through the twinned pipeline by the second or third quarter of 2022, delayed by about a year since last year's court decision, Anderson said.
Work to obtain building permits started on Wednesday, Canadian Finance Minister Bill Morneau said separately in Calgary.
Once complete, the project will triple the capacity of Trans Mountain, which carries crude from Alberta's oil sands to British Columbia's Pacific Coast.
Supporters say it is a vital conduit to help Canadian oil reach higher-priced international markets, but opponents, including environmental and indigenous groups and some municipalities, argue the risk of a spill is too great.
Trans Mountain has stockpiled about 30% of the pipe it needs and would resume construction where it left off a year ago, at the Westridge Marine Terminal in Burnaby, B.C., and between Edmonton and Jasper, Alberta, Anderson said.
The project still requires approvals from the National Energy Board (NEB) regulator, permits from municipal and provincial governments and finalization of its route.
The NEB expects to issue a certificate of public convenience and necessity this week, but Trans Mountain must also meet 156 conditions, said spokeswoman Sarah Kiley. Some conditions must be met before construction can resume.
The Coldwater indigenous band in British Columbia has raised concerns about risks to its aquifer. Anderson said Trans Mountain has closely consulted Coldwater and is willing to consider route alternatives.
In British Columbia, where the provincial government opposes the project, a protest against Trans Mountain took place in Vancouver on Tuesday and another is planned in Victoria on Saturday.
Anderson said Trans Mountain has had no direct conversations with the Canadian government about preventing protests that may aim to disrupt work, but said it has its own security plan in place.
Trudeau's government bought the pipeline last year from Kinder Morgan Canada for C$4.5 billion to help the expansion project get built.
Opponents of Trans Mountain are expected to challenge the approval in court. Morneau said the government felt it had fulfilled its duty to consider environmental impacts and consult with indigenous groups.
"Our view is we have done the work we need to do to make sure this project can go forward in the right way," he said.
Investors also remain skeptical. The Toronto Stock Exchange energy index was down 0.6 percent, even though crude futures were slightly higher.
($1 = 1.3303 Canadian dollars)
(Reporting by Nia Williams in Calgary and Rod Nickel in Winnipeg; Editing by James Dalgleish and Jonathan Oatis) |
Fitch director sees deterioration in credibility of Colombia fiscal targets
BOGOTA, June 19 (Reuters) - The credibility of Colombia's fiscal targets are deteriorating, the director of Latin American sovereign ratings for Fitch said on Wednesday, as the economy of the Andean nation looks set to grow less than the government had predicted.
The comments by Richard Francis come a week after the finance ministry said it would keep its central government fiscal deficit target for this year at 2.4% of gross domestic product, even though it has room to expand it to 2.7%.
The ministry has reduced its capital market internal debt target for 2019 and projected it will sell between 15 and 20 trillion pesos worth of state assets in the next five years.
"The government says it will try to reach the original (fiscal) goal, that's good, but there is still a deterioration in credibility," Francis said at an economic conference in Bogota.
"Selling assets or privatizations...isn't sustainable financing, it's not just getting to the fiscal target, it's how you get to the fiscal target," he said.
Francis said the country's current account deficit will be above 4% of GDP this year, one of the worst in the region, risking an increase in foreign debt.
In May Fitch adjusted the country's sovereign outlook to negative from stable, saying risks to fiscal consolidation and the trajectory of government debt, the weakening of fiscal policy credibility, and increasing risk from external imbalances in Latin America's fourth-largest economy brought the change.
"If we're seeing that the government can keep improving fiscal policies to get to the target and stabilize the debt over GDP, which is rising, then we could raise the outlook. If the credibility deterioration continues we could lower the rating by a level," Francis said.
Francis said there were doubts about whether economic growth could reach the figure predicted by the government.
"We have doubts that growth can reach the 3.6% the government is saying and don't even mention 4%," he said. (Reporting by Nelson Bocanegra and Carlos Vargas Writing by Julia Symmes Cobb Editing by Chizu Nomiyama) |
Hewlett Packard Introduces AI-Based HPE Primera Platform
Hewlett Packard EnterpriseHPE recently launched its new platform — HPE Primera — based on its AI and machine learning platform, the HPE InfoSight.The new intelligent platform will aid businesses by delivering autonomous, self-managing data storage, providing capabilities to predict and prevent issues, and accelerate application performance. The new platform will be available for order from August this year.The HPE Primera platform seeks to eliminate the challenges faced by businesses, which strive to bring new mission-critical applications to market and innovate on existing ones.Over the past 10 years, HPE InfoSight has analyzed application patterns across 1,250 trillion data points to prevent obstruction across storage, servers and virtual machines. This has helped it salvage more than 1.5 million hours of loss of productivity due to downtime.What It Means for HPEThe platform will help Hewlett Packard boost the company’s Storage business, which saw a revenue rise of 3.3% to $942 million in second-quarter fiscal 2019. Big data also witnessed a strong quarter, recording 25% year-over-year improvement. The company expects the recently announced acquisition of BlueData to ramp up the metric further.With the launch of HPE Primera, the company extends its HPE Intelligent Data Platform, which helps customers transition from delivering storage to increasing business value with intelligent data. Moreover, the launch also extends Hewlett Packard’s focus on SMBs (small and medium businesses).The increase in IT spending by businesses, and the ongoing digital transformation across most industries, are fueling the continued efforts by Hewlett Packard to stay relevant in this space.Per IDC, by the end of 2023, two-thirds of SMBs will embrace digital transformation as a key component of their IT strategies.Moreover, Gartner expects worldwide IT spending to reach $3.8 trillion in 2019, representing an expected 3.2% increase year over year. The growth will be mainly driven by increased spending by companies toward digitization and infrastructure build-up.In its earlier report, Gartner had indicated that major technology trends that include IoT, Big Data, AI and blockchain have been driving overall IT spending.Currently, Hewlett Packard is the world’s second-largest IT services company after Accenture ACN, generating revenues of approximately $25 billion annually.
Hewlett Packard Enterprise Company Revenue (TTM)
Hewlett Packard Enterprise Company revenue-ttm | Hewlett Packard Enterprise Company Quote
Zacks Rank & Other Key PicksHewlett Packard currently has a Zacks Rank #2 (Buy).A couple of other top-ranked stock in the broader Computer and Technology sector are eGain Corp. EGAN and Cirrus Logic, Inc. CRUS, sporting a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.Long-term earnings growth for eGain and Cirrus is projected to be 30% and 15%, respectively.This Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.Click here to see these breakthrough stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportHewlett Packard Enterprise Company (HPE) : Free Stock Analysis ReporteGain Corporation (EGAN) : Free Stock Analysis ReportCirrus Logic, Inc. (CRUS) : Free Stock Analysis ReportAccenture PLC (ACN) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Text of the Fed's statement after its meeting Wednesday
WASHINGTON (AP) — Below is the statement the Fed released Wednesday after its policy meeting ended:
Information received since the Federal Open Market Committee met in May indicates that the labor market remains strong and that economic activity is rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.
Although growth of household spending appears to have picked up from earlier in the year, indicators of business fixed investment have been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation have declined; survey-based measures of longer-term inflation expectations are little changed.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased.
In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren. Voting against the action was James Bullard, who preferred at this meeting to lower the target range for the federal funds rate by 25 basis points. |
What Does SunCoke Energy, Inc.'s (NYSE:SXC) Balance Sheet Tell Us About It?
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Investors are always looking for growth in small-cap stocks like SunCoke Energy, Inc. (NYSE:SXC), with a market cap of US$521m. However, an important fact which most ignore is: how financially healthy is the business? Evaluating financial health as part of your investment thesis is essential, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. We'll look at some basic checks that can form a snapshot the company’s financial strength. Nevertheless, this is just a partial view of the stock, and I suggest youdig deeper yourself into SXC here.
SXC's debt level has been constant at around US$844m over the previous year including long-term debt. At this stable level of debt, SXC's cash and short-term investments stands at US$144m , ready to be used for running the business. Moreover, SXC has produced US$164m in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 19%, meaning that SXC’s operating cash is less than its debt.
Looking at SXC’s US$218m in current liabilities, it seems that the business has been able to meet these commitments with a current assets level of US$387m, leading to a 1.78x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. For Metals and Mining companies, this ratio is within a sensible range as there's enough of a cash buffer without holding too much capital in low return investments.
With total debt exceeding equity, SXC is considered a highly levered company. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. We can test if SXC’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For SXC, the ratio of 2.43x suggests that interest is not strongly covered, which means that debtors may be less inclined to loan the company more money, reducing its headroom for growth through debt.
Although SXC’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. I admit this is a fairly basic analysis for SXC's financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research SunCoke Energy to get a better picture of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SXC’s future growth? Take a look at ourfree research report of analyst consensusfor SXC’s outlook.
2. Valuation: What is SXC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether SXC is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
No Rate Cut Yet -- Here’s What Investors Need to Know About the June Fed Meeting
Going into this week's Federal Reserve FOMC meeting, the market was only giving a roughly 20% chance of a rate cut. The general expectation was that the FOMC would choose to keep rates steady but relax the language in its statement, thereby paving the way to cut rates at thenextmeeting in July.
Well, we just heard the Fed's decision. Here's a rundown of the FOMC's interest rate decision and the closely watched statement, as well as the dot plot and economic projections that can give valuable clues about future interest rate moves.
Image source: Getty Images.
First, the headline news. As the majority ofexperts had expected, the FOMC held the federal funds rate steady. In simple terms, there wasno rate cut.
The FOMC has held rates steady thus far in 2019, with a target federal funds rate range of 2.25% to 2.50%.
The key word the market had been looking for was "patient." Previously, the FOMC said that it would be patient when it came to future interest rate movements, and the removal of this word would clear the way for the Fed to start cutting rates.
Well, just as with the interest rate decision, the experts were right. The word "patient" has been removed. The phrase "the Committee will be patient" has been replaced with "the Committee will continue to closely monitor..."
In addition, the Fed calmed its language down elsewhere in the statement. For example, the Fed changed its characterization of the economic growth rate from "solid" to "moderate."
Along with its June statement, the FOMC also released the latest version of itsdot plot, which shows where the committee's voting members see rates going for the rest of 2019 as well as in 2020, 2021, and beyond.
Previously, the most recent dot plot (March) indicated that the FOMC was expecting no rate activity at all in 2019, one ratehikein 2020, none in 2021, and another hike at some unspecified time beyond 2021.
The dot plot is still projecting no interest rate movements in 2019, one cut in 2020, and an interest rate hike back to current levels in 2021.
More significant is how divided the members seem to be. Of the 17 members who gave their projections, 8 see no rate cuts at all for 2019, while 7 see two rate cuts coming later this year.
The other major piece of information from the Fed meeting is the members' economic projections. Here's a rundown of the key numbers:
• The Fed sees 2019 GDP growth at 2.1%, the same as it did in itsMarch projections. However, the 2020 GDP growth forecast has been trimmed a bit, 1.9% versus 2%.
• Year-end unemployment is seen at 3.6%, a slight improvement from the 3.7% members previously projected. 2020 and 2021 unemployment projections were also reduced by the same margin.
• Perhaps most significantly, the Fed now sees inflation at just 1.5% for 2019, down significantly from the March projection of 1.8%.
In a nutshell, the FOMC gave investors exactly what they had been looking for. The federal funds rate was held steady, the statement set the committee up for a July rate cut, and economic projections and the dot plot were largely in line with expectations.
Much of the U.S. economy remains strong, but thanks to a lack of growth and inflation, the first rate cut in a decade could be right around the corner.
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The BIO-key International (NASDAQ:BKYI) Share Price Is Down 79% So Some Shareholders Are Rather Upset
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This week we saw theBIO-key International, Inc.(NASDAQ:BKYI) share price climb by 15%. But will that heal all the wounds inflicted over 5 years of declines? Unlikely. Five years have seen the share price descend precipitously, down a full 79%. While the recent increase might be a green shoot, we're certainly hesitant to rejoice. The important question is if the business itself justifies a higher share price in the long term.
View our latest analysis for BIO-key International
BIO-key International isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last half decade, BIO-key International saw its revenue increase by 8.6% per year. That's a fairly respectable growth rate. So it is unexpected to see the stock down 27% per year in the last five years. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Balance sheet strength is crucual. It might be well worthwhile taking a look at ourfreereport on how its financial position has changed over time.
While the broader market gained around 4.6% in the last year, BIO-key International shareholders lost 52%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 27% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on BIO-key Internationalit might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Russia Will Not Legalize Facebook’s Cryptocurrency, Official Says
Chairman of theRussianState Duma Committee on Financial Market Anatoly Aksakov has said thatFacebook’sforthcomingcryptocurrencyLibra will not be legalized in Russia, local news outlet TASSreportedon June 18.
Aksakov stated that Russia will not legalize the use of Facebook’s Libra cryptocurrency which the company intends to roll out in 2020, because it may pose a threat to the financial system of the country. Aksakov also stressed that Russia has no plans to adopt legislation “which provides space for the active use of crypto tools created in the framework of open platforms, blockchains.”
Aksakov’s statements would seem contradictory to those of Deputy Finance Minister Alexei Moiseev, whosaidthat the country’s major cryptocurrency bill “On Digital Financial Assets” could be adopted in the next two weeks.
According to Aksakov, people will be able to purchase Libra on foreign financial platforms, while the creation of similar mechanisms in Russia will be strictly limited:
"In theory, we should talk about the possibility of organizing all kinds of exchanges, trading platforms and sales of such currencies. We, I believe, will limit or prohibit the creation of such sites. Those who want to acquire these tools using foreign legislation can do it at their own risk.”
Regulators in other countries are also concerned about the issuance of Facebook’s native digital currency. Rep. Maxine Waters, chairwoman of the United States House of Representatives’ Financial Services Committeerequestedthat Facebook halt development on its crypto.
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action,” Waters said.
The French Minister of the Economy and Finance Bruno Le Mairesaidthat he intends to “ask for guarantees” from Facebook in regard to Libra. Le Maire stated that Libra is an “attribute of the sovereignty of the States” and should “remain in the hands of the States and not of the private companies which answer to private interests".
Facebookreleasedthe white paper for Libra, which states that the coin will operate on the native and scalable Librablockchain, and be backed by a reserve of assets ostensibly “designed to give it intrinsic value” and mitigate volatility fluctuations.
• French Minister of Economy to Ask for Guarantees From Facebook In Regards to Its Forthcoming Coin
• Facebook Has Not Applied for RBI Approval to Operate Libra in India: Report
• Senate Banking Committee Sets Hearing on Facebook’s Crypto for July 16
• Russia to Adopt Crypto Legislation Within Two Weeks: Deputy Finance Minister |
Cracker Barrel Gains 11% in 3 Months: Will Growth Continue?
Shares ofCracker Barrel Old Country Store, Inc.CBRL have gained 10.6% in the past three months compared with the industry’s 10.4% growth. The uptick can be primarily attributed to the company’s robust earnings surprise history, increased focus on menu innovation and consistent unit growth. Even though comps have increased over the past few quarters, weak traffic numbers remain a major concern. Let’s delve deeper.Key CatalystsCracker Barrel delivered better-than-expected earnings in nine of the trailing ten quarters. In the third quarter of fiscal 2019, adjusted earnings came in at $2.09 per share, which surpassed the Zacks Consensus Estimate of $2.05 by 2%. For fiscal 2019, management expects earnings of $8.95-$9.10 compared with $8.87 registered in fiscal 2018. Moreover, estimates for current-year earnings have moved north by 5 cents to $9 over the past 30 days.These apart, this Zacks Rank #3 (Hold) stock is consistently focusing on rejuvenating its menu, which serves as the backbone of the company’s riveting growth potential. Cracker Barrel’s continuous expansion strategies are also encouraging. In fiscal 2019, the company have opened eight restaurants.In order to drive traffic, Cracker Barrel relies heavily on seasonal promotions and limited-time offers to boost its top-line performance as they are appealing to both regular users and less-frequent guests. In fiscal 2019, the company aims to meet consumers' need for convenience via growth in its off-premise business.
To this end, Cracker Barrel plans to enhance its off-premise platform by introducing catering menu offering and in-store training of hourly employees. In the third quarter of fiscal 2019, off-premise sales (as a percentage of total revenues) increased 110 basis points year over year, following a 200 bps gain in the second quarter.Further, management will continue to invest in its product line-up for improving guest experience and employee training to support long-term plans within this space. Multiple delivery options will also be tested in this fiscal year.
ConcernsDespite cost-saving initiatives, higher labor costs due to increased wages are expected to persistently keep profits under pressure. Also, the company is apprehensive that inflationary costs are likely to be incurred. Meanwhile, management is making significant investments to support the training and launch of several initiatives as well as its value testing.
Although these initiatives are expected to drive Cracker Barrel’s top-line growth during fiscal 2019, initial investments might dent margins. Moreover, expenses for opening units are expected to hurt the company’s margins.Resultantly, operating margin in the first nine months of fiscal 2019 was 8.9%, down 60 basis points (bps) from 9.5% in the prior-year period. Cost of goods and labor expenses increased 2% and 4%, respectively, from the year-ago level. Cracker Barrel also witnessed a rise in other operating, general and administrative expenses.Key Picks
Better-ranked stocks worth considering in the same space include Denny's Corp. DENN, Noodles & Company NDLS and Yum China Holdings, Inc. YUMC, each sporting a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Shares of Denny's have gained 16.1% in the past three months.
The long-term earnings growth rate for Noodles & Company and Yum China is 8.8% and 9.4%, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.Click here to see these breakthrough stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportNoodles & Company (NDLS) : Free Stock Analysis ReportCracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis ReportDenny's Corporation (DENN) : Free Stock Analysis ReportYum China Holdings Inc. (YUMC) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Does Sensient Technologies Corporation's (NYSE:SXT) 33% Earnings Growth Reflect The Long-Term Trend?
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After looking at Sensient Technologies Corporation's (NYSE:SXT) latest earnings announcement (31 March 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Sensient Technologies's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Check out our latest analysis for Sensient Technologies
SXT's trailing twelve-month earnings (from 31 March 2019) of US$152m has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.4%, indicating the rate at which SXT is growing has accelerated. What's the driver of this growth? Let's see if it is solely owing to industry tailwinds, or if Sensient Technologies has experienced some company-specific growth.
In terms of returns from investment, Sensient Technologies has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. However, its return on assets (ROA) of 9.4% exceeds the US Chemicals industry of 7.1%, indicating Sensient Technologies has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sensient Technologies’s debt level, has declined over the past 3 years from 14% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 33% to 81% over the past 5 years.
Though Sensient Technologies's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Sensient Technologies to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SXT’s future growth? Take a look at ourfree research report of analyst consensusfor SXT’s outlook.
2. Financial Health: Are SXT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Captain 'Sully' Sullenberger has a message for Boeing about its 737 Max
Chesley “Sully” Sullenberger, the decorated commercial airline captain responsible for saving the lives of 155 people in a heroic 2009landingon New York’s Hudson River, has a message for Boeing (BA) and theFederal Aviation Administration: pilots need robust training before the 737 Max returns to the skies.
“Reading about it on an iPad isn't even close to sufficient,” Sullenberger testified during a congressional subcommittee hearing on Wednesday. He asserted that recertification should require simulator training, which subjects pilots to conditions that closely emulate those in flight.
“We should all want pilots to experience these challenging situations for the first time in a simulator and not in flight with passengers and crew on board,” Sullenberger said.
Exactly how much and what type of pilot training is needed before Boeing’s Max can be re-certified by the FAA and returned to service has been atopic of debate, as some aviation experts point to a lack of sufficient training concerning the Max systems as a central cause in the cascade of events that led totwo fatal Max aircraft crasheswithin five months. Meanwhile, others claim more experienced pilots would have averted crisis. Simulator training,estimatedto cost hundreds of dollars per hour, if required by the FAA, will add time and cost to the Max’s return to flight.
“We must face [the emergency] first-hand in a simulator before we experience it in flight,” Sullenberger told lawmakers.
As a result of the crashes, Boeing agreed to modify all Max planes in order to feed additional sensor data into a system designed for the aircraft called MCAS, or Maneuvering Characteristics Augmentation System. The system, which automatically pushes the nose of the plane down to prevent engine stall, is known to have been activated in both theLion AirandEthiopian Airlinescrashes that killed all passengers and crew on board.
Throughout his testimony, Sullenberger emphasized the significance of pilot “startle factor” and chaotic cockpit situations that play into a pilot’s emergency response capabilities.
Asked by Rep. Thomas Massie (R-KY) whether more experienced pilots would have been able to handle the MCAS-related emergencies, Sullenberger opined that it would have been unlikely they would have performed differently than the crews on the accident flights.
“I'm one of a relatively small group of people who have experienced such a crisis and lived to share what we learned about it. I can tell you firsthand that the startle factor is real. And it's huge. It absolutely interferes with one's ability to quickly analyze the crisis and take an active action,” Sullenberger said. “In both 737 max accidents, the failure of a single angle of attack sensor quickly caused multiple instrument indication anomalies, and sudden, loud, and in some cases, false warnings, creating major distractions masking the cause, and would have made it even harder to quickly analyze the situation and take effective, corrective action.”
Captain Dan Carey, Allied Pilots Association president and veteran commercial aircraft pilot, seconded Sullenberg’s position.
“This is a sudden, violent, and terrifying event,” Carey testified. “So airplanes pitching up and down rapidly and violently. There's bells, warnings, and clappers sounding. Communication is difficult.”
Carey blamed Boeing for prioritizing costs over safety.
“The Max was designed to provide the same aircraft feel as the 737. This was intended to minimize costs to Boeing's customers by allowing the Max to be certified as a 737-type aircraft. This led Boeing engineers to add the MCAS system,” he said. “Boeing failed to disclose the existence of the MCAS system to the pilot community around the world. The final fatal mistake was therefore the absence of a robust pilot training in the event of an MCAS failure.”
Boeing CEO Dennis Muilenburg has suggested a less aggressive approach than simulator training.
“We believe that the right answer right now is computer-based training,” Muilenberg told shareholders during Boeing’s annual meeting in April. “And then as part of the recurring training that pilots might do downstream, give them options for simulator training.”
Ultimately, the decision on requisite training rests with FAA regulators.
In response to whether Boeing’s position on flight training had changed since Muilenberg’s statement in April, a company spokesperson told Yahoo Finance, “Boeing continues to work with global regulators and our airline customers as they determine training requirements.”
Regarding the timeline for the Max to return to service, Boeing’s spokesperson said, “We have not given a timeline — safety is our priority and is the primary driver in the process. We have finalized the software update and the next step will be to finish certification work in the simulators ahead of the certification test flights, which will be scheduled with the FAA.”
Read more:
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Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced and reported for CNN and is a former litigation attorney. Follow on Twitter@alexiskweed.
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Hellcat-Powered Jeep Wrangler Rubicon 6x6 Pickup Exists Because It Can
Photo credit: Barret-Jackson From Car and Driver Nicknamed "Inferno," this Hellcat-powered 6x6-a veteran of the 2018 SEMA show-is up for auction June 28–29. It features a pass-through differential; all three diffs can be locked for true six-wheel drive. It measures more than 19 feet in length, with its Jeep Wrangler body lengthened by over 35 inches. It's hard to make a grand entrance these days, what with every here-today/gone-today celebrity of the moment rolling up to the Red Carpet Lobster in a Bentley or a Benz. Thankfully, the team over at Exotic Custom Motorsports has your back with this Hellcat-powered Jeep Wrangler Rubicon 6x6 pickup. Not only stylish, it's practical, too. Its bed is the perfect storage area for all the cases of the black-market original-recipe Four Loko you just picked up in Tijuana (it's still available in China, not that you heard that from us). Photo credit: Barret-Jackson Nicknamed "Inferno," this six-wheeled beast is based on a 2016 Jeep Wrangler Rubicon 75th Anniversary Hard Rock Edition. Power comes from a supercharged 6.2-liter Dodge Hellcat V-8 engine that is rated at 707 or 750 horsepower, depending on whether you go by the factory figure supplied by the Barrett-Jackson auction house or the 750-hp number quoted by Exotic Custom Motorsports, the Inferno's creator. An automatic transmission handles the gear swaps, and the bonus axle is fitted with brakes to help ensure it stops when asked. A true 6x6 with three live axles, the Inferno has a custom-built driveline that allows for the locking of all three Ford nine-inch-based 4.10 gearsets; lock the pair of rear axles, and it'll light up all four wheels in the quest for traction and attention. Photo credit: Barret-Jackson A five-inch lift kit, King off-road shocks, and 35-inch tires mounted on 20-inch wheels keep the Inferno riding high. The custom-formula, one-off Inferno Red finish is combined with a custom carbon-fiber fiber grille and wheel-arch extensions, plus a custom-built roof rack with front and rear LED light bars for an unmistakable profile. Custom steel bumpers feature tow hooks and a front winch to make sure everyone gets out alive or something boastworthy like that. Interior mods include a fully custom and surprisingly restrained leather interior. Story continues Photo credit: Barret-Jackson Currently showing just 125 miles on the odometer, this is one Inferno that is sure to burn brightly wherever it goes. If you've got the cash, ego, and desire to make children squeal and grownups turn green with envy or possibly convulse with laughter, make sure to register to bid on the Inferno when it crosses the block at the 2019 Barrett-Jackson Northeast auction to be held June 26–29 in Connecticut. Photo credit: Barret-Jackson ('You Might Also Like',) Unclogging Streets Could Help City Dwellers Save 125 Hours a Year The 10 Cheapest New Cars of 2018 Get Out Early, Get In Late: What to Know About Auto Lease Transfers |
World Series champ Keith Hernandez 'barely' gets away with being a Trump fan in New York
New York Mets World Series championKeith Hernandez was put on the spot during an appearance on FOX Business on Wednesday when asked about President Trump.
When FOX Business' Stuart Varney asked, “do you like Trump?,” the five-time all-star and former National League MVP said: “yes.”
“And you’re open and honest about it? And you’re in New York? How did you get away with that?” askedStuart Varney.
“Barely,” he replied.
The Mets legend said he likes Trump because he has “helped everybody” in theU.S. economy.
“I think the people have gone to work of all different races and creeds and colors – unemployment is down everywhere,” he said.
WATCH: KEITH HERNANDEZ SAYS PETE ROSE ‘UNQUESTIONABLY’ A HALL OF FAMER
In 2016, Trump ended the year with a New Year’s Eve bash. Hernandez was reportedly among those in attendance.
When Varney asked about having his picture taken on the red carpet, he replied: “Yes they did, I was VIP.”
“And there was hell to pay?” asked Varney.
“Well the Twitter world, you know, it’s very north and south – polar—that would be the right word. But you know what? I have my life to live – it’s a free country. I can believe what I want and I respect what anybody else feels and I just don’t get involved in conversation.”
Hernandez also serves as a game analyst for Mets telecasts on SNY.
In Varney's opinion, not only was Hernandez a great player, but he also speaks his mind.
"That's why I call you the Donald Trump of baseball -- do you object?" said Varney.
"I think I'm the Stuart Varney of business," Hernandez joked.
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Uber Technologies Stock Targeted for Bearish Options Trade
Uber Technologies Inc (NYSE:UBER) stock is trading up 1.7% at $44.61 this afternoon, heading for its third straight win. However, this rally ran out of steam earlier at $45 -- site of the ride-sharing service's initial public offering (IPO) -- and one options trader today appears to be positioning for a sharper retreat from here in the near term. UBER options volume is accelerated today, with 36,000 calls and 13,500 puts on the tape, 1.3 times the expected intraday amount. The weekly 6/28 44-strike put is one of Uber's most active options at last check, due to two large sweeps totaling 2,255 contracts that were likely bought to open earlier. By doing so, the put buyer expects the stock to swing below $44 by expiration at the close next Friday, June 28. This put buying runs counter to the broader trend seen in Uber's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 58,793 calls in the past two weeks, compared to 12,933 puts. This optimism is seen among analysts , too, even though Uber Technologies has struggled on the charts. More specifically, the stock opened for trading on May 10 at $42 -- below Uber's IPO price -- and dropped to a record low of $36.08 on May 13. While the shares rallied all the way up to $45 earlier this month, the key level has served as staunch resistance. uber stock price chart on june 19 |
What Should You Know About The Future Of BJ's Wholesale Club Holdings, Inc.'s (NYSE:BJ)?
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After BJ's Wholesale Club Holdings, Inc.'s (NYSE:BJ) earnings announcement on 04 May 2019, analyst consensus outlook appear cautiously optimistic, with earnings growth rate expected to be 44% next year, which is within range of the past five-year average earnings growth of 41%. By 2020, we can expect BJ's Wholesale Club Holdings’s bottom line to reach US$183m, a jump from the current trailing-twelve-month of US$127m. Below is a brief commentary on the longer term outlook the market has for BJ's Wholesale Club Holdings. Readers that are interested in understanding the company beyond these figures shouldresearch its fundamentals here.
See our latest analysis for BJ's Wholesale Club Holdings
Longer term expectations from the 14 analysts covering BJ’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for BJ, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, BJ's earnings should reach US$236m, from current levels of US$127m, resulting in an annual growth rate of 14%. This leads to an EPS of $1.91 in the final year of projections relative to the current EPS of $1.09. Margins are currently sitting at 1.0%, which is expected to expand to 1.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For BJ's Wholesale Club Holdings, I've put together three relevant factors you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is BJ's Wholesale Club Holdings worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether BJ's Wholesale Club Holdings is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BJ's Wholesale Club Holdings? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
GLOBAL MARKETS-Stocks gain, yields lower after Fed signals possible rate cuts
* Fed holds rates steady, signals cuts possible later this year
* MSCI global stocks index rises, Wall Street indexes up
* Fed decision comes after ECB's Draghi hints at stimulus
* Dollar, benchmark U.S. yields drop (Recasts throughout to reflect Fed decision)
By Lewis Krauskopf
NEW YORK, June 19 (Reuters) - A gauge of global stock markets added to gains on Wednesday and benchmark U.S. Treasury yields and the U.S. dollar fell after the U.S. Federal Reserve signaled possible rate cuts of as much as half a percentage point over the remainder of this year.
The U.S. central bank held interest rates steady and said it "will act as appropriate to sustain" the economic expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates.
