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My Favorite Credit Card Rewards
Here's what three of our contributors look for in rewards credit cards. Person rolling a suitcase through an airport Image source: Getty Images. There are all sorts of credit card rewards and perks available, and the best ones for you depend on your personal situation. To help get you thinking about some of the credit card rewards that could make the most sense for you, we asked three of our contributors to talk about their favorites, and here's what they had to say. A high-end perk that's well worth the cost for frequent travelers Matt Frankel, CFP : There are several credit card perks I value highly as a frequent traveler, from airline miles to free checked bags to TSA Pre-Check reimbursement. However, I have to say that my favorite credit card reward is one that doesn't come cheap: airport lounge access. Credit cards that offer lounge access tend to have some pretty hefty annual fees, typically $450 or more. However, I feel that frequent travelers can get their money's worth and then some. If you aren't familiar, airport lounges have amenities that vary slightly, but the general idea is that travelers can get free food (ranging from light snacks to a full meal, depending on the lounge), free drinks including beer, wine, and cocktails, and a quiet place to relax or get some work done. Some even have nice shower facilities, which alone is worth quite a bit after a long-haul flight. The way I figure, on the average two-hour layover, I'll typically spend anywhere from $20 to $50 on food and drinks. Double that if my wife is with me (I can bring a guest into the lounges with my card). A quiet place to get some work done with reliable and fast Wi-Fi adds even more value. I use my lounge access at least 10 times per year, on average, so I estimate this benefit alone justifies the annual fee of my high-end travel credit card. All that said, before you sign up for a card with this luxe benefit, make sure you'll be able to take full advantage of it. Look into which lounges you'll get access to and see if they're located at the airports (and terminals!) you fly out of often. Story continues A simple reward that keeps paying off for years to come Christy Bieber : I've had many credit cards over the years, all of which offered various perks ranging from statement credits for Uber rides to reimbursement for airline incidental fees or TSA Pre-Check. While I've used some of these perks and appreciated them (especially TSA Pre-Check), I only fly maybe once or twice a year, so the travel-related benefits don't help me that much. And I often forget which cards offer which perks to take advantage of. But there's one reward that always pays me back: cash back deposited into my investment accounts. I've had two credit cards in succession that both pay generous cash back for everyday purchases. The card I now have also offers bonus cash back for dining out, which we do a lot. Because these cards give me the option to have my cash back deposited directly into brokerage accounts every month, I can put the money straight to work helping me build wealth. While taking advantage of other credit cards perks can be a nice bonus, I'll always choose the card that allows me to earn the most in cash-back rewards. I prioritize that over every other cardholder benefit. That cash back effectively turns every purchase into a tool to grow my investments, and because we charge everything, we spend a lot on our credit cards, so it's far-and-away the most valuable reward any credit card company could offer me. Rewards that offer big savings on expensive travel Lyle Daly : Like Matt, I'm a big fan of travel perks. If I had to choose one type of credit card reward that I wouldn't want to live without, I'd have to go with transferable travel points. I like travel points because they're the most affordable way to book luxurious travel that would normally cost thousands of dollars, such as business-class international flights and stays at expensive resorts. The one drawback of traditional travel points (airline miles and hotel points) is that they're tied to a single brand, which limits your redemption options. Transferable points don't have that problem, because you can use them at any of the reward program's transfer partners. This type of reward fits my lifestyle perfectly, because a good portion of my travel is international. I don't mind flying coach for shorter domestic flights, but on international flights, there's a world of difference between economy and business class. A business-class ticket means much better food options, free drinks, and more spacious seating, with many airlines offering lie-flat seats that make it easier to sleep. When you're going to be on a plane for eight hours or longer, that added comfort is well worth the price. Given that business-class tickets often cost between $1,500 and $3,000, buying them several times per year would put a serious dent in my savings. That's why I like to rack up transferable travel points and save them for international flights, as those are my biggest travel expenses. And because my points are transferable, there's almost always one airline where I can use my points. The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule. If we wouldn’t recommend an offer to a close family member, we wouldn’t recommend it on The Ascent either. Our number one goal is helping people find the best offers to improve their finances. That is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. |
3 Trends Happening to Fintech That You Should Know About
We are now over a decade into the third era of finTtech innovation, which grew out of the fallout from the 2008 global financial crisis and the advent of the smartphone.
Withrecord amountsof investment flowing into the sector again in 2018, this innovation train shows no signs of slowing. However, in the past couple of years, it has rounded a curve and started to branch off in some interesting new directions.
Related:4 Trends That Will Rewire the Inner Workings of the Fintech Industry
The curve? Consumers reaped most of the benefits of the early part of this wave, with more efficient payment and lending products leading the way. However, investment in B2B fintech startups has been ramping up for the past couple of years, and by year's end we can expect to start to see businesses reap the benefits of the fintech wave in three major ways:
The early years of this third era saw a lot of very cool consumer payment products: The use of checks and physical wallets declined as people paid with smart phone apps. Mobile phones also proved to be a boon for the unbanked -- meaning people without credit cards or even bank accounts-- something very common in developing countries.
In that regard, Kenya’smPesahas been leading the way by letting people in markets long underserved by banks store and transfer money, using their phones.
All the while, B2B payments involving fintechs have been chugging along slowly and steadily, but lately they’ve really picked up speed. This is a market that has long been underserved by banks. Business payments are rife with complexity, manual processes and paper checks. Fintech solutions, on the other hand, can automate more of the process, not just move money from point A to point B, which is all that banks do.
Up-and-comers in this market include WorldRemit, which, on the heels of closing $175 million in new funding,announcedits WorldRemit for Business service, which will facilitate cross-border money transfers to pay employees and contractors.
Related:4 Trends That Will Rewire the Inner Workings of the Fintech Industry
Then there's Ripple, which is building a global, blockchain-based payment network. My own company, Nvoicepay, was recently acquired by Fleetcor, which has been quietly assembling a portfolio of B2B payments companies over the past several years.
Banks have had a lock on business payments for decades, but we’ve seen that consumers have gotten comfortable turning to tech companies which have a better offering; and I predict that businesses are going to follow suit.
As anyone who’s ever tried to get a bank loan knows, the application process can be arduous, and credit can be hard to get. Banks tightened lending rules significantly following the financial crisis, and they really haven’t loosened them much. That left the playing field wide open for fintechs using big data and advanced technologies to speed up underwriting and create new financing options for a wider range of people.
We’re seeing that mirrored in the B2B world. Business lending is going to increase as fintechs draw on a wide variety of data sources to offer loans and lines of credit to small and midsize businesses, which have been hit the hardest by tighter credit. Companies offering business loans include theLending Club, Fundera and OnDeck.Brex-- a San Francisco-based startup, which issues corporate credit cards to startups so founders don’t have to max-out their personal cards -- achieved unicorn status with its latest funding round.
I predict we'll also see a dramatic increase in supply-chain finance options. People have talked about the supply-chain finance opportunity for a long time, but in reality it's not a very big segment today. Still, B2B platforms, networks and marketplaces that sit in the middle of automated transactions between buyers and suppliers have amassed huge stores of transactional data. They can combine their own data with external data sources and make all of it visible to a wide range of potential funders who’d be willing to lend against startup funding, invoices or POs.
Banks will probably provide a lot of the capital, but it’s tech companies that will bring the parties together to transact. Entrants in this market includeSurecomp, an established player offering an API that connects bank systems to corporate systems to pull underwriting information such as invoices and trade contracts.
Other entrants? StartupsMarketInvoiceand Invoice Fair; Ario, a Canadian firm that offers a white-labeled suite of tools for businesses to offer customer financing; andFinexkap, a French firm that recently raised $44 million to further develop its factoring platform.
Back when all thesefintech happenings started in 2008, banks and traditional financial institutions were really on the ropes, and the common wisdom was that tech companies were going to come into the market and eat their lunch.
That didn’t happen, but fintechs did put a lot of pressure on banks, and banks have wisely embraced fintech companies, and vice versa -- though perhaps more slowly than one would have assumed back in 2015 when JPMorgan Chase CEO Jamie Dimon famously declared that “Silicon Valley is coming."
Banks, of course, have tremendous assets, big customer bases and big reach. But they don't have the technology that fintechs have or the ability to sell it like fintechs do. The combination of strengths really makes a lot of sense for banks to embrace fintechs. But to date there have been few partnerships, and only a handful of big banks, including Chase, which have acquired FinTechs.
Still, I think that as fintechs get more into B2B payments, and lending picks up steam, the pressure on banks will increase. These are much larger markets, with higher profit margins, and banks will likely fight hard to protect their market share. Then we’ll see the number of bank-fintech partnerships increase and second-tier banks will start to get into the game. That will translate into better offerings for businesses.
It’s interesting that payments and lending drove the early, consumer-oriented part of the third wave -- probably because those are the broadest use cases and the area where the most people have pain.
Now that a broad swath of consumers has experienced the ease and efficiency of fintech products, their changed expectations are starting to influence business buyers. Accounts payable is really starting to question why so much inefficiency still exists in its world and it's looking for better ways to handle payments. Treasury and finance as well are waking up to all the new lending and financing options for consumers and starting to think beyond the bank for the first time.
Related:What the Future of Fintech Looks Like
That’s great news for business customers. When there is more choice in the market, whether it's for payments or lending or other kinds of services, the customer wins. So, while I think 2019 is going to end up being a great year for B2B payments and lending companies, and for bank-fintech partnerships, businesses are going to be the really big winners in 2019. |
Is Russia introducing anti-crypto legislation?
Cryptocurrencies attracted the attention of the Russian authorities in 2014. Since then, the media has periodically published frightening news about new threats of criminal responsibility for crypto investors and traders. Such news is alarming, but is there any truth in it? It seems Russia is still not ready for the introduction of blockchain and cryptocurrencies from a legal perspective. Despite a renewed interest in the technology from Russian authorities, the problem lies in the lack of official control. Anti-crypto legislation in Russia The government of Russia is planning to impose new legislation around the mining of Bitcoin. Anatoly Aksakov, the head of the financial markets committee, believes cryptocurrencies created on open blockchains are illegal tools. Mr Aksakov announced that Russian lawmakers are considering the possibility of imposing fines on mining cryptocurrencies based on an open chain of blocks, such as Bitcoin. This was revealed in an interview with the Russian TASS news network. Mr Aksakov said: I note that any operations with cryptocurrency that are contrary to Russian law will be considered illegal. This means that mining, organisation of production, circulation, and the creation of exchange points for these tools will be prohibited. Administrative liability in the form of a fine will be incurred for such actions. We believe that cryptocurrencies created on open chains of blocks such as Bitcoin, Ethereum, and others are illegal tools. The deputy stressed that, despite the mining ban in Russia, it is still possible to own Bitcoins if they were acquired under foreign law at foreign points of sale and exchange but not in Russia. Aksakov recalled that the adoption of the law On digital financial assets was stuck because of FATF (Financial Action Task Force) requirements for regulating existing cryptocurrencies. However, the law will now be passed in June before the end of the spring session. What is the criminal liability for cryptocurrency in Russia? According to the Constitution of the Russian Federation, it is only possible to pay for goods and services in Russia with Russian rubles. The use of cryptocurrency for purchasing goods is illegal, although the punishment for such actions has not yet been established. Representatives of the Central Bank of Russia and the Ministry of Finance of Russia have repeatedly stated that the use of cryptocurrency to pay for goods and services is impossible. However, Russian citizens still use cryptocurrencies, and criminal penalties for this have not yet been fixed. Story continues There is no prohibition in the legislation regarding money substitutes other than what is contained in the law documentation of the Central Bank of the Russian Federation. In particular, the release and circulation of cryptocurrencies as such does not constitute a crime. Therefore, while law enforcement agencies can make claims about their illegality, according to the legal interpretation of the existing rules, the courts do not yet have a definitive position. However, the open use of cryptocurrency attracts attention and is fraught with accusations. If you decide to buy cryptocurrency in Russia, you should be careful about your dealings and remember that payments in cryptocurrency are still deemed illegal in Russia. Serious accusations The authorities in Russia consider cryptocurrency a tool for money laundering and financing terrorist activities. Conducting transactions with digital assets may therefore attract the attention of law enforcement. Cryptocurrency trading can be conducted through an exchange based in a crypto-friendly jurisdiction. However, the Central Bank of Russia still does not allow customers to openly use bank accounts for operations with cryptocurrency. Using a bank account to store the proceeds of crypto transactions can lead to your funds being frozen. Law enforcement agencies may regard such actions as illegal banking. Lawmakers are currently looking to establish strict rules for conducting operations with cryptocurrencies, and violators may face criminal penalties in the future. Other things to remember Tax evasion on income from transactions with cryptocurrencies may result in imprisonment of up to three years. It is necessary to enter information about such income in your tax returns. Russian lawmakers are considering the possibility of imposing fines on mining cryptocurrencies based on an open chain of blocks, such as Bitcoin. The Russian Ministry of the Interior is considering legislation against open source cryptocurrency, such as Bitcoin or Ethereum. The rapid spread of mining has led to many people attempting to get involved. This is a matter of concern for financiers, who increasingly declare the need to regulate such activities. Some of the most demanding and tough economists want to limit this activity only for experienced and wealthy individuals. The holders of cryptocurrency must provide identification in Russia. Users must obtain a special permit in order to be able to work with cryptocurrency. Violation of these rules may result in a prison term of up to 15 years. Conclusion The cryptocurrency market in Russia is valuable, important, and promising, but it is still extremely dangerous for those who are unprepared. It is recommended that you first get professional advice before you enter this new and developing space. This applies to both the launch of a crypto business and direct investment in digital assets. A lot has been said about the criminal liability for performing operations with cryptocurrencies in Russia. As this is a new and constantly evolving space, you should always try and keep up to date with any new legislation or legal developments where you live. In addition, taxpayers must remember to report any income from cryptocurrency transactions. You can read more about Russian crypto regulation and how Russia is taking aim at Bitcoin with Vladimir Putins CryptoRuble here on Coin Rivet: Russia takes aim at Bitcoin with Vladimir Putins CryptoRuble By Darren Parkin June 20, 2019 The post Is Russia introducing anti-crypto legislation? appeared first on Coin Rivet . View comments |
Mueller Water Products, Inc. (NYSE:MWA) Delivered A Weaker ROE Than Its Industry
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Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). We'll use ROE to examine Mueller Water Products, Inc. (NYSE:MWA), by way of a worked example.
Our data showsMueller Water Products has a return on equity of 5.5%for the last year. One way to conceptualize this, is that for each $1 of shareholders' equity it has, the company made $0.055 in profit.
View our latest analysis for Mueller Water Products
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Mueller Water Products:
5.5% = US$30m ÷ US$549m (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. A higher profit will lead to a higher ROE. So, all else being equal,a high ROE is better than a low one. That means it can be interesting to compare the ROE of different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As shown in the graphic below, Mueller Water Products has a lower ROE than the average (14%) in the Machinery industry classification.
That certainly isn't ideal. We prefer it when the ROE of a company is above the industry average, but it's not the be-all and end-all if it is lower. Nonetheless, it could be useful todouble-check if insiders have sold shares recently.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
While Mueller Water Products does have some debt, with debt to equity of just 0.81, we wouldn't say debt is excessive. I'm not impressed with its ROE, but the debt levels are not too high, indicating the business has decent prospects. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So I think it may be worth checking thisfreereport on analyst forecasts for the company.
If you would prefer 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.
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 of the Best-Performing ETFs for 2019 So Far
With the second quarter winding to a close, we’re nearly at the halfway point of 2019. So it’s an ideal time to examine some of the investment strategies that have been working this year. Broadly speaking, 2019 has been a good year for equities, but there have recently been bumps in the road, mainly caused by an ongoing trade tiff between the U.S. and China, the world’s two largest economies.
As hasbeen widely reported, this trade spat has wide-ranging implications for a variety of sectors, including cyclical and growth stocks, the corners of the equity market that have been driving forces for much of this bull run.
With that in mind, it may not have been surprising that stocks tanked in May, prompting massive outflows from exchange traded funds (ETFs).
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“As a result of the trade-induced market drawdown, equity ETFs posted their highest level of outflows for a given month ever, totaling over $19.9 billion,” said State Streetin a recent note. “Outflows in May are not that uncommon, however. Over the last ten years, equities have had outflows in the month of May 45% of the time—the third highest percentage for a given month.”
Still, the best ETFs remain beloved byadvisors and investors, particularly those looking for low-cost investment ideas or avenues for boosting portfolio diversity. Fortunately, some of the best ETFs are delivering stellar performances this year.
• 6 Stocks Ready to Bounce on a Trade Deal
In searching for this year’s best ETFs, we excluded leveraged funds because those are short-term instruments. A heads up: investors will find that many of the best ETFs to this point in 2019 arethematic funds, including some of the ETFs highlighted here.