The market expects the Fed could cut rates as soon as next month.
"I think it’s right in line with market expectations, puts a July cut in play,” said Brett Ewing, chief market strategist at First Franklin Financial Services in Tallahassee, Florida.
Investors' hopes that the Fed would soon cut interest rates had been fueled on Tuesday when European Central Bank President Mario Draghi hinted at economic stimulus, comments that drove up stocks and weakened yields.
"We think the Fed delivered," said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio. "It did no harm. It walked right up to a cut without doing it today. It'll likely be coming in July, absent some big trade news or other news."
MSCI's gauge of stocks across the globe gained 0.66%.
On Wall Street, the Dow Jones Industrial Average rose 50.53 points, or 0.19%, to 26,516.07, the S&P 500 gained 5.91 points, or 0.20%, to 2,923.66 and the Nasdaq Composite added 8.02 points, or 0.1%, to 7,961.91.
The pan-European STOXX 600 index was little changed.
Benchmark 10-year U.S. notes last rose 5/32 in price to yield 2.0422%, from 2.058% late on Tuesday.
The dollar index, which measures the greenback against a basket of currencies, fell 0.54%, with the euro up 0.51% to $1.1248.
U.S. crude fell 0.22% to $53.78 per barrel and Brent was last at $61.82, down 0.51% on the day.
(Additional reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss in New York and Sujata Rao in London; Editing by Hugh Lawson, Jonathan Oatis and Lisa Shumaker) |
If You Had Bought Troy Energy (CVE:TEG.H) Stock Three Years Ago, You Could Pocket A 200% Gain Today
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It hasn't been the best quarter forTroy Energy Corp.(CVE:TEG.H) shareholders, since the share price has fallen 25% in that time. But that doesn't change the fact that the returns over the last three years have been very strong. In three years the stock price has launched 200% higher: a great result. To some, the recent share price pullback wouldn't be surprising after such a good run. Only time will tell if there is still too much optimism currently reflected in the share price.
View our latest analysis for Troy Energy
Troy Energy hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Troy Energy will find or develop a valuable new mine before too long.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Troy Energy has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Our data indicates that Troy Energy had CA$206,868 more in total liabilities than it had cash, when it last reported in March 2019. That puts it in the highest risk category, according to our analysis. So the fact that the stock is up 44% per year, over 3 years shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. You can see in the image below, how Troy Energy's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with thisfreechart of insider buying (and selling).
While the broader market gained around 1.4% in the last year, Troy Energy shareholders lost 50%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9.7% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. If you would like to research Troy Energy in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
T-Mobile and Sprint Might Clear Major Merger Hurdle, Still Face Another
T-Mobile(NASDAQ: TMUS)andSprint(NYSE: S)were able to get the Federal Communications Commission to support their proposed $26.5 billion megamerger but have still been trying to appease antitrust regulators at the Department of Justice. Both the FCC and the DOJ have to sign off on the deal. To get the FCC's blessing, the companies had agreed to divest Sprint's Boost Mobile subsidiary, which helped ease concerns over competition in the prepaid market, where T-Mobiledominates. It's been previously reported that DOJ officials want T-Mobile and Sprint to "lay the groundwork" for a fourth carrier.
Investors are now getting a better idea of what that might look like.
Sprint executive chairman Marcelo Claure and T-Mobile CEO John Legere. Image source: T-Mobile.
Bloombergreports that T-Mobile and Sprint might also divest wireless spectrum as a concession to get DOJ approval.DISH Network(NASDAQ: DISH)has emerged as the top bidder, offering an estimated $6 billion for those airwaves and the Boost Mobile subsidiary, according to the report. Other rumored bidders in recent weeks have includedCharter Communications,Altice, and even e-commerce giantAmazon.com. Private equity firm Apollo Global may potentially help DISH fund its transaction,Reutersreported last week.
DISH has beenscooping up wireless spectrumfor nearly a decade -- and doing nothing with it, earning the company the nickname of "spectrum hoarder" among critics, including T-Mobile CEO John Legere.
The deadlines that Legere is referring to were imposed by the FCC, threatening to revoke DISH's licenses if it fails to use them. Way back in 2013, DISH committed to cover 70% of the population in 176 markets covered by its spectrum licenses, and the deadline to meet that goal is March 2020 -- less than a year away. Legere's February tweet was in response to reports that DISH had deployed itsfirsttower.
Wireless spectrum is the lifeblood of the wireless industry, carrying all those bits of data to consumers' pockets. Deploying more cellular networks to utilize the spectrum would lead to greater competition and benefit consumers in the form of greater coverage, better service, and potentially lower prices. T-Mobile sent a scathing letter to the FCC in October, accusing DISH of doing little more than "license saving" tactics and urging the agency to take a hard stance on enforcing the obligations.
"DISH and its affiliates have a track record of hoarding spectrum with no benefit for consumers, and the Commission should make it clear that it will not tolerate that behavior any longer," the Un-carrier wrote. "Instead of building out its spectrum holdings, DISH has consistently sought waiver of the rules to delay its performance obligations."
DISH Chairman and co-founder Charlie Ergen acknowledged the anemic deployment recently. "We're in the midst of that build-out today," Ergen said at a mobile carrier conference earlier this year. "It's harder than I thought it was going to be."
Even if the DISH deal works out, there's still the issue of the lawsuit filed by 10 state attorneys general last week seeking toblock the merger, arguing that it would hurt competition and result in job losses and higher prices over time.
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Canada opens probe into 250,000 GM pickups, SUVs over brake performance
(Reuters) - Transport Canada, the auto safety regulator, has opened a probe into braking issues in nearly 250,000 General Motors full-size pickups and SUVs after U.S. officials launched a similar probe last year, the agency said on its website.
The U.S. National Highway Traffic Safety Administration (NHTSA) in November into 2.73 million U.S. 2014-2016 model year SUVs and pickups after receiving 487 reports of hard brake pedal effort accompanied by extended stopping distance that were attributed to deterioration of the engine-driven brake assist vacuum pump.
Transport Canada's probe covers 249,700 2015 through 2017 model year vehicles including the Cadillac Escalade, Chevrolet Suburban, Chevrolet Tahoe and GMC Yukon as well as 2014-2017 Chevrolet Silverado LD and GMC Sierra LD vehicles.
The U.S. agency said it had reports of nine incidents of vehicles incurring damage as a result of colliding with another vehicle or fixed object at low speeds and reports of two injuries. NHTSA said if the pump fails to operate, the amount of brake power assist can be significantly reduced, extending vehicle stopping distance.
The NHTSA sent GM an information request in a Feb. 7 letter. A GM spokesman said he had no update on the investigation.
(Reporting by David Shepardson; editing by Jonathan Oatis) |
Lloyd's to meet with insurers AIG, Chubb to boost U.S. business -CEO
By Suzanne Barlyn
NEW YORK, June 19 (Reuters) - Lloyd's of London Ltd is meeting with major U.S. insurers about driving more business through its global insurance market, Chief Executive Officer John Neal said on Wednesday.
The 330-year-old insurance market, which launched its most recent modernization effort in May, will meet with American International Group Inc on Thursday, and later with Chubb Ltd about potential opportunities for selling more of their insurance products through Lloyd's, Neal told Reuters.
Neal, who took charge of Lloyd's in late 2018, is trying to drag Lloyd's into the 21st century, following combined losses of $3.9 billion over the last two years. Lloyd's insures everything from hurricane damage to soccer stars' legs, but high levels of insured losses from natural catastrophes triggered the two years of poor results.
While Lloyd's outlined plans last month to set up electronic platforms as soon as next year, its intricate structure involving 99 underwriting syndicate members and hundreds of brokers makes change difficult.
Neal said his strategy includes shifting Lloyd's geographic focus, including concentrating on developed markets with strong growth potential such as the United States. The United States and Canada accounted for 51% of Lloyd's business last year.
Lloyd's kicked off its U.S. strategy during a dinner on Tuesday for top insurance and brokerage executives in New York's new World Trade Center building, a site that following the destruction of the Sept. 11, 2001, attacks was rebuilt partly with $8 billion in claims payments from the Lloyd's marketplace, its chairman, Bruce Carnegie-Brown, said.
"We are talking to all of the big insurers here...to say, How do you feel about the marketplace and what opportunities can we help you realize in the Lloyd's marketplace?" Neal said, adding that both AIG and Chubb are interested in the conversation.
Lloyd's has already been talking to AIG, including CEO Brian Duperreault and Peter Zaffino, CEO of AIG's General Insurance business, about the possibility of selling more products through the marketplace, Neal said.
AIG acquired Bermuda reinsurer Validus in 2018, partly because of its Talbot unit, a Lloyd's of London syndicate, Duperreault said at the time.
"Our impression from any conversations with (Duperreault) and Zaffino is that they'd love to grow their business at Lloyd's," Neal said.
Neal said his London-based colleagues were surprised when he proposed the United States as a priority because they believed emerging economies had more growth potential.
He sees growth potential in several U.S. areas, including specialty insurance, which covers unique risks such as damage to a company's reputation, or liability for a merger deal that goes sour. "Professional lines" insurance, which includes liability coverage for corporate directors and officers, is another possible growth area, Neal said.
The global commercial, corporate, specialty insurance and reinsurance business is worth $750 billion, and half of those premiums are in the United States, Neal said.
"So literally, one dollar in two of everything that would interest Lloyd's underwriters is here," he said. (Reporting by Suzanne Barlyn in New York Additional reporting by Carolyn Cohn in London Editing by Neal Templin and Leslie Adler) |
Some BlockchainK2 (CVE:BITK) Shareholders Have Taken A Painful 92% Share Price Drop
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Long term investing is the way to go, but that doesn't mean you should hold every stock forever. It hits us in the gut when we see fellow investors suffer a loss. Anyone who heldBlockchainK2 Corp.(CVE:BITK) for five years would be nursing their metaphorical wounds since the share price dropped 92% in that time. And it's not just long term holders hurting, because the stock is down 67% in the last year. Furthermore, it's down 27% in about a quarter. That's not much fun for holders. This could be related to the recent financial results - you can catch up on the most recent data by readingour company report.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Check out our latest analysis for BlockchainK2
BlockchainK2 hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. Investors will be hoping that BlockchainK2 can make progress and gain better traction for the business, before it runs low on cash.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). BlockchainK2 has already given some investors a taste of the bitter losses that high risk investing can cause.
BlockchainK2 had cash in excess of all liabilities of CA$3.0m when it last reported (March 2019). That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. We'd venture that shareholders are concerned about the need for more capital, because the share price has dropped 40% per year, over 5 years. You can click on the image below to see (in greater detail) how BlockchainK2's cash levels have changed over time.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. You canclick here to see if there are insiders selling.
While the broader market gained around 1.4% in the last year, BlockchainK2 shareholders lost 67%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 40% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on BlockchainK2it might be wise to click here to see if insiders have been buying or selling shares.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
FOREX-Dollar drops after Fed holds rates steady, risk assets gain
(Adds context, analyst comment, broader market reactions)
By Kate Duguid
NEW YORK, June 19 (Reuters) - The dollar weakened on Wednesday and risk assets benefited after the U.S. Federal Reserve announced it held interest rates steady in June, but signaled a possible rate cut by the end of the year.
Responding to an increase in economic uncertainty and a drop in inflation, the U.S. central bank said it "will act as appropriate to sustain" the American economy's expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates. Nearly half its policymakers now show a willingness to lower borrowing costs over the next six months.
Seven of 17 policymakers said they expected it would be appropriate to cut rates by half a percentage point by the end of 2019, and an eighth member saw a rate cut of a quarter point as appropriate.
Against the euro, the dollar was down 0.38% to $1.123 , and against the pound it was down 0.77% to $1.265. The dollar index, which measures the currency against a basket of six rivals, was down 0.45% to 97.121. The drop slowed as the market digested the news, and some initial losses were retraced.
"This was a bit more dovish than what people were expecting and that's evident in how the market responded, especially in terms of interest rates - the two-year falling, equities responding positively and the dollar weakening," said Jason Draho, head of Americas asset allocation at UBS Global Wealth Management.
The 2-year Treasury yield, which moves with expectations of changes to interest rates, fell near 1-1/2-year lows hit earlier this month. U.S. stock indexes turned higher, with the S&P 500 last up 0.31%.
"For the Fed, which tends to move relatively slowly, this is a sizable move. What they have done by removing the word 'patient' from the statement is make July into a live meeting where if the data continues to deteriorate, if there are worries about growth because of trade concerns, they would be prepared to cut rates in July," said Draho. (Reporting by Kate Duguid Editing by Chizu Nomiyama and Jonathan Oatis) |
6 Cloud Gaming Stocks to Buy for 2020 and Beyond
Following the 2019 Electronic Entertainment Expo (E3), the video game industry’s biggest conference of the year, two things have become abundantly clear. Cloud gaming is the future of the gaming industry and that future is coming soon.
Cloud gaming is broadly defined as the ability to stream video games through the cloud, without any chunky hardware or lengthy downloads, and play those video games on any internet-connected device, like a smart TV, computer or smartphone. It’s basicallyNetflix(NASDAQ:NFLX), but for video games. Consumers pay a monthly fee to play video games through the cloud. And, much like Netflix uprooted traditional television due to its pricing and convenience advantages, cloud streaming services will uproot the traditional video game industry due to the same price and convenience advantages.
As such, cloud gaming is inevitably the future of the gaming industry.
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That future is coming soon … very soon. At E3, many of the leading players in this industry announced that their cloud gaming services would have limited roll-outs later this year, and full launches in 2020. Thus, it seems inevitable that the video game industry in the early 2020’s will be one dominated by a shift from traditional video game consumption, to cloud gaming consumption.
• 10 'Buy-and-Hold' Stocks to Own Forever
The investment implication of that shift? Stocks on the right side of the cloud gaming shift should win big in the early 2020’s. With that in mind, let’s take a look at six cloud gaming stocks to buy to play this secular pivot.
Source: Shutterstock
For all intents and purposes, it looks like internet search and cloud giantAlphabet(NASDAQ:GOOG, NASDAQ:GOOGL) has taken the lead in developing a true cloud gaming service.
Alphabet first announced its cloud gaming service, dubbed Stadia, in March. At it’s pre-E3 event, Alphabet divulged more details about Stadia. Broadly, there are two parts here. First, the hardware, which is just a controller to play the games. Second, the software, which is Stadia Pro and enables gamers to stream a library of video games to multiple devices. The controller costs about $70. Pro costs about $10 per month, so similar to Netflix pricing. The service presently supports about 30 games, but will grow over time. All of this is set for a limited roll-out in November 2019, and a full launch in 2020.
All in all, Alphabet is set to launch its true cloud gaming service Stadia later this year. That early launch will give Stadia a first mover’s advantage in this market. Further, Alphabet has a big enough data center network around the world that Stadia should be able to turn that first mover’s advantage, into a long-term advantage, meaning Stadia does project as an important player in the cloud gaming world at scale.
Is that a reason to buy GOOG stock? Yes. Cloud gaming will help lessen Alphabet’s reliance on advertising revenues, and broaden and lengthen Alphabet’s growth narrative. That will ultimately push GOOG stock higher.
Source: Shutterstock
Right behind Alphabet in the cloud gaming world is peer global tech giantMicrosoft(NASDAQ:MSFT).
Microsoft just announced its Project xCloud, which is the company’s cloud gaming initiative that launches in October 2019 and allows gamers to stream Xbox games across a variety of different devices. Project xCloud is different from Stadia in many ways. First, we don’t have many details on xCloud. Second, xCloud is more of a cloud extension of Microsoft’s Xbox console than anything else. Third, the goal of xCloud isn’t to create a consolidated cloud gaming platform; rather, it’s to get gamers to play Xbox games more frequently across multiple different devices.
As such, xCloud in its current status will serve as a perfect cloud complement to the Xbox. Naturally, that positions xCloud to get a big early user base through current Xbox owners. Further, Microsoft has a large enough global hyper-scale data-center presence to support xCloud being arguably the best performing cloud gaming service in the world.
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Will MSFT stock move higher because of xCloud? Perhaps. MSFT stock goes as its cloud businesses go and xCloud is a cloud business. Traction in xCloud could consequently excite the investor base, and push Microsoft stock higher.
Source: Shutterstock
There are four big tech companies with $700 billion-plus market caps. Three of them are jumping into the cloud gaming space. We’ve already talked about two of them: Alphabet and Microsoft. Now, let’s talk about the third —Apple(NASDAQ:AAPL).
Apple is jumping into cloud gaming with its Apple Arcade service. In short, Apple is taking all the best games in the App Store, putting them in a gaming library in the cloud, and allowing consumers to access that library for a monthly fee. That monthly fee hasn’t been announced yet, but will probably wind up somewhere around $10 per month. Also, gamers can access Apple Arcade on mobile or through a computer.
This is a big move for Apple. The company’s bread-and-butter, the iPhone business, is running out of growth runway. Apple is rapidly pivoting into the software and services space to help offset slowing hardware growth. This pivot is working … to a degree. But, it will work a whole lot better if Apple can successfully turn Arcade into a mobile/PC gaming equivalent of Netflix.
Is that possible? Sure. Apple has huge market share in smartphones and computers, and they will leverage that huge physical presence to help push their software services, which should increase adoption and help these relatively new services scale quite quickly. As Arcade does scale quickly, the Services business will get a boost, and AAPL stock will move higher.
Source: Shutterstock
The dark horse in the cloud gaming wars is video game publisherElectronic Arts(NASDAQ:EA), which announced its cloud gaming platform Project Atlas back in 2018.
Details on Project Atlas are scant, and from a media coverage and announcements perspective, it seems to have fallen behind Stadia, xCloud and Apple Arcade. Nonetheless, EA has a leg up here because it is a video game publisher that owns the content thatmanygamers want to play. As we’ve seen with Netflix and the video streaming wars, content is everything. Thus, EA comes into the cloud gaming world with a winning hand.
Will that winning hand help EA create a market-leading cloud gaming platform? Perhaps. We still don’t know what this market will look like in the future. But, we do know that whatever the market does end up looking like, EA will be a part of the picture, either as a cross-platform content provider, or a cloud gaming platform owner.
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Either way, the cloud gaming pivot is a good thing for EA. It will push revenues higher, increase revenue visibility and help expand the multiple on EA stock. All three of those things will help move EA stock higher in the long run.
Source: AMD
The first four companies on this list were potential providers of cloud streaming service. This fifth company, however, is the chip giant that is powering those cloud streaming services behind the scenes.
Advanced Micro Devices(NASDAQ:AMD) is a CPU and GPU company that services many different end markets. One of those end market is gaming. AMD does pretty well in gaming with its GPU chips. For example, the company’s GPU chips have long been the fuel behind Microsoft’s Xbox gaming consoles. Now, as tech giants are pivoting their gaming services to the cloud, many of them are tapping AMD to power their cloud gaming platforms, too.
Namely, Microsoft’s xCloud streaming service and Alphabet’s Stadia streaming service will both be built on AMD GPUs. Those are the two premiere, leading cloud gaming services, and both of them are tapping AMD for their GPU power.
That’s impressive. If AMD can maintain this trend of being the go-to GPU power behind the cloud gaming industry, then AMD’s revenues and profits will see a nice lift. That nice lift could provide an equally nice lift to AMD stock in the long run.
Source: Shutterstock
Last, but not least, in this list of relevant cloud gaming stocks to buy isNvidia(NASDAQ:NVDA), the chip giant that has dual exposure to the cloud gaming market.
On one end, Nvidia has already built its own cloud gaming service, called GeForce Now. According to most accounts and sources, GeForce Now is probably the best cloud gaming service out there right now. But, it’s limited. It focuses exclusively on computer games, and is in a beta, invite-only phase. Nvidia has not mentioned any intentions to open the floodgates for GeForce Now. As such, while Nvidia has built one of the world’s best cloud computer gaming platforms, that platform isn’t set for a commercial roll-out just yet.
Perhaps that’s because on the other end, Nvidia makes the GPU chips that are the building blocks for cloud gaming services. Nvidia has long been considered the king of the GPU market, and king of the data-center market. Naturally, that positioning makes them seem like the obvious choice to power cloud gaming platforms.
Net net, Nvidia has established dominance in the markets which are the fundamental building blocks for cloud gaming. In the long run, Nvidia will either leverage that dominance to build the best game streaming platform, or be the best provider of game streaming building blocks.
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Is this a big deal for NVDA stock? Absolutely. Nvidia’s long-term growth narrative is all about cloud, AI and data, and cloud gaming is a big part of that narrative. As such, cloud gaming should be one of the many reasons why NVDA stock heads higher in the long run.
As of this writing, Luke Lango was long NFLX, GOOG, AAPL, EA and NVDA.
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7 Blue-Chip Stocks to Buy for a Noisy Market
No matter where you look recently, the concept of stocks to buy in any industry looks risky. For years, poor and worsening relations between the U.S. and China have dominated media headlines. That situation does not appear to have an imminent solution. But several other factors are now weighing on domestic markets.
First, the Trump administration threatened tariffs on imported goods on Mexico unless they helped control Central American migration. The two sides reached an agreement, but the underlying relationship is icy. Second, India has hit the U.S. withretaliatory tariffsdue to the latter kicking out the former from its preferential-trade program. Finally, aninverting yield curvethreatens the markets, including even viable blue-chip stocks.
Again, from all angles, this environment looks like an absolute mess. Invariably, if these headwinds come to roost at once, we would face substantial volatility. Still, I’m confident in the longer-term case for blue-chip stocks to buy. No matter how bad the economy gets, companies must still get business done.
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Therefore, I think it pays to pick relevant, “big-ticket” names for your portfolio. Should the worst happen, they’ll likely ride the storm better. If not, even better: a rising tide lifts all boats. With that in mind, here are seven blue-chip stocks to buy now:
Source: Shutterstock
Let’s face facts: giant blue-chip stocks to buy are simply not in vogue anymore. Markets now place more emphasis on nimble organizations that can react to business changes. That’s a good quality, particularly if a recession occurs. I still think some wiggle room exists if your name isAT&T(NYSE:T).
Is T stock a perfect play? No. I understand the many criticisms that focus on AT&T’s massive debt load. At just under $164 billion on the latest read, it’s like the gross domestic product of a small nation. I also hear rumblings about its massive and so far disappointing deals, such asDirecTV. Finally, AT&T is hardly what you call a great growth opportunity.
Those are all fair points. But it’s also important to note that almost every business-related innovation of tomorrow will require 5G technology. With geopolitical tensions with our greatest adversaries in China and Russia, leading in 5G is absolutely critical. Like it or not, this simple fact benefits T stock, and I’m willing to roll with the punches.
Source: Shutterstock
One of the aforementioned innovations that will benefit from the5G rolloutis the cloud; specifically, the mobile-cloud segment. Prior-generation mobile technologies lacked the connectivity speeds to make mobile-cloud apps anything but rudimentary. But once 5G becomes the new standard in wireless internet, it opens up the door for innovators likeInternational Business Machines(NYSE:IBM).
I concede that among blue-chip stocks to buy, Big Blue doesn’t typically generate excitement. After a strong start to this year, pensive trading has characterized the last few months. Stakeholders of IBM stock are left to wonder if the company’s old version is coming back to bite them.
Certainly, I sympathize with the hesitation. However, I think it’s important to understand that at its core, IBM stock represents viable,big-ticket synergies. IBM is one of the top cloud providers, but it’s more than that. The company leads in multiple high-value technologies, such as deep learning, artificial intelligence, and automation.
What has set back IBM stock in the past is a lack of cohesion in bringing these synergies together. But key acquisitions, such as the recent Red Hatdeal, offers a new vision. Essentially, IBM is laying the groundwork for a comprehensive and scalable solution for cloud applications. We’re really talking about IBM 2.0, but the market doesn’t realize it yet. Therefore, this is easily one of the stocks to buy right now.
Source: Shutterstock
So much has changed over the past few decades. One huge development I noticed was in the parking lot of my localTarget(NYSE:TGT) store. I noticed rows and rows ofTesla(NASDAQ:TSLA) electric vehicles all waiting to park in a designated area. Initial confusion led to a quick realization: they’re waiting their turn to “gas” up.
Given the EV revolution, it’s hard to imagine spending too much investor dollars on oil giants likeConocoPhillips(NYSE:COP). Although COP stock benefits not just from automotive use, demand is demand. Back when EVs were not a thing, oil companies could play fast and loose with their pricing: at the end of the day, we could complain but what good would it do?
Now that consumers have alternatives to fossil-fueled cars, it seems blue chips that are levered to traditional energy markets are going to plummet. However, EVs have their ownquirks and inefficienciesthat obviously don’t make it to the dealership brochure. Plus, let’s think about what would happen if EV owners had their way.
Imagine if millions of EV owners across America decided to charge up their cars in the dead of summer: we’re talking wide-scale brownouts and blackouts. And are we likely to upgrade our infrastructure to accommodate EVs? That’s why you should still take a look at COP stock.
Source: Shutterstock
Speaking of energy-related blue-chip stocks to buy, concerned investors should take a look atSouthern Co(NYSE:SO). Logically, if we do have a comprehensive EV revolution, investments like SO stock could jump far higher than they already have.
I want to point out that I’m not a fossil-fuel snob. Admittedly, it’s a little weird when I see a car silently streak from a standstill to 60 miles per hour. And the cars from the greenFormula Eracing series sounds like a dog whistle…if I were a dog. But EVs are better for the environment and I get all that jazz.
But folks, energy is energy, which requires conversion of a static element to a kinetic force. That process necessarily impacts the environment, but it’s something that we all put up with to power our digital lifestyles.
For sure, an underlying political factor exists. At some point in the future, fossil-fuel energy may go by the wayside. However, utility firms like Southern Co will very likely be always relevant. They represent an essential cog of our digitalization gear, which is why I like SO stock.
Source: Shutterstock
It’s not a perfect comparison, but it’s a good starting point for a discussion. On a year-to-date basis,Toyota Motor(NYSE:TM) — an automotive titan among blue-chip stocks to buy — is up into double-digit territory, albeit slightly. Tesla, however, is staring at a staggering loss of nearly 30%.
Of course, TM stock is winning bigly against TSLA, which is supposed to represent the best of American automotive engineering. I don’t think this is a fluke. While the two companies differ in their choice of catalysts, they still have the same headwinds. For example,millennials don’t really carefor car ownership. Second, geopolitical tensions and trade-related conflicts impose significant pain. Thus, one is doing okay while the other is floundering under the same circumstances.
Furthermore, after recently looking into the details of EV ownership, I’ve come to this conclusion: pure EVs are rich people’s toys. They’re quirky, lose significant capacity under temperature extremes, and for Tesla, they’renot very reliable. That really hurts because EVs, with fewer moving parts, should be inherently more reliable than internal-combustion powered vehicles.
Now let’s consider the implications for TM stock. For decades, Toyota has garnered worldwide accolade for reliability. In fact, many of their cars are what I would call stupid-reliable. Plus, Toyota has the luxury Lexus brand that appeals to the snob.
So while autos generally aren’t a great play, TM is one of the stocks to buy for the long haul.
Source:Phillip Capper via Flickr
If you’re judgingBoeing(NYSE:BA) strictly on the headlines, it’s almost impossible not to have serious doubts. When the first fatal accident involving a Boeing 737 Max occurred, the company enjoyed the benefit of the doubt. As a result, BA stock experienced a relatively quick recovery from the Lion Air incident.
But when a 737 Max operated by Ethiopian Airlines tumbled out of the sky, we had a horrific pattern. With mounting evidence against Boeing, BA stock had nowhere to go but down. Understandably, shares still haven’t recovered from its bearish trajectory because the optics remain terrible. For instance, Boeing’s CEO recentlyadmitted mistakesin communicating the company’s onboard-safety system that’s at the center of the debate.
Sadly, that’s just the human-tragedy element of this story. BA stock also faces a competitive threat fromAirbus(OTCMKTS:EADSY). Airbus offers very similar products with one obvious advantage: their planes don’t kill people.
Yet I’d still put Boeing on my list of blue-chip stocks to buy. Of course, this is a riskier contrarian play. However, because the airplane-manufacturing industry is so massive, airliners can’t just willy-nilly switch producers. Basically, they have to suck it up, which like it or not benefits BA.
Source: Shutterstock
I’ve been around the block long enough to know that the best laid plans don’t always go your way. That’s the primary catalyst driving stocks to buy in the insurance industry. The biggest one on most people’s minds is health insurance. But contrary to common assumptions, just having basic medical coverage won’t protect you from financial catastrophe. That’s whereAflac(NYSE:AFL) comes in.
You probably know Aflac from their comical commercials featuring the talking duck. But AFL stock and its underlying entity does serious business, specializing in supplemental insurance. Theirwebsitegives a great explanation of one of their products, demonstrating that a broken leg averages costs over $7,100. Traditional health insurance may only cover 60% of that care, leaving you on the hook for nearly $2,900.
For most families, they may not have that money laying around to pay off this unexpected bill. Aflac’s supplemental coverage, though, would cover most of that cost, leaving only a minor net out-of-pocket expense.
The best part about AFL stock is that it’s not just about accident coverage; instead, Aflac offers solutions for multiple segments, including critical illnesses and short-term disabilities.
And with the labor market having improved significantly over the years, people may want to protect what they’ve earned. That’s why you shouldn’t overlook Aflac when considering blue-chip stocks to buy.
As of this writing, Josh Enomoto is long T stock.
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How to Better Understand ESG Investing for Your Clients
This article was originally published onETFTrends.com.
There is no shortage of acronyms when it comes to responsible investing.
On the upcoming webcast,How to Better Understand ESG Investing for Your Clients, Jordan Farris, Managing Director, Head of ETF Product Development, Nuveen; and Manica Piputbundit, Senior Director, Responsible Investing, Nuveen, will discuss why responsible investing matters to the investment process and how it can be used within client portfolios.
For instance, theNuveen ESG U.S. Aggregate Bond ETF (NUBD) helps fixed-income investors pair their bond investment needs with environmental, social and governance, or ESG, principles.
Investors can also fill out their equity portfolio with U.S. ESG-related ETFs, such as theNuveen ESG Large-Cap Value ETF (NULV) ,Nuveen ESG Large-Cap Growth ETF (NULG) ,Nuveen ESG Mid-Cap Value ETF (NUMV) ,Nuveen ESG Mid-Cap Growth ETF (NUMG) andNuveen ESG Small-Cap ETF (NUSC) , which screen companies of various market capitalization and asset categories for environmental, social and governance principles.