Source: Shutterstock
Expense ratio: 0.70%
YTD return: 49.92%
Oil prices climbed earlier this year, boosting the fortunes of alternative energy stocks along the way. Of course, that scenario benefited theInvesco Solar ETF(NYSEARCA:TAN), the largest solar ETF. Up nearly 50% year-to-date, TAN is easily one of this year’s best ETFs. Moreover, considering this fund’s China exposure, its recent performance has been exceptional. TAN barely budged in May and is up 10.14% this month.
Earlier this week, Goldman Sachs boosted its rating on several of TAN’s marquee components, includingSunPower Corporation(NASDAQ:SPWR),Sunrun Inc(NASDAQ:RUN), andSolaredge Technologies Inc(NASDAQ:SEDG).
While TAN allocates over 21% of its weight to Chinese solar companies, one of the important factors making this one of the best ETFs and one cited by Goldman in the aforementioned upgrades is domestic in nature.
Starting next year, California will require all new homes that are built there to have solar panels, representing significant opportunity for several of TAN’s components.
Source: Shutterstock
Expense ratio: 0.65%
YTD return: Almost 29%
Keeping with the theme of alternative energy funds, there is theALPS Clean Energy ETF(CBOE:ACES), which is also one of this year’s best ETFs. ACES, which is about a year old, is one of the best ETFs for investors looking for exposure to multiple clean energy themes.
While TAN is dedicated to solar,ACES offers exposure tosolar, wind, smart grid, biomass, geothermal, electrical vehicle/storage and fuel cell stocks. ACES slumped a bit more than TAN last month, but this alternative energy fund is on the mend this month and is up a solid 7% in the second quarter.
• Check Out These 5 Fast-Growing Stocks to Buy Today
If oil prices can rebound in the back half of 2019, ACES and TAN can solidify their perches as two of this year’s best ETFs.
Expense ratio: 0.59%
YTD return: 35.45%
The MSCI Emerging Markets Index, which will soon feature Argentine stocks, is up barely more than 7% this year, but theGlobal X MSCI Argentina ETF(NYSEARCA:ARGT) is clearly one of this year’s best ETFs, emerging markets or otherwise. Yes, some of ARGT’s status as one of 2019’s best ETFs has to do with global investors buying Argentine equities in anticipation of South America’s second-largest economy being added to the MSCI Emerging Markets Index.
However, there are other factors at play, including ARGT’s 21.14% weight to Latin American e-commerce giantMercadoLibre, Inc.(NASDAQ:MELI). That stock, which is ARGT’s largest holding, is up nearly 113% this year. ARGT is up 8.39% this month as the fund has been boosted by news that President Mauricio Macri is opting for a moderate running mate in this year’s national election there.
“This year, Argentine markets seem to be mimicking patterns from the last presidential election cycle in 2015, when after a strong Q1, election-related uncertainty led to a mid-year market downturn,”according to Global X research. “Almost on cue in 2019, a 17.3% rise in Q1 was met with a selloff in April after default risk spiked. The jump came after early polling data showed higher approval ratings for the former populist President, Cristina Fernandez de Kirchner (CFK) relative to the current pro-market reformist President, Mauricio Macri.”
Source: Shutterstock
Expense ratio: 0.60%
YTD Return: 34.05%
Some momentum stocks have been under pressure due to the trade spat, but others, particularly those withsignificant domestic exposure, are holding up pretty well. That has theInvesco DWA NASDAQ Momentum ETF(NASDAQ:DWAQ)sitting pretty as one of this year’s best ETFs. DWAQ can be used as complement or alternative to traditionalNasdaq-100ETFs.
DWAQ tracks the Dorsey Wright NASDAQ Technical Leaders Index, which is a different beast than the cap-weighted Nasdaq-100.
“All securities in the universe are ranked using a proprietary relative strength (momentum) measure. Each security’s score is based on intermediate and long-term price movements relative to a representative market benchmark and the other eligible securities,”according to Invesco.
• 5 Undervalued Stocks to Buy
DWAQ actually makes for a nice complement to a standard Nasdaq-100 ETF because this Invesco allocates “just” 27% of its weight to technology and healthcare is its largest sector weight at 38.22%. DWAQ is also one of the best ETFs for investors seeking mid/small blend exposure because large caps represent just 19.25% of the fund’s weight.
Source: Shutterstock
Expense ratio: 0.48%
YTD return: 31%
TheO’Shares Global Internet Giants ETF(NYSEARCA:OGIG) is one of several internet funds that qualify for the best ETFs conversation, but there is something rather remarkable about this fund this year. While OGIG features ample exposure to Chinese internet stocks, some of which have been slammed by the trade war, this fund is holding up really well.
None of OGIG’s holdings command weights of more than 6.59%, but the good news for investors is that marquee domestic names in the fund, such asFacebook(NASDAQ:FB) andAlphabet(NASDAQ:GOOG,GOOGL), derive significant portions of their revenue in the U.S. and small percentages in China.
Alphabet and Facebook garner 2% and 9% of their revenue from China, respectively, but Tencent depends on its home country for 97% of its top line,according to O’Shares research.
Todd Shriber does not own any of the aforementioned securities.
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Have Insiders Been Buying Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) Shares This Year?
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares inMid-Southern Bancorp, Inc.(NASDAQ:MSVB).
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
View our latest analysis for Mid-Southern Bancorp
Director Trent Fisher made the biggest insider purchase in the last 12 months. That single transaction was for US$300k worth of shares at a price of US$10.00 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$12.89. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Over the last year, we can see that insiders have bought 93515 shares worth US$949k. While Mid-Southern Bancorp insiders bought shares last year, they didn't sell. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, 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.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 5.5% of Mid-Southern Bancorp shares, worth about US$2.5m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
The fact that there have been no Mid-Southern Bancorp insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Mid-Southern Bancorp stock. To put this in context, take a look at how a company has performed in the past. You can accessthisdetailed graphof past earnings, revenue and cash flow.
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. |
Rio Tinto's Autonomous Trains Can't Work In North America...Yet
Autonomous trains might be fully running in remote Australia, but it will take awhile before those kinds of trains will be rolling down the North American countryside.
Mining companyRio Tintolast week celebrated the completion of a multi-year project to deploy autonomous trains to serve its iron ore mines in western Australia. Rio Tinto touts its AutoHaul trains as belonging to the world's first automated heavy-haul long distance network.
But Rio Tinto's trains in the Outback work under unique conditions that don't exist in North America, sources said. The trains are located in a remote location on an enclosed and privately owned track, and so they don't have to grapple with grade crossings and pedestrian access. Crews would also be needed to switch trains while they're operating. Because of these issues, it could take years and years before autonomous trains are used in North America, an industry expert said.
Still, the North American rail industry has visited Rio Tinto's trains in Australia to observe how that technology can be applied more locally. And so, while automated trains are unlikely in the near- and medium-term, automation – particularly for safety and operational applications – is a more tangible target.
"The Rio Tinto situation is certainly different to that of Class I railroads (a captive railroad moving its own product, run when ready versus scheduled, etc.), but I think paints a picture for the future," said Tom Forbes, chief executive officer ofBiarri Rail,a technology company. Biarri has worked withKansas City Southern(NYSE:KSU) to develop that railroad's precision scheduled railroading system.
"Autonomy is the end point that railroads we work with, such as KSU, have clearly identified. The journey they need to go on is to utilize data and decision-making artificial intelligence solutions in the planning environment and to steadily move towards more real-time and then automated solutions over time as the data sources mature," Forbes said.
Rio Tinto conducted its first loads on the automated train system in July 2018, adding more automated trains to the network since then. In December 2018, the mining company said it successfully deployed the technology throughout the network and would spend the subsequent months refining the system.
The company says the technology will improve productivity, increase flexibility and reduce bottlenecks. An operations center located 1,500 kilometers away in Perth remotely monitors the robot trains, which serve 16 iron ore mines and travel 1,700 kilometers of company-owned track.
"This project has cemented Western Australia as a leader in the heavy-haul rail industry and has attracted interest from around the world," said Ivan Vella, managing director of rail, port and core services for Rio Tinto Iron Ore.
The US$940 million initiative entailed installing software on Rio Tinto's 200 locomotives, as well as safety systems that monitor train speed and detect potential collisions. Rio Tinto also installed on-board video cameras on the trains that provide a front view. The company says these tools will cut the amount of road travel to transport drivers to and from trains.
Partners in the multi-year project included Hitachi Rail, Calibre, New York Air Brake and Wabtec, among others.
Wabtectold FreightWaves that it supplied two of the onboard computers that enable AutoHaul's remote capability for throttle and dynamic brake and other train driving functions. The computers provide the interface to the locomotive inputs and outputs that are used by AutoHaul, and they host both the electronically controlled pneumatic brake system, known as ECP brakes, and the direct locomotive control system, known as the DLC system.
"Rio Tinto's milestone is an exciting one for the rail industry, and demonstrates the opportunity for technology solutions to improve safety, efficiency and productivity across the broader transportation market," Wabtec said.
Image Sourced by Pixabay
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Here’s What Hedge Funds Think About China Mobile Limited (CHL)
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 China Mobile Limited (NYSE:CHL) from the perspective of those elite funds.
China Mobile Limited (NYSE:CHL)was in 19 hedge funds' portfolios at the end of the first quarter of 2019. CHL has seen an increase in activity from the world's largest hedge funds recently. There were 14 hedge funds in our database with CHL holdings at the end of the previous quarter. Our calculations also showed that chl isn't among the30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_746830" align="aligncenter" width="473"]
Matthew Hulsizer of PEAK6 Capital[/caption]
Let's review the key hedge fund action encompassing China Mobile Limited (NYSE:CHL).
Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CHL 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 China Mobile Limited (NYSE:CHL) was held byRenaissance Technologies, which reported holding $266.7 million worth of stock at the end of March. It was followed by Ariel Investments with a $59.3 million position. Other investors bullish on the company included Arrowstreet Capital, PEAK6 Capital Management, and Two Sigma Advisors.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves.PEAK6 Capital Management, managed by Matthew Hulsizer, created the most valuable call position in China Mobile Limited (NYSE:CHL). PEAK6 Capital Management had $15 million invested in the company at the end of the quarter. Lee Ainslie'sMaverick Capitalalso initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are David Kowitz and Sheldon Kasowitz'sIndus Capital, Michael Gelband'sExodusPoint Capital, and Jay Petschek and Steven Major'sCorsair Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as China Mobile Limited (NYSE:CHL) but similarly valued. These stocks are The Coca-Cola Company (NYSE:KO), The Walt Disney Company (NYSE:DIS), Oracle Corporation (NYSE:ORCL), and Comcast Corporation (NASDAQ:CMCSA). This group of stocks' market valuations are closest to CHL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KO,48,20680037,-5 DIS,114,7045572,43 ORCL,52,4994743,-2 CMCSA,87,6279870,4 Average,75.25,9750056,10 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 75.25 hedge funds with bullish positions and the average amount invested in these stocks was $9750 million. That figure was $410 million in CHL's case. The Walt Disney Company (NYSE:DIS) is the most popular stock in this table. On the other hand The Coca-Cola Company (NYSE:KO) is the least popular one with only 48 bullish hedge fund positions. Compared to these stocks China Mobile Limited (NYSE:CHL) is even less popular than KO. Hedge funds dodged a bullet by taking a bearish stance towards CHL. Our calculations showed that the top 15 most popular hedge fund stocks returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CHL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CHL investors were disappointed as the stock returned -10.9% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Chesapeake Energy Corporation (CHK) A Good Stock To Buy?
The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Chesapeake Energy Corporation (NYSE:CHK).
IsChesapeake Energy Corporation (NYSE:CHK)a bargain? Money managers are buying. The number of bullish hedge fund bets inched up by 5 recently. Our calculations also showed that CHK isn't among the30 most popular stocks among hedge funds.CHKwas in 20 hedge funds' portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with CHK holdings at the end of the previous quarter.
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 take a gander at the latest hedge fund action surrounding Chesapeake Energy Corporation (NYSE:CHK).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CHK 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.
According to Insider Monkey's hedge fund database, Cliff Asness'sAQR Capital Managementhas the number one position in Chesapeake Energy Corporation (NYSE:CHK), worth close to $65.1 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot isMillennium Management, led by Israel Englander, holding a $52.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism contain Joe Huber'sHuber Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital.
Now, specific money managers have jumped into Chesapeake Energy Corporation (NYSE:CHK) headfirst.Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Chesapeake Energy Corporation (NYSE:CHK). Arrowstreet Capital had $8.9 million invested in the company at the end of the quarter. Joel Greenblatt'sGotham Asset Managementalso made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Carlson'sCarlson Capital, Mark Wolfson and Jamie Alexander'sJasper Ridge Partners, and Kenneth Tropin'sGraham Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Chesapeake Energy Corporation (NYSE:CHK). We will take a look at MKS Instruments, Inc. (NASDAQ:MKSI), Popular Inc (NASDAQ:BPOP), IDACORP Inc (NYSE:IDA), and Seaboard Corporation (NYSE:SEB). All of these stocks' market caps are similar to CHK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MKSI,22,559663,-8 BPOP,33,776860,1 IDA,18,243743,-2 SEB,11,68653,1 Average,21,412230,-2 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $412 million. That figure was $180 million in CHK's case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Seaboard Corporation (NYSE:SEB) is the least popular one with only 11 bullish hedge fund positions. Chesapeake Energy Corporation (NYSE:CHK) 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 CHK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CHK investors were disappointed as the stock returned -34.2% 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 Carrols Restaurant Group, Inc. (TAST) A Good Stock To Buy?
Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Carrols Restaurant Group, Inc. (NASDAQ:TAST).
IsCarrols Restaurant Group, Inc. (NASDAQ:TAST)an excellent stock to buy now? Hedge funds are turning bullish. The number of long hedge fund positions rose by 2 lately. Our calculations also showed that tast isn't among the30 most popular stocks among hedge funds.
To most stock holders, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are over 8000 funds in operation today, Our experts choose to focus on the masters of this club, around 750 funds. These hedge fund managers manage bulk of the hedge fund industry's total capital, and by observing their best equity investments, Insider Monkey has figured out various investment strategies that have historically exceeded the market. Insider Monkey's flagship hedge fund strategy exceeded 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 view the new hedge fund action regarding Carrols Restaurant Group, Inc. (NASDAQ:TAST).
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TAST over the last 15 quarters. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds,Private Capital Managementheld the most valuable stake in Carrols Restaurant Group, Inc. (NASDAQ:TAST), which was worth $24 million at the end of the first quarter. On the second spot was Cannell Capital which amassed $17.8 million worth of shares. Moreover, Royce & Associates, Cove Street Capital, and Portolan Capital Management were also bullish on Carrols Restaurant Group, Inc. (NASDAQ:TAST), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were breaking ground themselves.Half Sky Capital, managed by Li Ran, established the largest position in Carrols Restaurant Group, Inc. (NASDAQ:TAST). Half Sky Capital had $7.2 million invested in the company at the end of the quarter. Warren Lammert'sGranite Point Capitalalso made a $1.8 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer'sPEAK6 Capital Management.
Let's go over hedge fund activity in other stocks similar to Carrols Restaurant Group, Inc. (NASDAQ:TAST). These stocks are Digimarc Corp (NASDAQ:DMRC), Hingham Institution for Savings (NASDAQ:HIFS), Green Plains Partners LP (NASDAQ:GPP), and HCI Group, Inc. (NYSE:HCI). All of these stocks' market caps are similar to TAST's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMRC,3,33204,-1 HIFS,1,4077,0 GPP,2,4807,0 HCI,9,20098,0 Average,3.75,15547,-0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $109 million in TAST's case. HCI Group, Inc. (NYSE:HCI) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Carrols Restaurant Group, Inc. (NASDAQ:TAST) is more popular among hedge funds. 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 TAST wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TAST were disappointed as the stock returned -15.3% during the same 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About LivaNova PLC (LIVN)
It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards LivaNova PLC (NASDAQ:LIVN) changed during the first quarter.
LivaNova PLC (NASDAQ:LIVN)has experienced a decrease in hedge fund interest recently. Our calculations also showed that LIVN 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.
We're going to go over the fresh hedge fund action surrounding LivaNova PLC (NASDAQ:LIVN).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in LIVN a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically,Redmile Groupwas the largest shareholder of LivaNova PLC (NASDAQ:LIVN), with a stake worth $56.7 million reported as of the end of March. Trailing Redmile Group was Point72 Asset Management, which amassed a stake valued at $43.9 million. Millennium Management, Renaissance Technologies, and Fisher Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that LivaNova PLC (NASDAQ:LIVN) has faced falling interest from the smart money, we can see that there exists a select few hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Arthur B Cohen and Joseph Healey'sHealthcor Management LPsaid goodbye to the biggest stake of the "upper crust" of funds monitored by Insider Monkey, worth close to $79.9 million in stock. Phill Gross and Robert Atchinson's fund,Adage Capital Management, also said goodbye to its stock, about $16.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as LivaNova PLC (NASDAQ:LIVN) but similarly valued. We will take a look at MGIC Investment Corporation (NYSE:MTG), ViaSat, Inc. (NASDAQ:VSAT), First Citizens BancShares Inc. (NASDAQ:FCNCA), and PLDT Inc. (NYSE:PHI). This group of stocks' market caps are similar to LIVN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTG,32,392959,-3 VSAT,22,2119384,3 FCNCA,18,139967,-4 PHI,5,67170,0 Average,19.25,679870,-1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $263 million in LIVN's case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 5 bullish hedge fund positions. LivaNova PLC (NASDAQ:LIVN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 LIVN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on LIVN were disappointed as the stock returned -26.4% during the same 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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Hedge Funds Have Never Been This Bullish On Sunstone Hotel Investors Inc (SHO)
How do we determine whether Sunstone Hotel Investors Inc (NYSE:SHO) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
IsSunstone Hotel Investors Inc (NYSE:SHO)a buy right now? Prominent investors are in an optimistic mood. The number of bullish hedge fund bets improved by 4 recently. Our calculations also showed that SHO isn't among the30 most popular stocks among hedge funds.
In the eyes of most market participants, hedge funds are seen as underperforming, old financial vehicles of the past. While there are more than 8000 funds in operation today, Our experts choose to focus on the top tier of this group, approximately 750 funds. Most estimates calculate that this group of people have their hands on the majority of the hedge fund industry's total capital, and by keeping an eye on their finest equity investments, Insider Monkey has formulated a number of investment strategies that have historically outstripped the market. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per annum 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 look at the new hedge fund action encompassing Sunstone Hotel Investors Inc (NYSE:SHO).
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SHO over the last 15 quarters. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds,Renaissance Technologiesheld the most valuable stake in Sunstone Hotel Investors Inc (NYSE:SHO), which was worth $43.8 million at the end of the first quarter. On the second spot was Echo Street Capital Management which amassed $36.1 million worth of shares. Moreover, Elliott Management, Citadel Investment Group, and Millennium Management were also bullish on Sunstone Hotel Investors Inc (NYSE:SHO), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were breaking ground themselves.Tudor Investment Corp, managed by Paul Tudor Jones, created the most outsized position in Sunstone Hotel Investors Inc (NYSE:SHO). Tudor Investment Corp had $1.4 million invested in the company at the end of the quarter. David Costen Haley'sHBK Investmentsalso initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Thomas Bailard'sBailard Inc, Steve Cohen'sPoint72 Asset Management, and David Harding'sWinton Capital Management.
Let's go over hedge fund activity in other stocks similar to Sunstone Hotel Investors Inc (NYSE:SHO). These stocks are Tetra Tech, Inc. (NASDAQ:TTEK), MFA Financial, Inc. (NYSE:MFA), Silgan Holdings Inc. (NASDAQ:SLGN), and iRobot Corporation (NASDAQ:IRBT). All of these stocks' market caps match SHO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TTEK,23,58316,-2 MFA,16,130476,-2 SLGN,15,156867,1 IRBT,15,121719,1 Average,17.25,116845,-0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $156 million in SHO's case. Tetra Tech, Inc. (NASDAQ:TTEK) is the most popular stock in this table. On the other hand Silgan Holdings Inc. (NASDAQ:SLGN) is the least popular one with only 15 bullish hedge fund positions. Sunstone Hotel Investors Inc (NYSE:SHO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 SHO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SHO were disappointed as the stock returned -6.5% during the same 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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Here’s What Hedge Funds Think About AMC Networks Inc (AMCX)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider AMC Networks Inc (NASDAQ:AMCX) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
AMC Networks Inc (NASDAQ:AMCX)investors should pay attention to an increase in hedge fund sentiment of late. Our calculations also showed that AMCX 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 key hedge fund action surrounding AMC Networks Inc (NASDAQ:AMCX).
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMCX 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.
According to Insider Monkey's hedge fund database,AQR Capital Management, managed by Cliff Asness, holds the biggest position in AMC Networks Inc (NASDAQ:AMCX). AQR Capital Management has a $92.1 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management's heels is Mario Gabelli ofGAMCO Investors, with a $50.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass Leon Cooperman'sOmega Advisors, Murray Stahl'sHorizon Asset Managementand Noam Gottesman'sGLG Partners.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness.Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in AMC Networks Inc (NASDAQ:AMCX). Arrowstreet Capital had $12.7 million invested in the company at the end of the quarter. Ken Griffin'sCitadel Investment Groupalso initiated a $2.2 million position during the quarter. The following funds were also among the new AMCX investors: Roger Ibbotson'sZebra Capital Management, Mike Vranos'sEllington, and Paul Marshall and Ian Wace'sMarshall Wace LLP.
Let's go over hedge fund activity in other stocks similar to AMC Networks Inc (NASDAQ:AMCX). These stocks are Generac Holdings Inc. (NYSE:GNRC), Valley National Bancorp (NASDAQ:VLY), FS KKR Capital Corp. (NYSE:FSK), and Apergy Corporation (NYSE:APY). This group of stocks' market caps are closest to AMCX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNRC,17,144727,-4 VLY,11,26971,3 FSK,19,202328,-1 APY,12,126003,-1 Average,14.75,125007,-0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $259 million in AMCX's case. FS KKR Capital Corp. (NYSE:FSK) is the most popular stock in this table. On the other hand Valley National Bancorp (NASDAQ:VLY) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks AMC Networks Inc (NASDAQ:AMCX) is more popular among hedge funds. 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 AMCX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AMCX were disappointed as the stock returned -5.6% during the same 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is MAXIMUS, Inc. (MMS) A Good Stock To Buy?
Before we spend days researching a stock idea we'd like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 2.6% in the first two months of the second quarter. Ten out of 11 industry groups in the S&P 500 Index lost value in May. The average return of a randomly picked stock in the index was even worse (-3.6%). This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 20 most popular S&P 500 stocks among hedge funds not only generated positive returns but also outperformed the index by about 3 percentage points through May 30th. In this article, we will take a look at what hedge funds think about MAXIMUS, Inc. (NYSE:MMS).
IsMAXIMUS, Inc. (NYSE:MMS)a buy right now? Investors who are in the know are in a bearish mood. The number of long hedge fund bets fell by 2 in recent months. Our calculations also showed that MMS isn't among the30 most popular stocks among hedge funds.MMSwas in 20 hedge funds' portfolios at the end of the first quarter of 2019. There were 22 hedge funds in our database with MMS positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the new hedge fund action regarding MAXIMUS, Inc. (NYSE:MMS).
Heading into the second quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MMS over the last 15 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in MAXIMUS, Inc. (NYSE:MMS) was held byGLG Partners, which reported holding $79.7 million worth of stock at the end of March. It was followed by P2 Capital Partners with a $76.1 million position. Other investors bullish on the company included AQR Capital Management, Arrowstreet Capital, and Renaissance Technologies.
Since MAXIMUS, Inc. (NYSE:MMS) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there is a sect of money managers that elected to cut their positions entirely last quarter. It's worth mentioning that Matthew Tewksbury'sStevens Capital Managementsaid goodbye to the largest position of the "upper crust" of funds watched by Insider Monkey, valued at about $3.1 million in call options, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund dumped about $1.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as MAXIMUS, Inc. (NYSE:MMS) but similarly valued. These stocks are CACI International Inc (NYSE:CACI), LendingTree, Inc (NASDAQ:TREE), Virtu Financial Inc (NASDAQ:VIRT), and Littelfuse, Inc. (NASDAQ:LFUS). This group of stocks' market caps resemble MMS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CACI,13,132826,-5 TREE,17,82935,-4 VIRT,17,93239,0 LFUS,13,248928,-2 Average,15,139482,-2.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $288 million in MMS's case. LendingTree, Inc (NASDAQ:TREE) is the most popular stock in this table. On the other hand CACI International Inc (NYSE:CACI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks MAXIMUS, Inc. (NYSE:MMS) is more popular among hedge funds. 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 MMS, though not to the same extent, as the stock returned 0.8% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Black Women Voters Will Be Central to the 2020 Presidential Election, Experts Predict
After black women delivered some notable advances for Democrats during last year’s midterm elections, they have emerged as a key voting bloc going into the 2020 presidential race.
In the wake of the general election last year, black women stand out as a demographic group with one of the largest voter turnouts. The U.S. Census Bureau reports that 55% of eligible black women voters cast ballots in November 2018, a full six percentage points above the national turnout.
At least one political expert says that the presidential candidates will need to demonstrate a commitment to issues important to this group if they want their party’s nomination. Among those issues: equal pay and maternal health, says Aimee Allison, founder and president of She the People, a group seeking to insure black women are part of the national political conversation.
“If you want to know what the possibilities for this country are beyond Trump, then listen to black women, who are extraordinarily engaged, who are following politics, who are the most likely to vote and bring our communities forward, and to support a broad-based justice agenda,” Allisontold Fortune.
Allison’s organization hosted a national political summit that generated the likes of Democratic U.S. Reps. Barbara Lee of California and Pramila Jayapal of Washington state, as well as a forum featuring several of the White House candidates.
“If you enter into a campaign and you don’t already have established relationships with black women in particular, you are not going to be successful,” she said.
Black women voters are bolstered by the fact that at least one woman of color—U.S. Sen. Kamala Harris of California—is consistently polling in the top five among more than 20 major Democratic White House hopefuls. Last year, black women voters helped former Georgia House Minority Leader Stacey Abrams come close to becoming the country’s first woman governor. And black women elected to the U.S. House last year helped the number of black women in Congress climb to more than 20 for the first time ever.
What black women want from the 2020 White House race is to have the issues important to them recognized by the candidates, said Glynda Carr, cofounder of Higher Heights for America, an organization seeking to corral the political power of black women and advance progressive policies. Carr pointed out that black women represent 4.1% of the U.S. House and Senate, but around 8% of the U.S. population.
“What we are looking for this year is a return in our voting investment,” Carr toldFortune. “We want economic relief, educated, healthy and safe communities, and although we are this growing political bloc, research shows that we are at the bottom of all the economic, social and health indicators. Frankly, we’re claiming our seat,” she said.
Black women have long been immersed in politics. During the push for voting rights in the 1960s, black women like student leader Diane Nash and late Martin Luther King associate Dorothy Cotton were at the center of sometimes violent demonstrations. Late U.S. Rep. Shirley Chisholm, a New York Democrat and first black woman in Congress, drew national attention in 1972 when she became the first black candidate from a major party to run for president.
The current surge among black women voters bubbled up around the time of former President Obama’s first election back in 2008, political experts say.
“Black women were the engine behind Barack Obama’s campaign built on election organizers and small-dollar donors,” Allison said.
“There was a surge in registration in the 2007-2008 period during the first Obama (presidential) campaign, so there are literally hundreds of thousands of additional black women on the rolls if you compare it to the pre-2008 period,” said Ron Lester, veteran Washington pollster. “And then, in 2012, even more were added,” he said.
In fact, in 2012, black women had the highest turnout of all voting groups, according to the Census Bureau’s Current Population Survey Voting and Registration Supplement. Just over 70% of eligible black women voters cast ballots in 2012, compared to 65.6% of white women, 62.6% of white men, 61.5% of black men and 59.2% of women of color overall, along with several other demographic groups that generated even lower numbers.
“The turnout of African-American women in 2012 was just extraordinary from a historical perspective,” Lester said in an interview withFortune. “It was the first-ever example of when African Americans actually outvoted whites. Many were new voters. A lot of people called them Obama voters.”
Recognizing this power, more than two dozen black women elected officials and political activists—including Glynda Carr—signed a June 2017 letter to the Democratic National Committee saying they were the party’s most loyal base and they were tired of being taken for granted. In response, DNC Chairman Tom Perez vowed to engage more with black women.
That year, a couple of races made pollsters begin to look at how they collect data, said Patrick Murray, director of the Monmouth University Polling Institute. They raised a collective eyebrow when Northern Virginia Democrats delivered a win in 2017 to Ralph Northam in the Virginia governor’s race, Murray toldFortune.In that same general election, Democrat Phil Murphy beat Republican Kim Guadagno in the New Jersey governor’s race.
By 2018, when black women pushed U.S. Sen. Doug Jones (D-Ala.), to victory in a special election, pollsters were recalibrating how they model likely voters. The win made Jones, a former U.S. attorney, the first Democrat to win a Senate seat representing Alabama in a quarter century.
“In a midterm, there are certain groups that just don’t turn out … African-American women don’t vote in the same numbers as in presidential years,” Murray said. “In 2018, we saw groups that just don’t turn out (for midterm elections).”
Jones’ win materialized because Democrats recognized black women’s voting power, and at a time when Democrats were losing special elections, Allison said. Abrams recognized that black women were her base, Allison added. The strategy brought her within 1.5 percentage points of the Republican winner, former Georgia Secretary of State Brian Kemp, that some say argue Abrams should have won after allegations of voting improprieties.
“She (Abrams) basically said, ‘Look, here’s my base, and I’m going to have people on the ground who are going to start knocking on doors all throughout Georgia’ from 18 months out,” Allison said. “She flipped the script.”
Black women are generating surges in educational attainment and employment, and studies show people with the most education are the most likely to cast ballots. The Obama elections brought them out in droves, but then they kept voting, according to Lester.
“I think what we saw in Alabama with Jones is kind of an activation of the Obama voters,” the pollster said.
Pollsters said it is still too early to see how the figures will shake out on Super Tuesday or in November of 2020, however.
Right now, former Vice President Joe Biden is scoring the highest among black women, said Lester, who speculates this is primarily because of name recognition. But this could change, he said, and he predicted Harris could benefit from the fact that her home state of California has moved its primary up to Super Tuesday on March 3, 2020.
Murray said key primary states like South Carolina will be important to watch.
“I think that the candidates that have emerged as new on the scene have made at least some notable inroads—Harris, [former U.S. Rep. Beto] O’Rourke and [South Bend, Ind., Mayor Pete] Buttigieg,” he said.
Looking ahead, there is lots of promise for black women on the political scene, according to Carr. For instance, Jennifer Riley-Collins, a civil rights lawyer and black woman, is running for attorney general in Mississippi. Stephany Rose Spaulding, a black woman, who is an educator and a pastor, is running for U.S. Senate representing Colorado.
“It’s progress,” said Carr, who would like for all candidates to learn how to talk to black women.
“The road to the White House has to stop at a black woman’s house—stop, have a cup of tea, and have real conversations around shaping a national policy that includes all women,” she said.
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Here’s What Hedge Funds Think About Kennametal Inc. (KMT)
How do we determine whether Kennametal Inc. (NYSE:KMT) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Kennametal Inc. (NYSE:KMT)has seen a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that KMT isn't among the30 most popular stocks among hedge funds.
To most investors, hedge funds are seen as worthless, old investment vehicles of years past. While there are over 8000 funds with their doors open at present, We hone in on the bigwigs of this group, about 750 funds. These investment experts preside over the majority of all hedge funds' total capital, and by keeping an eye on their top picks, Insider Monkey has figured out a few investment strategies that have historically defeated the market. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year 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.
[caption id="attachment_735677" align="aligncenter" width="473"]
Sander Gerber of Hudson Bay Capital[/caption]
Let's take a peek at the key hedge fund action encompassing Kennametal Inc. (NYSE:KMT).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KMT over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Kennametal Inc. (NYSE:KMT) was held byAriel Investments, which reported holding $196.1 million worth of stock at the end of March. It was followed by Adage Capital Management with a $19.5 million position. Other investors bullish on the company included GAMCO Investors, Renaissance Technologies, and Royce & Associates.
Seeing as Kennametal Inc. (NYSE:KMT) has faced falling interest from the smart money, logic holds that there exists a select few fund managers that slashed their full holdings heading into Q3. Intriguingly, Clint Carlson'sCarlson Capitaldumped the biggest stake of the 700 funds watched by Insider Monkey, totaling about $9.7 million in stock, and David Tepper's Appaloosa Management LP was right behind this move, as the fund dumped about $6.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks similar to Kennametal Inc. (NYSE:KMT). These stocks are Q2 Holdings Inc (NYSE:QTWO), Red Rock Resorts, Inc. (NASDAQ:RRR), Corporate Office Properties Trust (NYSE:OFC), and Louisiana-Pacific Corporation (NYSE:LPX). This group of stocks' market caps match KMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTWO,15,67077,3 RRR,17,377954,0 OFC,12,156974,-11 LPX,28,461781,-3 Average,18,265947,-2.75 [/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 $266 million. That figure was $271 million in KMT's case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Corporate Office Properties Trust (NYSE:OFC) is the least popular one with only 12 bullish hedge fund positions. Kennametal Inc. (NYSE:KMT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 KMT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on KMT were disappointed as the stock returned -13.8% during the same 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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Here’s What Hedge Funds Think About Jabil Inc. (JBL)
"The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak," are the words ofBrookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Jabil Inc. (NYSE:JBL) and see how it was affected.