Lastly, theNuveen ESG International Developed Markets Equity ETF (NUDM) andNuveen ESG Emerging Markets Equity ETF (NUEM) also align investors’ international equity investments with their values.
Nuveen’s ESG ETF methodology follows four key components, including ESG rating or captures an issuer’s performance on key ESG risks relative to peers; controversy score or an issuer’s exposure and response to event-driven controversies; controversial business involvement or issuer’s activity in industries that may cause significant social harm like tobacco; and low carbon criteria or the carbon intensity of an issuer based on involvement in certain industries.
The three ESG factors cover three separate broad categories. Environmental refers to climate change, greenhouse gas emissions, resource depletion, including water, waste and pollution, deforestation. The social aspect covers working conditions, including child labor, community and indigenous populations, operations in conflict zones, health and safety, employee relations and diversity. Lastly, the governance factor is based on executive pay, bribery and corruption, political lobbying and donations, board diversity and structure, tax structure.
The ESG factors are an all inclusive categorization, so investors should not see this as something like an exclusionary based investment approach. Furthermore, the responsible investment and ESG-related investment strategy is not indented to sacrifice performance or lower returns for the sake of achieving their goals – ESG investments have even shown to generate improved risk-adjusted returns over time.
Financial advisors who are interested in learning more about environmental, social and governance principles canregister for the upcoming Thursday, June 19 webcast here.
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Is Now The Time To Put BankFinancial (NASDAQ:BFIN) On Your Watchlist?
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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In contrast to all that, I prefer to spend time on companies likeBankFinancial(NASDAQ:BFIN), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
View our latest analysis for BankFinancial
As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. I, for one, am blown away by the fact that BankFinancial has grown EPS by 38% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a glint in the eye of my lover.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that BankFinancial's revenuefrom operationswas lower than its revenue in the last twelve months, so that could distort my analysis of its margins. BankFinancial maintained stable EBIT margins over the last year, all while growing revenue 13% to US$65m. That's a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not checkthis interactive chart depicting future EPS estimates, for BankFinancial?
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own BankFinancial shares worth a considerable sum. Indeed, they hold US$13m worth of its stock. That's a lot of money, and no small incentive to work hard. Those holdings account for over 6.2% of the company; visible skin in the game.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalizations between US$100m and US$400m, like BankFinancial, the median CEO pay is around US$1.1m.
The BankFinancial CEO received US$602k in compensation for the year ending December 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.
BankFinancial's earnings per share have taken off like a rocket aimed right at the moon. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. Big growth can make big winners, so I do think BankFinancial is worth considering carefully. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want tocheck if BankFinancial is trading on a high P/E or a low P/E, relative to its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Dave & Buster's Wants Investors to Know
The outlook just got cloudier forDave & Buster's(NASDAQ: PLAY)business.
The restaurant and entertainment hub had been showing encouraging signs of a growth rebound following two years of declines. However, the chain this month posted disappointing operating metrics that suggest its turnaround strategy might need more time to play out than investors had hoped.
In a conference call with Wall Street analysts, CEO Brian Jenkins and his team explained what went right -- and wrong -- for the business in the fiscal first quarter. Executives also detailed their reasoning for lowering the 2019 demand outlook while continuing to open stores at a record pace.
Let's look at a few investor takeaways from that presentation.
Image source: Getty Images.
Our comparable store sales were unfavorably impacted by this year's Easter calendar shift. Also, the combination of competitive intrusion and cannibalization continued to be a greater headwind compared to the same period last year.
Dave & Buster's in late March posted its first comparable-store sales increasesince 2017. Management noted at the time that comps remained strong through the first few weeks of fiscal 2019. However, demand turned lower in the following weeks so that comps surprisingly slipped back into negative territory. Executives said the calendar shift around the Easter holiday played a role in the disruption, but that competition also harmed growth trends.
Dave & Buster's managed higher sales in the amusements section, but those gains came entirely from rising prices as customer traffic continued to decline. "Comparable store sales were below expectations," Jenkins noted.
We are working to drive awareness of our food and beverage improvements but expect this will take time.
The accelerating food demand that Dave & Buster'sreported last quarterproved short-lived. Its restaurant segment shrank by more than 3% at the start of fiscal 2019, with food down 2.8% and bar sales lower by less than 0.5%.
Management highlighted several encouraging trends in this division, which accounts for about 40% of the business. Dave & Buster's has simplified the menu to speed up service and improve quality. Guests are noticing the changes, executives said, leading to higher customer satisfaction scores.
However, it appears that rebounding food demand will take more time to engineer than executives had hoped. In the meantime, the company is still rolling out initiatives aimed at enhancing the guest experience, while also "working with urgency" to control costs.
In amusements, we continue to differentiate our brand by offering bigger, better and marquee titles to delight our guests.
By adding new virtual reality (VR) titles in theMarvelandStar Warsfranchises, Dave & Buster's took another step toward building a deep catalog of exclusive simulation games. This strategy deepens customer connections with the chain, takes advantage of its large sales base, and also raises profitability since guests have demonstrated a willingness to pay a premium for quality VR experiences.
Dave & Buster's main challenge is to use that early success to build a more loyal fan base around its entertainment business. At the same time, the company needs to convince more of these gamers to try out its upgraded food menu.
The problem is that competitors are following a roughly similar strategy, and right now it's not clear that Dave & Buster's is delivering a strong enough guest experience to protect its market share. Shareholders have to hope that improvements in both the restaurant and entertainment sides of the business will solve that problem over the next few quarters.
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Demitrios Kalogeropouloshas no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has adisclosure policy. |
This Just In: U.S. Steel Upgraded
Every day, Wall Street analysts upgrade some stocks, downgrade others, and "initiate coverage" on a few more. But do these analysts even know what they're talking about? Today, we're taking one high-profile Wall Street pick and putting it under the microscope...
2019 has not been kind toU.S. Steel(NYSE: X)shareholders.
So far, the stock is down 36% from its highs in February on fears atrade war with Chinais sapping steel demand -- at the same time as a tradetrucewith Mexico and Canada will remove theprotective tariffsthat enabled the company to nearly triple its profits last year. On Wall Street, Citigroup this month cut its price target on U.S. Steel (to $15, saysStreetInsider.com), while Goldman Sachs downgraded it to sell.
Yesterday, U.S. Steel moved to address these fears by idling three of its blast furnaces -- and immediately won an upgrade from a completely different analyst: Vertical Group.
Image source: Getty Images.
According to U.S. Steel's latest 10-K filing with the SEC, the company currently operates 14 blast furnaces spread across the United States, as well as an integrated production facility in Kosice, Slovakia. So U.S. Steel's move to idle three of its furnaces could potentially cut its steel output by as much as 21%.
In its note this morning, Vertical Group calls this move "unthinkable" -- but apparently in a good way. In fact, the analyst has swung all the way from a sell rating on U.S. Steel to a buy and hiked its price target to $17 per share.
But was this move really good news?
Perhaps. Falling demand for steel among manufacturers, combined with a 35% decline in the price of hot-rolled coil over the past year, has significantly dinged U.S. Steel's profitability. In last night's Q2 2019 earnings preannouncement, which contained the news about the furnace closings, the company warned that "second quarter 2019 adjusted diluted earnings per share [will] be approximately $0.40" -- 23% below the $0.52 per share that Wall Street had been forecasting.
In addition to "decreasing steel prices and softening end market demand," management blamed the weak profits forecast on "flooding in the southern United States, which has limited the availability of barges and our ability to ship finished product," as well as "market headwinds" and "lower selling prices" in Europe.
Given the soft demand for its product, and even weaker prices it's able to command for the steel it does sell, U.S. Steel's decision to idle its "Great Lakes B2 blast furnace" and "south blast furnace at ... Gary Works," as well as the "#2 blast furnace" in Kosice may make sense. (Why flood an already oversupplied market with additional production that's only going to drive down prices even further?)
According to management, idling the three furnaces will remove "approximately" 325,000 to 350,000 tons of steel supply from the market monthly -- or as much as 4.2 million tons annually, depending on how long these idlings last. That still leaves U.S. Steel shipping about 14.6 million tons of steel this year, but it's a significant reduction nonetheless.
It could also be mean a significant reduction in U.S. Steel's annual capital spending budget -- maybe even significant enough to return this company to free-cash-flow positive despite the reductions in steel pricing (and the planned reduction in production).
Consider: With $1.15 billion in trailing earnings, U.S. Steel stock currently sells for an ultra-low valuation of just 2.3 times profit. Granted, management just warned us that profits are slumping, and that's part of the reason analyst forecasts show that the shares are trading at10.5times what the company is expected to earnnextyear. But even so -- 2.3 times trailing earnings is a valuation almost too enticing to resist.
What really worries me about U.S. Steel stock, though, is the fact that after generating positive free cash flow in 2017, a number not too far short of its reported earnings (it reported $387 million inGAAPprofit in 2017, and FCF of $321 million), the company's free cash flow dropped to negative $63 million last year, and remains in the red (negative $29 million) over the past 12 months. Without cash coming in to support its $2 billion net debt, I see a lot of balance sheet risk.
However, by lowering production and idling facilities, not only will U.S. Steel be doing its bit to support global steel prices going forward, it should also be able to reduce capital expenditures on maintaining and upgrading those furnaces that are no longer operating. If this permits U.S. Steel to reduce its capital spending budget to the $500 million-ish level that was more the norm over the past five years, I could see the company generating positive free cash flow even if operating cash flow falls by half over the next year.
So is that good enough news to justify an upgrade on U.S. Steel stock? Yes, I think it just might be.
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Should Textainer Group Holdings Limited’s (NYSE:TGH) Weak Investment Returns Worry You?
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Today we'll look at Textainer Group Holdings Limited (NYSE:TGH) and reflect on its potential as an investment. Specifically, we're going to calculate its Return On Capital Employed (ROCE), in the hopes of getting some insight into the business.
First up, we'll look at what ROCE is and how we calculate it. Then we'll compare its ROCE to similar companies. Then we'll determine how its current liabilities are affecting its ROCE.
ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. All else being equal, a better business will have a higher ROCE. Overall, it is a valuable metric that has its flaws. Author Edwin Whitingsaysto be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'
Analysts use this formula to calculate return on capital employed:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
Or for Textainer Group Holdings:
0.05 = US$223m ÷ (US$4.8b - US$322m) (Based on the trailing twelve months to March 2019.)
So,Textainer Group Holdings has an ROCE of 5.0%.
See our latest analysis for Textainer Group Holdings
One way to assess ROCE is to compare similar companies. We can see Textainer Group Holdings's ROCE is meaningfully below the Trade Distributors industry average of 8.3%. This performance could be negative if sustained, as it suggests the business may underperform its industry. Putting aside Textainer Group Holdings's performance relative to its industry, its ROCE in absolute terms is poor - considering the risk of owning stocks compared to government bonds. There are potentially more appealing investments elsewhere.
When considering this metric, keep in mind that it is backwards looking, and not necessarily predictive. ROCE can be deceptive for cyclical businesses, as returns can look incredible in boom times, and terribly low in downturns. ROCE is, after all, simply a snap shot of a single year. Future performance is what matters, and you can see analyst predictions in ourfreereport on analyst forecasts for the company.
Current liabilities include invoices, such as supplier payments, short-term debt, or a tax bill, that need to be paid within 12 months. The ROCE equation subtracts current liabilities from capital employed, so a company with a lot of current liabilities appears to have less capital employed, and a higher ROCE than otherwise. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets.
Textainer Group Holdings has total liabilities of US$322m and total assets of US$4.8b. Therefore its current liabilities are equivalent to approximately 6.7% of its total assets. Textainer Group Holdings has very few current liabilities, which have a minimal effect on its already low ROCE.
Still, investors could probably find more attractive prospects with better performance out there. But note:make sure you look for a great company, not just the first idea you come across.So take a peek at thisfreelist of interesting companies with strong recent earnings growth (and a P/E ratio below 20).
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Winnebago Industries, Inc. (WGO) Q3 2019 Earnings Call Transcript
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Winnebago Industries, Inc.(NYSE: WGO)Q3 2019 Earnings CallJune 19, 2019,10:00 a.m. ET
• Prepared Remarks
• Questions and Answers
• Call Participants
Operator
Good day, ladies and gentlemen, and welcome to the Winnebago Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press "*0" on your touchtone telephone. As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference, Mr. Steve Stuber, Director of Financial Planning and Analysis and Investor Relations. Sir, you may begin.
Steve Stuber--Director of Financial Planning, Analysis, and Investor Relations
Good morning, everyone, and thank you for joining us today to discuss our third quarter earnings results. I am joined on the call today by Michael Happe, President and Chief Executive Officer, and Bryan Hughes, Vice President and Chief Financial Officer.
This call is being broadcast live on our website at investor.wgo.net and a replay of the call will be available on our website later today. The news release with our third quarter results was issued and posted to our website earlier this morning.
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Before we start, I'd like to remind you that certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain and a number of factors, many of which are beyond the company's control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which I encourage you to read.
With that, I would now like to turn the call over to our President and CEO, Michael Happe. Mike?
Michael Happe--President and Chief Executive Officer
Thank you, Steve, and good morning to those of you listening in on our call. We sincerely appreciate your interest in Winnebago Industries. I would like to begin this morning with an overview of our fiscal year 2019 third quarter results and some important context as to the drivers behind those outcomes. I will then turn the call over to our Chief Financial Officer, Bryan Hughes, who will provide more detail on the related financial numbers. We will then offer some closing comments before concluding the call with some Q&A from select participants.
Our third quarter performance, specifically in terms of profitability and retail share, reflects our continued progress toward building a stronger, more diversified outdoor lifestyle company. Beginning in early 2016, we set out on a journey that progresses still today: a concurrent mission to develop a more robust, full-line recreational vehicle business using some of the best brands in the North American industry and to initiate or acquire new revenue streams in other adjacent outdoor market spaces that result in an increasingly more balanced portfolio.
As we mentioned repeatedly, we are committed to becoming a more profitable and efficiently run organization, consistently gaining share in the industries we serve, pursuing smart new growth opportunities that strengthen our brands and lengthens our runway for future success. By staying focused on a truly distinct foundation of quality, innovation, and service in all we do, we have made significant strides toward our goal of transforming Winnebago Industries into a company that you, as investors, can begin to count on for stronger returns.
This quarter is a true example of how our new enterprise approach can provide strong consolidated results even when we incur unexpected external challenges in one of our core businesses. While we are not immune from the North American RV industry headwinds that have persisted during our fiscal year, our consolidated, competitive position and the strength of our diverse set of product lines have enabled us to once again outpace the industry.
Our continued strength in our towable segment, led by our Grand Design RV product line, has once again grown revenues year-over-year and sustained share gains over 100 basis points. More recently, our motor home segment has grown real retail market share, driven by impressive Class B momentum and signs of stability within our Class C gas category.
On a consolidated level, third quarter revenues were down 5.9% for the quarter, driven by continued destocking efforts by dealers and a significant and unexpected chassis supply disruption related to our Class B van production. I will expand on this development in a moment.
Despite a slight decline in revenues, we made further positive progress expanding our margins. Consolidated gross profit margin increased 120 basis points in the quarter, driven by revenue mix and expanding margins in our towable segment, driven by price increases and the continued success of our cost mitigation efforts to offset rising input costs.
Throughout the year, we have been working deliberately to maintain a disciplined approach to production levels, staying focused on product quality and working to ensure our retail value propositions in the market are not inordinately stretched. As a result, not only are we expanding margins, but our year-to-date cash flow is up 36% over the prior year.
Now, turning to the segments in more detail, unit shipments in our towable segment were up 6.5% for the quarter, despite efforts by dealers to lower inventories on most competitive towable product lines, leading to industry wholesale market declines of 24% calendar year-to-date. The strength of our company's dual-branded towable products led to the continuation of gaining retail market share and dealer lot space.
For the quarter, towable revenues increase 10.8% from the fiscal 2018 period. Adjusted EBITDA margins increased by 200 basis points, largely reflecting the timing of price increases and effectively managing input cost pressures. Towable backlog for the quarter did decrease 24.2% in dollars over the prior year, reflecting the positive impact of utilizing additional capacity added during calendar year 2018 and dealers shifting more of their order behavior to adjust to shorter order-to-delivery lead times available from OEMs, including us.
Given our retail pace within the towable segment, we are confident that our net dealer order activity, stocking, and retail replenishment, and thus future shipment potential, is likely greater than most of our competitors relative to share.
Turning now to motorized, invigorating this business remains a key priority for us and the launch of new products and designs continues to provide customers with an enhanced lineup of high-quality, innovative motorized products. However, revenues for this segment were down 34.6% versus the prior year, largely due to continued industry headwinds in Class A and Class C products.
Unfortunately, and as mentioned earlier, Class B van sales were also down due to a temporary, yet material, disruption in chassis supply by one of our strategic suppliers, which had a significant impact on us shipping two of our most popular Class B units. We have been working closely with this strategic supplier to enable them to remedy their situation and we feel confident in the partnership with them and their ability to address this important supply issue.
My own estimate of the impact of this supply disruption on our motorized segment during the quarter was multiple eight-figures on the top line and multiple seven-figures of adjusted EBITDA on the bottom. We are beginning to see the situation improve a bit as we progress through the first month of our fourth quarter and expect to return to normalized supply of this Class B chassis within the fourth fiscal quarter period.
We saw our motorized segment adjusted EBITDA margins decrease 460 basis points in the quarter versus last year, driven by deleverage related to the sales decline, a mix impact related to the decline in sales of our most profitable Class B products, and continued competitive discounting in a challenging market. As we address the previously mentioned specific supplier issue, combined with a continued focus on managing costs and implementing operational improvements to improve overall manufacturing efficiency, we are confident the motorized segment will revert to delivering improved levels of profitability in the fourth quarter.
We are dedicating a considerable amount of energy and resources to positioning this segment for sustained retail growth and improved profitability long-term. In March, we successfully launched several new products at the RVX Show in Salt Lake City. Additionally, we are successfully executing against our recent decision to shift our Winnebago branded Class A diesel motorized manufacturing from our Junction City, Oregon plant to our manufacturing campus in Forest City, Iowa.
Motorized backlog decreased 5.6% in dollars, which reflects the ongoing efforts of dealers to right-size their inventory levels. Partially offsetting the declines is an increase in several Class B product orders delayed from being delivered as real shipments, again, due to the chassis supply issue mentioned that affected our Q3.
Our luxury boat business, Chris-Craft, celebrated its one-year anniversary as part of the Winnebago Industries' portfolio in early June and delivered another strong quarter of organic sales growth during the fiscal third quarter period. We continue to see strong traffic in demand for our products. New products launched during the first half of 2019 will provide additional momentum forward as we head into our fourth quarter. While consumer demand within the overall boating market has been a bit inconsistent as of late, interest in the Chris-Craft brand remains strong and we are outpacing our own expectations for this business.
With that overview, I will now turn the call over to Bryan Hughes, our Chief Financial Officer, to review our fiscal 2019 third quarter financials in more detail. Bryan?
Bryan Hughes--Vice President and Chief Financial Officer
Thanks, Mike, and good morning, everyone. Third quarter consolidated revenues were $528.9 million, a decrease of 5.9% compared to $562.3 million for the fiscal 2018 period, driven by declines in motorized segment revenues, partially offset by the growth in towable segment revenues and the addition of Chris-Craft.
Gross profit was $86.6 million, an increase of 1.3% compared to $85.5 million for the fiscal 2018 period. Gross profit margin increased 120 basis points in the quarter, driven primarily by favorable business mix and pricing in our towable segment.
Third quarter operating income was $49 million, an increase of 1.4% compared to $48.3 million in the third quarter of last year. Our results include restructuring charges related to our previously announced move of our diesel production from Junction City, Oregon to northern Iowa in the amount of $1.1 million or $0.03 diluted earnings per share. We expect additional charges related to this production move in the fourth quarter in the range of $0.01 to $0.02.
Net income was $36.2 million, an increase of 11.2% compared to $32.5 million last year, and earnings per diluted share were $1.14, an increase of 11.8% over the same period last year. Both net income and earnings per share were favorably impacted by an improved tax rate resulting from the Tax Cuts and Jobs Act, totaling $1.7 million or $0.06 diluted earnings per share, and a change in estimate related to R&D tax credits of $1.4 million or $0.04 diluted earnings per share.
The effective tax rate for the quarter was 19.4%. We currently expect our full-year tax rate to approximate 20% and we expect our tax rate in our forthcoming fiscal 2020 to approximate 23% to 24% before consideration of any discrete tax items.
We have provided non-GAAP EBITDA and adjusted EBITDA performance measures in our press release as a comparable measure to help clearly illustrate our performance. The schedules accompanying the press release show a reconciliation between net income and adjusted EBITDA.
Consolidated adjusted EBITDA was $55.9 million for the quarter compared to $53.4 million last year for an increase of 4.7%. The biggest reconciling item to arrive at our adjusted EBITDA number in the third quarter was related to charges attributable to the previously announced restructuring of our diesel production. To reiterate, these charges amounted to $1.1 million in the third quarter and are $1.3 million on a year-to-date basis.
Now, turning to the individual segments, starting with the towable segment, revenues for the third quarter were $356.8 million, up 10.8% year-over-year. The increase was driven by increased unit sales and pricing actions in the Grand Design RV business. Segment adjusted EBITDA for the third quarter was $57.2 million, up 26% from the prior year, and adjusted EBITDA margins increased 200 basis points, primarily reflecting pricing actions taken over the past 12 months but also helped by operational efficiencies and good cost management.
Turning now to the motorized segment, motorized revenues were $160.2 million for the quarter, down 34.6% versus last year. The revenue decline was due to a decrease in Class C and Class A unit sales, driven by industrywide dealer destocking efforts and a temporary supplier disruption in our Class B chassis as Mike discussed earlier in his comments, partially offset by pricing actions taken over the past 12 months.
As it relates to the Class B chassis supply disruption issue, we believe the impact in our third quarter was in the range of 10-15 percentage points of revenue growth to our motor home segment in the quarter versus the same period last year. We believe we will return to normalized levels of production and sales by the end of our current fourth quarter, as we are already seeing an improvement in flow of supplies today in the fourth week of the quarter. It is our current expectation that we will recapture the postponed sales from the third quarter and any additional impact we see in fourth quarter during our fiscal 2020 since we have the production capacity to do so.
Segment adjusted EBITDA was $0.4 million for the third quarter, down 96.7% year-over-year. Adjusted EBITDA margin decreased by 460 basis points, primarily driven by deleverage in the sales reduction, unfavorable business mix within the motor home segment, and continued discounting that has been necessary to keep pace in a very competitive landscape.
Turning to our balance sheet, as of the end of the third quarter, the company had outstanding debts of $259.6 billion net of debt issuance costs of $6 million. Working capital was $186.2 million. Our current net debt to adjusted EBITDA ratio is 1.4 times, back within our targeted leverage ratio range of 0.9 to 1.5 times. Cash flow from operations was $82.8 million for the year-to-date period, up $21.8 million, or approximately 36%, from the same period last year.
The effective income tax rate for the third quarter was 19.4%, compared to 26.4% for the same period in fiscal 2018. The drivers of the decrease in the effective tax rate were the year-over-year impact of the reduction in the federal corporate income tax rate associated with the Tax Cuts and Jobs Act, or TCJA, and a change in estimate related to R&D tax credits. The impact from the TCJA was $0.06 to diluted earnings per share. The impact of the change in estimate related to R&D tax credits totaled $1.4 million or $0.04 to diluted earnings per share.
Considering our year-to-date tax provision, including all favorable discrete items and change in estimates, as well as our current ongoing tax rate assumptions for the remainder of the year, we expect our full-year fiscal 2019 tax rate to be approximately 20% before consideration of any discrete tax items in the fourth quarter. Under the current tax code, we expect our ongoing tax rate in fiscal 2020 and beyond to be in the range of 23% to 24%, again, before consideration of any discrete tax items.
Finally, our Board of Directors approved a quarterly cash dividend of $0.11 per share, payable on July 3, 2019, to common stockholders of record at the close of business on June 19, 2019.
That concludes my review of our quarterly financials and, with that, I will now turn the call back to Mike to provide some closing comments. Mike?
Michael Happe--President and Chief Executive Officer
Thanks, Bryan. As you have heard us mention this morning, our third quarter results demonstrate that we have continued to build on the momentum we established in the first half of fiscal year 2019. While the broader RV industry wholesale shipments have declined due to dealers reducing their levels of inventory and macroeconomic noise weighs on consumers, especially as it pertains to consumer discretionary products, we have further demonstrated that our company's brands can not only endure these challenges but that we can succeed in growing share and profits at this time. Across our organization, our employees are dedicated to producing high-quality, innovative, and profitable products and we will continue to execute on our initiatives to improve the efficiency and consistency in which we deliver these products to our valued channel partners.
The benefits of our internal portfolio transformation efforts are evidence, as they have made our company more resilient and able to navigate the headwinds affecting the RV industry while strengthening our competitive position. This resiliency is due, in large part, to the nature of our expanded business platform, which is more diversified than ever with active full-line RV, select marine, and specialty vehicle operations. We remain confident that there will be significant opportunities for share expansion in each of those global markets over the next 5-10 years. We will look to grow both organically and inorganically in each of those industry arenas.
In fact, I am pleased to announce that we have enough confidence in our future business prospects to announce two important capacity expansion efforts today. First, we will be adding to our manufacturing footprint within our Grand Design campus in Middlebury, Indiana, with a new assembly building which is expected to be completed in the middle of our fiscal year 2020. In addition to the two recent expansions in calendar 2018 at Grand Design RV, this new 175,000-square-foot facility is validation of the fast growth this brand is experiencing.
As mentioned previously, our Chris-Craft business continues to perform well also. I am pleased to announce that we have initiated proceedings to add a new multi-million dollar manufacturing complex, which will add 80,000 square feet of additional capacity, on the Sarasota campus. This is an exciting time for the Chris-Craft team in Florida, as we look to build on the success of their brand in the marketplace and launch several new products into the market in the years to come.
Next, I'd like to share with you my thoughts on some of the market challenges facing both the RV wholesale industry and the retail environment for the remainder of 2019. While consumer sentiment in the broader RV market has yet to recover from the bearish trajectory we have witnessed over the last year, we remain confident in the long-term retail prospects for the RV industry. Stock market volatility and political uncertainty are certainly weighing on consumers, combined with the potential impact of price increases and rate increases related to some of the new tariffs and/or policies. And while we will not use weather as an overt singular excuse, it is no secret that the spring conditions of 2019 to kick off our selling season, especially in the northern half of the country, were some of the most challenging in recent memory.
However, potential easing of interest rate hikes and the prospects of growth in wages and levels of employment are tailwinds that we believe will keep consumer sentiment level stable. That said, it appears RV industry retail sales for calendar year 2019 will be down versus last year in the mid-single-digit range and this will elongate the recovery period for the industry.
While we are still seeing consumer confidence at stable levels, our RV and boating customers continue to exercise increased discipline as they invest their valuable discretionary resources on large ticket items. More and more, consumers in 2019 are focused on value and products that also leverage the latest technology to ensure a seamless outdoor experience with their family and friends.
There are signs that the destocking we are seeing will continue to improve during the back half of calendar year 2019. Net, the RV Industry Association is forecasting calendar industry wholesale shipments to be down 14% versus last year, with a range or bookends of down 11% to down 18%. We are generally aligned to that point of view.
The industry is also dealing with the looming threat of increased tariffs. While the threat of additional tariffs related to products imported from Mexico has passed, a trade war with China appears to be more lasting. List 3 of 301 tariffs and pending List 4 tariffs will combine to have a material dollar impact on our cost inputs. While the impact to our fiscal 2019 results is minimized by timing, the impact to fiscal 2020 could be in the range of double digits of millions of dollars or more than that of the previous tariffs combined. Similar to how we successfully addressed tariff impacts during the back half of fiscal '18 and fiscal '19, our teams are working diligently now to prepare for our potential plans for fiscal 2020.
For the remainder of fiscal '19 and into fiscal year 2020, we are poised to continue to outpace the RV industry as it relates to top-line sales percentage growth, profitability, and share gains. Although we have made great progress thus far against our strategic priorities, we understand that there is more work to be done. Our management team and employees are working relentlessly to make Winnebago Industries a high-quality company that investors can place their trust in. We also continue to be extremely active in terms of adding more talent to the team, improving channel relationships and networks across our businesses, and vigorously scanning our industries for possible new acquisition candidates to complement our existing group of brands.
The strategic and financial benefits of having an expanded, more diversified product portfolio are beginning to translate to more consistent results and driving incremental growth. We are committed to delivering on our promises and maximizing value for our shareholders and customers in the years to come.
With that, I'll begin to wrap up my comments for today. As always, I would like to end by thanking all our Winnebago Industries' employees for their hard work and flexibility during the quarter as we navigate ever-changing RV and marine industries and for helping to transform our company.
I had the privilege of spending the last two business days, Monday and Tuesday of this week, at four of our campuses within the motor home business in north Iowa. Unfortunately, none of you on this call can see what I saw these last two days and that's why I've never been more bullish on what we're building here long-term. I am optimistic about our future because our teams are sincerely thinking about customers' problems or unmet needs and truly working on differentiated, next-generation solutions in the forms of new products, many of which are already in the pipeline for the next several years.
I am optimistic because our employee safety initiatives are taking hold and our workplaces are quickly becoming some of the safest in our industries, improving morale and driving productivity. I am optimistic because of our absolute commitment to product quality and taking care of customers after the sale if we do get it wrong. Both are true tiebreakers for us. I am optimistic because of the literally thousands of quick wins or continuous improvement ideas which are being generated by our teammates at all levels of the organization and are being executed for the benefit of our business. I am optimistic because of the increased commitment here in our company to give back to the communities in which our employees live, work, and play in, and the many photos of employees, families, and friends I've seen participating in those events.
These and many other business improvement efforts are what will continue to make Winnebago Industries and our brands stronger. Thanks very much for your time today. I will now turn the line back to the operator for the Q&A session.