Jabil Inc. (NYSE:JBL)shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds' portfolios at the end of March. 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 Emcor Group Inc (NYSE:EME), Rayonier Inc. (NYSE:RYN), and Eastgroup Properties Inc (NYSE:EGP) to gather more data points.
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.
We're going to check out the latest hedge fund action regarding Jabil Inc. (NYSE:JBL).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JBL over the last 15 quarters. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Jabil Inc. (NYSE:JBL) was held byAQR Capital Management, which reported holding $113.1 million worth of stock at the end of March. It was followed by Pzena Investment Management with a $40 million position. Other investors bullish on the company included Millennium Management, Adage Capital Management, and Citadel Investment Group.
Since Jabil Inc. (NYSE:JBL) has faced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of money managers that slashed their full holdings in the third quarter. At the top of the heap, Doug Gordon, Jon Hilsabeck and Don Jabro'sShellback Capitalcut the largest position of the 700 funds followed by Insider Monkey, worth close to $2.5 million in stock. Ravee Mehta's fund,Nishkama Capital, also dropped its stock, about $1.3 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Jabil Inc. (NYSE:JBL) but similarly valued. We will take a look at Emcor Group Inc (NYSE:EME), Rayonier Inc. (NYSE:RYN), Eastgroup Properties Inc (NYSE:EGP), and Tribune Media Company (NYSE:TRCO). This group of stocks' market valuations match JBL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EME,26,248543,8 RYN,14,318375,-5 EGP,7,31107,0 TRCO,28,1320785,-12 Average,18.75,479703,-2.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $480 million. That figure was $275 million in JBL's case. Tribune Media Company (NYSE:TRCO) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 7 bullish hedge fund positions. Jabil Inc. (NYSE:JBL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 JBL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on JBL were disappointed as the stock returned -3.4% during the same 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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Here’s What Hedge Funds Think About NuVasive, Inc. (NUVA)
How do we determine whether NuVasive, Inc. (NASDAQ:NUVA) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
NuVasive, Inc. (NASDAQ:NUVA)shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds' portfolios at the end of the first quarter of 2019. At the end of this article we will also compare NUVA to other stocks including White Mountains Insurance Group Ltd (NYSE:WTM), Rogers Corporation (NYSE:ROG), and AVX Corporation (NYSE:AVX) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a glance at the new hedge fund action encompassing NuVasive, Inc. (NASDAQ:NUVA).
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NUVA over the last 15 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in NuVasive, Inc. (NASDAQ:NUVA) was held byFisher Asset Management, which reported holding $63.1 million worth of stock at the end of March. It was followed by York Capital Management with a $50.2 million position. Other investors bullish on the company included Camber Capital Management, Eversept Partners, and Citadel Investment Group.
Because NuVasive, Inc. (NASDAQ:NUVA) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedge funds that slashed their positions entirely last quarter. At the top of the heap, Steve Cohen'sPoint72 Asset Managementcut the largest investment of the 700 funds watched by Insider Monkey, valued at close to $28.7 million in stock. Justin John Ferayorni's fund,Tamarack Capital Management, also said goodbye to its stock, about $24.8 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 now take a look at hedge fund activity in other stocks - not necessarily in the same industry as NuVasive, Inc. (NASDAQ:NUVA) but similarly valued. We will take a look at White Mountains Insurance Group Ltd (NYSE:WTM), Rogers Corporation (NYSE:ROG), AVX Corporation (NYSE:AVX), and Conduent Incorporated (NYSE:CNDT). This group of stocks' market values resemble NUVA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WTM,16,161311,-2 ROG,9,67070,2 AVX,11,107908,-5 CNDT,30,579659,-5 Average,16.5,228987,-2.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $249 million in NUVA's case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand Rogers Corporation (NYSE:ROG) is the least popular one with only 9 bullish hedge fund positions. NuVasive, Inc. (NASDAQ:NUVA) 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 NUVA as the stock returned 5.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Chart Industries, Inc. (GTLS)
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 Chart Industries, Inc. (NASDAQ:GTLS).
IsChart Industries, Inc. (NASDAQ:GTLS)going to take off soon? Money managers are getting more optimistic. The number of bullish hedge fund bets improved by 5 in recent months. Our calculations also showed that GTLS isn't among the30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a peek at the latest hedge fund action surrounding Chart Industries, Inc. (NASDAQ:GTLS).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in GTLS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey,Citadel Investment Group, managed by Ken Griffin, holds the largest position in Chart Industries, Inc. (NASDAQ:GTLS). Citadel Investment Group has a $55.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held byFisher Asset Management, led by Ken Fisher, holding a $48.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Principal Global Investors'sColumbus Circle Investors, Anand Parekh'sAlyeska Investment Groupand Mario Gabelli'sGAMCO Investors.
Consequently, key hedge funds were breaking ground themselves.Point72 Asset Management, managed by Steve Cohen, created the largest position in Chart Industries, Inc. (NASDAQ:GTLS). Point72 Asset Management had $7.3 million invested in the company at the end of the quarter. Matthew Hulsizer'sPEAK6 Capital Managementalso initiated a $5.2 million position during the quarter. The other funds with brand new GTLS positions are Vince Maddi and Shawn Brennan'sSIR Capital Management, Mariko Gordon'sDaruma Asset Management, and Richard Driehaus'sDriehaus Capital.
Let's go over hedge fund activity in other stocks similar to Chart Industries, Inc. (NASDAQ:GTLS). We will take a look at Genesis Energy, L.P. (NYSE:GEL), Valmont Industries, Inc. (NYSE:VMI), Holly Energy Partners, L.P. (NYSE:HEP), and Canada Goose Holdings Inc. (NYSE:GOOS). This group of stocks' market caps are similar to GTLS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GEL,3,22495,-2 VMI,19,234638,1 HEP,4,2658,2 GOOS,27,122294,-2 Average,13.25,95521,-0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $267 million in GTLS's case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 3 bullish hedge fund positions. Chart Industries, Inc. (NASDAQ:GTLS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 GTLS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GTLS were disappointed as the stock returned -13.8% during the same 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 The Manitowoc Company, Inc. (MTW) A Good Stock To Buy?
Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards The Manitowoc Company, Inc. (NYSE:MTW).
The Manitowoc Company, Inc. (NYSE:MTW)has seen an increase in support from the world's most elite money managers in recent months. Our calculations also showed that MTW isn't among the30 most popular stocks among hedge funds.
To most shareholders, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our researchers look at the moguls of this group, about 750 funds. These investment experts preside over most of all hedge funds' total capital, and by following their highest performing stock picks, Insider Monkey has revealed several investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship hedge fund strategy beat 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 review the recent hedge fund action regarding The Manitowoc Company, Inc. (NYSE:MTW).
Heading into the second quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in MTW a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in The Manitowoc Company, Inc. (NYSE:MTW) was held byFirefly Value Partners, which reported holding $55.3 million worth of stock at the end of March. It was followed by Hawk Ridge Management with a $13 million position. Other investors bullish on the company included Rutabaga Capital Management, Marshall Wace LLP, and Lodge Hill Capital.
Now, some big names have jumped into The Manitowoc Company, Inc. (NYSE:MTW) headfirst.Lodge Hill Capital, managed by Clint Murray, assembled the largest position in The Manitowoc Company, Inc. (NYSE:MTW). Lodge Hill Capital had $5.3 million invested in the company at the end of the quarter. Jim Simons'sRenaissance Technologiesalso initiated a $4.7 million position during the quarter. The following funds were also among the new MTW investors: Steve Cohen'sPoint72 Asset Management, Clint Murray'sLodge Hill Capital, and Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital.
Let's now review hedge fund activity in other stocks similar to The Manitowoc Company, Inc. (NYSE:MTW). These stocks are Midland States Bancorp, Inc. (NASDAQ:MSBI), BlackRock MuniVest Fund, Inc. (NYSE:MVF), Sorrento Therapeutics Inc (NASDAQ:SRNE), and Bridge Bancorp, Inc. (NASDAQ:BDGE). This group of stocks' market caps resemble MTW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSBI,4,1643,-3 MVF,1,450,-2 SRNE,5,3048,-1 BDGE,11,97507,2 Average,5.25,25662,-1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $114 million in MTW's case. Bridge Bancorp, Inc. (NASDAQ:BDGE) is the most popular stock in this table. On the other hand BlackRock MuniVest Fund, Inc. (NYSE:MVF) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks The Manitowoc Company, Inc. (NYSE:MTW) is more popular among hedge funds. 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 MTW wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MTW were disappointed as the stock returned -14% during the same 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Federal Signal Corporation (FSS)
Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Federal Signal Corporation (NYSE:FSS).
Federal Signal Corporation (NYSE:FSS)has seen a decrease in support from the world's most elite money managers lately. Our calculations also showed that fss 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 look at the key hedge fund action surrounding Federal Signal Corporation (NYSE:FSS).
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in FSS a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically,GAMCO Investorswas the largest shareholder of Federal Signal Corporation (NYSE:FSS), with a stake worth $20.4 million reported as of the end of March. Trailing GAMCO Investors was Royce & Associates, which amassed a stake valued at $7.8 million. Arrowstreet Capital, Impax Asset Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Federal Signal Corporation (NYSE:FSS) has experienced declining sentiment from hedge fund managers, it's easy to see that there were a few funds that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, David Costen Haley'sHBK Investmentssold off the largest investment of the "upper crust" of funds watched by Insider Monkey, worth close to $0.8 million in stock. Benjamin A. Smith's fund,Laurion Capital Management, also sold off its stock, about $0.5 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Federal Signal Corporation (NYSE:FSS) but similarly valued. We will take a look at Redwood Trust, Inc. (NYSE:RWT), Oceaneering International, Inc. (NYSE:OII), Ferro Corporation (NYSE:FOE), and Prestige Consumer Healthcare Inc. (NYSE:PBH). This group of stocks' market caps are closest to FSS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RWT,15,111479,3 OII,21,127792,5 FOE,16,216138,-3 PBH,13,66863,-2 Average,16.25,130568,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $71 million in FSS's case. Oceaneering International, Inc. (NYSE:OII) is the most popular stock in this table. On the other hand Prestige Consumer Healthcare Inc. (NYSE:PBH) is the least popular one with only 13 bullish hedge fund positions. Federal Signal Corporation (NYSE:FSS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 FSS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FSS were disappointed as the stock returned -5.5% during the same 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 Big Lots, Inc. (BIG) A Good Stock To Buy?
Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Big Lots, Inc. (NYSE:BIG).
Big Lots, Inc. (NYSE:BIG)investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that big 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 go over the fresh hedge fund action regarding Big Lots, Inc. (NYSE:BIG).
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in BIG a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,Balyasny Asset Management, managed by Dmitry Balyasny, holds the number one position in Big Lots, Inc. (NYSE:BIG). Balyasny Asset Management has a $41.3 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second isArrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $33.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions consist of John Overdeck and David Siegel'sTwo Sigma Advisors, Israel Englander'sMillennium Managementand Ken Griffin'sCitadel Investment Group.
As industrywide interest jumped, some big names have been driving this bullishness.Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Big Lots, Inc. (NYSE:BIG). Arrowstreet Capital had $33.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $4 million investment in the stock during the quarter. The following funds were also among the new BIG investors: Matthew Hulsizer'sPEAK6 Capital Management, David Costen Haley'sHBK Investments, and Steve Cohen'sPoint72 Asset Management.
Let's also examine hedge fund activity in other stocks similar to Big Lots, Inc. (NYSE:BIG). We will take a look at Mobile Mini Inc (NASDAQ:MINI), Aircastle Limited (NYSE:AYR), Vector Group Ltd (NYSE:VGR), and trivago N.V. (NASDAQ:TRVG). All of these stocks' market caps resemble BIG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MINI,14,96722,-1 AYR,12,82003,-1 VGR,22,171934,2 TRVG,11,120462,-2 Average,14.75,117780,-0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $179 million in BIG's case. Vector Group Ltd (NYSE:VGR) is the most popular stock in this table. On the other hand trivago N.V. (NASDAQ:TRVG) is the least popular one with only 11 bullish hedge fund positions. Big Lots, Inc. (NYSE:BIG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 BIG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BIG were disappointed as the stock returned -31.6% during the same 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 The Madison Square Garden Company's (NYSE:MSG) 0.9% ROE Worse Than Average?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand The Madison Square Garden Company (NYSE:MSG).
Madison Square Garden has a ROE of 0.9%, based on the last twelve months. That means that for every $1 worth of shareholders' equity, it generated $0.0092 in profit.
Check out our latest analysis for Madison Square Garden
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Madison Square Garden:
0.9% = US$39m ÷ US$2.8b (Based on the trailing twelve months to March 2019.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is the capital paid in by shareholders, plus any retained earnings. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the profit over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As shown in the graphic below, Madison Square Garden has a lower ROE than the average (16%) in the Entertainment industry classification.
That's not what we like to see. It is better when the ROE is above industry average, but a low one doesn't necessarily mean the business is overpriced. Nonetheless, it could be useful todouble-check if insiders have sold shares recently.
Virtually all companies need money to invest in the business, to grow profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used.
While Madison Square Garden does have a tiny amount of debt, with debt to equity of just 0.037, we think the use of debt is very modest. Its ROE is quite low, and the company already has some debt, so surely shareholders are hoping for an improvement. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is useful for comparing the quality of different businesses. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have the same ROE, then I would generally prefer the one with less debt.
But when a business is high quality, the market often bids it up to a price that reflects this. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to take a peek at thisdata-rich interactive graph of forecasts for the company.
Of courseMadison Square Garden may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
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. |
Slack Shares Open at $38.50 on NYSE After Unusual Direct Listing
(Bloomberg) -- Slack Technologies Inc. opened at $38.50 on the New York Stock Exchange Thursday, valuing the office chat software maker at about $19.5 billion.
Shares started trading at 12:08 p.m., almost three hours after Slack Chief Executive Officer Stewart Butterfield rang the opening bell at the exchange.
Unlike a traditional initial public offering, Slack’s decision to pursue a direct listing means there was no offer price for the shares. Instead, advisers spent the morning gathering buy and sell orders to assess what the first-trade price should be. The stock exchange set a reference price Wednesday of $26 a share.
The market valuation of the company is based on the outstanding Class A and Class B shares, and doesn’t include restricted stock units.
Slack shares trade under the ticker WORK. Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. advised on the listing.
To contact the reporter on this story: Elizabeth Fournier in New York at efournier5@bloomberg.net
To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Elizabeth Fournier, Matthew Monks
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P. |
What Are Analysts Saying About The Madison Square Garden Company's (NYSE:MSG) Future?
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Looking at The Madison Square Garden Company's (NYSE:MSG) earnings update in March 2019, analysts seem fairly confident, with profits predicted to increase by 28% next year, though this is noticeably lower than the past 5-year average earnings growth of 56%. With trailing-twelve-month net income at current levels of US$142m, we should see this rise to US$181m in 2020. Below is a brief commentary around Madison Square Garden's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
See our latest analysis for Madison Square Garden
The longer term view from the 7 analysts covering MSG is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of MSG's earnings growth over these next few years.
From the current net income level of US$142m and the final forecast of US$353m by 2022, the annual rate of growth for MSG’s earnings is 30%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $4.12 in the final year of forecast compared to the current $5.99 EPS today. In 2022, MSG's profit margin will have expanded from 9.1% to 20%.
Future outlook is only one aspect when you're building an investment case for a stock. For Madison Square Garden, there are three important aspects you should further examine:
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 Madison Square Garden 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 Madison Square Garden is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Madison Square Garden? 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. |
The U.S. Census Has a Long History of Discrimination
As the debate over the addition of a citizenship question for the 2020 census has continued to rage in U.S. Congress, experts and laymen in the public sphere have reckoned with the potential fallout of such a development.
The greatest fear among policy analysts and average Americans alike is that the question will cause millions of people, including many legal immigrants, not to respond to the census at all. This, in turn, could cause an inaccurate distribution of federal resources and congressional seats, leading to inadequate representation for an estimated4 million people.
“This census has become this administration’s new front in its war on immigration and immigrants. That context has created a real climate of fear,” Teri Ann Lowenthal, former staff director of the House census oversight subcommittee, toldFortune.
But the contemporary fight over the citizenship question is hardly the first time that the census has been used to partisan ends, often in discriminatory ways.
From its inception, the U.S. census has done far more than just take population counts—it has served repeatedly as a tool to name, disenfranchise, and even root out ethnic “undesirables” as recently as the 1940s.
Lowenthal and other census experts were quick to point out that it’s worth noting a difference between the census being used to discriminatory ends and the census results themselves being manipulated by racism. The question of who should be counted and how has always been a highly subjective enterprise.
“I think the Trump administration’s push to add a citizenship question to the 2020 Census essentially uses the census process itself to achieve similar discriminatory goals, in this case a likely disproportionate undercount of people of color that will reduce political representation for these communities just as the three-fifths compromise did 230 years ago,” said Lowenthal.
The roots of the U.S. census go all the way back to the American Revolution and its quest to ensure fair and representative government. The census is even enshrined in the U.S. constitution, with article one, section two, calling for it to be conducted once every 10 years. And from the start, the census was defined by much of the moral ambiguity and racial tensions that have continued to plague it today.
The first census was far simpler than current versions, and it counted only the number of white men under and over 16 years old, the number of white women under and over 16, the number of other free persons, and the number of slaves. Native Americans did not count, according to the founding fathers, because they were not tax-payers. After the notorious three-fifths compromise, each slave would only be counted as three-fifths of a person.
As the nation grew exponentially in the next century, the census was in many ways a vital tool for ensuring that each state was apportioned fair representation. When eugenic racial pseudoscience began to expand in popularity in the middle of the 19th century, terms like “mulatto,” “quadroon,” and “octoroon” begin to appear in language around the census. The 1850 census instructed enumerators:
Be particularly careful to distinguish between blacks, mulattoes, quadroons, and octoroons. The word “black” should be used to describe those persons who have three-fourths or more black blood; “mulatto,” those persons who have from three-eighths to five-eighths black blood; “quadroon,” those persons who have one-fourth black blood; and “octoroon,” those persons who have one-eighth or any trace of black blood.
Even after the end of the Civil War, such categories lingered on the census. As Jennifer L. Hochschild and Brenna M. Powellpointed out in research for Harvard, an Alabama Congressman in 1888 called on the census to uncover the birthing rates of “negroes, Chinamen, Indians, and half-breeds or hybrids of any description.” Carroll Wright, then commissioner of labor and acting census superintendent in the late 1880s responded: “the sooner the statistics are collected the better.”
In 1850, the census also started asking respondents about their country of origin and naturalization status. Ostensibly the questions, as well as data about English fluency and residence of the respondents, were meant to measure how well people were assimilating into American society. But the results of that census data would end up being used for an altogether different purpose: immigration quotas. The Dillingham Commission, which investigated U.S. immigration patterns at the start of the 20th century, pointed specifically to census data in making its recommendation thatimmigration be restricted. It was Dillingham and his assistant, relying on data provided by the census, that proposed the quotas that would become law just a few years later.
The history of the census and ethnicity, and even where this question is concerned, is still murky. Particularly in the 1990s, some activists from communities of color wanted questions about ethnicity to be asked and advocated for multi-racial categories to appear on the census.
Meanwhile, the 20th century continued to witness interactions between the census bureau and other branches of the government. The census bureau had also long denied any involvement in the incarceration of more than 100,000 people of Japanese descent—most of whom were American citizens—during World War II. But in 2000, historian Margo J. Anderson of the University of Wisconsin at Milwaukee and statistician William Seltzer of Fordham University found proof that census officials provided block-level information on Japanese-Americans living in California, Arizona, Wyoming, Colorado, Utah, Idaho, and Arkansas. And in 2007 they discovered that census officialshad later shared names and addressesof people of Japanese origin in Washington, D.C.
The census bureau issued an apology on this several decades after the end of the war, but many census officials and the researchers themselves are still quick to point out that what the census bureau did was not illegal at the time, thanks in part to wartime legislation.
The legality tightened around sharing census data starting in the 1950s, and the World War II-era legislation that allowed census data to be used in rounding up people would no longer be legal. It’s also worth noting that the census began to be used as a tool for integration in the 1960s following Civil Rights legislation, with the data being employed to measure and root out inequality.
“By and large, the census has been a tool for democracy,” Margo Anderson said in a phone interview. The census has always been a product of its time, she argued. “Is the census any more discriminatory than Congress? Than the courts? It’s just another piece of the enterprise.”
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Does Model N, Inc.'s (NYSE:MODN) Past Performance Indicate A Weaker Future?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! When Model N, Inc.'s ( NYSE:MODN ) announced its latest earnings (31 March 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Model N's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not MODN actually performed well. Below is a quick commentary on how I see MODN has performed. Check out our latest analysis for Model N Commentary On MODN's Past Performance MODN is loss-making, with the most recent trailing twelve-month earnings of -US$29.7m (from 31 March 2019), which compared to last year has become more negative. Furthermore, the company's loss seem to be growing over time, with the five-year earnings average of -US$21.9m. Each year, for the past five years MODN has seen an annual increase in operating expense growth, outpacing revenue growth of 14%, on average. This adverse movement is a driver of the company's inability to reach breakeven. Eyeballing growth from a sector-level, the US software industry has been growing its average earnings by double-digit 22% in the prior year, NYSE:MODN Income Statement, June 20th 2019 Given that Model N is loss-making, with operating expenses (opex) growing year-on-year at 14%, it may need to raise more cash over the next year. It currently has US$54m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached US$104m in the latest twelve months. Even though this is analysis is fairly basic, and Model N still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the outcome of this analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable. What does this mean? While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Model N may be facing and whether management guidance has regularly been met in the past. I suggest you continue to research Model N to get a more holistic view of the stock by looking at: Story continues Future Outlook : What are well-informed industry analysts predicting for MODN’s future growth? Take a look at our free research report of analyst consensus for MODN’s outlook. Financial Health : Are MODN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here . Other High-Performing Stocks : Are there other stocks that provide better prospects with proven track records? Explore our free 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 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. |
EXPLAINER-U.S.-China trade talks: where they are and what's at stake
June 20 (Reuters) - U.S. President Donald Trump and Chinese President Xi Jinping agreed this week to meet at the G20 summit in Japan in late June to discuss how to end a nearly year-long trade war.
Trade talks between the United States and China broke down in early May when Trump accused Beijing of making a U-turn on commitments to change its laws to enact sweeping economic and trade reforms.
Here is a look at the state of talks, the key issues and their implications:
WHAT ARE POSSIBLE OUTCOMES OF THE G20 MEETING?
It is unclear if the two presidents outlined objectives for their meeting in Japan when they spoke by telephone on Tuesday and agreed to restart trade negotiations.
After over a month with no contact, trade negotiators are unlikely to make much headway on a deal before the G20 on June 28-29.
Trump has previously said he would trigger the next round of tariffs on $300 billion of Chinese goods if the meeting with Xi yields insufficient progress. The move would subject virtually all trade between the world's two largest economies to punitive tariffs.
One possible outcome would be for Xi and Trump to delay further escalation of the dispute while talks continue at the negotiator level. That would be a repeat of what was agreed when the two presidents last met at the G20 in Buenos Aires in 2018.
U.S. officials have repeatedly said they want to avoid drawn out negotiations with China, however.
THE STATE OF TALKS
Neither side has signaled it would shift from positions that led to the impasse last month, when Beijing revised a draft of the trade deal, removing references to changes in Chinese law.
U.S. Trade Representative Robert Lighthizer said the changes substantially weakened the deal. Lighthizer, the top U.S. trade negotiator and a lawyer, has repeatedly called for a strong, enforceable deal.
U.S. officials have said that the resumption of talks would depend on China returning to the original text.
Lighthizer told a congressional hearing on Wednesday that China also backtracked on commitments on digital trade issues, including U.S. access to cloud computing services in China.
China has downplayed its changes, and also said U.S. demands violate its sovereignty. It said any deal should not be one-sided, with Beijing making all the concessions.
WHAT CONCESSIONS HAD BEEN AGREED AND WHAT WERE THE STICKING POINTS?
Before the talks broke down, U.S. officials had said the two sides made progress on intellectual property protection and that China made proposals on a range of issues that went further than Beijing had gone before.
For example, China for the first time discussed forced technology transfer as a widespread problem. China had previously refused to acknowledge that such coercion had existed to the extent alleged by the United States. U.S. companies complain they are pressured to hand over their competitive secrets as a condition to doing business in China.
U.S. officials also said they had made progress on cyber theft, services, currency, agriculture and non-tariff barriers to trade.
China had offered to bring subsidies in line with World Trade Organization guidelines but had not detailed how it would do that.
For its part, the United States had watered down demands China end industrial subsidies, which would require a change in China's state-driven economic model.
China also offered to make purchases of over $1 trillion worth of goods over the next six years, including agricultural and energy products as well as industrial goods. China has said that there is still disagreement between the two sides on the actual purchases.
One of the key sticking points until talks broke down was the timeline for removal of the 25% tariffs on $250 billion worth of imported goods from China that the Trump administration has already imposed. The United States wanted to keep some tariffs in place to ensure that China met the terms of the deal, but China demanded all tariffs be lifted immediately.
Another contentious issue was the plan for a regular review of China's compliance, a mechanism that would maintain the perpetual threat of U.S. tariffs.
THE STAKES
One of the biggest U.S. concerns is who will dominate future high-technology industries, according to the USTR. China is determined to upgrade its industrial base in 10 strategic sectors by 2025, including aerospace, robotics, semiconductors, artificial intelligence and new-energy vehicles.
Washington's demands for change follow years of steadily rising U.S. trade deficits with China and U.S. complaints that Beijing has systematically obtained American IP and trade secrets through coercion and outright theft.
The USTR says China's subsidies to state enterprises, including at the provincial and local government levels, have also led to an unsustainable build up in industrial capacity in China - such as in steel - that has depressed global prices and hurt producers in the U.S. and elsewhere.
U.S. officials argue that China's massive support for state-owned enterprises makes it hard for U.S. companies to compete on a market-driven basis.
They say they do not have a problem with China moving up the technology ladder, but they do not want it to happen with stolen or unfairly obtained American know-how or in a market in which Chinese firms have an unfair advantage.
HOW DOES BEIJING VIEW THESE COMPLAINTS?
Chinese officials generally view the U.S. actions as a broad effort to thwart the Asian country's rise in the global economy. They previously denied China required or coerced technology transfers, saying that any such actions are commercial transactions between American and Chinese firms.
China has pledged to buy more U.S. goods in the future to reduce the trade imbalance between the world's two largest economies, and has taken some steps to open up more markets to foreign competition.
WHAT ACTIONS HAS THE UNITED STATES TAKEN?
In addition to the tariffs on $250 billion worth of imported goods from China, Trump is preparing to extend tariffs to the remaining $300 billion of Chinese imports, and will be in a position to make a decision on implementing them after July 2, when a public comment period closes.
Trump has also blacklisted China's Huawei Technologies Co Ltd, citing national security concerns. This effectively banned U.S. companies from doing business with Huawei, and many non U.S.-based global technology firms have since cut ties with the company, the world's largest telecommunications equipment maker. The United States is lobbying other countries to reduce dealings with Huawei and threatened to blacklist other Chinese firms.
HOW HAS CHINA RETALIATED?
China has imposed tariffs of 25 percent on $110 billion worth of U.S. goods, including soybeans, beef, pork, seafood, whiskey, ethanol and motor vehicles.
China has said it would draft its own list of foreign companies that it deems had harmed Chinese companies. That could serve as the basis for retaliation against U.S. companies for action against Huawei.
China has also indicated it may strike back through limiting rare earth supplies to the United States. Rare earth are minerals important to manufacturers of high-tech consumer goods and China is the dominant supplier. (Writing by Simon Webb Editing by David Lawder and Sonya Hepinstall) |
Facebook's Libra: Bank of England Mark Carney gives cautious backing
Bank of England governor Mark Carney. Photo: Hannah McKay/Reuters Facebook’s ( FB ) new cryptocurrency Libra could “substantially improve financial inclusion and dramatically lower the cost of domestic and cross border payments,” Bank of England governor Mark Carney will say on Thursday evening. Carney’s words are a significant boost for Facebook and the consortium of corporate giants backing Libra. The new cryptocurrency project was officially launched earlier this week but met an immediate backlash from politicians and regulators around the world. Carney’s words are the strongest endorsement so far from a policymaker. Carney will also say on Thursday that Libra could become “systematically important” to global finance. READ MORE: Facebook's Libra could spark 'mass adoption' of crypto However, despite backing Libra’s goals, Carney will on Thursday repeat his assertion that the Bank of England will approach Facebook’s cryptocurrency project “with an open mind but not an open door.” “Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch,” Carney will say. Libra must ‘meet the highest standards’ The logo for new Facebook-backed cryptocurrency Libra. Photo: Facebook Facebook and a consortium of 27 other backer, including PayPal ( PYPL ), Uber ( UBER ), MasterCard ( MA) , Visa ( V ), and eBay ( EBAY ), on Tuesday announced Libra, a new global cryptocurrency set to launch in 2020. It will be controlled by a Swiss-based non-profit and aims to help the 1.7 billion people around the world without a bank account access financial services. Regulators and politicians fear the new currency could enable money laundering, ceed control of monetary policy to private companies, and even endanger financial stability if not properly managed. READ MORE: Why politicians and regulators are already going after Facebook's Libra “It would have to meet the highest standards of prudential regulation and consumer protection,” Carney will say. “It must address issues ranging from anti-money laundering to data protection to operational resilience. Story continues “Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability. Our citizens deserve no less.” Carney said the Bank of England will hold discussions about Libra with the IMF, the Bank for International Settlements, the Financial Stability Board, as well as both the G7 an G20 groups of countries. The G7 called for an investigation into the project just hours after it was announced. The future of finance Facebook CEO Mark Zuckerberg makes his keynote speech during Facebook's annual F8 developers conference in April. Photo: REUTERS/Stephen Lam Carney’s comments will form part of his speech at the annual Mansion House dinner in the City of London on Thursday. The event is one of the most significant in the UK financial calendar, with the UK chancellor and Britain’s top bankers in attendance. Carney’s speech will focus on the Bank of England’s response to the Future of Finance report. The report, published Thursday, concludes a year-long review commission by the Bank into how to keep up with the rapid changes in the UK’s financial system. READ MORE: Facebook hasn't told us: why launch a cryptocurrency? One of the key recommendations is modernising Britain’s payments system. Carney will announce that the Bank of England will consider opening up the central bank’s balance sheet to non-banks for the first time. If enacted, it would mean private companies in any industry could hold accounts directly with the Bank of England, rather than working through retail banks. Currently, only regulated banks can hold money at the Bank of England. The floated reforms would be a potentially historic move that could have wide reaching implications for the economy and monetary policy. “Whatever the fate of Libra, its creation underscores the imperative of transforming payments,” Carney will say. “The Bank’s strategy to open access to a wide range of payment solutions combined with appropriate regulatory oversight of them maximises the likelihood that the payments revolution will meet the demands of the new economy and the needs of all our citizens.” ———— Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut . Read more: Bank of England cuts growth forecast on no-deal Brexit fears, rates unchanged Why politicians and regulators are already going after Facebook's Libra Lloyds exec defends CEO's £2.8m pay: 'People like a winner' Facebook's Libra could spark 'mass adoption' of crypto Usain Bolt wants to launch electric scooters in London |
Slack CFO: Our path to profitability will be a 'multiyear period'
Slack (WORK) went public Thursday on the New York Stock Exchange, with shares of the workplace messaging platformopening at $38.50 per share.
The NYSE initially set the reference price at $26 per share on Wednesday. By 12:19 p.m. EST, shares were trading at $41.68.
While Slack has yet to report a profit, it has $841 million in cash or cash equivalents in its most recent fiscal year. That would be enough to keep the company afloat foranother 8.6 years, based on its current pace of free cash outflow. Slack CFO Allen Shim told Yahoo Finance in a phone interview that the company won’t see a profit for several years.
“Our number one focus is investing in growth. But 1b is about going toward cash flow profitability. We have high gross margins, strong customer retention dynamics, and are investing aggressively into the company. We’ll update our progress as we issue next year’s guidance, but it will be a multiyear period.”
While investors are eagerly monitoring the stock’s fluctuations throughout Thursday’s trading session, Shim said he doesn’t “tie his success metric to a price point. Internally, we care about having a healthy market where buyers and sellers can freely trade Slack and it’s effectively determined by market forces.”
Slack eschewed a traditional IPO process and instead went public via direct listing for a simple reason: because it didn’t need to raise additional money.
“We didn’t need new capital. We benefited from healthy private markets. We have a very strong balance sheet and we didn’t need to dilute existing shares,” Shim said.
Slack raised$1.36 billionacross 13 venture capital rounds, most recently a $427 million round in August 2018 that valued the company at $7.1 billion. The largest investors include Accel, Andreessen Horowitz, Social Capital, and SoftBank’s Vision Fund.
By all measures, Spotify’s (SPOT) direct listing last year went more smoothly than expected. Shim tapped into the C-suite at the music streaming giant to prepare for the IPO.
“We took advantage of Spotify [coming before us]. They were generous with their time. I spoke with the CFO Barry McCarthy — after doing our due diligence and homework, and after speaking with them, it was clear this was the best option.”
Regarding what he would consider success at the end of the first day, Shim, who has been with the company for over five years, said, “We have talked about being a public company, being ready to be one for years. It’s a long-term vision — to have that discipline and rigor.”
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter@melodyhahm. She hostsBreakouts, a monthly interview series for Yahoo Finance featuring up-close and intimate conversations with today’s most innovative business leaders.