Operator
Thank you. Ladies and gentlemen, if you have a question at this time, please press "*1" on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press "#". Again, that's "*1" to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated.
Our first question comes from Craig Kennison with Baird. Your line is now open.
Craig Kennison--Robert W. Baird & Co. -- Analyst
Good morning and thanks for taking my questions. A lot of good detail on the call. I wanted to dig into the retail commentary since that's an issue everyone's focused on. I know weather's been a factor. There's no doubt about that. But what can you tell us about May and June so far in especially these northern markets that might shed more light on that dynamic?
Michael Happe--President and Chief Executive Officer
Yeah, good morning, Craig. This is Mike. Certainly, I think summer has begun in several parts of the northern parts of the country. There has been quite a bit of rain and moisture in certain places but I think we generally feel better about the summer selling season here in the last several weeks. The variability of retail is probably the best way I would describe it. The variability of the retail has settled down and it has been performing on a more consistent basis going forward. As you know, we represent only, today, about 9% to 10% of the total industry. So, like many of you in the industry, we don't get to see some of the formal data as well for a while.
But the spring was particularly tough. We don't use that as an excuse. We didn't even attempt to quantify it on this morning's call. But if you talk to dealers and even, again, homeowners or end customers, all of them will generally say that, in most parts of the country, it wasn't the greatest of springs and summer got off to a little bit later start. So, as you know, we're a very seasonally retail driven business. It's important that we see good retail here over the next several months so that the dealers, as they go into the open house event in the RV industry in September, are in a good position to consider a good reorder position at that particular event.
Craig Kennison--Robert W. Baird & Co. -- Analyst
Thanks. And then in your prepared remarks you talked about the backlog and also order trends. The backlog did deteriorate but you seem comfortable with the pace of orders. How do you sort of reconcile all of that and is the answer basically you're taking share?
Michael Happe--President and Chief Executive Officer
Yeah. At the end of the day, retail performance is, for us, the ultimate market metric and we feel confident that, as long as, in certain parts of our business -- very specifically, as examples, Grand Design RV and our Winnebago branded Class B motorized segment -- as long as consumers continue to choose our brands in those categories more than other brands, that the orders will follow.
I think you've heard this from other manufacturers, Craig, but during the run-up in this past decade of RV wholesale shipments, you saw many dealers putting orders in over an extended period of time. They were ordering product three months out, six months out, potentially even farther. Certainly, with the capacity that's been freed up in the industry due to the market slowdown, as I mentioned in my comments, the dealers are much more comfortable giving the OEMs their orders in a much shorter time period. And whether we call those stocking orders or retail replenishment orders, it's sometimes difficult now to differentiate because they're coming in with, again, relatively short lead notice in terms of when the dealers now want them.
But, again, where we have retail momentum, we are seeing very acceptable dealer order activity. Where our product lines are struggling in the marketplace, the order activity isn't as robust. And so both of those should probably not be surprising. So, yeah, again, the backlog is certainly, year-over-year, in a different place but Bryan and I are not losing a lot of sleep about the backorder position at this time. We're staying very focused on retail and the turns at the dealers, managing aging inventory, so that those orders hopefully can just steadily continue going forward.
Craig Kennison--Robert W. Baird & Co. -- Analyst
Thanks. And, lastly, just on this capacity expansion. Bryan, can you comment on the capex associated with the new capacity Mike mentioned? And then, more broadly, just frame where we should see capex trending. I know you don't provide guidance but we've got to think through the margin implications of all of this as well when we think about fiscal 2020. So, any comments around your capacity and the implications for margin next year would be helpful.
Bryan Hughes--Vice President and Chief Financial Officer
Yeah. In the current year, we're projecting our capex to be in that $35 million to $40 million range. For next year, we haven't provided guidance yet in that regard, as you stated, but as Mike alluded to, as it relates to the timing, we do have the facility for Grand Design that will be coming online mid-2020. And so the bulk of the spending related to that facility will occur in fiscal 2020. Likewise, with the Chris-Craft expansion, the 80,000-square-foot facility that Mike alluded to, will be 2020 spending. But neither of those projects will drive outlying capital spending in 2020 versus 2019. We did have some capacity expansion that hit our capex in 2019 as well, of course. So, I don't expect either of those facilities to drive a noted increase in capex next year.
Craig Kennison--Robert W. Baird & Co. -- Analyst
Great. Thank you.
Michael Happe--President and Chief Executive Officer
Thank you, Craig.
Operator
Thank you. And our next question comes from Scott Stember with C.L. King. Your line is now open.
Scott Stember--C.L. King & Associates -- Analyst
Good morning, guys, and thanks for taking my questions as well.
Michael Happe--President and Chief Executive Officer
Good morning, Scott.
Scott Stember--C.L. King & Associates -- Analyst
Well, just talk about towable again. Obviously, the announcement to add capacity at Grand Design is great news but maybe just explain how fast you're filling up the rather sizable increase that you had last year and maybe also tell us, are we expecting any expansion in product offerings or is this just because the demand is just so strong for the current offerings that you have right now.
Michael Happe--President and Chief Executive Officer
Yeah, Scott, this is Mike. I'll answer that and then if Bryan wants to jump in, he can certainly do so. I would just tell you that the expansion at Grand Design, specifically, is a carefully considered effort to stay up with the projected growth of that business. And while, at certain times during the current fiscal year, we have appropriately throttled back the production rates on several of the lines in the existing Grand Design facilities, including the two plant expansions that came online, I believe, in calendar 2018, our projections with that business, and almost exclusively related to the growth of their existing towable business, really calls for us to have to consider more expansion there.
Now, we recognize that highlighting a capacity expansion project in the midst of the current RV conditions when some of our competitors are certainly talking about managing their capacity back may seem at odds with what's happening, but it is reflective of the momentum that that particular brand has but also our belief that that talented team can do what they say they will do and that is continue to deliver great products for our dealers and end customers, resulting in more lot share and more retail growth. And so, believe me, those types of decisions during these times don't come without a lot of deliberation and angst and we always reserve the right to, I guess, manage the pace of construction and other factors should the market take a hard turn in a negative direction. But we are beginning significant construction work there.
And the same thing applies to our Chris-Craft business in terms of their prospects going forward. I would tell you both of those businesses, Scott, have a healthy list of new products and ways to grow in the market from a product expansion standpoint that are not public yet. And those are certainly underpinning some of the projected volume that you'll see running through those facilities. But I guess that's how I view it at this time.
Scott Stember--C.L. King & Associates -- Analyst
That's great.
Bryan Hughes--Vice President and Chief Financial Officer
We also, Scott, we do have some new products coming out as well with Grand Design as they continue to fill out their line. As an example, the Transcend has an extension coming out. Likewise, the Momentum. Toy Hauler, they continue to expand that line, as well as the Solitude and the expansion of the S Class. So, there's continued expansion of the line, as you would expect, and in line with comments we've made on Grand Design in the past, in terms of how we will continue to grow that business. And that's part of the driver of the expansion as well.
Scott Stember--C.L. King & Associates -- Analyst
Got it. That was very helpful. And going over to Class Bs, I know you spoke about the transitory issues with the chassis, but maybe just give us an update on Roadtrek with the dislocation of the brand. I know it definitely caught some consternation at the dealer level at retail, maybe even in wholesale. But maybe just give us an update, at least near-term, what the impact has been to you and just highlight some of the opportunities going forward once that dislocation clears out in the next couple of months.
Michael Happe--President and Chief Executive Officer
Yeah. That continues to be an opportunity for us. I'll probably target our comments less so at that particular competitor who ran into some challenges within the last 6-9 months and more so at the opportunity. But it certainly has challenged many of the dealers that have carried the Roadtrek or Hymer brands in North America and sent them, obviously, looking for alternate solutions. Now, in most cases, we have existing dealers already in those markets. And for our existing dealers, it's an opportunity for us to continue to put good Winnebago branded product in front of them to potentially take advantage of this opportunity and steal that market share from the Roadtrek and Hymer brands.
And I think we've done that. If you've looked at the retail market share results that have come out recently here from SSI -- and, as we all know, those are not always complete the moment that they're released and there's a little ebb and flow of those as they settle -- but I believe in the last retail report on Class Bs, we took somewhere in the neighborhood of five more points in market share in that category in that time period. So, we are taking share there.
We are really just trying to play our game and ramp it up even further as opposed to, in any way, shape, or form -- we're in no way, shape, or form saying anything negative about Roadtrek or Hymer. It's more about what Winnebago has available. And as Roadtrek has a new parent coming into this market that tries to stabilize that business, we anticipate that competition from them and other RV manufacturers will elevate and we have to be very committed.
That's why this supply chain disruption in our third quarter was especially disappointing because you could make the argument that our retail share gains could have been even higher in our third quarter and/or in the coming months had we been able to deliver some of the product that we had hoped to deliver. So, the timing of that is particularly unfortunate for us and, I think, the market. We have hundreds of backorders -- literally, retail backorders in some cases -- of products that our end customers want that we have not been able to fulfill.
But as both Bryan and I said, that situation appears to be getting better with every week, albeit it's far from being perfect. And so we'll continue to work through that. We do view that as a very temporary situation and not systemic and we'll get through that and we'll continue to hopefully compete very vigorously in that space.
Scott Stember--C.L. King & Associates -- Analyst
Just one last quick one. If you could just maybe give a little bit more granular detail on your expectations for tariffs. You talked about List 3 and List 4 potentially being some pretty onerous impacts but is that commentary really more of List 4 concerns? Because it was my understanding that the List 3, even at a 25% rate, wouldn't be all that bad. So, I'm just trying to get a sense of what gives you this more cautious tone about tariffs.
Bryan Hughes--Vice President and Chief Financial Officer
Yeah, Scott, this is Bryan. I'll take that one. It's both List 3 and List 4. I wouldn't characterize it as more heavily weighted to List 4. Mike alluded to our estimate for those new tariffs that will take effect here soon to be at least as big as what the prior tariffs had been -- 232 and the List 1 and List 2 of 301. And so our teams are working hard to mitigate it, just as they did on the previous tariffs. We will be pursuing cost mitigation with the suppliers, reengineering on some of those cost opportunities, and then ultimately negotiating with the vendors and pricing where necessary. So, we certainly aren't meaning to indicate that there's not an offset to the tariffs. There always will be and we will strive to fully offset them whenever we can. But there is a risk, certainly, from the new tariffs and it's sizable.
Scott Stember--C.L. King & Associates -- Analyst
Got it. That's all I have. Thank you.
Michael Happe--President and Chief Executive Officer
Yeah. Thanks, Scott.
Operator
Thank you. And our next question comes from Tristan Thomas with BMO Capital Markets. Your line is now open.
Tristan Thomas--BMO Capital Markets -- Analyst
Good morning.
Michael Happe--President and Chief Executive Officer
Good morning.
Tristan Thomas--BMO Capital Markets -- Analyst
Can you just -- maybe I misheard this. The 10% to 15% from the chassis impact, that was in total motor home revenue not Class B revenue?
Bryan Hughes--Vice President and Chief Financial Officer
That was total motor home segment, yes.
Tristan Thomas--BMO Capital Markets -- Analyst
Okay. Got it. And then just kind of moving forward on that, we're seeing a lot of new entrants in Class Bs, really strong consumer demand. What are you changing to make sure you don't have chassis shortages in the future?
Michael Happe--President and Chief Executive Officer
Well, I mean, we are working very closely with all of our chassis suppliers, not just on Class B but for the entire motorized business. And I would argue we've never been closer with this particular supplier which has had some challenges in the last several months. And certainly, we've been one of the pioneers in this category. We understand, though, that there will be several new and increased competitive activity from others in the market. But we believe that our engineers and our product development resources combined with our sourcing relationships with these key suppliers will continue to put us in good position to not only develop the value proposition that we think will be competitive but that we'll be able to get our fair share of chassis from many of these manufacturers.
And there have been investments in capacity expansion from some of the chassis manufacturers in this space and so that should be positive for probably not just the RV industry but probably other industries that might use these platforms. So, it's a fair question and it's one that we do think about. And we feel confident that if we do our job having a strategic relationship on a regular basis with these companies, we'll stay ahead of the business, give them good forecasts, and, in turn, they'll be good suppliers and ensure that they meet our forecasts. But time will tell. But, to date, we've been able to stay ahead of it, again, with the exception of this disruption in the last couple of months.
Tristan Thomas--BMO Capital Markets -- Analyst
Okay. Got it. Piggybacking off Scott's question, I know you mentioned tariffs, one of the possible offsets is raising prices. I was just wondering how much more can you increase pricing without having an impact on retail.
Michael Happe--President and Chief Executive Officer
Yeah, that's a great question as well. And I will tell you that, not just for Winnebago Industries but for probably all other durable goods manufacturers in other industries that are impacted by potential rising costs in materials due to tariffs, that is the million dollar question. We have always taken the stance here at Winnebago, at least in the last three years, to try to price to the market as opposed to price to cost. Now, that's easy to say but you're certainly cognizant of your costs as you devise your pricing strategies.
I am concerned that, both as a company with our brands, that we have reached some of the outer limits of pricing elasticity, in terms of asking for a premium over some of our competitive brands. And so our potential to price is probably more limited today than it was two years ago because of that. I also think the broader concern -- and I do think it's had an impact on retail results to date in the industry and especially in calendar '19 -- is that it just generally raises the price of RVs overall to the end customer. And every $10, every $100, every $1000 that a product goes up in price in the market, it does have an impact.
And while there have been a lot of comments generally about inflation not being an issue in the broader U.S. economy yet, I personally am not sure that that's the case in the RV industry. I do think some of the product pricing inflation has had an impact on slowing retail here in the last year. And I think all of the RV manufacturers are going to be very intentional with how they price going forward in light of this. So, yes, it is a bigger challenge for us going forward than it ever has been.
Tristan Thomas--BMO Capital Markets -- Analyst
Okay. I'm gonna sneak one more in here. You talked a lot about kind of the inventory dealer destocking, where that is. I'm just curious where you guys think you stand.
Michael Happe--President and Chief Executive Officer
We have maintained all along that we've been in a better position than most of our competitors. And I would tell you, we probably haven't done this chart here recently from an IR standpoint and we can probably do it, but our inventory position on a consolidated company basis has continued to fall quarter-over-quarter, in terms of comparisons versus a year ago. And I would tell you, in the Winnebago branded businesses especially, our inventory is behind a year ago. It's lower than a year ago. In the Grand Design business, it still remains higher than a year ago but that's particularly Grand Design because of the incredible retail success that that brand continues to have.
So, probably the biggest thing that we pay attention to today is the aging inventory. And we have a number of programs in place in some places, particularly on the Winnebago side, to make sure that the aging inventory that we do see in the dealer channels are addressed. I'm pleased to report, on the Grand Design side, that aging inventory, while a little elevated from a year ago, is probably significantly lower than most of the rest of the industry. So, we're watching both but it's a position that we still feel comfortable with at this time.
Tristan Thomas--BMO Capital Markets -- Analyst
Okay. Got it. Thanks.
Michael Happe--President and Chief Executive Officer
Thank you.
Operator
Thank you. And our next question comes from Michael Swartz with SunTrust. Your line is now open.
Lucas Servera--SunTrust Robinson Humphrey -- Analyst
Hey, guys, good morning. This is Lucas on for Mike. How are you?
Michael Happe--President and Chief Executive Officer
Good morning.
Bryan Hughes--Vice President and Chief Financial Officer
Good. Good morning.
Lucas Servera--SunTrust Robinson Humphrey -- Analyst
I just had a quick one on imported raw material costs. With some of the major commodities pulling back on pricing recently, do you guys expect to see any benefit of that in the upcoming quarters and are you able to quantify it?
Bryan Hughes--Vice President and Chief Financial Officer
Yeah, I think the easing of the commodities will help be one of those mitigating impacts to tariffs, broadly speaking, in our cost inputs. That has been the case on a year-to-date basis, calendar year-to-date basis here in '19 as commodities have eased. It has certainly helped our overall equation and offset some of those tariffs that have been in place. And I expect that that will continue. I guess that's the way I'm looking at it right now. I look at it on a blended and overall basis, so you've got some commodities easing and then you've got pressure in other areas.
Lucas Servera--SunTrust Robinson Humphrey -- Analyst
Got it. All right. Thank you. That's all I had.
Bryan Hughes--Vice President and Chief Financial Officer
Thanks, Lucas.
Operator
Thank you. And our next question comes from Steve O'Hara with Sidoti and Company. Your line is now open.
Stephen O'Hara--Sidoti & Company -- Analyst
Hi. Can you hear me?
Bryan Hughes--Vice President and Chief Financial Officer
We can, Steve. Good morning.
Stephen O'Hara--Sidoti & Company -- Analyst
Hi. Good morning. I was just curious, on the capacity expansion that you talked about, can you maybe frame that in terms of maybe the increase in square feet or increase in production capacity roughly? I know it's kind of a slippery figure to get around.
Michael Happe--President and Chief Executive Officer
I think, Steve, what we'll probably do is I'll ask Steve Stuber here to probably touch base with you and any others on the call that want to gain that information. We can give you a percentage in terms of increase in overall square footage but I'm not sure that that's the right way to think about that quite yet. There will be a ramp-up and production rates, depending on product, could vary. But I would say, as a percentage increase, the Chris-Craft capacity increase is a much bigger percentage of their business than the Grand Design is of that particular brand's business. And so, obviously, one is much bigger than the other, undoubtedly, but it's a major move for the Chris-Craft business. It's a material move for the Grand Design business. So, they're both important but I'll ask Steve to try to figure out how we can maybe give you some more context on that in terms of our overall capacity.
Stephen O'Hara--Sidoti & Company -- Analyst
And then maybe just a follow-up on the tariff-related question. I mean, how hard is it -- or is the industry maybe working on alternate sourcing for some of these commodities that you guys are concerned with on the tariff side? Where are we in that process and what's the potential benefit down the road at some point? Thank you.
Michael Happe--President and Chief Executive Officer
Yeah. That is also a very popular question, as obviously you realize as well. Our company is also looking at other choices for those particular products that come from countries that a tariff is being implemented on. In some cases, we do have choices and we are, as we speak, exploring some of those options. But there are other categories of products where the options are either limited, in terms of just true, legitimate alternatives, or the time and investment it would take to relocate that part and find and put a new supplier into the business is potentially not reasonable in terms of making that move.
So, you and our other investors can be assured that our teams are looking at those alternatives but there are, unfortunately, some components where it's much harder to do that than others. As an overall manufacturer, we don't own plants in China. We do not own plants in Mexico. So, we don't have the ability, in many cases, to kind of up and move those ourselves. These are usually important and good conversations with our suppliers about our alternatives. And, in fact, some of our suppliers are thinking about that same question themselves as they're having to have these conversations with their customers as well.
Stephen O'Hara--Sidoti & Company -- Analyst
Okay. All right. Thank you very much.
Operator
Thank you. And our next question comes from Bret Jordan with Jefferies. Your line is now open.
Bret Jordan--Jefferies -- Analyst
Hey, good morning, guys.
Michael Happe--President and Chief Executive Officer
Good morning, Bret. Welcome to the team.
Bret Jordan--Jefferies -- Analyst
Thanks. In the last quarter, you talked about conversion trends at retail. And, I guess, do you have any sequential commentary? It sounds like maybe people didn't show up because it was raining but do you have any sort of feedback on the probability of buying when they did show up at the retail level?
Michael Happe--President and Chief Executive Officer
No, I do not have any hard data on that. We generally have a hard time tracking traffic to retail conversion from a very quantitative standpoint. I would just say, in general, that the retail environment this year for higher ticket, consumer discretionary goods, both on the recreational vehicle side but also the boating side, has been just a little bit more difficult to close. In many of my conversations with dealers, the principles or sales managers often struggle to even articulate exactly why that is except that the consumer just doesn't take that credit card out at the end and close the sale. And so we've hypothesized that it could be any number of factors -- general anxiety, increased prices, rising rates on financing vehicles, the equity markets continuing to be volatile, although they've been better as of late. So, no, unfortunately, we don't have any great data to give you on that other than, anecdotally, it's probably not a whole lot dissimilar here in June than it was in April.
Bret Jordan--Jefferies -- Analyst
Okay. Great. I guess that was sort of my follow-up question. Now, with another quarter of recreational marine under your belt, what's your take on that? I guess, is the cyclicality of marine less than RV because it's a higher socioeconomic buyer or, I guess, how do you compare the two from a cyclical standpoint?
Michael Happe--President and Chief Executive Officer
Yeah. I mean, I think we continue to take the mindset that the RV industry and the boating industry are very similar, in terms of cyclicality, and that the real answer to that question, you probably have to drill down to what category you're looking at. In the marine industry, there are particular segments which have been hanging in there and better as of late. Surf and wake has been one. Pontoons has been a little bit inconsistent but they've generally ran stronger the last year.
What we found with the Chris-Craft brand -- and, remember, we're generally the Aston Martin of the 20-40 foot fiberglass outboard and inboard category -- that our customers are still present, most of our customers in that business pay with cash, and that the dealer improvements that we're making, in terms of working with our current dealers and upgrading our dealers in certain markets, is resulting in a still robust business there. And we were also pleased that some of the tariffs from some of the other countries, particularly Canada, have been rescinded so that those products can begin to flow back into those countries as well. So, yes, very similar in cyclicality but Chris-Craft is probably like Grand Design in our RV business in that they have enough current momentum and are doing enough of the right things that they're able to swim against some of the recent challenges in both of those sectors.
Bret Jordan--Jefferies -- Analyst
Okay. Great. Thank you.
Operator
Thank you. And our next question comes from Brandon Rolle with Northcoast Research. Your line is now open.
Brandon Rolle--Northcoast Research -- Analyst
Good morning. Most of my questions have been asked. But on the RV side, I was gonna ask, could you talk about the promotional activity in the market right now and how you see that playing out as, hopefully, retail improves throughout the year? Thanks.
Michael Happe--President and Chief Executive Officer
Yeah, the promotional activity in the RV market continues to be very present, albeit I think we have noticed a little bit of a change here as we enter the summer months. I think the promotional activity is becoming more targeted at retail, specifically around some of the aging product. We have seen, I think, a slight deceleration on some of the pushing of product into the market, as some of our larger competitors, I believe, have done a better job of seeing their inventories normalize, both in their lots but also on their dealers' lots.
And so I think the promotional activity you're seeing now is starting to trend toward products that are stuck in either an OEM or on a dealer lot. And you're seeing a lot more product-specific SPIFs for dealer salespeople against aging inventory. Or a particular OEM may have overbuilt a little bit on a particular brand or floorplan or model and you're seeing a push to get that specific product out.
I think the industry is generally going to ride out the summer months on the recreational vehicle side. Hopefully, retail continues to slightly improve through the summer months at retail, the levels of inventory in the field continue to work their way down. And I think we're really gearing up for a quite interesting and potentially strong open house in September as dealers wait for that next industry event to potentially bring a lot of stocking orders back to the OEMs.
Brandon Rolle--Northcoast Research -- Analyst
Okay. Great. Thank you.
Operator
Thank you. And our next question comes from David Whiston with Morningstar. Your line is open.
David Whiston--Morningstar -- Analyst
Good morning. Thanks for getting me in. Just two questions. First is on the working capital. Looking at the cash flow statement and just doing the math to isolate third quarter, year-over-year, it looks like there was a pretty bad headwind, particularly around receivables. And is that primarily the Class B issue or something else?
Bryan Hughes--Vice President and Chief Financial Officer
Yeah. Thanks, David, this is Bryan. The receivables issue was notably related to our rental business, in particular, at the end of the month, which shipped toward the end of the quarter. Rental business is focused in typically the April-May timeframe, in terms of when it is delivered. And we noted a spike in receivables right at the end of the May, there at the end of our quarter, related to that business in particular. And so it's hard to characterize or point your finger at one specific thing but that was an item that jumped out as we analyzed it.
David Whiston--Morningstar -- Analyst
Okay. Thanks. And this other one's probably for Mike, just on your consumer segments -- Millennial, baby boomer, etc. Can you just talk very briefly about what does the Millennial RV customer want that's maybe different from your other customer groups?
Michael Happe--President and Chief Executive Officer
Yeah, David, I think the thing that comes to mind -- or two things -- right off the bat, thinking out loud to that question. One is their comfort with technology and their desire to be in touch with their family and friends from the road. And so, certainly, that is not only affecting the products that we design but it's also affecting the campgrounds in which they stay and the National Park System, which has holes in its Wi-Fi or broadband infrastructure as well. So, that's one thing.
I would say the other thing that we spend a lot of time thinking about is -- I hate to stereotype -- but, generally, the younger consumers are less comfortable with doing work themselves in order to make sure the product works to their liking. And so just the way cabinets open today are different and the way we think about serviceability and what the dealer will touch and what the customer will touch.
I would say that they're not yet viewed as disposable products but there's been a lot of articles written, I know, and there are companies like Outdoorsy which are much closer to this than we are, about the "try it before you buy it" trend in RVs. And probably in a lot of other categories, including automobiles. And so this phenomenon of making sure that they're getting almost a maintenance-free experience and that they can experience the product potentially before they buy it are things that we're tracking.
People have talked about Millennials in terms of deferred home ownership for some time. That may, in fact, be a trend on RV ownership as well that we have to watch, particularly in some of the larger motor home segments. So, those are things that come to mind -- technology, maintenance, try before you buy. Those are probably three things, David, that I can think about that we're thinking about in terms of that segment of customer.
David Whiston--Morningstar -- Analyst
Okay. Helpful. Thank you.
Michael Happe--President and Chief Executive Officer
Thank you.
Operator
Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Steve Stuber for any closing remarks.
Steve Stuber--Director of Financial Planning, Analysis, and Investor Relations
Great. Thank you, everyone, for joining our call today. We look forward to speaking with many of you throughout the quarter. Have a great day.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone, have a wonderful day.
Duration:67 minutes
Steve Stuber--Director of Financial Planning, Analysis, and Investor Relations
Michael Happe--President and Chief Executive Officer
Bryan Hughes--Vice President and Chief Financial Officer
Craig Kennison--Robert W. Baird & Co. -- Analyst
Scott Stember--C.L. King & Associates -- Analyst
Tristan Thomas--BMO Capital Markets -- Analyst
Lucas Servera--SunTrust Robinson Humphrey -- Analyst
Stephen O'Hara--Sidoti & Company -- Analyst
Bret Jordan--Jefferies -- Analyst
Brandon Rolle--Northcoast Research -- Analyst
David Whiston--Morningstar -- Analyst
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Micron Stock Presents Too Much of a Trading Conundrum
Micron (NASDAQ: MU ) is playing a game most investors won’t be willing to concede. Indeed, it’s a game most investors don’t even know they’re playing. But betting on MU stock isn’t a value-minded play. It’s not even a bet on rebounding DRAM prices. It’s a bet on how other investors are going to perceive Micron’s prospects at some point in the foreseeable future. Near-Term Pain Will Shift To Longer-Term Benefits For MU Stock Investors Source: Shutterstock And that’s a very tricky game to play. It was almost starting to make sense right before two curve balls were thrown.The first curve ball is, of course, a trade war that took dead aim at China’s consumer-tech outfit Huawei , which by itself accounts for — or accounted for — 13% of Micron’s revenue . The other curve ball is the advent of China’s new DRAM maker Changxin Memory , which should be able to scoop up from Chinese business from Micron InvestorPlace - Stock Market News, Stock Advice & Trading Tips Largely lost in the discussion is the fact that MU stock is now trading at what can only be described as a stupidly low trailing P/E of 3.1. The forward-looking P/E of 8 makes it more than twice as expensive into its most plausible future, though that’s still dirt cheap. According to Bank of America Merrill Lynch that valuation says the worst-case scenario is more than priced in . TheStreet’s Tiernan Ray agrees , adding a psychological element to the matter:”With no remedy to DRAM’s woes this year, it certainly seems the bears have been given just about everything they could hope for in terms of bad news. That may mean a pick-up in shares as the market discounts better times in 2020.” 7 Value Stocks to Buy for the Second Half It seems counterintuitive, at first, and perhaps it is. It’sa perfect synopsis of the headache at hand. The cyclical bottom for DRAM prices and the cyclical bottom in bearish sentiment surrounding MU stock aren’t even close to being synchronized. Story continues The added trouble is, nobody truly knows how close we are to either bottom. It’s entirely possible both are behind us. MU Stock Investors Have Selective Vision It’s not as if investors haven’t struggled with erroneously estimating the depths of trouble before. When computer sales peaked in 2011, shares of the HewlettPackard arm that eventually became the consumer-oriented HP (NYSE: HPQ ) initially tumbled, but turned around between 2013 and 2014. PC and laptop sales not only continued to fall, they began to slide in earnest in 2015, wiping away a huge chunk of that rebound. HPQ has since recovered, making a turnaround move in 2016 that persisted through most of 2018. The point isinvestors confused hope with results. Another case of misguided assumptions involves General Electric (NYSE: GE ). Although shares of the iconic blue chip turned around in 2009 like most other stocks did, neither sales nor earnings have grown since 2008. And that’s even after stripping out the impact of divestitures. Investors largely convinced themselves for years that GE would work its way out of trouble, until 2017 when it became clear that wasn’t going to happen. The 80% rout suffered during the second half of 2018 essentially priced in eight years’ worth of deteriorating results too few people were willing to see. Neither comparison is a carbon copy of what’s making Micron stock so tough to handicap now, though the underpinnings are the same. Namely, investors see the facts they want to believe, and ignore the facts that might conflict with their established conceptions. The masses have largely convinced themselves that Micron is unsalvageable right now. They hold up Changxin Memory and the trade war as evidence, all the while ignoring the fact that Changxin’s IP leaves something to be desired, and that the trade war could end at any time as long as an unpredictable President Donald Trump occupies the White House. Meanwhile, DRAM prices are still falling. That’s leading many would-be buyers to assume they’ll fall in perpetuity, though that’s clearly not going to be the case. None of those factors are minor matters. Bottom Line for MU Stock It’s not a bearish or a bullish call. It’s just a much-needed reminder to not assume the rhetoric surrounding any stock at any given time is accurate. It might be, but it may well not be. And when that stock is a well-watched ticker like MU stock that inherently inspires emotional responses, the rhetoric is all the more skewed. There’s no denying the stock’s trading at bargain prices right now. Bank of America and Tiernan Ray are both right in that regard. The value argument holds water, even if the DRAM glut and the tariff standoff persist. Value isn’t enough though. As irrational as the doubts working against Micron right now may be, as John Maynard Keynes told us decades ago, “the market can stay irrational longer than you can stay solvent.” The best course of action here may be to not play the game at all but to find another stock that’s proving more predictable. As of this writing, James Brumley held no positions in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com , or follow him on Twitter at @jbrumley. More From InvestorPlace 4 Top American Penny Pot Stocks (Buy Before June 21) 7 Value Stocks to Buy for the Second Half 7 Hot Stocks to Buy for a Seemingly Sleepy Summer 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post Micron Stock Presents Too Much of a Trading Conundrum appeared first on InvestorPlace . |
If You Like EPS Growth Then Check Out BayCom (NASDAQ:BCML) Before It's Too Late
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It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested inBayCom(NASDAQ:BCML). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Check out our latest analysis for BayCom
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. It's no surprise, then, that I like to invest in companies with EPS growth. It certainly is nice to see that BayCom has managed to grow EPS by 33% per year over three years. As a general rule, we'd say that if a company can keep upthatsort of growth, shareholders will be smiling.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of BayCom's revenue this year is revenuefrom operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. BayCom maintained stable EBIT margins over the last year, all while growing revenue 16% to US$59m. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want tocheck this interactive graph of professional analyst EPS forecasts for BayCom.