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KFC's Cheetos Sandwich With a ‘Special’ Cheetos Sauce Is Launching Nationwide
Photo credit: KFC From Best Products UPDATED: June 20, 2019 at 12:19 p.m. Prepare your taste buds! After a successful test market launch, KFC is bringing the Cheetos Sandwich to locations nationwide. Who’s hungry? The fried chicken sandwich will be coming to restaurants for just four weeks beginning on July 1. If you’re located in New York City, you can head to their 14 th Street location on June 27 from 4 to 8 p.m. for even more offerings, including Cheeto-fied Hot Wings, Loaded French Fries, and KFC Mac and Cheese Bowl. “Complete with a perfect layer of Cheetos, the newest menu item is a match made in cheese and crunch lovers heaven,” a KFC statement says. ORIGINAL POST: January 29, 2019 at 4:22 p.m. Cheetos have become less of a snack and more of a necessary topping. We’ve seen them on pizza , ice cream , cookies , and even Thanksgiving turkey , to name a few. Now it’s becoming part of KFC ’s menu with the launch of their Cheetos Sandwich. “Starting today and for a limited time, KFC is testing its new Cheetos Sandwich in select restaurants,” a restaurant spokesperson said, according to WTVR . It's “made by coating a juicy, hand-breaded Extra Crispy chicken filet with special Cheetos sauce and placing it on a toasted bun with mayo and a layer of crunchy Cheetos.” Photo credit: Reddit user rhinofeet For the time being, the Cheetos Sandwich will reportedly only be available at locations in Roanoke, Virginia; Richmond, Virginia; Raleigh, North Carolina; Greensboro, North Carolina; and Greenville, Georgia. Fingers crossed all goes well so the sandwich launches nationwide! Read More: KFC Added Chicken and Waffles to Its Menu KFC Created a Fried-Chicken-Scented Fire Log Flamin’ Hot Cheetos Pizza Is One Wild (But Tasty) Pie Follow BestProducts.com on Facebook , Instagram , Twitter , and Pinterest ! ('You Might Also Like',) 44 GIFT IDEAS THAT’LL TOTALLY IMPRESS YOUR WIFE These Tasty Canned Wines Mean You'll Never Need a Corkscrew Again If You're Lacking Closet Space, It's Time to Get a Storage Bed |
MSFT Stock Hits All-Time High: Can it Keep the Momentum Going?
New Highs
Microsoft MSFT opened Thursday at a new 52-week high and also a new all-time high of $137.66 per share. Microsoft hit this all-time high after reaching its previous all-time high the day before. Microsoft’s momentum is extremely high right now and has fueled the stock’s gains over the past 6 months.
Since the start of the year, Microsoft stock has had steady gains. YTD the stock is up 34%, including a 12% jump since the beginning of June.
Microsoft’s new high was also partly a result of Deutsche Bank reiterating its “Buy” rating on the company. The firm also raised its price target from $145 to $155 per share. Plus, Microsoft is currently a Zacks Rank #2 (Buy).
Outlook
Analysts have been positive about the company’s fiscal 2019 and fiscal 2020 earnings (Microsoft ends its fiscal year in June). Estimate revisions have trended completely upward, with 13 upward and 12 upward revisions for fiscal 2019 and 2020 earnings, respectively. Zacks Consensus Estimates call for earnings to surge 18% on the back of 13% revenue growth for fiscal 2019. Fiscal 2020 is expected to have further growth with expectations of 10.57% revenue growth and 11.24% earnings growth on top of their respective fiscal 2019 estimates.
Microsoft also seems to be relatively well valued. Microsoft currently trades with a Price/Cash Flow ratio of 25.78, below industry average of 28.12. This is important because it shows that even compared to this record high stock price it still has strong cash flow.
Microsoft’s growth also comes as the Department of Justice and Federal Trade Commission prepare for antitrust probes into some of Microsoft’s major competitors, namely Facebook FB, Apple AAPL, Google GOOGL and Amazon AMZN. The big tech investigations that have been fueled by 2020 presidential candidates and others in Washington have, so far, not involved Microsoft. This might provide some comfort to investors that Microsoft has avoided the antitrust probes for now.
Bottom Line
With the S&P 500 hitting an all-time high today, investor confidence is quite high. This confidence, Microsoft’s recent momentum, solid earnings expectations, and good value give Microsoft’s stock the potential to continue this hot streak.
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Could Hornby Bay Mineral Exploration Ltd.'s (CVE:HBE) Investor Composition Influence The Stock Price?
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If you want to know who really controls Hornby Bay Mineral Exploration Ltd. (CVE:HBE), 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.'
With a market capitalization of CA$2.0m, Hornby Bay Mineral Exploration is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own shares in the company. Let's delve deeper into each type of owner, to discover more about HBE.
Check out our latest analysis for Hornby Bay Mineral Exploration
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Hornby Bay Mineral Exploration, for yourself, below.
We note that hedge funds don't have a meaningful investment in Hornby Bay Mineral Exploration. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our information suggests that insiders maintain a significant holding in Hornby Bay Mineral Exploration Ltd.. Insiders have a CA$823k stake in this CA$2.0m business. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
The general public -- mostly retail investors -- own 59% of Hornby Bay Mineral Exploration . This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, backed by strong financial data.
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. |
UPDATE 3-Slack starts trade with surge, valued at more than $23 billion
(Adds trading details)
By Joshua Franklin and Carl O'Donnell
NEW YORK, June 20 (Reuters) - Shares of Slack Technologies Inc, the fast-growing workplace messaging and communication platform, debuted in public trading at a price of $38.50 each, valuing the company at more than $23 billion, well above the $16 billion reference point set by the New York Stock Exchange.
The stock soared 54.2% to more than $40.08 at midday on Thursday. The NYSE on Wednesday set a reference price of $26 a piece. The reference price is not a trading price but is used in the process of building a book of orders.
Slack went the unusual route of a direct listing on the New York Stock Exchange on Thursday, which is different from a traditional IPO because it does not raise fresh funds. The listing is another test for a method pioneered last year by music streaming business Spotify Technology SA.
Slack's debut follows a spate of much anticipated technology IPOs, some of which, including Uber Technologies Inc and Lyft Inc, had disappointing starts to trading.
The direct listing model offers Slack an opportunity to save significantly on investment banking fees and avoid agreements that would otherwise prevent many current shareholders from selling their stock.
"We think a direct listing is a more effective and efficient way to get to a normalized level of supply and demand without the constraints of an IPO,” said Allen Shim, Slack's chief financial officer.
Slack's direct listing could have implications for other large technology companies such as Airbnb Inc, which is considering going public through a similar approach, a person familiar with the matter said.
Spotify's direct listing in April 2018 was perceived as a success at the time, with a healthy number of buyers and sellers.
More than a year later, Spotify's stock is trading at around 15% percent below where it debuted as the company sacrifices profit margins for growth.
"Direct listings are still a pretty new vehicle. It's really interesting to see how that evolves," Fiverr International Ltd Chief Executive Officer Micha Kaufman said in an interview last week after the Israel-based company, which offers an online marketplace for freelance services, went public.
"But it's definitely more appropriate for companies that have raised larger sums for longer periods of time in the private market, and are really wanting to give their investors an upside or an exit."
Revenues for the San Francisco-based Slack soared more than 80 percent to $400 million in 2018, but it reported losses from operations of $143.85 million. It has more than 90 million users but so far has only around 100,000 paid customers.
"We are in a growth phase right now and we are continuing to invest, but we expect to hit breakeven cash flow soon," CFO Shim said.
Slack had about $800 million in total cash, cash-like assets and marketable securities at the end of April and has raised about $1.2 billion so far from private investors, according to data provider PitchBook and the company's regulatory filing. (Reporting by Joshua Franklin and Carl O'Donnell in New York; Editing by Cynthia Osterman and Jeffrey Benkoe) |
Is Noble Energy, Inc.'s (NYSE:NBL) Balance Sheet A Threat To Its Future?
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Stocks with market capitalization between $2B and $10B, such as Noble Energy, Inc. (NYSE:NBL) with a size of US$9.8b, do not attract as much attention from the investing community as do the small-caps and large-caps. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. Today we will look at NBL’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourselfinto NBL here.
See our latest analysis for Noble Energy
Over the past year, NBL has maintained its debt levels at around US$6.9b – this includes long-term debt. At this current level of debt, the current cash and short-term investment levels stands at US$528m , ready to be used for running the business. Additionally, NBL has generated US$2.3b in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 33%, indicating that NBL’s current level of operating cash is high enough to cover debt.
Looking at NBL’s US$1.9b in current liabilities, the company may not be able to easily meet these obligations given the level of current assets of US$1.2b, with a current ratio of 0.64x. The current ratio is calculated by dividing current assets by current liabilities.
With debt reaching 66% of equity, NBL may be thought of as relatively highly levered. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. But since NBL is currently 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.
NBL’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 mid-cap. I admit this is a fairly basic analysis for NBL's financial health. Other important fundamentals need to be considered alongside. You should continue to research Noble Energy to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for NBL’s future growth? Take a look at ourfree research report of analyst consensusfor NBL’s outlook.
2. Valuation: What is NBL 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 NBL 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. |
Cell Phones Might Be Causing Horns to Grow on Young People's Skulls: Study
Well, this is terrifying.
Researchers at the University of the Sunshine Coast in Queensland, Australia havefound evidencethat our frequent use of mobile devices could be fundamentally altering our physiology. Specifically, they’re seeing horn-like bone spurs appear on younger adults (themost frequent usersof those devices).
The good news, if there is any here, is that you’re not going to see a generation of kids looking like triceratops wannabes, with horns poking out of their foreheads. The bad news is, the spurs are growing at the back of the skull.
Here’s what the researchers say is happening: Frequent users of mobile devices regularly tilt their heads forward to view them. That shifts the weight of the head from the spine to muscles in the back of the head, which causes bones to grow in the tendons and ligaments. That results in a horn-like spur that grows from the base of the skull.
“Our findings raise a concern about the future musculoskeletal health of the young adult population and reinforce the need for prevention intervention through posture improvement education,” the scientists noted in the report, which was originally published a year ago, but has come to more prominent attention recently.
The study looked at 1,200 X-rays taken in Queensland covering a wide variety of age ranges. One-third of those showed the bone spur, with the frequency decreasing with age. Larger spurs were much more prominent in younger people.
Cell phones have been criticized fortheir impact on human healthbefore, but researchers say this is the first time the body has shown an adaptation to technology used in everyday life.
“An important question is what the future holds for the young adult populations in our study, when development of a degenerative process is evident in such an early stage of their lives?,” they wrote.
Worried about the effect of phones on your own body? The study’s lead author suggests you run your hand over the lower rear part of your skull, telling theWashington Postthat if you’ve got a horn growing there, you can probably feel it.
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Don’t miss the dailyTerm Sheet,Fortune‘s newsletter on deals and dealmakers. |
Darden Restaurants Inc (DRI) Q4 2019 Earnings Call Transcript
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Darden Restaurants Inc(NYSE: DRI)Q4 2019 Earnings CallJun 20, 2019,8:30 a.m. ET
• Prepared Remarks
• Questions and Answers
• Call Participants
Operator
Good morning. Welcome to the Darden Fiscal Year 2019 Fourth Quarter Earnings Call. Your lines have been placed on listen-only until the question-and-answer session. (Operator Instructions) This conference is being recorded, if you have any objections you may disconnect at this time.
I will now turn the call over to Mr. Kevin Kalicak. Thank you. You may begin.
Kevin Kalicak--Vice President of Investor Relations and Corporate Analysis
Thank you, Jill. Good morning, everyone, and thank you for participating on today's call. Joining me on the call today are Gene Lee, Darden CEO; and Rick Cardenas , CFO.
As a reminder timings made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning and in its filings with the Securities and Exchange Commission.
We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com. Today's discussion and presentation includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation. We plan to release fiscal 2020 first quarter earnings on September 19th before the market opens, followed by a conference call.
This morning, Gene will discuss our fiscal year performance and quarterly business highlights. And Rick will provide more detail on our financial results from both the fourth quarter and the full year before providing our initial outlook for fiscal 2020. As a reminder, all references to the industry benchmark during today's call refer to estimated Knapp-Track excluding Darden.
During our fiscal fourth quarter, industry total sales growth was 0.7%; industry same-restaurant sales declined 0.3%; and industry same-restaurant guest counts decreased 2.4%. For the full fiscal year, industry total sales growth was 1.6% ; industry same-restaurant sales grew 0.7%; and industry same-restaurant guest counts decreased 1.2%.
Now I will turn the call over to Gene.
Gene Lee--President and Chief Executive Officer
Thank you, Kevin, and good morning, everyone. As you've seen from our press release this morning, the fourth quarter wrapped up a very strong fiscal 2019 for Darden. Total sales from continuing operations for the year were $8.5 billion, an increase of 5.3%. Same-restaurant sales for the year increased 2.5% and adjusted net earnings per share were $5.82, an increase of 21% from last year. I want to start this morning by briefly talking about the industry dynamics we saw during the fourth quarter and also share some thoughts on the consumer.
As you know, the industry experienced sales volatility during the quarter. After a good March, April was a challenging month. But the industry bounced back in May. A significant part of the volatility was due to holiday shift, which helped March but hurt April. Our business followed the same pattern and I was pleased to see that our traffic after the industry expanded each month throughout the quarter. As we think about the consumer and look at the macro environment, the economy continues to be strong. Unemployment is as its lowest levels in nearly 50 years, wages are growing at a healthy rate, outpacing inflation and consumer confidence remains high.
Turning to our brand highlights for the quarter. Olive Garden had a good quarter, which resulted in its 19th consecutive quarter same-restaurant sales growth. Total sales grew 3.7%, driven by same-restaurant sales growth of 2.4% and 1.3% growth from new restaurants. Same-restaurant guest counts declined 0.4%. But Olive Garden's gap to the industry expanded throughout the quarter even as they continue to
reduce incentives. If you adjust for lack of incentives, guest counts would have been positive during the quarter. Check average increased by 2.8% this quarter, comprised of 1.6% pricing and 1.2% menu mix. The reduction in menu mix compared to prior quarters was driven primarily by promotional offerings being similar to the prior year. Olive Garden's results were driven by the team's focus on flawless execution, everyday value and their off-premise business. During the quarter, the restaurant team's focus on flawless execution helped maintain all-time-high guest satisfaction ratings. A great example of this focus was on Mother's Day, the busiest day of the year at Olive Garden, when they recorded the highest Mother's Day sales ever. Olive Garden continued to strengthen their everyday value platform throughout the quarter.
They refreshed their 5 for $5 value drink platform and increased awareness on everyday value through secondary TV advertising, which highlighted their Lunch Duos starting at $6.99, everyday Early Dinner Duos starting at $8.99 and Cucina Mia! starting at $9.99. Finally, Olive Garden's off-premise sales increased 9%, representing 15% of total sales. The team remains focused on improving To Go capabilities and executing at a high level while driving continued growth in their catering business. Olive Garden had an excellent year. They continue to gain share in casual dining market share as they grew total sales 5% to $4.3 billion, which outperformed the industry benchmark by 340 basis points. It grew traffic for the fourth year in a row. The business remained strong and the team is doing a great job of executing against the strategy to drive frequency among their most loyal guests while making the appropriate investments.
LongHorn Steakhouse had another strong quarter. Total sales grew 5.7%, driven by 2.4% growth from new restaurants and same-restaurant sales growth of 3.3%, the 25th consecutive quarter same-restaurant sales growth. Same-restaurant guest counts grew 0.3%. The LongHorn team continues to successfully execute their long-term strategy of investing in the quality of the guest experience, simplifying operations to drive execution and leveraging a unique culture to increase team member engagement. They remain focused on creating relevant promotions while leveraging their guest favorite core menu items. Focusing on core items ensures their operators are able to execute at a very high level. The LongHorn team also continued to do a great job of supporting these promotions by telling their quality story with multiple guest touch points.
Additionally, during the quarter, LongHorn launched a new beverage program that brought their focus on quality, simplicity and culture to life. The program is focused on strengthening their growing beverage sales. Initial guest feedback has been positive. Finally, the LongHorn team has been focused on ensuring the To Go experience equals their in-restaurant experience for guests who choose this convenience. They're enhancing their capabilities and have a dedicated To Go area in 40% of their restaurants. This ongoing focus has resulted in improvement in overall experience with high guest satisfaction scores for order accuracy and timeliness. I'm very pleased with LongHorn's performance this year. They continue to take share of the casual dining market as they grew total sales 6.3% to $1.8 billion, which outperformed the industry benchmark by 470 basis points. These results reflect their commitment to execute their long-term strategy.