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Like a sturdy phalanx BayCom insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the President, George Guarini, paid US$54k to buy shares at an average price of US$22.49.
Along with the insider buying, another encouraging sign for BayCom is that insiders, as a group, have a considerable shareholding. Indeed, they hold US$15m worth of its stock. That's a lot of money, and no small incentive to work hard. Those holdings account for over 5.6% of the company; visible skin in the game.
For growth investors like me, BayCom's raw rate of earnings growth is a beacon in the night. The cranberry sauce on the turkey is that insiders own a bunch of shares, and one has been buying more. So it's fair to say I think this stock may well deserve a spot on your watchlist. Of course, just because BayCom is growing does not mean it is undervalued. If you're wondering about the valuation, check outthis gauge of its price-to-earnings ratio, as compared to its industry.
The good news is that BayCom is not the only growth stock with insider buying. Here'sa a list of them... with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
New York allowed driver's licenses for undocumented immigrants. Is New Jersey next?
NEPTUNE, N.J. A day after New York became the 13th state to allow undocumented immigrants to apply for driver's licenses , New Jersey's advocates renewed calls on Tuesday for the Garden State to be next . "We applaud this historic victory for immigrants and for everyone that cares about respect, dignity and safety in New York,'' said Olga Armas, a leader of Make the Road New Jersey, which has lobbied for the change. "This fight has been waged for more than a decade in New Jersey, and it has never been more urgent." But advocates will have to wait. A bill introduced last year to make driver's licenses available to immigrants without legal status remains in review, Liza Acevedo, a spokeswoman for Assembly Speaker Craig Coughlin, D-Middlesex, said Tuesday. In New Jersey, state lawmakers introduced a bill in November that would, in part, let immigrants without legal status, certain senior citizens and others lacking documentation get a license that could be used only for driving, and not for other purposes. Gov. Phil Murphy, a Democrat, has said it's an idea he would support. The divisive measure, though, has stalled, with some political observers saying that the proximity of November elections is contributing to the delay. All 80 seats in the state's Assembly will be on the ballot, and observers expect Coughlin, the speaker, to stay clear of the driver's license bill as it could make Democratic lawmakers targets of attack ads. More: New York allows undocumented immigrants to apply for driver's licenses Fraud found when states grant the licenses As was seen in New York, advocates of New Jersey's bill have ramped up efforts in recent months by organizing rallies and marches : This past Sunday, on Fathers Day, advocates held a rally outside Coughlin's district office in Woodbridge, New Jersey, that drew hundreds. Proponents of the bill argue that extending drivers licenses to undocumented immigrants would increase public safety and boost the economy as new licensees buy car insurance, vehicles, gasoline and auto parts. Story continues Undocumented immigrants struggle every day without having a drivers license because they have to take their children to school and doctor appointments, as well as get to work every day, proponents say. Opponents of the proposal said it prioritizes immigrants without legal status above everyone else. Some have also said it would reward immigrants who have broken the law. Also, several states that have extended driving privileges to undocumented immigrants have discovered cases of fraud. In Vermont, for instance, state residents who dont have permission to live in the country can apply for a form of identification called a driving privilege card. Since Vermont began issuing the cards in 2014, its Department of Motor Vehicles has found that residents from other states have applied for and received licenses that have had to be canceled. In Maryland, which also started issuing drivers licenses and identification cards to undocumented immigrants in 2014, an audit of the Motor Vehicle Administration a few years later found that 826 drivers licenses and identification cards had been issued in a six-month period to people who had presented counterfeit documentation. As a result of an internal investigation, 270 fraudulent licenses were canceled. The problems in Maryland continue: This past October, a 38-year-old woman was charged with multiple fraud counts for selling fake bank statements and utility bills so out-of-state residents could get drivers licenses, police said. 220,000 residents could get the licenses New Jersey is home to an estimated 450,000 undocumented immigrants, and, according to the latest estimates from New Jersey Policy Perspective, a left-leaning think tank, 222,000 residents in the Garden State would obtain driver's licenses during the first three years if the measure is adopted. The bill is expected to generate $21 million in revenue from permit, title and drivers license fees in the first three years, according to an analysis by the group. Once the legislation is fully implemented, new drivers would generate $90 million annually from registration fees, the gas tax, and the sales tax on purchases made at gas stations and motor vehicle and auto parts, according to the analysis. Frequently asked questions about the New Jersey bill: Which states allow undocumented immigrants to obtain drivers licenses? New York this week became the latest state to extend driver's licenses to immigrants without legal status. It joins Washington, D.C., and the states of California, Connecticut, Colorado, Delaware, Hawaii, Illinois, Maryland, Nevada, New Mexico, Utah, Vermont and Washington. Could undocumented immigrants' information used to obtain the licenses be shared with other agencies? The measure as introduced states any personal information shall not be disclosed for purposes of "investigation, arrest, citation, prosecution, or detention" related to an applicants citizenship or immigration status without the consent of the driver's license holder or a valid court order or subpoena. How will the proposal be implemented as law? The bill calls for the Motor Vehicle Commission to establish the documentation for applicants to obtain a driver's license. Documents would have to verify an applicant's identity and that the person resides in New Jersey. Licenses issued under the measure would bear a unique "design or color" to indicate that it cannot be used for federal purposes. This article originally appeared on North Jersey Record: New York allowed driver's licenses for undocumented immigrants. Is New Jersey next? |
Meghan McCain yells at Joy Behar on The View: 'Don't feel bad for me, b****!'
The View co-hosts Meghan McCain and Joy Behar go head-to-head on air regularly, but a conflict between the two became extra heated Wednesday morning over a political discussion that devolved into a screaming match, and McCain even snapping when fellow co-host Whoopi Goldberg tried to defuse the situation. The fireworks began when the panel discussed the size of President Trump’s crowd at a rally in Orlando Tuesday evening, at which the president “officially” announced his 2020 bid for reelection. McCain, who has continually voiced her opposition to the president — and his rather generous estimation of his crowd sizes — nonetheless said that there were people lined up “40 hours before the event” in Florida. Behar chimed in with the accusation that people were “bussed in” to increase the number of attendees for the president’s 2020 kickoff efforts. Things went downhill from there, with the liberal Behar and conservative McCain escalating both their rhetoric and volumes. “I know you’re angry. I get that you’re angry that Trump’s president, like a lot of people are,” McCain said to Behar . “But I don’t think yelling at me is going to fix the problem, OK? … I’m trying to explain why 2020 is not in the bag for you! It’s not!” Seeking to lower the temperature around the table, Goldberg tried to calm things, but McCain didn’t back down, shooting the comment “Don’t feel bad for me, b****! I get paid to do this!” at Behar before Goldberg hurried the show into a commercial break. After the ad break, McCain said that she uses the word regularly — and does so in a friendly fashion with Behar on a regular basis. “Joy and I call each other b**** all the time,” she said. “I know this is a big shock: We get along backstage!” “We’re both pugilistic, and so we’re fine. I’m very straight in what I believe, and so is she, so we’re going to fight,” added Behar. “I don’t care if you call me a b****.” “It’s almost 2020, and women can debate on TV in a spirited way without it being personal,” McCain continued. Story continues It’s far from the first on-air spat between The View co-hosts. In April they fought about their supposed levels of intelligence while discussing democratic socialism, with the audience eventually booing McCain. Following the incident, a social media campaign was launched with the express purpose of pressuring ABC to fire McCain from the morning chat show. McCain also revealed that the two co-hosts also often spar backstage as well. Despite being a conservative and the daughter of late Republican Sen. John McCain of Arizona, Meghan McCain has consistently voiced her opposition to President Trump’s policies and comments about her father, including that he liked people “who weren’t captured” during the Vietnam War. Trump was infamously not invited to the senator’s funeral at the National Cathedral last summer, during which he was eulogized by former presidents Barack Obama and George W. Bush, both of whom were onetime political foes of McCain. Trump’s feud with the late senator has continued even after his death. During a recent trip to Japan, the administration pressured the Navy to “hide” the vessel USS John McCain from sight during the president’s visit. Read more from Yahoo Entertainment: Bette Midler writes anti-Trump poem: 'There once was a girl from Slovenia' Kathy Griffin pens tribute post to Gloria Vanderbilt despite falling out with Anderson Cooper Kevin Sorbo goes off on Democratic party over abortion, immigration: 'Build the wall' Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyle's newsletter. |
Why Is Everyone Talking About CEO Pay?
Earlier this year, 57% of Disney shareholders approved a compensation package for CEO Bob Iger that will be worth as much as $35 million. That’s for one year’s worth of work, mind you. Abigail Disney, filmmaker, philanthropist and granddaughter and grand niece of company co-founders Roy and Walt Disney, responded that CEOs "in general are paid far too much." Though she did not single out Iger, she added that "if your CEO salary is at 700, 600, 500 times your median workers' pay, there is nobody on Earth—Jesus Christ himself isn't worth 500 times his median workers' pay." It can be difficult to know when an idea has fully entered the contemporary zeitgeist. But when even a Disney heiress thinks that CEOs are wildly overpaid, it is safe to say that something is up. And as recently outlined in our explainer on proxy voting, executive pay, or “Say on Pay,” is another issue where you as a shareholder can weigh in. How did executive compensation become such a hot topic? Though it is hardly a new phenomenon, income inequality—or the pooling of wealth among a sliver, or “1 percent,” of the population— wasn’t something talked about widely for a long time. But the topic re-entered the national conversation during Senator Bernie Sanders first campaign for President, and it is a theme he has returned to repeatedly during his current run. Last year he introduced the 'Stop BEZOS Act' in the Senate, which was meant to highlight what he felt was the perceived disparity between Amazon chief executive Jeff Bezos, the richest man in the world, and the wages of Amazon workers, many of whom reportedly rely on food stamps to make ends meet. The bill called for large employers like Amazon and Walmart to reimburse the government for food stamps, public housing, Medicaid and other federal assistance received by their workers. In response, Bezos raised Amazon workers' wages to $15 an hour. Regardless of your opinion on Sanders and his politics, he seemingly tapped into a raw cultural nerve, and has continued to draw attention to low hourly minimum wage for workers at other companies. He appeared at Walmart’s 2019 shareholder meeting and held a town hall at McDonald’s ’meeting, calling for both companies to raise worker pay to $15 an hour. Sanders is also not the only one questioning the gap between the pay of CEOs and rank-and-file employees. Since 2015, the shareholder advocacy non-profit As You Sow has been ranking “The 100 Most Overpaid CEOs” using a formula that contrasts "excess CEO pay assuming such pay is related to total shareholder return" and "companies where the most shares were voted against the CEO pay package," then lists "the company, the CEO and his pay as reported at the annual shareholder meeting, and the pay of the company’s median employee." Number one with a bullet (or lucrative bonus, as it were) is Fleetcor Technologies’ CEO Ronald F. Clarke, who boasts a CEO-to-median-worker-pay ratio of 1,517. Why did pay ratio become a thing? Dodd-Frank. Introduced by Congressman Barney Frank and Senator Chris Dodd (with input from Senator and now-Presidential Candidate Elizabeth Warren), the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 requires publicly traded companies to disclose their chief executive’s compensation in terms of the median salary of its employees. It was enacted in response to the 2008 economic collapse. As recently reported by The Financial Times, “the median chief executive pay ratio for 2018 was 254:1.” 2018 was the first full year reported, but it’s worth noting that the reported ratio was “235:1 in 2017, when only two-thirds of the companies it tracks disclosed such figures.” So things have gone up a bit. But as reported by MarketWatch, even close to a decade "after the passage of the reform law, 5 of 12 mandatory executive compensation rules remain to be approved by the Securities and Exchange Commission." While Dodd-Frank requires companies to be transparent about CEO pay, the act was also intended to curb excessive executive pay. As its supporters argue, extravagant salaries incentivize the sort of short-term, risky behavior that led to the grave effects of 2008 in the first place. Astronomical executive pay wasn’t exactly reined in. As you probably surmised already. As noted in the MarketWatch piece, "The Securities Industry and Financial Markets Association, whose members include the largest broker-dealers, provided comments to all of the regulators responsible for drafting and approving the incentive compensations rules for financial institutions, saying they would have a significant negative impact on financial institutions’ ability to recruit and retain top talent." The SEC did not adopt rules that would curb CEO pay. How did we get here, anyway? No CEO wants to feel like he or she is being underpaid. Or, more plainly, the attitude is “if you have it, I want it too.” Poynter recently talked to corporate governance expert Charles Elson about why CEO pay is so high in the United States, as opposed to other countries. “‘It’s all about peer groups,’ said Elson. Consultants and a board compensation committee first compile a list of as many as a dozen comparable companies and what their CEOs make. ‘Then they pay their own CEO 50 percent of that figure or higher.’” The result has been a steep rise in CEO pay, even as wages for most Americans have remained stalled for decades. As noted by Forbes, a 2017 report by the The Economic Policy Institute, shows “CEO pay in the US peaked in 2000 at $20.7 million (in 2016 dollars), 376 times the pay of the typical worker. In 1995, the CEO-to-worker pay ratio was 123-to-1; in 1989, it was 59-to-1; in 1978, it was 30-to-1; and in 1965, it was... 20-to-1." So extravagant CEO salaries are a bad thing? It depends on whom you ask. Here’s a few of the arguments against super-duper CEO pay that have been making the rounds lately. The first and most obvious argument is that it is just a bad look for any company when its CEO is making exorbitantly more money than the average worker. It’s an especially bad look for a CEO to be raking it in while the company begins laying off employees, as happened recently with the video game company Activision Blizzard. It laid off 800 employees despite self-reported “record results in 2018." Don’t search social media for the reaction to this move, as it is not pretty. While it has never been a closely kept secret that CEOs earn more than anyone else at a company, thanks to Dodd-Frank, employees are now learning just how much more they are being paid. As reported by the Society for Human Resources Management , this could lead to a rise in employee dissatisfaction and low morale, which ultimately hurts productivity and retention. "’Employees will see quickly if they are paid more or less than the median employee, not only at your company but also at other organizations within the same industry or geography. This information may change their perceptions with regard to their current compensation,’ which could impact productivity and job satisfaction and lead to retention issues,” said Donna Westervelt, a principal at Conduent HR Services in New York City. CEO pay is generally tied to benchmarks the company must hit to justify high salaries and bonuses. But these targets, as Fortune has pointed out, are often low-bar, “mushily subjective or can be easily manipulated. If you want more sales, simply cut prices. If you want more cash flow, hold back investment.” What could be considered "mushily subjective"? One of the main mechanisms that companies use to hit goals is with stock buybacks. This is when a company uses excess cash reserves or profit to buy up its own shares on the public markets. With fewer shares on the market, buybacks tend to drive up the company’s stock price. Given that CEOs typically own company shares, and often have various stock option plans, stock buybacks tend to increase a CEOs’ wealth without increasing his or her salary. Critics of buybacks argue that cash reserves should not only go back to executives and investors but to employee compensation, research and development, long-term projects, and other areas that can help a business grow and become even more profitable in the long-term. Under this logic, long-term shareholders and the workers who help make their companies successful, would reap the benefits. Senators Sanders and Minority Leader Chuck Schumer have proposed legislation that, among other provisions, would prevent companies from buying back their own stock unless they raise their minimum wage to $15 an hour and increase health benefits. But investment guru Warren Buffett, CEO of Berkshire Hathaway Inc. and JPMorgan Chase CEO Jamie Dimon have both invested in buybacks in the past few years, arguing that they’re not examples of short-termism. It’s kinda become their thing. In a letter earlier this year to shareholders, Buffet argued that "Repurchases will benefit both those shareholders leaving the company and those who stay." In last year's JPMorgan Chase 2018 annual report, Dimon called buybacks "a no-brainer" and "an important tool that businesses must have to reallocate excess capital." He also noted that "Seven years ago, we offered an example of this: If we bought back a large block of stock at tangible book value, earnings and tangible book value per share would be substantially higher just four years later than without the buyback." It’s not just Buffet and huge banks, either—Apple is also big into buybacks, as CEO Tim Cook used the money the company saved from President Trump’s Tax Cuts and Jobs Act to scoop up $75 billion of the company’s own stock. OK, what about the argument for high CEO pay? There are lots of people in the “for” corner. Let’s use Iger’s pay at Disney as an example. Under his stewardship, Disney acquired both the Star Wars franchise and Marvel, the two biggest film properties on the planet. Since becoming CEO in 2005, he has led Disney to unparalleled success, and is at least partially responsible for bringing Groot onto the big screen, a titanic achievement. But while many critics think there is a reasonable limit to how much anyone can be rewarded, there are plenty of people who think sky-high CEO pay is just fine, thank you very much. The main argument for high CEO pay is that the market can justify it as a simple result of supply and demand. And what’s more, if a CEO is not paid his or her absolute highest worth, he or she can bring their talents to another company that will value them more. So if Iger isn’t getting his maximum bonus, he can just over to Netflix or HBO or whathaveyou. While some critics argue that CEOs would continue to work hard even if they were merely paid very well instead of very, very, very well, Investopedia sums up the more-is-best argument thusly: "Companies that come up with this justification say that by awarding a big part of an executive’s compensation in the form of stock grants, they are providing an incentive for him or her to run the company well and personally benefit, as well as reward shareholders." Take Tesla’s Elon Musk. He was last year’s highest-paid CEO. Tesla shareholders voted to approve a 10-year compensation plan valued at about $2.3 billion dollars in stock options, a number The New York Times called the biggest ever, noting that one of the reasons the package was deemed necessary was to require Musk to focus on Tesla and not go off to space: “The award’s structure was driven by concern that Mr. Musk’s attention could wander to his other ventures, like SpaceX, or that he could leave Tesla altogether.” The thing to keep in mind, however, is that Musk would only see that money if Tesla hit remarkably aggressive performance goals. In response, Musk said that he did not receive any money for performance-based compensation in 2018, tweeting “Tesla last year was actually net negative comp for me.” Might excessive CEO pay be a canary in the wealth-gap coal mine? Exorbitant CEO pay might not just hurt a company’s image and productivity. Some economic thinkers believe that excessive pay, as symptomatic of growing wealth disparity between the ultra-haves and the median/less-haves, might hurt society itself. As reported by MarketWatch, Ray Dalio, founder of hedge fund Bridgewater Associates, said that the ever-increasing wealth gap is threatening to put "the very existence of the United States at risk." Dalio posits that the wealth gap is the highest it has been since the 1930s and will “lead to increasing conflict, and, in the government, that manifests itself in the form of populism of the left and populism of the right and often in revolutions of one sort or another.” Some thinkers, like late M&T Bank CEO and billionaire Robert Wilmers, agreed with Dalio and warned in American Banker that widespread resentment of high CEO pay would inevitably lead to some sort of backlash and greater regulatory response. “It is easy to understand the widespread public resentment,” he wrote in 2014. “It is this sentiment that provides fuel for our elected officials and policymakers to call for more legislation and regulation, which is placing a costly burden on the engines of growth for our economy." Now, are CEOs the only people in the world that compromise the 1%s that have most of the wealth? Of course not. There are, obviously, others in the c-suite (Iger is certainly not the only person at Disney making ultra-bank), real-estate titans, and all sorts of financial wizards who make more money than most of the country. But high levels of CEO pay are now being reported on so frequently and making for eye-catching headlines, that they rapidly are becoming a sort of social shorthand for inequality as a whole. Is it fair that CEOs are quickly becoming a symbol for massive inequality and the huge chasm between the middle class and the rich? That is a debatable subject. Is it rapidly becoming the case in the mind of the American public? That seems much less debateable. So what can shareholders do about it? Whether high CEO pay rubs you the wrong way or inspires you, it is hard at this point to not have an opinion on the subject. You also have a say in the matter. While Dodd-Frank didn’t achieve all its goals, it wasn’t a goose egg either. It requires companies to allow shareholder “say-on-pay” votes at least once every three years as well as a “frequency” vote at least once every six years that allows shareholders to say how often they’d like to be given a say-on-pay vote. So remember, as a shareholder, you have a say in CEO pay. Whether you think that ultra, ultra rich should maybe be merely very rich or you think the sky’s the limit when it comes to these things, use your voice and cast your proxy vote. —Michael Tedder |
Is The Hanover Insurance Group, Inc. (NYSE:THG) An Attractive Dividend Stock?
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Today we'll take a closer look at The Hanover Insurance Group, Inc. (NYSE:THG) from a dividend investor's perspective. Owning a strong business and reinvesting the dividends is widely seen as an attractive way of growing your wealth. Yet sometimes, investors buy a popular dividend stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.
While Hanover Insurance Group's 1.9% dividend yield is not the highest, we think its lengthy payment history is quite interesting. The company also bought back stock equivalent to around 5.4% of market capitalisation this year. Some simple analysis can reduce the risk of holding Hanover Insurance Group for its dividend, and we'll focus on the most important aspects below.
Click the interactive chart for our full dividend analysis
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. In the last year, Hanover Insurance Group paid out 31% of its profit as dividends. This is a middling range that strikes a nice balance between paying dividends to shareholders, and retaining enough earnings to invest in future growth. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
We update our data on Hanover Insurance Group every 24 hours, so you can always getour latest analysis of its financial health, here.
One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. For the purpose of this article, we only scrutinise the last decade of Hanover Insurance Group's dividend payments. The dividend has been stable over the past 10 years, which is great. We think this could suggest some resilience to the business and its dividends. During the past ten-year period, the first annual payment was US$0.75 in 2009, compared to US$2.40 last year. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time.
With rapid dividend growth and no notable cuts to the dividend over a lengthy period of time, we think this company has a lot going for it.
Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. Hanover Insurance Group has grown its earnings per share at 5.9% per annum over the past five years. It's good to see decent earnings growth and a low payout ratio. Companies with these characteristics often display the fastest dividend growth over the long term - assuming earnings can be maintained, of course.
To summarise, shareholders should always check that Hanover Insurance Group's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. Firstly, we like that Hanover Insurance Group has a low and conservative payout ratio. Second, earnings growth has been mediocre, but at least the dividends have been relatively stable. Overall we think Hanover Insurance Group is an interesting dividend stock, although it could be better.
Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Hanover Insurance Groupfor freewith publicanalyst estimates for the company.
Looking for more high-yielding dividend ideas? Try ourcurated list of dividend stocks with a yield above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
5 Strong Buy Biotech Stocks for the Second Half
We are now approaching the second half of 2019. And it may well be time for a little portfolio rebalancing. If you are a fan of biotech stocks, then I would recommend taking a closer look at the stocks below. These 5 ‘Strong Buy’ biotech stocks all boast significant Street support. Plus these analysts are confident that juicy upside potential lies ahead. You have to be careful with biotechs. Big rewards can quickly turn to severe losses if trial data disappoints.
• 7 Value Stocks to Buy for the Second Half
This also means that biotech stocks operate independently of the broader market. Catalysts are more stock-specific, and it pays to be prepared. So that’s why I find it helpful to turn to the Street when it comes to deciding which biotechs make promising investing opportunities for 2H19. Let’s take a closer look at which top biotech stocks make the cut now:
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Source: Shutterstock
Global Blood Therapeutics Inc(NASDAQ:GBT) develops innovative treatments for rare blood diseases. After a meteoric share rise in 2017, GBT has continued to outperform. Most recently GBT revealed impressive results for voxelotor (GBT440). This is an oral, once-daily breakthrough treatment for sickle cell disease (SCD).
“Voxelotor improved clinical measures of hemolysis and demonstrated a favorable safety profile” commented Wedbush analystLiana Moussatos. She reiterated her GBT Buy rating with a $107 price target (97% upside potential).
However shares pulled back 6% following the event. Moussatos believes the weakness is “unwarranted, overdone, and should be used as a buying opportunity.” She is predicting a 2020 US launch, and $1 billion in gross worldwide sales by 2023. That rises to peak sales of $5 billion in 2027.
A similar message comes from William Blair’sRaju Prasad: “we believe that today’s sell-off is unwarranted given the totality of the data that points to a likely approval for voxelotor in 2020… given the effects across all subgroups in the study, the addressable market for the drug gives us confidence in its blockbuster potential.”
But don’t wait too long. The company has guided to a NDA [new drug application] submission for voxelotor in sickle cell disease under accelerated approval in 2H19. This could send shares soaring.
Out of 9 analysts covering the stock, 8 rate GBT a Buy. Meanwhile the $96 average analyst price target indicates upside potential of over 75%. Interested in Global Blood stock?Get the free GBT Stock Research Report.
Source: Shutterstock
Krystal Biotech Inc(NASDAQ:KRYS) is a gene-therapy company specializing in skin diseases. That includes DEB, an incurable, often fatal skin blistering condition caused by gene mutations, and ARCI a severe skin disorder that causes skin to scale. And from an investing perspective this is a top stock to buy now. All six analysts covering the stock rate KRYS a Buy. So no hold or sell ratings here. Plus the $44 price target indicates upside potential of 55%.
Five-star Chardan Capital analystGbola Amusahighlights KRYS as a ‘Chardan Top Pick for 2019.’ In a report on June 14 he reiterated his Buy rating with a Street-high $57 price target. That suggests shares can double from current levels! He notes that the European Medicines Agency (EMA) has now granted PRIME Designation to KB103 for the treatment of DEB.
“We continue to view PRIME designation (and corresponding RMAT/BTD in the US) as leading indicators we track closely for alpha generation in the gene therapy space” cheered the analyst. What’s more Krystal’s platform also has the potential to produce a topical gene-therapy for chronic wounds, which Amusa views as a potential blockbuster opportunity.
• 7 Hot Stocks to Buy for a Seemingly Sleepy Summer
Bottom line: “We would not be surprised if Krystal’s market cap crosses $1 billion by 2020E and now add that we would not be surprised if the company’s market cap crosses $1 billion in 2019E.”Get the KRYS Stock Research Report.
Source:Wikipedia
Iovance Biotherapeutics Inc(NASDAQ:IOVA) is working to cure cancer, via the patient’s own immune system. It is developing novel cancer immunotherapies based on tumor infiltrating lymphocytes (TIL). The goal: to fight solid tumors across many types of cancer. This includes metastatic melanoma, carcinoma of the head and neck and cervical cancer.
Now’s the time to climb on board a rising stock. Shares have exploded 148% year-to-date — but there’s still plenty of growth ahead. Indeed IOVA has received 9 recent buy ratings from the Street, hence its ‘Strong Buy’ consensus.
“We believe Iovance’s potential for meaningful market share within ACT-based [Adoptive cellular therapy] therapies in cancer is now starting to take shape in the solid tumor setting” enthuses HC Wainwright’sJoseph Pantginis. Following ASCO 2019, the analyst commented: “Iovance’s TIL products, LN-144 and LN-145, are continuing to deliver significant clinical promise in these two indications, and we believe investors are starting to recognize and reward it.”
“If we look at our broader thesis, we continue to view Iovance as a viable takeout candidate by Big Pharma” the analyst adds.
Looking ahead, there are a few catalysts coming up before YE19. These include discussions with the FDA on a registration path in cervical cancer (for LN-145). According to Pantginis, this could boost investor confidence on the future development of LN-145 and the clinical success of its trials.Get the IOVA Stock Research Report.
Source: Shutterstock
BioMarin Pharmaceutical Inc.(NASDAQ:BMRN) is seeking to develop treatments for rare diseases. The company already has seven products on the market, and a robust pipeline of clinical and pre-clinical candidates in development.
Most recently, the company announced positive 3-year clinical data from the ongoing Phase 1/2 study of Valrox gene therapy for Hemophilia A and positive initial Phase 3 data. However what stands out about BioMarin is its share price. And that the stock continues to look significantly undervalued.
JP Morgan’sCory Kasimovhas just held a call with management, and he addresses this point here. “Perhaps not surprisingly given that BMRN’s share price has been relatively range bound for the past 3 years, management does not believe they are getting enough credit for these opportunities and that competitive risks are overblown,” says the analyst.
“We tend to agree (especially with the former point) and have argued that BMRN is undervalued at these levels,” concludes Kasimov. Indeed, BMRN remains a high conviction long-term idea for the firm, thanks to its orphan-disease focused, diversified base business (>$1B in sales), growing commercial portfolio, and potentially disruptive late-stage pipeline.
This is a point echoed by the Street. “While valrox’s launch trajectory remains uncertain, there is little question that Hem A is a large market” comments Cowen & Co’sPhil Nadeau. So even modest uptake with a price point around $2MM would represent significant revenue explains the analyst. He continues to view BMRN shares as undervalued.
• 5 Stocks to Buy for $20 or Less
In total, 15 out of 16 analysts polled recently rate BMRN a ‘Buy.’ Their average price target of $125 translates into 48% upside potential.Get the BMRN Stock Research Report.