Cheddar's Scratch Kitchen total sales increased 0.6% in the fourth quarter, driven by sales growth from new restaurants to 3.8% and offset by same-restaurant sales decline of 3.2%. The magnitude of this decline was driven by the former franchise restaurants, which fell 6.1%. The original company restaurants were down 1.5%. I was encouraged to see a sequential improvement in guest count trends for Cheddar's from Q3 to Q4. At the beginning of the fiscal year, the Cheddar's team established three strategic priorities; staff to win, master the tools and standardize and simplify, with the goal of repairing fundamental elements of the business and shifting momentum. During the quarter, they continue to make progress against these priorities. Overall staffing levels for both team members and managers are now on par with our standards. This better enables the Cheddar's team to focus on execution. And while turnover has improved, it is still significantly above the Darden norm. In addition, the restaurant teams continue to build out with our systems and tools. They improved the use of their guest count forecasting application, which is critical to running efficient shifts.
Finally, the Cheddar's team made progress with standardization and simplification by deploying new culinary processes during the quarter. These improvements contributed to better execution, efficiency and productivity while enhancing speed of service. Fiscal 2019 was a challenging year for Cheddar's, one that was filled with significant change. However, the team made meaningful progress throughout the year that helped Cheddar's deliver double-digit profit growth this quarter. And while I'm disappointed the work has yet to translate to top line sales growth, I'm encouraged that we saw 180 basis point improvement in guest count trends from the first half of the year to the second half of the year. These improvements indicate momentum is beginning to shift in the right direction. There's still a lot of work left to be done, but I'm confident in the plan that Cheddar's team has in place and their ability to execute.
Fiscal 2019 was a great year for Darden. Our restaurant teams demonstrated their commitment to getting better every day as they execute our back-to-basics operating philosophy. And we continue to make meaningful progress in strengthening our core competitive advantages. I remain convinced that we have the right strategy in place, and we are well positioned to achieve our long-term value creation framework over time. On behalf of our Board of Directors and senior leadership team, I want to thank our 185,000 team members for all they do to make our company successful.
Now I'll turn it over to Rick.
Rick Cardenas--Senior Vice President, Chief Financial Officer
Thank you, Gene, and good morning, everyone. We are pleased with our fourth quarter performance. We grew total sales by 4.5% from the addition of 39 net new restaurant and same-restaurant sales growth of 1.6% quarter. Fourth quarter adjusted diluted net earnings per share from continuing operations was $1.76, an increase of 26.6% from last year. This quarter we paid $92 million in dividends and repurchased $42 million in shares, returning a total of $134 million of capital to our shareholders.
Looking at the P&L, restaurant level EBITDA margin was flat versus last year and adjusted EBIT margins expanded 10 basis points to 11% this quarter. Food and Beverage was flat to last year as pricing and cost savings offset inflation of just over 1% an unfavorable menu mix. Restaurant labor of 32.2% was unfavorable 10 basis points, driven by mark-to-market, while the 120 basis points of unfavorability from continued wage inflation was offset by favorability from pricing leverage, incremental sales leverage from higher check mix and productivity improvements.
Both marketing and G&A were favorable 10 basis points, driven by sales leverage, depreciation and amortization was unfavorable 20 basis points as we continue to invest in new restaurant growth, remodels and technology. Impairments were favorable 20 basis points as we lapped a $4.5 million of impairments last year for restaurants that were earmarked for closing as their leases expired.
Our effective tax rate for the quarter was 5.5%. This rate was approximately 400 basis points lower than we anticipated in March. Roughly half of this favorability was from the higher-than-anticipated benefit from stock option exercise and mark-to-market hedges. The remainder was the result of strategic tax projects that were completed in Q4.
Turning to our segment performance. All of our segments grew total sales and segment profit dollars again this quarter. Segment profit margin held flat at both Olive Garden and LongHorn, while the fine dining and other segments grew segment profit margins. Of particularly note in the other segment, as Gene mentioned, Cheddar's significantly grew segment profit this quarter even with negative same restaurant sales, as they focused on running more efficient food costs and labor.
Fiscal 2019 was another great year performance as our brands continue to leverage Darden scale and other competitive advantages. Our strong operating model generates significant cash flows and this year was no exception. This year's strong top and bottom line performance drove approximately $1.2 billion in EBITDA from continuing operations. We invested approximately $450 million of capital in the business and returned over $0.5 billion to shareholders consisting of $371 million in dividends and $208 million in share repurchases. In fact, in 2016, we've grown EBITDA 9% annually and returned over $0.5 billion to shareholders each year in the form of dividends and share repurchases.
Before I share our outlook for fiscal 2020, I want to reiterate our long-term value creation framework. This framework calls for a 10% to 15% total shareholder return, which is meant to be achieved over time assuming a constant earnings multiple. Our total shareholder -- our actual total shareholder returns have well exceeded our long-term framework since its introduction in 2015. In fact, our annualized TSR over the three-year fiscal period ended May 26th was approximately 25%.
To achieve our long-term framework, we anticipate earnings after tax growth of 7% to 10%, which is made up of total sales growth of between 3% to 6% and EBIT margin expansion between 10 to 30 basis points. Additionally, we expect to return another 3% to 5% to shareholders in the form of a dividend payout ratio between 50% and 60% of our net income and share repurchases, between $150 million and $250 million.
As I mentioned on last quarter's call, fiscal 2020 includes two unique items. First, it's a 53-week year and we anticipate a positive impact on diluted net earnings per share from continuing operations of roughly $0.15. Second, in the first quarter of fiscal 2020. we are implementing ASC 842, the new accounting standard for leases. We currently estimate this will negatively impact EPS by approximately $0.05, roughly three quarters of this impact is in interest, while the rest impacts EBIT.
Now turning to our full outlook for fiscal 2020. We expect total sales growth of 5.3% to 6.3% driven by approximately 2% from the addition of the 53rd week. Same-restaurant sales growth of 1% to 2% and approximately 44 net new restaurants. Capital spending between $450 million and $500 million, total inflation of approximately 2.5% with commodities inflation of 1% to 2% and total labor inflation of 3.5% to 4.5%.
An annual effective tax rate of 10% to 11% and approximately $124 million diluted average shares outstanding for the year. All resulting in diluted net earnings per share between $6.30 and $6.45. This morning, we also announced that our Board approved a 17% increase to our regular, quarterly dividend to $0.88 per share. Implying an annual dividend of $3.52 resulting in a yield of 3% based on yesterday's closing share price.
And with that, we'll take your questions.
Operator
Thank you. (Operator Instructions) Our first question will be from Brian Bittner with Oppenheimer & Company. Sir, your line is open.
Michael Tamas--Oppenheimer & Company -- Analyst
Great, thanks. This is actually Mike Tamas on for Brian. You guys started out talking about a pretty healthy consumer environment. So when you think about driving sales in 2020, is it -- the playbook the same, is there anything you thinking you need to do differently, whether you're looking at the competitive environment or how do you think about 2020 sales drivers versus say the last 12 months, which is really healthy? Thanks.
Gene Lee--President and Chief Executive Officer
I think we stay focus on our back-to-basics philosophy. I think it's getting more important than ever that we continue to ensure that our restaurants are staffed with the appropriate team members and that we're creating great dining experiences. We think there's still opportunity with throughput, especially on the weekends and these high-demand days. And we're continuing to focus on how do we simplify our operations, so our teams can execute at a higher level. We're going to continue to win this at the 9 square feet. We've got to do a better job than our competitors taking care of our guests and providing offerings that our guests are excited about. So I'd sum that up by saying our playbook has not changed and we're focused on the exact same things.
Michael Tamas--Oppenheimer & Company -- Analyst
Got you. Thanks. And then just on the cost side, I think your total cost basket is up a little bit more in '20 versus '19. So is there anything that you have to do a little differently there? Or is there a little more productivity, you need to kind of squeeze out of the mall or how do you think about that? Thanks.
Gene Lee--President and Chief Executive Officer
Yeah, we are working on productivity every year. We don't anticipate squeezing out a lot more than we did last year. We still anticipate productivity enhancements. But we also have a great supply chain team that will continue to look for cost savings to help offset any incremental inflation.
Michael Tamas--Oppenheimer & Company -- Analyst
Thank you.
Operator
Thank you for your question. Mr. Bittner. Our next question comes from David Tarantino with Baird. Your line is open, sir.
David Tarantino--Robert W. Baird & Co. -- Analyst
Hi, good morning. Gene, just a question about the industry environment. I appreciate your opening remarks. But if I look at the last three or four months. It does look like traffic and the industry has softened relative to what we were running, I guess the prior 12 months. So wondering if you have some thoughts on why we've seen that softening trend even when you kind of normalize out for the calendar shift? And then as you think about that trend, do you think you need to sort of normalize the value promotion or maybe tick back up the value promotion after maybe pulling back on some of the offers over the last 12 months or 24 months? Thanks.
Gene Lee--President and Chief Executive Officer
David, good morning. We've been trying to tease out the change in traffic trend. I'll pivot just here just for one second to say what we're really pleased about is this, the industry traffic has softened a little bit, our gap has increased. And that's been really reassuring. We haven't been able to point to any particular thing that's causing this traffic softness in the industry. And we've tried, we plan it from different angles. Overall, I think our thought is that the consumer is still in a really good place. And we don't see that changing here in the near term. Obviously, we're living in a more volatile environment. I will say one of the things that we do see is day-to-day, week-to-week, there's a little bit more volatility than it was -- there had been. And again, hard for us to try to figure out what's driving that. As far as value, I think that we'll continue to look for ways to add value to the consumer proposition. I think as we think about incentives right now, we believe that we're still in the mode of withdrawing incentives based on the environment. I'd rather continue to find ways to invest in what we call everyday value in the businesses. But there's no doubt, we've taken a lot of currency out of the marketplace. And we do have that available to put back in if we think that's the right thing to do.
David Tarantino--Robert W. Baird & Co. -- Analyst
And Gene, maybe a follow-up on that last comment, what would you need to see to add back some of those incentives or get more aggressive on the value side?
Gene Lee--President and Chief Executive Officer
Well, I think, I know, if traffic started to go the other way against the industry, the gap started to shrink, and I think then we have to consider what's going on with the business model. I think one of the things that we focus on is protecting our business model and using our scale, not to make short-term decisions that may drive a few extra guests here in there but really aren't that profitable. So I think as long as our gap to the industry is healthy from a traffic standpoint, we'll continue to be very cautious with that.
David Tarantino--Robert W. Baird & Co. -- Analyst
Makes sense. Thank you very much.
Operator
Thank you for your question. Mr. Tarantino. Our next question comes from David Palmer with Evercore ISI. Your line is open, sir.
David Palmer--Evercore ISI -- Analyst
Thanks. Good morning. Question on just the polished casual dining side. It does look like that's a little tougher than it has been in that segment. Wondering if there is a reason or insight there, tax season, stock markets might impact that segment were also regionally bigger on the West Coast? And then separately on LongHorn, is that brand picking up steam or was there in a way that feels like in the medium term that is widening its gap to nap or is there certain reasons within that quarter for that to happen? Thank you.
Gene Lee--President and Chief Executive Officer
David, great question on polished. I think I'll sum that up as saying polished casual operates in some the best retail trade areas across the country. And I believe there's more good competition, smaller brands that are really good businesses that are expanding in those trade areas putting more pressure on our polished casual brands. And I'll use, I think, a very good example. I mean if you're going to grow True Foods, where are you going to put a True Foods today? You're going to put it right on top of a Seasons 52. And there are other brewery brands that are -- where are they going to put their businesses? They're going to put them right on top of a Yard House. And so those brands operate in very good trade areas. And we're experiencing a little bit more competition there. So I think you asked a good question. But I think that's the insight there.
As far as LongHorn goes, we've been making, I think, since -- when Todd Burrowes came back, under his leadership, we've been making great investments in LongHorn. And I think that there have been multiple year investments. And I think we're gaining a lot of momentum in that business. We've increased the size of the steaks. We've simplified the operation. We've simplified the promotional constructs. And our retention is incredibly high. And we're executing on a really high level. So I think there's a lot of good momentum in that business. And the last thought on LongHorn is we had a pretty good growth curve there in really in the mid -- between 2010 and 2015, we broke into a lot of new territories. And those new territories are really starting to mature nicely and we're getting good growth from them. Going in and being the fourth or fifth steakhouse in a marketplace, it's really tough to break in and get into the consumer routines. And over time, we know that LongHorn will build loyalty in those years in the three to 10-year cycle. So there's a lot of momentum in that piece of the business also.
David Palmer--Evercore ISI -- Analyst
Thank you.
Operator
Thank you for your question, Mr. Palmer. Our next question comes from Chris O'Cull with Stifel. Your line is open.
Chris O'Cull--Stifel, Nicolaus & Company -- Analyst
Thanks, good morning, guys. Gene, several of the bar and grill and midscale casual dining chains have been pretty aggressive with new promotional platforms and while Olive Garden clearly has the scale to compete. Does some of the other smaller brands like Cheddar's and Yard House, do they need to make any adjustments to their marketing strategy?
Gene Lee--President and Chief Executive Officer
So I think that they've got always reexamine where they are from a value standpoint. I would say that Cheddar's is the value leader. Maybe there is some opportunity as we move forward to highlight that value differently and to bring that to life. There's no doubt, and I've said at the last couple of calls, that the large casual dining brands are being much -- are much more effective and disciplined today and advertising very effectively and their share voice is up. That's making it a little bit more difficult for a Cheddar's to compete effectively. And we may have to think about how we go to market to highlight that great value that we have. But your insight is relevant and it's a challenge that we face with the Cheddar's brand.
Chris O'Cull--Stifel, Nicolaus & Company -- Analyst
Is there any plans to test or introduce anything in coming quarters?
Gene Lee--President and Chief Executive Officer
Yes. But I'm not going to talk about them.
Chris O'Cull--Stifel, Nicolaus & Company -- Analyst
Fair enough, thanks.
Operator
Thank you for your question, Mr. O'Cull. Our next question from Gregory Francfort with Bank of America Merrill Lynch. Your line is open, sir.
Gregory Francfort--Bank of America Merrill Lynch -- Analyst
Hey, I just had two quick questions. The first one was just a follow-up to David's question on polished casual. Is there any difference in terms of the store growth capacity as it's happening at polished casual versus maybe casual dining more broadly? Because my understanding was casual dining store growth might be slowing a little bit. And a question just for Rick. Just on the cash balance, and we're at the end of the quarter, I think the last time you ran a cash balance close to this high, you made a pretty big acquisition. Is there a reason why maybe you're not deploying that cash for purchases? And as you think about acquisitions, how much does Cheddar's performance, the need to turn that, impact your thoughts on future acquisitions? Thank you.
Gene Lee--President and Chief Executive Officer
I'll go first. On the polished growth, I think that it's an attractive space. We have a lot of entrepreneurs out there that over the last decade have created some pretty good concepts that are starting to get to -- getting past that 10 unit area and starting to grow. It's obviously an attractive marketplace, but it's also relatively small. It just happens when we -- on our smaller polished brands, when we have increased competitions, it has a bigger effect on the overall top line number. What we do believe is that we can fight off that initial competition over 12 to 18 months, and our restaurants will get back to the sales levels they were prior to the competition coming in. So it's just something that you have to -- I think you have to continue to operate really well and you don't make an adjustment in the short term for that increased competition. You just go back to winning the 9 square feet and your business will get back to growth.
Rick Cardenas--Senior Vice President, Chief Financial Officer
Yeah, as it relates to our cash balance, even though we have significantly more cash than we had last year, our teams are still focused on doing the things every day to continue to increase that cash balance. And one of the things that we did in the fourth quarter was we significantly improved our working capital position and we also did a few more sale leasebacks. So that helped increase our cash balance. And I talked to the teams' ability to continue to find the best use of our cash and actually take as much cash in as we possibly can, even though we have some cash. As it relates to what we're going to do with that, we continue to speak with our Board to determine what the best use of that cash is, whether it's through share buybacks or dividends. And as you've heard earlier, we just increased our dividend by 17%. And we will find the right times to either buy back shares or acquisitions if they come to play. It has nothing to do with Cheddar's, whether we're doing an acquisition right now or not. It just has to do with making sure that we have the right brands, et cetera, to target.
Gregory Francfort--Bank of America Merrill Lynch -- Analyst
Thank you.
Operator
Thank you for your question, Mr. Francfort. Our next question is from John Glass with Morgan Stanley. Your line is open, sir.
John Glass--Morgan Stanley -- Analyst
Thanks very much. I know, Darden's position on delivery has been clear, but Gene, do you see either one, the delivery is helping the overall industry in any way? I know it may not show up in traffic, but maybe it shows up in check for example? And two, do you think by not participating delivery at this point by in anyways put you at a traffic or a total sales disadvantage?