Last but by no means least comesDicerna Pharmaceuticals Inc(NASDAQ:DRNA). Shares have surged 48% year-to-date, and a further 40% upside lies ahead (say analysts). Dicerna delivers RNAi-based breakthrough therapies to improve lives. Essentially this involves turning off destructive disease processes by silencing underlying genes.
“We believe that Dicerna has the potential to become a significant competitor in the emerging field of RNAi) The field of RNA medicines is attractive due to its promise to address significant unmet medical needs in rare, liver, cardiometabolic, and respiratory diseases” explains Chardan Capital’sKeay Nakae.
Future updates for Dicerna’s pipeline programs should push shares higher over the next 12 months. Most notably, the first HBV (hepatitis B virus) patient data in 4Q19 represents a significant potential catalyst. Last month, Dicerna announced the initiation of dosing in about 18 chronic HBV patients. “Given the best-in-class preclinical RNAi data in two separate validated mouse models of HBV infection, we believe DCR-HBVS is likely to demonstrate a substantial reduction in HbsAg” writes top-rated HC Wainwright analystEd Arce.
And Dicerna is making sure it has a strong foundation from the offset. In just the last couple of weeks it has appointed a number of key execs. That includes Rob Ciappenelli as COO and Steven Kates as VP of regulatory affairs. “We regard this expansion of senior management roles as critical to minimizing ongoing regulatory risk, while maximizing patient engagement” says Arce.
“These new appointments help ensure the right capabilities are in place for both the FDA [application] review… and for a well-planned and efficient product launch” the analyst told investors.Get the DRNA Stock Research Report.
See what the experts are saying about your stocks now atTipRanks.com. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.
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Is Bioanalytical Systems, Inc.'s (NASDAQ:BASI) Balance Sheet Strong Enough To Weather A Storm?
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Bioanalytical Systems, Inc. (NASDAQ:BASI) is a small-cap stock with a market capitalization of US$21m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that BASI is not presently profitable, it’s vital to assess the current state of its operations and pathway to profitability. We'll look at some basic checks that can form a snapshot the company’s financial strength. However, potential investors would need to take a closer look, and I suggest youdig deeper yourself into BASI here.
Over the past year, BASI has ramped up its debt from US$4.4m to US$11m , which accounts for long term debt. With this growth in debt, BASI's cash and short-term investments stands at US$520k , ready to be used for running the business. Additionally, BASI has produced cash from operations of US$3.6m in the last twelve months, leading to an operating cash to total debt ratio of 33%, indicating that BASI’s current level of operating cash is high enough to cover debt.
Looking at BASI’s US$12m in current liabilities, the company may not have an easy time meeting these commitments with a current assets level of US$7.7m, leading to a current ratio of 0.63x. The current ratio is calculated by dividing current assets by current liabilities.
With total debt exceeding equity, BASI is considered a highly levered company. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. However, since BASI is presently unprofitable, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.
Although BASI’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised. Though its lack of liquidity raises questions over current asset management practices for the small-cap. This is only a rough assessment of financial health, and I'm sure BASI has company-specific issues impacting its capital structure decisions. I recommend you continue to research Bioanalytical Systems to get a better picture of the stock by looking at:
1. Valuation: What is BASI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether BASI is currently mispriced by the market.
2. Historical Performance: What has BASI's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
The Latest: Fed sees no risk to dollar from cryptocurrencies
NEW YORK (AP) — The Latest on the Federal Reserve's monetary policy meeting (all times local):
3:10 p.m.
Federal Reserve Chairman Jerome Powell is downplaying the possibility that digital currencies such as Facebook's planned "Libra" could supplant government-backed dollars any time soon.
Powell tells reporters at a news conference, "I think we're a long way from that. Digital currencies are in their infancy."
The Fed chair says that Facebook had met with regulators and government supervisors to offer a digital currency, including with officials from the U.S. central bank.
Powell says the currencies offer both potential benefits and possible risks.
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2:55 p.m.
Federal Reserve Chairman Jerome Powell says he would serve his full-term as head of the U.S. central bank even if President Donald Trump tries to demote him.
Powell tells reporters at a Wednesday news conference, "The law is clear that I have a four-year term and I fully intend to serve it."
Trump has been displeased with Powell after the Fed hiked rates four times in 2018, saying the upward moves had stifled growth and the benefits of his tax cuts. The Fed raised rates in accordance with its dual mandate to keep prices stable and maximize employment.
Trump asked White House officials to look into the possibility of removing Powell as Fed chairman but keeping him on the board of governors, Bloomberg News reported Tuesday.
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2:35 p.m.
Stocks rose on Wall Street Wednesday and bond yields fell even lower after the Federal Reserve indicated that it's prepared to start cutting interest rates if needed to protect the economy.
Major market indexes had been wavering between small gains and losses as traders waited for the Fed's policy announcement to be released at 2 p.m. Eastern Time.
Shortly afterward, the S&P 500 index was up 0.3% and the Dow Jones Industrial Average added 63 points, or 0.3%, to 26,528.
The bond market had a more pronounced reaction to the Fed's statement. The yield on the 10-year Treasury note touched its lowest level since September 2017. It fell to 2.04% from 2.06% late Tuesday.
___
2:05 p.m.
The Federal Reserve expects inflation to finish this year noticeably below its 2% target, a trend that could make it more likely policymakers will cut short-term interest rates in the coming months.
In its latest set of economic projections, Fed policymakers forecast that its preferred inflation gauge would increase just 1.5% by the end of 2019 compared with a year earlier, down from its March forecast of 1.8%. It sees core inflation, which excludes the volatile food and energy categories, finishing the year at 1.8%, down from 2% in March.
Fed policymakers also note in their statement that financial markets are expecting inflation to slow. That is typically a concern because inflation expectations can become self-fulfilling. If business executives, for example, expect inflation will be lower, they will likely limit their own price increases.
In April, Fed Chairman Jerome Powell said that the weak inflation readings would be "transitory."
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2:00 p.m.
The Federal Reserve is leaving its key interest rate unchanged but signaling that it's prepared to start cutting rates if needed to protect the U.S. economy from trade conflicts and other threats.
The Fed left its benchmark rate — which influences many consumer and business loans — in a range of 2.25% to 2.5%, where it's been since December.
While not changing rates, Fed officials say that uncertainties "have increased" and for that reason the central bank was prepared to "act as appropriate to sustain the expansion."
That language echoes comments Fed Chairman Jerome Powell made two weeks ago that triggered a huge stock market rally as investors started believing rate cuts are on the way. As expected the Fed removed a pledge to be "patient" in changing rates.
A survey of the 17 Fed officials showed that nearly half now expect at least one rate cut this year, with seven projecting two cuts. At the March meeting, no officials had forecast a rate cut.
___
11:15 a.m.
Stocks are little changed in morning trading on Wall Street Wednesday ahead of a highly anticipated Federal Reserve statement on interest rates.
The S&P 500 was unchanged, the Dow Jones Industrial Average rose 39 points, or 0.2%, to 26,505. The Nasdaq composite edged down less than 0.1%.
Bond prices rose. The yield on the 10-year Treasury note rose to 2.09%. That's still well below the 2.21% yield on the three-month Treasury bill.
The Fed isn't expected to cut rates today, but it has already signaled that it is prepared to take that action in order to help stabilize the U.S. economy if trade disputes cut into growth. Investors are betting on at least one interest rate cut this year, possibly as early as July.
The Fed's statement comes a day after the head of the European Central Bank said it was ready to cut interest rates and provide additional economic stimulus if necessary.
___
5:05 a.m.
Stock markets are subdued as investors look ahead to the U.S. Federal Reserve's policy meeting, where the central bank is expected to indicate it could cut interest rates in coming months.
Futures for the Dow and S&P 500 are down about 0.1% on Wednesday, as is Germany's DAX stock index. The dollar is stable against the yen, at 108.43 yen, and against the euro, at $1.1200.
The Fed isn't considered ready to announce that it's reducing rates for the first time in more than a decade. But when it ends its latest policy meeting Wednesday, the central bank is expected to signal an inclination to ease credit sometime within the next several months. What it won't likely do is indicate when that might happen.
___
12:05 a.m.
The Federal Reserve seems poised to pivot from keeping interest rates steady to holding out the option of cutting rates if it were to decide that the economic expansion needs support.
The Fed isn't considered ready to announce that it's reducing rates for the first time in more than a decade. But when it ends its latest policy meeting Wednesday, the central bank is expected to signal an inclination to ease credit sometime within the next several months. What it won't likely do is indicate when that might happen. |
Former Hollywood exec Ryan Kavanaugh eyes China for film production
Film financier and producer Ryan Kavanaugh is back in the film business not long after he swore he was done with Hollywood . He built Relativity Media into a major independent film studio with hits including “The Social Network,” “The Fighter” and “Mamma Mia!” before leading it into bankruptcy — twice — and eventually selling the company. For his comeback, Kavanaugh is looking east to China with his new media firm: Proxima Media. He spoke exclusively with FOX Business following his keynote at the Wrap's "Grill" conference. The wide-ranging interview began with a question on why he’s teaming up with a Hong Kong-based studio in the midst of a trade war with China. “For China, yes, there's a trade war and that's political, but for the Chinese consumer that doesn't change that they love U.S. films and there's no change in the way that films are being made; except that it was just announced that Hong Kong is no longer considered to be part of the [foreign film] quota. So if you are using Hong Kong films, Hong Kong facilities, you actually are considered to now be a Chinese [studio].” Of course, the Chinese theatrical market rivals the U.S. in size and is only expected to grow. Kavanaugh says he's raising a $250 million fund that can be leveraged to $1 billion. That will be used to create films with National Arts & Entertainment. Kavanaugh told Fox Business he hasn't finished raising that fund but is looking to make American-style films with $15 million to $80 million budgets , “I can’t really say what we’ve got ‘raised’ because until the money’s in the bank, and it’s a public company and there’s a lot of protocols it has to go through, but we feel fairly good we will close the whole amount.” Kavanaugh and the publicly traded Hong Kong studio are also developing a theme park/studio on the mainland called "The World." It will replicate major cities from around the globe that can also be used as sets. Story continues Creating a new film trading platform The producer was a pioneer in slate financing for films -- bringing in hedge funds and non-traditional investors to back projects. And now, he’s looking to bring film financing from Wall Street to Main Street. His next act, Proxima Media, includes creating a trading platform and a security token on the Ethereum cryptocurrency platform -- allowing fans to directly invest in movies once they IPO and trade titles as they go from the big screen to streaming video and other windows and platforms that generate revenue for content makers. “I always saw a better market … a more efficient market, which is not the hedge funds and banks," Kavanaugh said. "But how do we get the very consumers who are buying tickets to movies to be investors in the films they love? So really what we've created is a trading platform that allows for investors to literally purchase into their favorite movies.” He added, “We believe from our discussions most of [the studios] will list [films] and we'll start listing a good portion of their 600 projects and we can be the marketplace to put end-users and the studios together.” The movie exec says Entertainment Stock X (ESX) plans to launch later this year. Kavanaugh says the platform is designed to provide dividends, which may attract hedge funds seeking market inefficiencies and alternative assets. But the main thrust is attracting individuals. He’s confident it will pass government scrutiny under Regulation A of the Jobs Act. That law allows mass marketing to adults, not only so-called sophisticated (i.e. wealthy) investors, to invest in private companies and even initial public offerings with fewer government regulations and requirements than hedge funds and traditional securities. In fact, Kavanaugh sees marketing to movie fans alongside film information with links to the ESX, targeting folks who may invest just $50 or $100 each into a film. “So an 18-year-old who loves, you know, Spider-Man or Batman can actually invest and we can market to that person. So what's changed is Regulation A, of which there's now been I think a couple hundred-plus IPOs, opens up this world where it's a quick, efficient, inexpensive, easy way to take companies public. So every movie is a company, every TV show's a company and at the same time to be able to market to anyone with no lockups, no restrictions, no hold back stone and so forth. “ Securities experts say there are risks to the trading platform plan, which may attract greater SEC scrutiny, even under Regulation A, depending on the number of investors and how much Proxima raises. There are also questions about whether movie fans will invest enough to create a liquid market in the risky film business. Assembling the Avengers Kavanaugh is characteristically bullish on this venture, just as he was when arguing to turn certain comic book heroes into silver screen gold. "I remember literally sitting in the room with 100 bankers in different rooms getting laughed at when they said, ‘You want to tell me that Iron Man, who we’ve never heard of, is going to be the size of Spider-Man? Or Captain America is going to work in France, Italy, and Germany? OK, you’ve got to leave, kid!’” But the producer added, “Merrill Lynch underwrote it and we brought in studio people to run it as a studio. But looking at it now, I wish I could say I thought it could be as big as it is. I thought it would be big, I believed in it, obviously, I spent a year of my life on it, but it’s awesome to see it actually create a revolution.” Related Articles Ryan Lochte's Brand Value Sinks Amid Rio Scandal Here's How You Get a Body Like An Olympian Fmr. Notre Dame Coach Lou Holtz Predictions for Trump vs. Media |
UPDATE 2-Governor wants Pennsylvania to join greenhouse gas reduction program
(Adds details in paragraphs 5-6) By Scott DiSavino June 19 (Reuters) - Democratic Pennsylvania Governor Tom Wolf asked Republican lawmakers on Tuesday to authorize the state to join a program to reduce greenhouse gas emissions in several Northeastern U.S. states, according to a report from the Associated Press. An analyst at Height Capital Markets in Washington said on Wednesday that discussion on the market-based Regional Greenhouse Gas Initiative (RGGI) was likely related to a nuclear bailout deal, that would provide subsidies to prevent reactors from retiring. The governor's office, however, said Wolf did not talk to lawmakers about a nuclear bailout on Tuesday and that the AP story came from state fiscal year-end budget negotiations, which Wolf was not commenting on. Height Capital Markets said momentum to join RGGI is gaining in Pennsylvania but noted it was unclear at this point whether the Republican-majority legislature would be willing to authorize joining RGGI in exchange for nuclear subsidies. Legislators in Pennsylvania have been working on a plan to subsidize nuclear power to keep reactors from retiring. Pennsylvania's nine nuclear reactors provide thousands of jobs and most of the state's non-carbon emitting generation. In recent years, electricity prices have been depressed by cheap natural gas from shale fields, including the Marcellus in Pennsylvania, and increased use of renewable power. This has made some nuclear and coal plants uneconomical, and forced generators to shut several units over the past five years. Joining RGGI would create additional costs for several power companies that operate coal plants in Pennsylvania, like FirstEnergy Corp's bankrupt FirstEnergy Solutions unit. FirstEnergy Solutions said it could shut its 2,490-megawatt (MW) Bruce Mansfield coal plant and the 1,808-MW Beaver Valley nuclear plant in Pennsylvania in 2021 unless the state or federal government finds a way to provide more money for the facilities. One megawatt can power about 1,000 U.S. homes. FirstEnergy Solutions said it has not seen the details of Wolf's RGGI proposal but said it "applauds (the governor) for continuing the conversation about carbon free energy generation ... (and) looks forward to remaining part of the discussion and greenhouse gas reduction solution." A nuclear bailout plan, however, did not come soon enough for Exelon Corp's Three Mile Island plant, the site of the worst nuclear accident in U.S. history in 1979. Exelon said in May it would shut the one reactor operating there on Sept. 30. The state's other reactors are operated by Exelon at Limerick and Peach Bottom and privately held Talen Energy at Susquehanna. Height Capital Markets expects Pennsylvania legislators will resume negotiations on a nuclear bailout in the autumn and noted Wolf's comments appear to be an early public nod to negotiations occurring behind the scenes. (Reporting by Scott DiSavino; editing by Jonathan Oatis and Marguerita Choy) |
Libra Reserve and the Libra Investment Token
Libra’s network launching brings with it a handful of new technological advances in blockchain development, from its new consensus protocol to its new blockchain programming language. However, Libra’s success or failure will hinge on the execution of two mechanisms underpinning the entire system: Libra Reserve and the Libra Investment Token.
According to documents published by the Libra Association, Libra Reserve was created to help preserve the value of the underlying Libra tokens. These reserves represent a basket of currencies, government securities, and bonds, that the association has deemed “stable and reputable.” While the association has not gone into detail on the exact assets that will make up its reserves nor the specific weights of these assets, it did cite by name the U.S.
Join Genesis nowand continue reading,Libra Reserve and the Libra Investment Token! |
Analyst Says Bitcoin Could Hit $62K This Year Based on Technical Signals
ByCCN Markets: Bitcoin is flying high in 2019. The price of the flagship cryptocurrency is now well past the $9,000 level. But there are quite a few analysts out there who believe that bitcoin’s meteoric rise isn’t over yet.
Galaxy, a well-followed crypto handle on Twitter, predicts that the price of bitcoin could hit all-time highs of $62,000 in about four months.
Galaxy is one of many bitcoin bulls counting on favorable technical patterns to sustain the price rally. Noted bitcoin analyst Robert Sluymer of Fundstrat Global Advisors recently advised investors toload upthe digital currency on the back of improving technicals.
Read the full story on CCN.com. |
Embark dog DNA tests on sale for $30 off
TL;DR:Get theEmbark Breed + Health Kitfor just $169 with promo codeWORK30and save $30.
They might not look like it as they lounge on your couch, but your dog is a complex creature. Just like humans, dogs have pretty complicated family treesDog DNA testscan help clear up the matter by distinguishing breeds and other helpful facts.
SEE ALSO:8 of the best dog toys for some epic playtime with your pup
Unlock your dog's ancestral roots with anEmbark Dog DNA Test for only $169when you enter the coupon codeWORK30at check out. That $30 discount is better thanAmazon's current price of $189, and you'd have to wait until Black Friday to likely get a better deal. On top of that, every order from Embark qualifies for free standard shipping in the U.S.Read more...
More aboutDogs,Pets,Dna Test,Mashable Shopping, andShopping Solo |
Some Toachi Mining (CVE:TIM) Shareholders Have Taken A Painful 88% Share Price Drop
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Every investor on earth makes bad calls sometimes. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders ofToachi Mining Inc.(CVE:TIM), who have seen the share price tank a massive 88% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. And more recent buyers are having a tough time too, with a drop of 70% in the last year. The falls have accelerated recently, with the share price down 55% in the last three months.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
See our latest analysis for Toachi Mining
Toachi Mining hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Toachi Mining will find or develop a valuable new mine before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Toachi Mining has already given some investors a taste of the bitter losses that high risk investing can cause.
Toachi Mining had liabilities exceeding cash by CA$1,771,059 when it last reported in January 2019, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived -50% per year, over 3 years, it looks like some investors think it's time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how Toachi Mining's cash levels have changed over time.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. You canclick here to see if there are insiders selling.
While the broader market gained around 1.4% in the last year, Toachi Mining shareholders lost 70%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 21% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. If you would like to research Toachi Mining in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Chanos' Kynikos Associates long on Tesla put options on March 31 -Amended SEC filing
June 19 (Reuters) - Jim Chanos' Kynikos Associates was long on Tesla Inc put options, not call options, on March 31, according to an amended Securities and Exchange filing on Wednesday. The filing restated a May 15 filing by Kynikos, and shows that the firm held put options in Tesla, iRobot Corp and Coca-Cola Co on March 31. Kynikos' earlier filing had said the firm held call options on those companies. (Reporting by Jennifer Ablan; editing by Jonathan Oatis) |
Easy Come, Easy Go: How Basic Energy Services (NYSE:BAS) Shareholders Got Unlucky And Saw 82% Of Their Cash Evaporate
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It's nice to see theBasic Energy Services, Inc.(NYSE:BAS) share price up 13% in a week. But that isn't much consolation for the painful drop we've seen in the last year. During that time the share price has plummeted like a stone, down 82%. So it's not that amazing to see a bit of a bounce. Only time will tell if the company can sustain the turnaround.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
Check out our latest analysis for Basic Energy Services
Because Basic Energy Services is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Basic Energy Services saw its revenue grow by 1.2%. That's not a very high growth rate considering it doesn't make profits. Even so you could argue that it's surprising that the share price has tanked 82%. Clearly the market was expecting better, and this may blow out projections of profitability. If and only if this company is still likely to succeed, just a little slower, this could be a good opportunity.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Thisfreereport showing analyst forecastsshould help you form a view on Basic Energy Services
While Basic Energy Services shareholders are down 82% for the year, the market itself is up 4.6%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 54% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. If you want to research this stock further, the data on insider buying is an obvious place to start. You canclick here to see who has been buying shares - and the price they paid.
Basic Energy Services is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Himalayan glaciers melting far faster this century - study
By Matthew Green
LONDON, June 19 (Reuters) - Himalayan glaciers have been melting twice as fast since the start of this century, underscoring the threat the climate crisis poses to water supplies for hundreds of millions of people across Asia, according to a study published on Wednesday.
Scientists have long been trying to establish how quickly rising global temperatures caused by the burning of coal, oil and gas are eating away at the region's icebound landscapes, sometimes referred to as Earth's third pole.
The new analysis, spanning 40 years of satellite observations across India, China, Nepal and Bhutan, showed glaciers have been losing the equivalent of more than a vertical foot-and-a-half of ice each year since 2000. That represents double the rate between 1975 and 2000.
"This is the clearest picture yet of how fast Himalayan glaciers are melting over this time interval, and why," lead author Joshua Maurer, a PhD candidate at Columbia University's Lamont-Doherty Earth Observatory, said in a statement.
Although the study, published in Science Advances, did not attempt to ascertain precisely how much ice had melted, Maurer said the glaciers may have lost as much as a quarter of their mass over the last 40 years.
The accelerated melting appears to be swelling rivers during warm seasons, but scientists are concerned about the long-term impact on irrigation, hydropower and drinking water supplies that support some 800 million people.
Joseph Shea, a glacial geographer at the University of Northern British Columbia, who was not involved in the study, said the findings demonstrated that even glaciers in the world's highest mountains were being affected by higher temperatures.
"In the long term, this will lead to changes in the timing and magnitude of streamflow in a heavily populated region," Shea said. (Reporting by Matthew Green; Editing by Andrew Cawthorne) |
NBA Draft: Ja Morant says he thrives on negative energy
The “buts” constantly follow Ja Morant, the Murray State sensation who is expected to go second in the NBA draft Thursday. But he played at a mid-major. But he didn’t face the likes of Duke and fellow top pick Zion Williamson. But he’s 19 years old and untested. None of that matters to Morant, who entered the draft after his sophomore year of college and was asked during media day about dealing with that negativity. Ja Morant: “I love negative energy, it motivates me. My dad was my first hater.” pic.twitter.com/OtleId7DEZ — Ben Golliver (@BenGolliver) June 19, 2019 “I really like the negative energy. The ‘he hasn’t played against nobody. He’s too small. He can’t shoot.’ I love, like, negative energy motivates me. It really doesn’t bother me because my dad was my first hater. So if I can take it from him, I can take it from anybody.” Morant’s rise is well-documented and while his father, Tee Morant, may be his “first hater,” he’s also one of his biggest supporters. Tee Morant is a former college player himself who recorded his son’s games on a GoPro in the hopes someone would notice the talent. He and Ja’s mother, Jamie Morant, got in on the fun when the family pranked Murray State coaches in Ja making a commitment to the school. The teenager’s stock rose as he took the Racers to the second round of the NCAA tournament this year. He played in all but three of the team’s 200 postseason minutes and in March averaged 27.4 points per game, 5.8 rebounds and 8.8 assists. Over the entire season he averaged 24.4 points, 5.7 rebounds and 10 assists. The Grizzlies, who dealt veteran point guard Mike Conley Jr in a trade with the Utah Jazz earlier Wednesday, are expected to draft Morant with the No. 2 overall pick. Morant underwent a minor arthroscopic procedure on his right knee this month and is expected to fully recover within four weeks. He told reporters Wednesday it “doesn’t hurt at all” and he expects to play in summer league. Story continues Ja Morant, likely a top pick in the NBA draft, said negative energy motivates him. (AP) More from Yahoo Sports: CP3, Harden relationship deemed ‘unsalvageable’ From mid-major to NBA draft: Morant's historic rise Coach K on Zion’s NBA potential: 'He’s a gift from God' Why D-Wade supported son at Miami Pride |
China Cord Blood Corporation (CO) Q4 2019 Earnings Call Transcript
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China Cord Blood Corporation(NYSE: CO)Q4 2019 Earnings CallJun 19, 2019,8:00 a.m. ET
• Prepared Remarks
• Questions and Answers
• Call Participants
Operator
And welcome everyone to Global Cord Blood Corporation's Earnings Conference Call for the Fourth Quarter and Full Year Fiscal 2019. All participant lines will be placed on mute during the presentation. After which there will be a question and answer session.
(Operator Instructions) Now, I would like to introduce Ms. Kathy Bian VP of Corporate Finance to begin the presentation, please.
Kathy Bian--Vice President of Corporate Finance
Thank you, Ray. Good morning, everyone. Welcome to our fourth quarter and full year of fiscal 2019 earnings conference call. A press release discussing our financial results has already been published and a copy is available on our Company's website. During the call, our management team will summarize operational developments and financial highlights for the quarter. A question-and-answer session will follow.
Before we begin, please note that today's discussion will contain forward looking statements that are subject to certain risks and uncertainties and actual results could be materially different from these forward-looking statements. Kindly refer to our SEC filings for detailed discussions of potential risks.
In the interest of time, we will begin with our CEO's remarks followed by a detailed report of our fourth quarter fiscal 2019 financials given by our CFO Mr. Albert Chen. Our management will be available to answer questions during the Q/A session. In view of recent developments, we understand investors and shareholders have various questions to ask. To give everyone a chance to ask questions, we'd appreciate if you could ask one question at a time.
Today, on behalf of our CEO, Tina, I will read her prepared remarks. Let's begin the presentation.
Good morning, shareholders, investors, ladies and gentlemen. Welcome to Global Cord Blood Corporation's Fiscal 2019 Fourth Quarter Earnings Conference Call. During the reporting quarter, we recruited 22,194 new subscribers, up by 3.8% year-over-year and down by 6.2% quarter-over-quarter.
During fiscal 2019, despite newborn numbers in China trending downwards, the Group managed to acquire 88,906 new subscribers, in line with our expectations. By March 31st, 2019, we had accumulated 750,273 subscribers in total, consolidating our leading position in the Global Cord Blood Banking industry.
In the beginning of 2016, the universal two-child policy was officially released and the families in China were allowed to bear two children instead of one child. By the end of 2018, the boosting effect from this policy had waned and the total newborn number in China recorded a year-over-year decrease. Under current demographic trends and fertility levels, we do not expect such momentum to change drastically.
However, as a result of urbanization, the population is still growing in certain areas, particularly in Guangdong province. Therefore, we expect that in fiscal 2020, Guangdong will still be the main driver of our growth. Zhejiang will maintain its contribution. Beijing will still be constrained by a decreasing population, and in particular, fewer women of child-bearing age. Therefore, we need to enhance our ability to recruit new clients and to cater to local client's needs to penetrate existing market. In addition, we increased our processing fee by RMB3,000 to RMB9,800 in April 1st, 2019. The adjustment reflects our ongoing efforts to improve our service quality and client experience.
It also absorbs some of the costs associated with Cord Blood Processing. By increasing single client contribution and providing a buffer to counter the impact from the current demographic trends we just described, we believe such a measure will allow us to maintain our top line and margin levels. Taken together, we expect that the number of new subscribers for fiscal 2020 will range between 80,000 and 85,000.
Meanwhile, in order to expand our geographic coverage and revenue sources, we will continue to screen for business development opportunities inside and outside of the PRC that could offer synergies to our current services. Thank you all, again, for your support of GCBC.
I will now turn the call over to our CFO Mr. Albert Chen to review our fourth quarter financial performance in greater detail.
Albert Chen--Chief Financial Officer, Director
Good morning everyone. In the fourth quarter, revenues increased by 8% year-over-year to RMB252 million. As our accumulated subscriber base increased to more than 75,0000 as of March 31st,2019, fourth quarter storage revenue increased by 20% year-over-year to RMB103 million, and storage revenue now accounted for 41% of total revenues, up from 37% in the same period of last year.
In the fourth quarter, we recruited 22,194 new subscribers and processing revenue increased to RMB149 million, up from RMB147 million of last year. Similar to prior quarters, the majority of the new subscribers came from our Guangdong division. In line with our top line growth, fourth quarter gross profit increased by 8% year-over-year to RMB204 million. Increased contribution from storage revenue helped to improve gross margin. But this was partially offset by an increase in raw material and labor costs. Consequently, gross margin edges up by 20 basis points and maintained at the 81% range in the reporting quarter.
Operating income in the reporting quarter increased significantly to RMB89 million, up from RMB42 million in last year period, despite higher sales and marketing expenses. This was mainly due to the absence of share-based compensation expenses related to the Company RSU schemes, as all of the RSUs were fully vested in last year period.
Share based compensation expenses for the last year period were RMB48 million. Depreciation and amortization expenses in the reporting quarter were RMB13 million. Fourth quarter operating income before depreciation, amortization and share-based compensation expenses or we commonly refer to as the non-GAAP operating income, amounted to RMB102 million compared to RMB103 million of last year.
Non-GAAP operating income margin was 41% compared to 44% of last year. In the fourth quarter, sales and marketing expenses increased by 13% year-over-year and 4% quarter-over-quarter to RMB67 million. This was mainly attributable to an increase in staff remuneration expenses and escalated marketing and promotional activities. Sales and marketing expenses, as a percentage of revenues, increased to nearly 27%.
In the context that the number of newborns gradually declined in our addressable markets, we remain focused on advocating existing and potential medical benefits of umbilical cord blood banking for the general public and believe it is necessary to do so in order to maximize our long-term market position and drive future client conversion rates.
General and administrative expenses for the fourth quarter dropped to RMB44 million from RMB84 million of last year, mainly due to the absence of share based compensation expenses. Aside from the absence of share-based compensation expense, we managed to keep various general and administrative expense items in check by further tightening other administrative cost items.
On a quarter over quarter basis, general and administrative expense decreased by 3%, as we continue to closely monitor our administrative costs. In the reporting quarter, we recognized a nearly RMB12 million increase in the fair value of equity securities or we commonly refer to as the mark-to-market gains as other income under the accounting standard adopted since April 1st, 2018.
Such gains were mainly related to our investment in Cordlife Group Limited. In the fourth quarter of last year, a decrease in fair value of equity securities of RMB2.5 million was recorded as other comprehensive loss. Due to the increase in operating income as well as the mark to market gain, net income attributable to the Company's shareholders for the fourth quarter nearly tripled to RMB91 million.
Net margin for the reporting quarter improved to 36% from 13% in last year period. The total number of shares issued and outstanding as of March 31st, 2019 was 121.55 million. Basic and diluted earnings per ordinary share for the fourth quarter improved to RMB0.74.
This pretty much wrap up my presentation. And these are the highlights for the fourth quarter. We are now happy to take any questions concerning our latest financial results and the recent developments.
Operator
Thank you, sir. We will now begin our question-and-answer session. (Operator Instructions) The first question is from Danny David at Baker Botts. Please go ahead.
Danny David--Baker Botts -- Analyst
Thank you. Last time the Company received a lowball offer, it assembled a Special Committee which took two years to decide to terminate any further evaluation and negotiation of that proposal. In the meantime, the pending offer served only to suppress the price of the stock. Given that the Company has now resurrected the same Special Committee; will the Special Committee move faster this time and reject the offer immediately?
Albert Chen--Chief Financial Officer, Director
Thank you for the questions. As you are aware, the Special Committee is already formed to evaluate the non-binding offer from Cordlife Group Limited. The members of the committee are all independent non-Executive Directors who have no ties to Cordlife Group whatsoever. Obviously, I think this is for the benefit of the Company as well as for the benefit of the shareholders.
It will be ideal, if any actions or decisions to be made can be made within the relatively short period of time. I think it will be ideal. But at the same time, I think the committee would take a careful approach in evaluating the non-binding offer.
As we stated in our press release, the committee do intend to engage professional parties, including legal counsel, as well as financial advisor to assist in evaluating the nonbinding offer.
Since all the committee members have good experience dealing with similar type of situation in the past, I'm confident that the committee member would take into account the various aspects when reviewing the non-binding offer, including the time constraint or the expectations of the process that you just mentioned.
And I do believe that they will make the appropriate recommendation in the period of time when they deem -- when they think this is -- when they think it is appropriate.
Operator
Our next question is from Jeff Neal at Merrill Lynch. Please go ahead.
Jeff Neal--Merrill Lynch -- Analyst
Good morning. My question is directed toward CEO and Chairperson, Ms. Zheng. Ms. Zheng, you have the dual-hatted responsibility of being CEO, responsible for the management of resources that the Board directs you. And you also have the unique position of Chairperson who has the responsibility of stewarding the Board and the resources of the Company. So in your capacity as Chairperson, I have a question.
This business is remarkably stable. It's consistently profitable. Margins are stable. The Company has no competition within the markets it operates, yet the capital efficiency ratios of the Company are among the worst I look at. And it is the reason the stock is where it is today. The share is closed below the Company's estimated cash value per share yesterday. And there is principally one reason for that, the inefficiency of capital the deployment.
So I'd like Ms. Zheng to enumerate the reasons that the Company maintains this policy with regards to basically capital storage as opposed to capital efficiency for shareholders. And please, I'm not interested in platitudes and generalizations. I'd like an enumeration of the specific reasons the Company has adopted the strategies that it has adopted. Thank you.
Albert Chen--Chief Financial Officer, Director
Thank you for the questions. Even though Ms. Zheng is not here today I will try to answer this question on her behalf to the best I can. Internally, I should say, the capital allocation decision is one of the heavily debated issues and various members has expressed different views and concerns. And we are not taking this decision lightly because when it comes to capital allocation decisions, we look at the existing policy environment, the cord blood banking industry outlook within the PRC, especially when we are seeing the number of newborns in China gradually declining, and also the current economic weakness in the PRC market, and also taking into account the opportunities and strategic options available to us.
Needless to say that the recent non-binding proposal from Cordlife is -- make things a little bit complicated. But that said, as many of you are aware that the cord blood banking business in the PRC is our company's sole revenue source, and with the current cord blood banking license regime and policy expiring in 2020, we are basically retaining capital and getting ready for a possible change in regulatory landscape. This also urges us to revisit our business strategy as well as the Company's future direction. As we talked about in our previous calls, we are evaluating our strategic options whether or not to expand our service offerings beyond cord blood banking or to march into other geographical regions, but either way, to allow the Company to grow and lower our business concentration risk.
We talked about the non-binding offer from Cordlife, with the Special Committee is taking helm in leading the evaluation as well as negotiations, if any, but this non-binding offer is clearly a sign that the Company has to review the value propositions and carry on or even expedite our expansion strategy, if necessary. I hope this will give you a better sense about our -- about where we're heading.
Jeff Neal--Merrill Lynch -- Analyst
Well actually it doesn't. And that continues to be the issue, I think. The lowball offers that I think most shareholders would view both the original Golden Meditech offer and the subsequent offer now from Cordlife are directly reflective of a stable policy, a policy that has been frozen in time essentially with regards to capital allocation and capital efficiency.
And despite the debates that you reference, there hasn't been a change. In fact it's very disappointing and I'm sure others will voice this morning of a lack of dividend (technical difficulty) small test dividend and much discussion over the course of the last year as to the dividend. So, no I'm -- and I'm sure I'm joined by many others on the phone, I don't understand the Company's decision, it's the Board's decisions, obviously, with regards to capital usage. I don't have another question so you may move on. Thank you.
Albert Chen--Chief Financial Officer, Director
Thank you.
Operator
Our next question is from Mike Schmitz at Jayhawk. Please go ahead.
Michael Schmitz--Jayhawk Capital Management -- Analyst
Good morning, Albert. And as the previous caller mentioned, I'm going to ask about the dividend policy. Over the past year, you've been very insistent that yes we have a dividend policy and it's to be stable and consistent even though as we pointed out several times, no one knew what that meant. So it actually wasn't stable and consistent and it appears that there is no dividend announcement here either.
You -- I believe seem to indicate that maybe because this non-binding proposal or offer was made, can you confirm whether or not that had an impact on deciding not to do a dividend right now and if so why that should have any impact on it? Or could you clarify that when you said stable and consistent, you meant that there would be no dividend policy at the Company?
Albert Chen--Chief Financial Officer, Director
Thank you, Mike. First off, I mean, let me say -- let me say this. For not recommending dividend for the current year is a difficult decision. And it was very severely debated internally. But you also rightfully pointed out that in the past earnings call; we did mention that we prefer to have a stable and predictable dividend policy, because this is something which we think will be easier for market to understand.
But unfortunately, in light of the circumstances, we decided or the Board decided that we will not recommend dividend for this year. However, as we look at our strategic options available to us, we also examined the capital required, as well as the capital allocations. So we will constantly revisit this topic from time-to-time. And also as for the Cordlife non-binding offer, I mean fair to say that it certainly make my life extremely complicated.
Michael Schmitz--Jayhawk Capital Management -- Analyst
I guess, at some point you know what it seems like is that you know Sanpower, the person that control the majority stake of this Company and also in control of the Cordlife Company as well, clearly they're orchestrating this offer. You resigned from the Board of Cordlife, maybe at least an appearance at least in part because you were excluded from their decision to make this offer. At what point are the supposedly independent Board Members and even the Board Members of the senior management going to just stand up and say, No, we do what's right for the Company and not just cater to the whims of the majority owner.
Albert Chen--Chief Financial Officer, Director
Well, I mean, for the decisions made with respect to CO is always being reviewed and examined in the context of the Company, as well as all the shareholders. Even though we have a majority shareholders and -- but like many shareholders, I mean we have to evaluate what's best for the Company and what's best for everyone. So I think this is how we have gone by in the past. And right now, I don't see how we are changing that philosophy. But that being said, I mean, their representative, certainly, is one of the Board members and their opinions will also be heard as well as -- just like the opinions and comments from the shareholders will also be heard.
Operator
(Operator Instructions) Next question is from Kent McCarthy at Jayhawk, please go ahead.
Kent McCarthy--Jayhawk Capital Management -- Analyst
Hey, Albert. Obviously disappointed but not surprised on the dividend. And I think it's pretty clear that the Board the independent -- the so-called independent Board and Tina don't represent and never have the minority shareholders. This offer is a complete joke. It's made by a company that's broke, that owes everybody money, both you and Sanpower and Nanjing. Nanjing is under investigation.
Tina -- we've been a shareholder since say for 15 years or whatever it's been, and we, I think, rang the bell at 20 -- in 2009 at $6, when the stock was brought public. The stock right now is as cheap as it's ever been in relationship to cash. There is more cash on the books than the price and that does not count this mysterious Shandong receivable of $34 million nor the value of Shandong.
So in December, Tina and all the Golden Med Boards were sanctioned by Hong Kong Stock Exchange, Kam, Tina, Cordlife, Sanpower, Yuan and the so-called Independent Board members have been involved in all of these transactions, meaning they agreed your stock options, convertible bond that destroyed value for minority shareholders. And now you've got a Special Committee that got paid over $1 million to basically do nothing for two years, except suppress the stock price with another so-called non-binding offer. It was only rejected.
When the new plan came were Golden Meditech and Kam, with Tina's help received 11.70 a share. There was no investment bankers hired. There was no rejection of the bid. There was no communication for over two years. These guys were not independent; convertible bond, the diluted stock options, approving Sanpower's purchase of Golden Med stake at 11.70 to the exclusion of minority shareholders, failure to stop the self-dealing by Kam and Sanpower, approving projects where Kam and Yuan get side payment, like management contracts for the buildings of different plants.
We and every other shareholder, has asked for 10 years, for a share repurchase and a special dividend. The stock would be at 12, 15, 20, if you would have done that. And so this is another -- hopefully you're not involved, Albert. But this is clearly, just another insider deal with Tina, who we've never met. She's never on the call. So I think we all know what's going on here, and then Tina's comments which are almost hilarious, which say we're reviewing the capital outlay.
The Company that's making this proposal is owned by Sanpower. For sure Kam still has its fingers in it and Tina is involved in all of this. Tina and Kam in March had to resign from the Golden Med Board. Oh, and by the way, the stock has gone up 30%, probably an SFC investigation. What do we know publicly? This all relates around the lack of disclosure of a transaction between Golden Med i.e. Mr. Kam; Tina who's on the Board; and Sanpower with respect to a company called Funtalk. It wasn't disclosed also, and bad news came out, Kam was able to increase his position at extremely low prices and sell at much higher. Tina has been there all along.
Now, there is a $34 million -- there was a purchase of Shandong. Again, same cast of characters; Sanpower owns a 76%. We put down $34 million seven years ago as an option. Last year in the 20-F, it said we've moved this to receivable to get it out, the receivable, shuck (ph) . Sanpower can't pay anybody. And now they're making an offer of a failed company, that's absolutely tiny, that's been losing money.
And to add insult to injury, the stock around the time of this offer has moved up 60% and paid for research who's tried to make it into a good investment, you know recommending it. In the last year you said you'd look for new investors. We have no investors on this phone call -- no new investor. So it has been 10 years of stock suppression and whatever else. And so we're asking you to have Tina resign immediately, to reject this offer, and to get -- for future offers get independent Board members, not Board members who determine compensation or on the audit and have made lots of money. And their job is to (inaudible).
And you know, Albert, there's many people that are willing to bid $10 for this asset. They need to be able to talk to somebody, go see and do due diligence and whatever else. It's just an insider deal. We have asked you and management and over the years, the Tina's management -- Tina decides what goes to the Board. We asked you to project what the GAAP earnings this year. You've got a company with really $900 million cash, probably. So my question is, when are you going to disclose and when are we going to get our money back from Shandong, and when are we going to get cash out of Shandong, our 24% asset, which according to Sanpower's publicly filed statements and Nanjing is making a lot of money and generating a lot of cash.
This again, is very similar to the Golden Med Funtalk situation, where we had this asset on the books since it was public, nothing. I wouldn't say, no cash payments, OK, there was cash payments. The cash payment we've had in is in 2015. So, will we receive the same platitudes we have; well it's strategic that we're receiving it. Why was it in the 20-F as being receivable and when will we get cash out of this asset, Shandong? What's being done to protect the minority shareholders and Sanpower who is involved in all this other stuff, will ultimately end up probably with that asset.
Thanks Albert, I sure hope you're not involved in this.
Albert Chen--Chief Financial Officer, Director
Well, again, there is a lot of matters being mentioned. But I think to clear the air, Tina has been the CEO and Chairing the Company's and steering company for a long time. She has her prior Directorships as the non-executive Director at the Golden Meditech level because we used to be subsidiaries of Golden Meditech and she acting as the Non-Executive Director for one of these subsidiaries is totally understandable.
Matter for her to resign I think is inappropriate at this stage. I fail to see why this is -- will lead to her resignations, but I acknowledge that Golden Meditech has made public announcement regarding the sanctions and the Board has -- their Board has been criticized. But as you pointed out, that was a transaction which doesn't even involve our Company. As for the Shandong operations, Shandong is operationally, performing well. I think this is a fair statement, based on their public disclosure. But the ability to or whether or not Shandong decided to distribute all their earnings, it is a thing that's a little bit out of our control, I mean, but it is certainly something that we can voice out as something -- obviously something that we can push for.
But as you are aware that we don't have a Board representative at the Shandong cord blood bank level, but we can try to make an attempt to convince them to dividend out some of their earnings. But that will, once again, be subject to their own capital plan as well as their business expansion plan.
Operator
Our next question is from Jeff Oliver (ph) at Actis Funds. Please go ahead.
Jeff Oliver--Actis Funds -- Analyst
Yes, thank you for taking my questions. With respect to the operations of your business, I wanted to ask you about your increase in processing fees in recent quarters. Can you provide some color on how this increase flows to and impact your bottom line profit? This would be helpful to understand. Thank you.
Albert Chen--Chief Financial Officer, Director
Thank you for the questions. With respect to the recent revision in the processing fee, as many of you are aware that we recently increased our processing fees from RMB6,800 per client to RMB9,800 per client, since April 1st, 2019. But, fair to say that the accounting impact is actually not universal across Beijing, Guangdong and Zhejiang. We're using Beijing market as an example, because as probably that's best -- the easiest example to understand.
The processing fee increased from RMB6,800 to RMB9,800 for -- in Beijing. Whether or not the clients choose to pay their storage fee annually or choose to pay their storage fee in one lump sum, the have to pay the RMB9,800 processing fee per client. So this mean that we are actually getting RMB3,000 more from every new client who sign up with us. But as you know, Beijing only account for a fraction of our new subscriber numbers. Things get little bit complicated when you try to understand the other markets.
Now for example, before the price adjustment, if you are living in Guangdong and Zhejiang and you want to pay 18 years of storage fee in one lump sum payment. You will pay RMB17,640 plus insurance. And out of that RMB17,640, RMB6,800 will be recognized as processing revenue once the sample is collected, tested and proved viable for storage. Now, after the -- after April 1st, 2019 or after we adjust the processing fees, if you are living in Guangdong and Zhejiang and you elect to pay 18 years of storage fee in one lump sum your total payable is still RMB17,640 plus insurance. In other words, we are not asking Guangdong or Zhejiang new subscribe who elect lump sum payment option for more money.
And In fact once the -- for the client who elected the lump sum payment options, once the cord blood is collected, tested and stored, we recognize RMB9,800 as processing revenue. And then we act -- we're actually giving them a bigger discount in the annual storage fees. So this is the difference in terms of payment options for Beijing versus Guangdong or Zhejiang.
Now, let's not forget, we do different types of promotions from time to time. Now in light of the weakness in the PRC economies as well as the consumer market, for example, if you are living in Guangdong and if you elect to pay your storage fee annually. Right now we are actually waiving your first year storage fee. So we're giving you a discount of RMB860 plus insurance. So and then we do the -- we do this type of promotion events from time to time, and we also use this as a way to adjust or match our services with the market demand.
So I think to sum up, because we have various payment options and different promotional activities, the increase in processing fee can sometime come in the expense of an adjustment in the annual storage fees. So in short, I think the accounting impact is not simply like one-plus-one-equals-two. I hope this answer your question.
Operator
Our next question from David Whitehall (ph) at Waterfall (ph) Asset Management. Please go ahead.
David Whitehall--Waterfall Asset Management -- Analyst
Thank you for taking my call. My question is, it relates to the Special Committee. Are they going to ask their investment advisors and hopefully they're going to be employing a major New York investment bank to advise them? Are they going to solicit competing offers? I think that's very important to get to the bottom of whether what we're arguing in terms of value is truly correct.
Albert Chen--Chief Financial Officer, Director
As we've stated in our prior release, this Special Committee is now formed and it is very likely and I think they do intend to solicit the appropriate financial advisor to advise them on this particular non-binding offer and also to review and evaluate this non-binding offer. I do believe that the committee will take the appropriate course of actions with the recommendation from the council, as well as their financial advisor as to how they should evaluate this non-binding offer and whether -- and what kind of recommendations they should make. So, I think we should let the Special Committee perform their duties and responsibilities based on what they see fit.
Operator
Our next question is from Jeffrey Morrison, Individual Investor. Please go ahead.
Jeffrey Morrison--Individual Investor
Thank you for taking my call. Just to kind of reiterate what everyone else is saying. You know I hope the Special Committee will announce to us who their US based legal and/or financial and payment advisors are, so we can understand who those people are. Don't know if they're going to release those names. And you know two, for a Company that generates $120 million in operating cash flow a year and has $750 million on the balance sheet. You know I find it laughable that you guys are vigorously debating how to allocate capital. You don't allocate capital. You hoard it and I don't know what you're going to do with it. But you're consistently not looking out for the shareholders. And in particular there's one reason, Tina Zheng should resign, is look at the stock price. I don't care what everything else is going on, look at the stock price. She is not capable of leading this Company and obviously not wanting to speak with us as well. But would appreciate if you could provide some guidance that we'll understand who are the advisors that will be working with the Special Committee.
Albert Chen--Chief Financial Officer, Director
I believe the Special Committee is -- based on prior practice, the Special Committee will do a -- will solicit their financial advisors. I mean they, as well as their legal counsels, so professional parties will normally submit their proposal to the Special Committee. Special Committee will evaluate and identify the appropriate advisor as well as the legal advisor based on prior experience.
I'm not saying that this will happen again, but this may. I mean at least based on prior experience is that once the engagement of professional parties are confirmed, they tend to put out a press release stating who is being engaged. This certainly happened in the past. I hope that if they complete the solicitation process, they will put out a press release again and that -- in that way, the market will know who is advising the Special Committee and who is doing what.
Operator
Thank you. That's all the time we have on today's call. I would turn the call back over to management for any closing remarks.
Kathy Bian--Vice President of Corporate Finance
Thank you, Ray. That's all the time we have. So now, we come to the end of the Q/A, and this concludes our earnings conference call for the fourth quarter and full year of fiscal 2019. Thank you all for your participation. Have a great day. Ray, you may now disconnect. Thank you.
Duration: 49 minutes
Kathy Bian--Vice President of Corporate Finance
Albert Chen--Chief Financial Officer, Director
Danny David--Baker Botts -- Analyst
Jeff Neal--Merrill Lynch -- Analyst
Michael Schmitz--Jayhawk Capital Management -- Analyst
Kent McCarthy--Jayhawk Capital Management -- Analyst
Jeff Oliver--Actis Funds -- Analyst
David Whitehall--Waterfall Asset Management -- Analyst
Jeffrey Morrison--Individual Investor
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George Takei says U.S. border camps are concentration camps
Actor George Takei is backing U.S. Rep. Alexandria Ocasio-Cortez’s controversial comment likening the detainment of immigrants at facilities on the U.S.-Mexico border to “concentration camps.” “This administration has established concentration camps on the southern border of the United States for immigrants, where they are being brutalized with dehumanizing conditions and dying,” Ocasio-Cortez, a Democratic lawmaker from New York, said on Twitter Tuesday. “This is not hyperbole. It is the conclusion of expert analysis.” Actor George Takei visits LinkedIn on May 30, 2019, in New York City. (Photo: Slaven Vlasic/Getty Images) While Ocasio-Cortez’s comment was met with anger from some Republicans and people who accused the lawmaker of downplaying the seriousness of the Holocaust, Takei offered his support on social media. The 82-year-old Star Trek actor, who was born in America to Japanese-American parents, cited his time in U.S. internment camps during World War II. “I know what concentration camps are. I was inside two of them, in America. And yes, we are operating such camps again,” Takei wrote. I know what concentration camps are. I was inside two of them, in America. And yes, we are operating such camps again. — George Takei (@GeorgeTakei) June 19, 2019 Takei described his time being held with his family at detention centers in Arkansas and California following the Japanese bombing of Pearl Harbor in a 2018 column for Foreign Policy magazine. He argued then that, while his experience had been awful, he was grateful to have been detained with his parents rather than separately. “At least during the internment of Japanese-Americans, I and other children were not stripped from our parents. We were not pulled screaming from our mothers’ arms. We were not left to change the diapers of younger children by ourselves,” he wrote. Takei had previously spoken about his experience in a November 2016 editorial for The Washington Post . “I was just a child of 5 when we were forced at gunpoint from our home and sent first to live in a horse stable at a local race track, a family of five crammed into a single smelly stall. It was a devastating blow to my parents, who had worked so hard to buy a house and raise a family in Los Angeles,” Takei wrote. “After several weeks, they sent us much farther away, 1,000 miles to the east by rail car, the blinds of our train cars pulled for our own protection, they said. We disembarked in the fetid swamps of Arkansas at the Rohwer Relocation Center. Really, it was a prison: Armed guards looked down upon us from sentry towers; their guns pointed inward at us; searchlights lit pathways at night. We understood. We were not to leave.” Story continues Takei’s latest comments about internment sparked an, at times, ugly argument about what makes a site a concentration camp, which political party is to blame for current immigration problems and how America can best deal with impoverished people already in the country. One commenter shared a photo of cremation ovens. Another wrote, “There was a stark difference between the camp you were in and the ones German Jews were in. I don’t the same descriptor applies to both, not at all.” Of course, some were less civil. “You were not in a f***ing concentration camp. WTF is wrong with you? What Democrat FDR did to your people was WRONG but FFS, to LIE about what happened is DISGUSTING.” But there were kind reactions, too, with multiple people thanking Takei for speaking out. “Originally, I ‘liked’ your tweet in solidarity, but I realized what I really wanted to say was, "I'm SO sorry that happened to you and your family! And, Dear God, I hope we can stop this!” someone shared. “George, please keep fighting the good fight,” one commenter piped up. Actress Patricia Arquette applauded Takei for “ringing the alarm.” Thank you for ringing the alarm. — Patricia Arquette (@PattyArquette) June 19, 2019 Someone else wrote, “Its so horrifying to think that those that Never have been, or experienced what Mr. Takei had, can sit around and play semantic games, with him. shameful and horrifying and so privileged its so scary, and so telling.” When someone asked for how to combat feelings of helplessness, others advised her to vote. Read more on Yahoo Entertainment: Happiness begins: Jonas Brothers give recovering addict Able Heart his big break on 'Songland' Maren Morris says she lost 5,000 social media followers after sharing photo of Parkland shooting survivor: 'Not many country artists speak up' Make Keanu Reeves Time's Person of the Year, fans demand Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyle’s newsletter. |
How Purpose-Driven Companies Address Business’s Greatest Challenges
There is much discussion these days about CEO activism, and companies are under pressure to wield their power to enact positive change in the world. As a result, many CEOs are scrambling to decide which issues to tackle and when they should speak out.
But is this the right way to think about a CEO’s role? After all, having an outspoken and socially conscious CEO doesn’t always lead to revenue growth. Recently, the world’s top business leaders convened at theFortuneCEO Initiative to discuss how businesses can best incorporate efforts to solve urgent social problems into their core business strategies. The secret, perhaps unsurprisingly, doesn’t lie in CEO activism alone, but rather in a company’s ability to define and maintain a clear sense of purpose.
So, if the top CEOs are lauding the benefits of strong values and activism, why aren’t more companies adopting a purpose-driven mindset? It seems the answer is twofold. First, many don’t understand that that purpose and performance are intrinsically linked. Secondly, there needs to be a broader set of CEOs visibly embracing this new vision as a means of combating the idea that capitalism is in crisis. Outside of the A-list CEOs like Jamie Dimon, Larry Fink, and Ray Dalio, the purpose-driven approach still isn’t widely endorsed.
Here are three key factors that will dispel hesitation leaders may have about adopting a purpose-driven mindset:
Effective purpose-driven companies align business growth objectives with the overarching goal of furthering global well-being. According to the recent Leaders on Purpose study, leaders who do this can pinpoint the instances wherebusiness goals overlapwith the advancement of social and environmental causes. This helps ensure a company’s longevity and adaptability.
ConsiderCitigroupCEO Michael Corbat’s comments about his company’sfailure to retain female talent in senior and leadership roles. (Citigroup is a client of my company.) Corbat recognized that the loss of so many valuable people isn’t an HR problem; it’s a strategy problem that could derail the company’s long-term success. In response, he set a strategy to reduce this attrition and simultaneously reiterate the company’s commitment to gender equality.
It’s also useful to think of purpose agendas as the intersection of “left” and “right” brain approaches to business. For instance, empathy, creativity, and intuition—often considered right brain skills—are obviously essential qualities to a person inclined toward integrating social impact into their values. Similarly, you’d be hard-pressed to find a CEO who didn’t prioritize left brain attributes like strategic and logical thinking. Interestingly, a recent study showed that C-suite leaders who used a combined right-and-left brain approach to business achieved22% higher revenue growthand 34% higher profitability growth, illustrating that it takes both emotional and rational intelligence to succeed in today’s business world.
Many employees today expect companies to take a stand on a range of issues, including religion, gender identity, women’s rights, health care, and gun control. Smart CEOs will open channels of communication to learn which issues are most pressing to their employees, building company loyalty and camaraderie in the process.
In a conversation withFortuneCEO Alan Murray, Salesforce co-CEO Marc Benioff described how his activism was borne out oflistening deeply to his employees. Consequently, Benioff has become an emblem of CEO activism, unafraid to comment on hot-button issues like pay equality and LGBTQ rights. Compare this with recent demonstrations organized by employees at major tech companies—likeGoogle,Microsoft, and Palantir—related to the handling of #MeToo allegations and collaboration with the military and ICE.
It’s not surprising that many leaders and organizations struggle to respond to the rapid, unprecedented degree of change in today’s business environment. However, companies that lean into a purpose-driven strategy have a more comprehensive perspective of today’s challenges, allowing for clearer decisions.
For example, many retail companies struggle to keep up with ever-shifting consumer expectations and trends. Many consumers today prioritize a clothing brand’s ethics over affordability. Indeed, one study found that 62% of consumers werewilling to pay 2-5% more for expensive clothingif it was produced by workers making a fair wage. Rather than lament the challenges of mass-producing ethical clothing, Inditex CEO Pablo Isla has chosen to embrace ethical products as part of his company’s purpose. He wrote in the Leaders on Purpose survey that in order to produce products that inflict minimal environmental damage, companies have to invest more in research and development. The extra efforts pumped into R&D actually lead to higher quality products overall.
Of course, there are many other reasons to instill a sense of purpose in your organization. Consumers, for example, are more likely to give their business to companies they perceive as ethically and socially responsible. The link between purpose and profit is undeniable; just look at how Unilever’s purpose-led brands—such as Ben & Jerry’s, Vaseline, Seventh Generation, and Dove—are growing 69% fasterthan their other brands are.
At the conclusion of the CEO Initiative, journalist David Brooks discussed the need to return to a society that emphasizesstrong interpersonal bonds. I believe that the success of purpose-driven agendas reflects Brooks’s point about society’s craving for community.
While political commentators shout about capitalism’s crisis, I propose that capitalism is evolving. In this new era, the companies that combine social impact and business growth strategies will forge new collaborative partnerships, drive creative solutions, and innovate at unheard-of speeds.
Kathy Bloomgarden is the CEO ofRuder Finnand is the author ofTrust: The Secret Weapon of Effective Business Leaders.
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Taco Bell is testing plant-based proteins
The hype around plant-based proteins is hot, and Taco Bell is looking to jump on the bandwagon.
“Today, fans can simply remove meat and add beans to any of our menu items without compromising on flavor,” Taco Bell said in a statement to Yahoo Finance. “We’re also testing an in-restaurant vegetarian menu featuring our two plant-based and certified vegan proteins: refried pinto beans and black beans.”
Taco Bell is already one of the more vegetarian-friendly fast-food restaurants, but the company announced earlier this year that it would begin testing out a comprehensive vegetarian menu. According to the chain, the company is keeping a close eye on all food trends and isn’t ruling out a potential partnership with popular alternative-meat producers like Beyond Meat (BYND) and Impossible Foods.
“It is important for us to provide our customers with food that fits their lifestyles, so we keep an eye on trends and the plant-based category is no exception,” Taco Bell told Yahoo Finance.
Earlier, Taco Bell’s president of North American operations, Julie Felss Masino, said that Taco Bell has been keeping Beyond Meat and Impossible Foods on its radar.
“We’ve looked. We’ve met with Beyond, we’ve met with Impossible — our head of innovation knows everybody, and they all know her,”Masino told CNBCin an interview.
It has been difficult to ignore the noise around the alternative-meat market, as companies like Beyond Meat and Impossible Foods continue to draw increased interest from consumers and investors alike.
Other fast food rivals like Del Taco (TACO) and Burger King, a Restaurant Brands (QSR) company, have partnered with Beyond Meat and Impossible Foods to create menu items that would cater to their vegetarian and vegan customers. And they are already reaping rewards.
“Since the April 25 launch of Beyond Tacos, our check and transaction same-store sales trends have improved significantly, which reflects favorably on our outlook, particularly as prior-year compares ease in the second half,” Del Taco CEO John Cappasolasaid on the first-quarter earnings conference call on May 6. “Our operational efforts are paying off with early guest experience measurement survey results showing a high level of guest satisfaction for Beyond Tacos.”
Moreover, KFC, which is also in the Yum Brands (YUM) family, alsotold Yahoo Finance on May 30 that it was also exploring the alternative-meat space. “Beyond Meat is an example of someone we’ll eventually talk to in the near future,” KFC CEO Kevin Hochman said in an interview. “We look at all of the emerging food trends and [ask], ‘What are the things that are going to be broadly appealing for our core guests?’”
Beyond Meat has been on fire since its IPO last month. The stock has been on a meteoric rise and jumped a whopping 580% after pricing its offering at $25.
—
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter:@heidi_chung.
Follow Yahoo Finance onTwitter,Facebook,Instagram,Flipboard,LinkedIn, andreddit.
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What You Must Know About Tyner Resources Ltd.'s (CVE:TIP.H) Beta Value
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If you're interested in Tyner Resources Ltd. (CVE:TIP.H), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market.
Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.
See our latest analysis for Tyner Resources
Zooming in on Tyner Resources, we see it has a five year beta of 1.96. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. Based on this history, investors should be aware that Tyner Resources are likely to rise strongly in times of greed, but sell off in times of fear. Beta is worth considering, but it's also important to consider whether Tyner Resources is growing earnings and revenue. You can take a look for yourself, below.
Tyner Resources is a rather small company. It has a market capitalisation of CA$486k, which means it is probably under the radar of most investors. Relatively few investors can influence the price of a smaller company, compared to a large company. This could explain the high beta value, in this case.
Since Tyner Resources tends to moves up when the market is going up, and down when it's going down, potential investors may wish to reflect on the overall market, when considering the stock. In order to fully understand whether TIP.H is a good investment for you, we also need to consider important company-specific fundamentals such as Tyner Resources’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Financial Health: Are TIP.H’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
2. Past Track Record: Has TIP.H been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look atthe free visual representations of TIP.H's historicalsfor more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Did Hedge Funds Drop The Ball On Cable One Inc (CABO) ?
Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Cable One Inc (NYSE:CABO).
IsCable One Inc (NYSE:CABO)a buy, sell, or hold? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets went up by 3 lately. Our calculations also showed that cabo isn't among the30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the latest hedge fund action regarding Cable One Inc (NYSE:CABO).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CABO over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,Renaissance Technologies, managed by Jim Simons, holds the largest position in Cable One Inc (NYSE:CABO). Renaissance Technologies has a $252.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Lou Simpson ofSQ Advisors, with a $151.7 million position; the fund has 11.5% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Scott Wallace'sWallace Capital Management, Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitaland Ken Griffin'sCitadel Investment Group.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness.Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Cable One Inc (NYSE:CABO). Arrowstreet Capital had $19.3 million invested in the company at the end of the quarter. Benjamin A. Smith'sLaurion Capital Managementalso made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander'sMillennium Management, Jeffrey Talpins'sElement Capital Management, and George Zweig, Shane Haas and Ravi Chander'sSignition LP.
Let's also examine hedge fund activity in other stocks similar to Cable One Inc (NYSE:CABO). These stocks are Affiliated Managers Group, Inc. (NYSE:AMG), Gardner Denver Holdings, Inc. (NYSE:GDI), Coupa Software Incorporated (NASDAQ:COUP), and Pilgrim's Pride Corporation (NASDAQ:PPC). This group of stocks' market values are closest to CABO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMG,23,517004,-4 GDI,23,386157,-4 COUP,41,1385130,5 PPC,14,140859,-3 Average,25.25,607288,-1.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $607 million. That figure was $525 million in CABO's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Pilgrim's Pride Corporation (NASDAQ:PPC) is the least popular one with only 14 bullish hedge fund positions. Cable One Inc (NYSE:CABO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on CABO as the stock returned 15.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Watsco Inc (WSO)
Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Watsco Inc (NYSE:WSO) from the perspective of those elite funds.
IsWatsco Inc (NYSE:WSO)a bargain? Investors who are in the know are betting on the stock. The number of long hedge fund bets moved up by 4 recently. Our calculations also showed that wso isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's check out the new hedge fund action regarding Watsco Inc (NYSE:WSO).
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WSO over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Tom Gayner'sMarkel Gayner Asset Managementhas the number one position in Watsco Inc (NYSE:WSO), worth close to $47.1 million, corresponding to 0.8% of its total 13F portfolio. Coming in second isRenaissance Technologies, led by Jim Simons, holding a $44.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain Ken Griffin'sCitadel Investment Group, Israel Englander'sMillennium Managementand D. E. Shaw'sD E Shaw.
As one would reasonably expect, key money managers were breaking ground themselves.Holocene Advisors, managed by Brandon Haley, assembled the biggest position in Watsco Inc (NYSE:WSO). Holocene Advisors had $1.1 million invested in the company at the end of the quarter. Benjamin A. Smith'sLaurion Capital Managementalso initiated a $0.9 million position during the quarter. The following funds were also among the new WSO investors: Jeffrey Talpins'sElement Capital Management, Roger Ibbotson'sZebra Capital Management, and John A. Levin'sLevin Capital Strategies.
Let's now review hedge fund activity in other stocks similar to Watsco Inc (NYSE:WSO). These stocks are Syneos Health, Inc. (NASDAQ:SYNH), Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), Morningstar, Inc. (NASDAQ:MORN), and Gentex Corporation (NASDAQ:GNTX). This group of stocks' market values are closest to WSO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYNH,26,333112,2 OLLI,22,155022,-2 MORN,21,225704,1 GNTX,23,308447,0 Average,23,255571,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $138 million in WSO's case. Syneos Health, Inc. (NASDAQ:SYNH) is the most popular stock in this table. On the other hand Morningstar, Inc. (NASDAQ:MORN) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Watsco Inc (NYSE:WSO) is even less popular than MORN. Hedge funds clearly dropped the ball on WSO as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on WSO as the stock returned 12% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Is MDU Resources Group Inc (MDU) A Good Stock To Buy?
Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
IsMDU Resources Group Inc (NYSE:MDU)a worthy stock to buy now? Hedge funds are in a pessimistic mood. The number of long hedge fund bets retreated by 6 in recent months. Our calculations also showed that mdu isn't among the30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the recent hedge fund action surrounding MDU Resources Group Inc (NYSE:MDU).
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MDU over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in MDU Resources Group Inc (NYSE:MDU) was held byCitadel Investment Group, which reported holding $61.9 million worth of stock at the end of March. It was followed by AQR Capital Management with a $23.9 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and ExodusPoint Capital.
Judging by the fact that MDU Resources Group Inc (NYSE:MDU) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there were a few hedgies who were dropping their entire stakes by the end of the third quarter. It's worth mentioning that Dmitry Balyasny'sBalyasny Asset Managementsaid goodbye to the largest position of all the hedgies followed by Insider Monkey, comprising an estimated $25 million in stock. Paul Marshall and Ian Wace's fund,Marshall Wace LLP, also dumped its stock, about $3.5 million worth. These moves are interesting, as total hedge fund interest dropped by 6 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as MDU Resources Group Inc (NYSE:MDU) but similarly valued. We will take a look at JBG SMITH Properties (NYSE:JBGS), ITT Inc. (NYSE:ITT), Crane Co. (NYSE:CR), and Insperity Inc (NYSE:NSP). This group of stocks' market values are closest to MDU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBGS,17,312625,-3 ITT,22,395262,-3 CR,22,334024,-1 NSP,24,458494,0 Average,21.25,375101,-1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $375 million. That figure was $189 million in MDU's case. Insperity Inc (NYSE:NSP) is the most popular stock in this table. On the other hand JBG SMITH Properties (NYSE:JBGS) is the least popular one with only 17 bullish hedge fund positions. MDU Resources Group Inc (NYSE:MDU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately MDU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MDU investors were disappointed as the stock returned -5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Hope Solo says fight for equal pay got her suspended
Former United States goalkeeper Hope Solo believes her 2016 suspension had little to do with her harsh comments about Sweden. Instead, Solo believes she was suspended for being outspoken about equal pay. Following the U.S. womens national teams loss to Sweden in the 2016 Olympics, Solo drew criticism after calling the Swedish team a bunch of cowards. Days after Solo made those comments, U.S. Soccer suspended Solo and terminated her contract. In a Guardian column on Wednesday, the 37-year-old Solo explained her side of the story. Solo admitted that her comments were emotionally charged. She was upset her team lost the game, and wanted to express her frustration over Sweden resorting to extreme defensive tactics to win. Shortly after making those comments, Solo said she talked to Swedens captain and made sure there were no hard feelings. Solo added that she also spoke to U.S. Soccer head coach Jill Ellis, and didnt get the sense that Ellis was upset about her comments. But Solo was still reprimanded. U.S. Soccer cited conduct that is counter to the organizations principles as the reason for the punishment. Hope Solo believes her "cowards" comment about Sweden wasn't the real reason she was suspended back in 2016. (Reuters) Solo believes that was just a convenient excuse to distract from the real issue: her fight for equal pay. I have made no secret about the fact that I believe my termination was not about what happened in Rio at all, but about my fight for equal pay. I had been a thorn in the Federations side for years and things had gotten worse leading up to and through the Games as negotiations for our collective bargaining agreement intensified. US Soccer realized it now had an excuse to remove its biggest adversary in the fight for equal pay, and it did. But US Soccer told a different story to the outside world. It said I showed poor sportsmanship and didnt represent our country well. And the media backed this narrative. It was clearly not OK to show emotion. I had shown emotion. It wasnt OK. I apparently had a bad reputation. Story continues Solo advocated for equal pay in July 2015 . She also appeared on the Today Show in 2016 alongside other members of the USWNT to speak about the issue. The USWNT is still fighting that fight today. In March, the women signed a lawsuit against U.S. Soccer alleging institutionalized gender discrimination. When U.S. Soccer fought back, the women said they looked forward to going to trial . The Americans will take on Sweden in the World Cup on Thursday. Chris Cwik is a writer for Yahoo Sports. Have a tip? Email him at christophercwik@yahoo.com or follow him on Twitter! Follow @Chris_Cwik More from Yahoo Sports: CP3, Harden relationship deemed unsalvageable From mid-major to NBA draft: Morant's historic rise Coach K on Zions NBA potential: 'Hes a gift from God' Why D-Wade supported son at Miami Pride |
Is Casey’s General Stores, Inc. (CASY) A Good Stock To Buy?
There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Casey's General Stores, Inc. (NASDAQ:CASY).
Casey's General Stores, Inc. (NASDAQ:CASY)shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of the first quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as BWX Technologies Inc (NYSE:BWXT), Avnet, Inc. (NASDAQ:AVT), and Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="487"]
Cliff Asness of AQR Capital Management[/caption]
We're going to review the latest hedge fund action encompassing Casey's General Stores, Inc. (NASDAQ:CASY).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. On the other hand, there were a total of 16 hedge funds with a bullish position in CASY a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Casey's General Stores, Inc. (NASDAQ:CASY) was held byLomas Capital Management, which reported holding $10.3 million worth of stock at the end of March. It was followed by GAMCO Investors with a $9 million position. Other investors bullish on the company included Citadel Investment Group, AQR Capital Management, and Renaissance Technologies.
Because Casey's General Stores, Inc. (NASDAQ:CASY) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their positions entirely by the end of the third quarter. At the top of the heap, Israel Englander'sMillennium Managementcut the biggest position of all the hedgies tracked by Insider Monkey, totaling an estimated $12.2 million in stock, and Richard Driehaus's Driehaus Capital was right behind this move, as the fund sold off about $3.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Casey's General Stores, Inc. (NASDAQ:CASY). These stocks are BWX Technologies Inc (NYSE:BWXT), Avnet, Inc. (NASDAQ:AVT), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), and LivaNova PLC (NASDAQ:LIVN). This group of stocks' market values resemble CASY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BWXT,18,107854,-1 AVT,17,586463,-7 TKC,7,8792,-2 LIVN,20,262833,-2 Average,15.5,241486,-3 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $51 million in CASY's case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 7 bullish hedge fund positions. Casey's General Stores, Inc. (NASDAQ:CASY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on CASY, though not to the same extent, as the stock returned 1.2% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About BWX Technologies Inc (BWXT)
Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze BWX Technologies Inc (NYSE:BWXT) from the perspective of those elite funds.
IsBWX Technologies Inc (NYSE:BWXT)a great investment now? The smart money is taking a pessimistic view. The number of bullish hedge fund bets were trimmed by 1 recently. Our calculations also showed that bwxt isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's check out the latest hedge fund action encompassing BWX Technologies Inc (NYSE:BWXT).
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BWXT over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically,Alkeon Capital Managementwas the largest shareholder of BWX Technologies Inc (NYSE:BWXT), with a stake worth $50.6 million reported as of the end of March. Trailing Alkeon Capital Management was Citadel Investment Group, which amassed a stake valued at $9.9 million. Two Sigma Advisors, MSDC Management, and Ancora Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Since BWX Technologies Inc (NYSE:BWXT) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of money managers who sold off their positions entirely in the third quarter. Intriguingly, John A. Levin'sLevin Capital Strategiescut the biggest investment of the "upper crust" of funds watched by Insider Monkey, worth an estimated $0.6 million in stock. Minhua Zhang's fund,Weld Capital Management, also dumped its stock, about $0.6 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to BWX Technologies Inc (NYSE:BWXT). We will take a look at Avnet, Inc. (NASDAQ:AVT), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), LivaNova PLC (NASDAQ:LIVN), and MGIC Investment Corporation (NYSE:MTG). This group of stocks' market valuations resemble BWXT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVT,17,586463,-7 TKC,7,8792,-2 LIVN,20,262833,-2 MTG,32,392959,-3 Average,19,312762,-3.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $108 million in BWXT's case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 7 bullish hedge fund positions. BWX Technologies Inc (NYSE:BWXT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BWXT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BWXT investors were disappointed as the stock returned -5.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Barnes Group Inc.'s (NYSE:B) Balance Sheet A Threat To Its Future?
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Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as Barnes Group Inc. (NYSE:B), with a market cap of US$2.7b, often get neglected by retail investors. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. B’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourselfinto B here.
View our latest analysis for Barnes Group
B's debt levels surged from US$521m to US$940m over the last 12 months – this includes long-term debt. With this rise in debt, B currently has US$104m remaining in cash and short-term investments to keep the business going. On top of this, B has produced cash from operations of US$260m over the same time period, leading to an operating cash to total debt ratio of 28%, meaning that B’s operating cash is sufficient to cover its debt.
At the current liabilities level of US$369m, it appears that the company has been able to meet these commitments with a current assets level of US$797m, leading to a 2.16x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Machinery companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
With debt reaching 74% of equity, B may be thought of as relatively highly levered. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can test if B’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For B, the ratio of 12.73x suggests that interest is comfortably covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
Although B’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. I admit this is a fairly basic analysis for B's financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Barnes Group to get a more holistic view of the mid-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for B’s future growth? Take a look at ourfree research report of analyst consensusfor B’s outlook.
2. Valuation: What is B worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether B is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Here’s What Hedge Funds Think About Black Hills Corporation (BKH)
Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Black Hills Corporation (NYSE:BKH).
Black Hills Corporation (NYSE:BKH)was in 18 hedge funds' portfolios at the end of March. BKH has experienced an increase in support from the world's most elite money managers lately. There were 17 hedge funds in our database with BKH positions at the end of the previous quarter. Our calculations also showed that bkh isn't among the30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the fresh hedge fund action encompassing Black Hills Corporation (NYSE:BKH).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BKH over the last 15 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Black Hills Corporation (NYSE:BKH) was held byRenaissance Technologies, which reported holding $63.1 million worth of stock at the end of March. It was followed by GAMCO Investors with a $22.3 million position. Other investors bullish on the company included GLG Partners, Shelter Harbor Advisors, and AQR Capital Management.
As aggregate interest increased, key hedge funds were breaking ground themselves.Millennium Management, managed by Israel Englander, assembled the largest position in Black Hills Corporation (NYSE:BKH). Millennium Management had $1.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $1 million investment in the stock during the quarter. The following funds were also among the new BKH investors: Jeffrey Talpins'sElement Capital Management, Ken Griffin'sCitadel Investment Group, and Andrew Feldstein and Stephen Siderow'sBlue Mountain Capital.
Let's now review hedge fund activity in other stocks similar to Black Hills Corporation (NYSE:BKH). We will take a look at CarGurus, Inc. (NASDAQ:CARG), Hawaiian Electric Industries, Inc. (NYSE:HE), First Horizon National Corporation (NYSE:FHN), and Williams-Sonoma, Inc. (NYSE:WSM). This group of stocks' market valuations resemble BKH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CARG,24,819877,5 HE,12,144367,-1 FHN,16,126038,-3 WSM,29,371142,12 Average,20.25,365356,3.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $136 million in BKH's case. Williams-Sonoma, Inc. (NYSE:WSM) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 12 bullish hedge fund positions. Black Hills Corporation (NYSE:BKH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on BKH, though not to the same extent, as the stock returned 1.7% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Best ETFs for 2019: Financial Sector Spider ETF (XLF) Still Has a Chance
Editor’s Note: This article is part of InvestorPlace.com’sBest ETFs for 2019 contest. Dana Blankenhorn’s pick isFinancial Select Sector SPDR Fund(NYSEARCA:XLF).
At the start of 2019, when we relaunched our best exchange-traded funds feature, I thought the market was getting frothyand chose to get defensivewith theFinancial Sector Spider ETF(NYSEARCA:XLF).
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
So far, that’s up 15%. Pretty fly for an old guy. But folks who were more aggressive have done better. The editor of this section, Robert Waldo, hasmore than doubled me upwith his choice, thePacer Benchmark Data & Infrastructure Real EstateETF(NYSEARCA:SRVR). SRVR has big holdings in technology landlords likeAmerican Tower(NYSE:AMT), which owns most of those big cell towers you love, andEquinix(NASDAQ:EQIX), a data center REIT that connects the clouds.
Can the big banks come back?
Hope for a comeback lies in consolidation. The merger ofBB&T(NYSE:BBT) andSunTrust(NYSE:STI) to create something called Truist is making investors money. It’s a big win for Charlotte, which will be the new bank’s headquarters, and a loss for my hometown of Atlanta, where SunTrust is based.
TheProsperity Bancshares(NYSE:PB) acquisition ofLegacyTexas Financial Group(NASDAQ:LTXB) in Dallas gave that stateits first big locally owned bank in decades. By such standards it’s still a minnow. Total assets will be about $30 billion (SunTrust alone is worthseven times more) but if this is the start of a trend, then XLF investors should benefit. That’s because takeovers fuel speculation about more takeovers, leading speculators to feed on potential targets and bankers to start whispering sweet nothings of profit in other bankers’ ears.
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In general, however, banks remain subject to the same computerization trend facing other service-based businesses like insurance and real estate. Don’t let your kid think he can grow up to sit behind a desk with pillars at either side and a swinging gate in front of him. That’s a game for lawyers.
I have only been in banks a few times in the last year … once to visit my safety deposit box and another time to use a notary. (You probably thought I was going to say bathroom.) There was a time when I regularly visited my broker’s office to deposit checks into my market account, but there’s an app for that now.
Willie Sutton, the bank robber who supposedly saidbanks “are where the money is,”would today be a geeky hacker, because that’s where the money is in banking today. It’s in programming.
Why sit in front of a banker when you can just borrow throughSquare(NYSE:SQ) Capital —they have all your financial figures anyhow.On the other hand, the biggest banksare also the biggest payment processors.They’re not going to let that business go without a fight.
Expect more deals.
The bottom line is that as money continues to become magnetic ink, banks will remain under pressure to consolidate and run off to the dog track with the depositors’ money. The likelihood of morescandalslike that ofDeutsche Bank(NYSE:DB), once seen as a Donald Trump-era darling, is only going to grow.
It all comes down to a new sobering reality. Banks are about to become the new stock market casino. But casinos make good money. And if your kid grew up as a geeky programmer type,JPMorgan Chase(NYSE:JPM)is hiring.
Dana Blankenhornis a financial and technology journalist. He is the author of a new environmental story,Bridget O’Flynn and the Bear, available now at the Amazon Kindle store. Write him atdanablankenhorn@gmail.comor follow him on Twitter at@danablankenhorn. As of this writing he owned shares in JPM.
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Did Hedge Funds Drop The Ball On Manhattan Associates, Inc. (MANH) ?
Hedge funds are known to underperform the bull markets but that's not because they are terrible at stock picking. Hedge funds underperform because their net exposure in only 40-70% and they charge exorbitant fees. No one knows what the future holds and how market participants will react to the bountiful news that floods in each day. However, hedge funds' consensus picks on average deliver market beating returns. For example in the first 5 months of this year through May 30th the Standard and Poor’s 500 Index returned approximately 12.1% (including dividend payments). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the same 5-month period, with the majority of these stock picks outperforming the broader market benchmark. Interestingly, an average long/short hedge fund returned only a fraction of this value due to the hedges they implemented and the large fees they charged. If you pay attention to the actual hedge fund returns versus the returns of their long stock picks, you might believe that it is a waste of time to analyze hedge funds' purchases. We know better. That's why we scrutinize hedge fund sentiment before we invest in a stock like Manhattan Associates, Inc. (NASDAQ:MANH).
Manhattan Associates, Inc. (NASDAQ:MANH)was in 18 hedge funds' portfolios at the end of March. MANH shareholders have witnessed a decrease in hedge fund interest recently. There were 20 hedge funds in our database with MANH positions at the end of the previous quarter. Our calculations also showed that manh isn't among the30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's analyze the fresh hedge fund action regarding Manhattan Associates, Inc. (NASDAQ:MANH).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in MANH over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,RGM Capital, managed by Robert G. Moses, holds the number one position in Manhattan Associates, Inc. (NASDAQ:MANH). RGM Capital has a $110.6 million position in the stock, comprising 7.5% of its 13F portfolio. Sitting at the No. 2 spot isAQR Capital Management, managed by Cliff Asness, which holds a $60 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions consist of Chuck Royce'sRoyce & Associates, Noam Gottesman'sGLG Partnersand Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital.
Judging by the fact that Manhattan Associates, Inc. (NASDAQ:MANH) has witnessed a decline in interest from the smart money, logic holds that there was a specific group of hedge funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Richard S. Meisenberg'sACK Asset Managementsaid goodbye to the biggest investment of the 700 funds followed by Insider Monkey, comprising close to $2.3 million in stock. Matthew Tewksbury's fund,Stevens Capital Management, also dumped its stock, about $1.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Manhattan Associates, Inc. (NASDAQ:MANH) but similarly valued. These stocks are Darling Ingredients Inc. (NYSE:DAR), Aaron's, Inc. (NYSE:AAN), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), and NorthWestern Corporation (NYSE:NWE). All of these stocks' market caps are closest to MANH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DAR,19,210442,1 AAN,20,244703,-1 RARE,18,319720,4 NWE,15,188627,0 Average,18,240873,1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $337 million in MANH's case. Aaron's, Inc. (NYSE:AAN) is the most popular stock in this table. On the other hand NorthWestern Corporation (NYSE:NWE) is the least popular one with only 15 bullish hedge fund positions. Manhattan Associates, Inc. (NASDAQ:MANH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on MANH as the stock returned 19.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Trading Grain ETFs
All eyes are on grains—especially corn—as extreme weather and ongoing trade tensions have caused plantings in the Midwest to greatly lag historical records. Prices of agricultural commodities have risen, offering opportunities in single-commodity ETFs, like theTeucrium Corn Fund (CORN), which allow traders to play the space with ease.
ETF.com recently chatted with Grant Engelbart, senior portfolio manager and director of research for CLS Investments. He follows the grains complex closely, and explained how he uses CORN and other commodity ETFs inside CLS' client portfolios, worth $9.2 billion.
ETF.com: We've been covering the grain space quite a bit on ETF.com lately. (Read: "Floods & Tariffs Lift Grain ETFs"; listen: "ETF Prime Podcast: Grain Funds Pop.") You’ve also increased your allocation to corn ETFs recently. Why do you find CORN [theTeucrium Corn ETF] to be a compelling trade at the moment?
Grant Engelbart, CLS Investments:Generally, we're asset allocators. We're not all that tactical; we take a consistent amount of risk and make sure it's balanced in our portfolios.
That leads us to use many different asset classes, particularly those with strong diversification properties. As of late, that's been hard to find, but agricultural commodities tend to be driven by [fundamentals] completely diversified from the stock market, like weather conditions.
We're value investors as well, so we're constantly scouring the world for attractive value. When we look at an asset class like agriculture, one that’s been beaten down for years, we see compelling prices relative to their inflation-adjusted average prices.
Here in the Midwest—we're located in Omaha, Nebraska—we've started to see changes in the supply/demand characteristics of the market that have led us to say this is attractive from a long-term perspective.
So we've invested in broad agriculture in general. We also use WEAT [theTeucrium Wheat Fund].
ETF.com: Generally, you maintain a consistent commodity allocation, then.
Engelbart:Yes, internally we use an asset allocation benchmark that includes a 5% commodity allocation. Within that, we could own broad commodities or get more nuanced. ETFs allow us to do that easily.
ETF.com: Have you shifted your positions within that allocation from other single-commodity ETFs or from other diversified commodity exposure to CORN and WEAT?
Engelbart:It's kind of a combination of both. We've taken exposure from our existing commodity allocations and shifted it into corn, but we're also adding a little bit more to the asset class in general. We've taken a little bit from equity and fixed income, but we keep our risk consistent as we reallocate.
ETF.com: For you, this is a short-term call. But how short term is that? Is this something you'll reevaluate by the end of the summer? By the end of the year? By the end of next Tuesday?
Engelbart:Generally, we maintain three- to five-year allocations, so this would be shorter than that. It's more tactical, from our standpoint. But I'd say [we'd hold] through the end of the harvest season. There's speculation, but not a ton of hard facts, about these commodities until specific agricultural reports come out, so we'd want to see those first.
Realistically, though, it's about a year’s play through the harvest and until the supply/demand dynamics fully shape out.
ETF.com: You mentioned CORN and WEAT. Do you use any other pure-play single-commodity ETFs, whether in the grain complex or in a different sector?
Engelbart:We also use the broad ag fund, DBA [theInvesco DB Agriculture Fund]. But it depends. We have a lot of different portfolios, so it depends on how specific we want to get with each client's account and how much risk they're willing to take.
ETF.com: Why DBA, versus other ETFs or ETNs that also give you diversified exposure?
Engelbart:We have a series of mutual funds that hold much of our commodity ETFs; the fund then is responsible for the K-1 tax form that comes with the three ETFs I mentioned. When we allocate for client portfolios outside those funds, we become much more cognizant of the K-1.
Nobody really likes them, because they come too late, and it's just a headache for clients. Many of our clients have said, "We don't want K-1s; I don't care what we need to do."
So in that case, we'll use something like RJA [theElements Rogers International Commodity Index-Agriculture TR ETN]. It gets into some pretty esoteric commodities, but still gives us that exposure. We use ETNs, which have a little more favorable tax treatment.
You know about DBC and PDBC [theInvesco DB Commodity Index Tracking Fundand theInvesco Optimum Yield Diversified Commodity Strategy No K-1 ETF, respectively. Author's note: PDBC offers effectively the same exposure as DBC, but structured such that it avoids issuing a K-1 form]. If Invesco would make a "PDBA," if you will—a K-1 free version of DBA—that would probably be our preferred vehicle inside of client accounts.
ETF.com: CORN and WEAT can be expensive funds to own and trade. Are you concerned about the cost of ownership? How do you factor it into your trading decisions?
Engelbart:Well, there are a couple things about the expense ratio. The sponsor fee—or how much Teucrium is actually getting—is actually 1%. What's listed gets into the 3’s. [Author's note: ETF.com lists CORN's expense ratio as 3.65%]. That makes us cringe. But it's not accounting for the futures collateral that's offsetting that expense ratio. When you offset that, you get a much more reasonable expense ratio.
From a trading perspective, we haven't had any issues getting in or out of the product, given the liquidity of the futures market underneath it. Teucrium did a good job structuring the product to hold liquid futures contracts.
It holds the second month, the third month and the next December, which generally has a pretty liquid contract. ETF.com even gives it a 5 out of 5 from a trading [block liquidity] perspective, last time I checked.
Like anything in the commodity space, obviously you've got to make sure you understand the product completely before you trade.
Contact Lara Crigger atlcrigger@etf.com
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Here’s What Hedge Funds Think About Ultragenyx Pharmaceutical Inc (RARE)
Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Ultragenyx Pharmaceutical Inc (NASDAQ:RARE)was in 18 hedge funds' portfolios at the end of March. RARE investors should be aware of an increase in hedge fund interest of late. There were 14 hedge funds in our database with RARE holdings at the end of the previous quarter. Our calculations also showed that rare isn't among the30 most popular stocks among hedge funds.
If you'd ask most traders, hedge funds are perceived as underperforming, outdated investment vehicles of years past. While there are greater than 8000 funds trading today, Our experts look at the leaders of this club, approximately 750 funds. These hedge fund managers orchestrate the lion's share of the smart money's total asset base, and by paying attention to their top stock picks, Insider Monkey has found various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's take a gander at the key hedge fund action surrounding Ultragenyx Pharmaceutical Inc (NASDAQ:RARE).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in RARE over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) was held byAlkeon Capital Management, which reported holding $102.1 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $67.6 million position. Other investors bullish on the company included Highline Capital Management, Rock Springs Capital Management, and EcoR1 Capital.
Now, key money managers have been driving this bullishness.EcoR1 Capital, managed by Oleg Nodelman, assembled the most outsized position in Ultragenyx Pharmaceutical Inc (NASDAQ:RARE). EcoR1 Capital had $34.5 million invested in the company at the end of the quarter. Joseph Edelman'sPerceptive Advisorsalso made a $3.5 million investment in the stock during the quarter. The other funds with brand new RARE positions are Benjamin A. Smith'sLaurion Capital Management, Michael Platt and William Reeves'sBlueCrest Capital Mgmt., and Mike Vranos'sEllington.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) but similarly valued. We will take a look at NorthWestern Corporation (NYSE:NWE), Covetrus, Inc. (NASDAQ:CVET), Macquarie Infrastructure Corporation (NYSE:MIC), and Blueprint Medicines Corporation (NASDAQ:BPMC). All of these stocks' market caps are closest to RARE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWE,15,188627,0 CVET,18,537367,18 MIC,24,221709,-4 BPMC,32,632126,10 Average,22.25,394957,6 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $395 million. That figure was $320 million in RARE's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand NorthWestern Corporation (NYSE:NWE) is the least popular one with only 15 bullish hedge fund positions. Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately RARE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RARE investors were disappointed as the stock returned -17.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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