Gene Lee--President and Chief Executive Officer
I don't believe -- I'll start with the second part of that. I don't believe it's put us in a disadvantage at all. I really like the way our off-premise business continues to grow. I think we continue to remove friction from the process. And we continue to offer great value without having to have any destruction to our overall margins. And so I like where we're at. I don't think we're missing out on anything. I think it's -- this is still an immature business. There's still lots to learn. There's a lot of discussion around whether it's incremental, it's non-incremental. Where I want us to focus and I want our teams to focus on is creating a compelling in-restaurant experience that people want to come and visit. I think when you do that, that helps create the demand for the off-premise visit. And we know convenience will continue to be important to the consumer. But what our focus right now is to create a compelling off-premise -- in-restaurant experience that drives a compelling off-premise experience in which the consumer still wants to come and pick up -- will still come and pick up because the value and the quality of the offering is so strong.
John Glass--Morgan Stanley -- Analyst
And just as a follow-up, if I missed it, I'm sorry, what was the Olive Garden off-premise business this quarter and how much did it grow? And then just to the first part of my first question was simply, do you see any evidence anyone is getting a real lift at delivery? Or is this all talk and we haven't really seen the industry sales in fact benefit from this in total?
Gene Lee--President and Chief Executive Officer
Yes, sorry, I missed that part, John. I think that -- I don't think I see any real growth from it. I'm seeing margin destruction. But that's just -- that's my opinion. We've got test going on and we're not -- it's not -- the results aren't compelling enough that we're running out and doing something with it. I think with that, I think it really indicates how we're feeling about it. Olive Garden To Go is 9% for the quarter, two-year stack of almost 18%. It's 14.5% of sales. I'm just -- I'm really pleased with where we are with our off-premise business. We continue to enhance those capabilities, which is really important. And we continue to work with the adoption of digital because we think that's going to be a continued driver. And we've got some other investments that we're continuing to make -- that we'll continue to make to remove some friction in the off-premise experience.
John Glass--Morgan Stanley -- Analyst
Great. Thank you so much.
Operator
Thank you for your question, Mr. Glass. Our next question is from Matthew DiFrisco with Guggenheim. Your line is open, sir.
Matthew DiFrisco--Guggenheim Securities -- Anaalyst
Thank you. Just had a follow-up on a question. Specific to the Olive Garden and I guess what could be perceived as a slight shortfall versus what expectations were, and then LongHorn's topping. Did the Olive Garden brand, was that the only one that saw basically less incentives and had somewhat of a drag in the quarter or did LongHorn's experience some of that as well?
Gene Lee--President and Chief Executive Officer
LongHorn didn't have the same drag as Olive Garden did. There was much more reduction incentives in Olive Garden than LongHorn's for the quarter.
Matthew DiFrisco--Guggenheim Securities -- Anaalyst
And where are we in that cycle of reductions? Are we going to expect that to continue into the first half of '20? Or are we starting to maybe now see more comparable year-over-year comparisons on incentives?
Gene Lee--President and Chief Executive Officer
I think when we get to the middle of the -- or the middle of the -- or beginning of the middle of the second quarter last year is when we started to start to really pull back. So look at a little bit more time before we wrap that.
Matthew DiFrisco--Guggenheim Securities -- Anaalyst
And then my last question, you mentioned a lot about some of the competition coming in and where you would grow a store, the obvious place would be sort of where our capital grow already sits or some other your brands. But as far as the real estate availability, say for the next three to five years. What are you seeing out there for the potential for the Cheddar's brand in that -- those brands are lower, better position, best for the lower income consumer or the broader consumer base. A lot has been said that there's not a lot of availability. Do you feel the same? Or do you think the brand is something that can fit into more locations, maybe than some other brands that have commented about tight locations?
Gene Lee--President and Chief Executive Officer
Well, I think we have a lot of green space, right? So we're still relatively underpenetrated. So that gives you a lot more opportunity. It's obviously a lot easier for us to find sites for Cheddar's than it is for Olive Garden. I don't see availability being an issue for Cheddar's long-term growth, whereas Olive Garden now, I mean everything that we do with Olive Garden we have to really figure out what the cannibalization is going to be versus we don't have that much of an issue with Cheddar's. So I think it all depends on what's your size, what's your penetration level. I don't see that as a burden as we move forward with Cheddar's.
Matthew DiFrisco--Guggenheim Securities -- Anaalyst
Thank you.
Operator
Thank you for your question, Mr. DiFrisco. Our next question is from Jeffrey Bernstein with Barclays. Your line is open.
Jeffrey Bernstein--Barclays Capital -- Analyst
Great. Thank you very much. Two questions, one just on the fiscal '20 guidance. I'm just wondering if there was anything in the fiscal fourth quarter just ended, whether it will be slower or more volatile comps or maybe higher than expected costs. Anything there that might have led to temper your initial fiscal '20 guidance? I know, if you look at past years, some like initial guidance was fairly conservative, allowing for beaten raise which Gene, I know that's a critical component is to guide conservatively. But looking back to fiscal '19 to be comp by 75 basis points, should beat earnings growth by 700 percentage points. So just wondering, as you think about your initial guidance for '20. How that was impacted by the most recent trends in the industry? And then I had one follow-up?
Rick Cardenas--Senior Vice President, Chief Financial Officer
Hey, Jeff, this is Rick. Yes, I'm assuming you're talking about our same-restaurant sales guidance of 1% to 2%. As Gene mentioned, we did -- we are seeing a little bit more volatility in the industry. And this is an annual guidance, this is 12 months ahead of time. And so we want to make sure that we're prudent, and being at the lower end of our 1% to 3% range, makes sense. We also have seen a little bit of a slowdown in discretionary spending in this calendar year versus last calendar year. So we feel like 1% to 2% is the right range at this time.
Jeffrey Bernstein--Barclays Capital -- Analyst
And from an earnings per share perspective, would you view that similarly, in terms of a little bit more cautious to start the year?
Rick Cardenas--Senior Vice President, Chief Financial Officer
I wouldn't say it's a little bit more cautious to start the year than we've been in the past. We have a few things. One is our same-restaurant sales of 1% to 2% with a little bit more inflation that we've seen in the past and also a big difference in tax rate year-over-year will impact our EPS.
Jeffrey Bernstein--Barclays Capital -- Analyst
Got it. And my follow-up was just on the unit guidance for fiscal '20, seems like on a net basis we're looking at roughly 2.5% growth. I'm just wondering, if you can give some color in terms of what -- where Olive Garden and LongHorn fall into that and confidence in Cheddar's maybe accelerating or is Cheddar's still in wait and see mode?
Rick Cardenas--Senior Vice President, Chief Financial Officer
Yeah. First of all, in the broad picture, the total number of openings that we have this year will be very similar to last year. The difference is the openings will fall a little bit later in the fiscal year, than they did this year. Just because of construction and developers, not necessarily meeting the timelines that they had originally. So while our openings will be about the same, our timing will be a little bit different. The total percent from Olive Garden and LongHorn, is about a little bit over half of our total openings, which isn't that different than we've had this year. Cheddar's will have about the same pace, as last year.
Jeffrey Bernstein--Barclays Capital -- Analyst
Got you. Thank you.
Operator
Thank you for your question, Mr. Bernstein. Our next question is from Andrew Strelzik with BMO Capital Markets. Your line is open, sir.
Andrew Strelzik--BMO Capital Markets -- Analyst
Hi, good morning. Two things from me. First, a number of the casual diners that have pulled back on promotional activity, are actually performing from a same-store sales perspective among the best in the group. I'm just wondering, do you think the customer -- consumer sensitivity to discounting has maybe lessened a bit or it's less disruptive than it has been in the past with more everyday value on menu across the group? That's first. And second, the conversation on African swine fever has ticked up and I saw that you increased the commodity inflation relative to last year. How did that play into your thinking, how comfortable are you with that, and how it may impact Darden? Thanks.
Gene Lee--President and Chief Executive Officer
Yeah, On the everyday value question and then sensitivity promotions, I think there's been a lot of good work done in the industry over the last couple of years to put more everyday value in. And we've been saying for a while that the consumer didn't want to be told what they had to do, what they had to buy to get that value. And I think a lot of people have rotated to more everyday value. And to be able to do that means that you have to be less promotional when you make that strategic choice. So I think that there's not much more for me to add there, other than I believe that we led the way with everyday value. Others have followed. I think it's the right thing to do and it tones down the promotional activity. Rick will talk about the other question.
Rick Cardenas--Senior Vice President, Chief Financial Officer
Yeah, as it relates to African swine flu, couple of things, one is, pork represents approximately 2% of our total buy. So it's really a small impact and it had very, very small impact on our guide. It's going to take 18 months to 36 months for this to work itself out. We are currently not seeing a huge increase in pricing, but we expect to see some more of that in the back half of the year and that's already contemplated in our inflation numbers.
Andrew Strelzik--BMO Capital Markets -- Analyst
Great. Thank you very much.
Operator
Thank you for your question, Mr. Strelzik. Our next question is from Dennis Geiger with UBS. Your line is open.
Dennis Geiger--UBS -- Analyst
Thank you. Gene, I wanted to ask a bit about the strength of operational execution at Olive Garden, which you often identifies as the biggest driver of the brand's success and probably the largest sales driver. So just wondering, if you could talk more about onset execution in the quarter, if it remained as strong as what you'd see -- as what you've seen in recent quarters? And then I guess just more importantly, if you could frame the run rate from here for operations and throughput, specifically to be a continued driver of outperformance, as we look ahead through the balance of the year? Thanks.
Gene Lee--President and Chief Executive Officer
Yeah, I think, The team continues to make progress on improving operational execution. There's always pockets in a system the size of Olive Garden that has opportunities. There's always opportunities day-to day, week-to-week to improve your overall execution. When you think about the size of Olive Garden and the number of service that we have on each and every day, there is always -- we always break down a little bit. So every day that we break down a little bit less, more guests have a better experience. The keys to this long term are continued simplification. And I believe that management and the operating team inside Olive Garden is really focused on taking it to -- simplification to the next level. And that could drive even further improvement in overall execution for the next couple years. Throughput will always continue to be an opportunity. We were very effective from an advertising standpoint. A lot of our advertising drives people on Friday and Saturday nights. And we have long waits in our restaurants. And that's -- we talk a lot about convenience. And that's not very convenient. And consequently, we've got to get better at making that experience more convenient for the consumer and we've got to get -- we have to get more people and guests through our restaurants each hour and shorten up those dining experiences. So we're going to continue to focus on this and we think it's a big upside.
Dennis Geiger--UBS -- Analyst
Great. And then just if I could, just recognizing you've given a lot of the key guidance pieces, which is great. Can you also just summarize your expectations thinking about EBIT margins for the year maybe relative to the long-term framework, if there's anything else you could add there specific to that item? Thanks.
Rick Cardenas--Senior Vice President, Chief Financial Officer
Yeah, Dennis, this is Rick. Our EBIT margin will be within our long-term framework. And our long-term framework, as a reminder is 10 to 30 basis points.
Dennis Geiger--UBS -- Analyst
Thank you.
Operator
Thank you for your question, Mr. Geiger. Our next question is from John Ivankoe with JP Morgan. Your line is open.
John Ivankoe--J.P. Morgan -- Analyst
Hi, thank you. I wanted to go back to off-premise for Olive Garden. Obviously, at 15% of sales, it's actually getting pretty big on a per store basis. Gene, you mentioned enhancing capability, I think that was around off-premise. How big do you think that can be on a per store basis? How much would you want it to be, obviously considering that much of that business is going to come when you are at your busiest on a Friday or Saturday night?
Gene Lee--President and Chief Executive Officer
Yeah, I think that's always going to depend on consumer demand. I think improving our capabilities is going to be an important part of growing this. We just opened a new prototype in Orlando that has a full dedicated off-premise area, where we're learning a lot from that. We think that, that has tremendous upside for our higher-volume off-premise restaurants. We have restaurants now doing well over $1 million off-premise. A lot of this business comes in and is out the door before 11:30. And again, a lot of the catering that we're starting to do now is really off -- it's pre the big meal period. And so that's really helpful. So we've got multiple projects going on today to improve our capabilities. And then we think there's some attachment opportunities. Can we attach additional sales to the normal off-premise experience? Example, can we -- if we start building these takeout spaces, can we get some more beverage sale? Can we get other attachment? We're still in the infancy of thinking about that. But we think it's a fairly big idea, which could grow that overall percentage over time. I think that the way to summarize this is that we see tremendous opportunity in this space without sacrificing what we're really here to do, which is create a great in-restaurant experience.
John Ivankoe--J.P. Morgan -- Analyst
And how big of a capital project would one of these dedicated takeout space be in existing restaurants?
Gene Lee--President and Chief Executive Officer
John, it's too early to really talk about that. But every restaurant -- we've got it figured out in the multiple -- in the different prototypes we have, where would we add it, has to be added in a specific place where you can staff it in your downtimes without adding a lot of labor. You want proximity to the kitchen. You have the right heating and holding areas. And so I don't want to put a price tag on it right yet. We're still too early in that process.
John Ivankoe--J.P. Morgan -- Analyst
Helpful. Thank you.
Operator
Thank you for your question, Mr. Ivankoe. Our next question is from Sara Senatore with Bernstein. Your line is open, ma'am.
Sara Senatore--Sanford C Bernstein & Co., LLC -- Analyst
Thank you. I have a follow-up actually on Olive Garden and then a question on Cheddar's. On Olive Garden, I know you have said that in the past, you were trying to reduce mix. And also obviously, you talked about some promotional activity. I guess margins seem fairly flat versus last year. So I was just trying to understand a little bit about how to think about the trade-off between cost and margins or traffic and mix, however you think about the complexion of the comp and how that flows through the margin. And then I have a question on Cheddar's, too.
Gene Lee--President and Chief Executive Officer
I think the margin impact in the quarter had a lot more to do with the investment we made with the Chicken Alfredo, which ticked up our -- with the 50% more chicken, which ticked up our cost of sales. And then we had a promotional construct that was pretty similar to last year at this same time. We didn't have to trade-up opportunity that was driving a lot of mix. I mean at the end of the day, when you look at that Olive Garden margin, there's no one out there in this space that has those types of margins. And we're going to continue to invest in value, which may limit the upward mobility of that. We don't expect margins to contract. But I want to make sure that we're investing properly into that business.
Sara Senatore--Sanford C Bernstein & Co., LLC -- Analyst
Okay, thank you. And then on Cheddar's, a couple of comments just about -- you talked about maybe having -- not having that much scale. You also talked about how the franchise businesses continue to be a much bigger drag certainly than -- or the formerly franchised than the rest of them. As you think about that just in going forward, one, is, I guess to me Garden's scale was a big part of where the value creation could be with respect to Cheddar's. So I'm just trying to understand how you think about scale in the context of a brand that's smaller but as a part of a very large system like Darden? And then also do you contemplate -- would you ever contemplate doing something more drastic with the former franchise restaurants? They seem they're still covering their cost of capital. But at some point, does it ever make sense to close them or to think about them differently?
Gene Lee--President and Chief Executive Officer
No. I mean, I'll start with the latter part of that question. These restaurants that are driving the comp down are still extremely busy and they're high -- and most of them are very high volume restaurants that are leaking back down to a more of the system average. So these are still great restaurants on average. They still produce good returns. They've been through the most change. And that I think has created the most -- these have been the most disrupted restaurants. And I think that's why we're seeing a lot of the same-restaurant sales decline come from those restaurants. The destruction -- the big disruption has been total management change, total system change. Everything that they do day-in and day-out has just changed there operationally and they've had some tough times adjusting. But overall, these are great restaurants in great territories. So there's no drastic, we're going to close these things. I think when you look at it -- and Rick alluded to it and I talked about it, we made more money in Cheddar's this quarter than we did last quarter. I think one of the things I'm really excited about in Cheddar's, when we literally look at it and dissect it, our guest counts improved Q3 to Q4 against the industry 160 basis points.
As the industry weakened, Cheddar's guest count actually improved. So I mean we're making progress. One more thing on Cheddar's that I didn't talk about in my prepared remarks. But I think it's important to recognize is that, we've been transforming these kitchens in the last year. We've done approximately 100 of them. We did 34 in the fourth quarter. This is a very disruptive process and the majority that this transformation this quarter were done in the formerly franchised restaurants. This transformation allows us to really improve the efficiency and labor, improve the speed of service with the food coming out of the kitchen. These were big, big moves. This is behind us. And we're really excited about this and we think that this is going to have a big impact.
One of the things that we do know is that there is a significant sales decline after we do transformation as the team struggle with this new operating procedure. But that works its way out. As far as scale goes, I think my reference to scale was more about just the overall size of the brand and the future growth opportunities. Today, Cheddar's is definitely benefiting from our scale. It's plugged into our supply chain. It's been a huge benefit for them. It's allowed us to really continue to focus on value for the consumer. And so I think scale is working for them on that side. They're going to benefit from our data scale over time. And most importantly, I think the thing that I continue to focus on is can we get these human resource metrics closer to our Darden norms? I think when that happens, that's when we're going to see some really great growth.
Sara Senatore--Sanford C Bernstein & Co., LLC -- Analyst
Thank you.
Operator
Thank you for your question, Ms. Senatore. Our last question is from Stephen Anderson with Maxim Group. Your line is open, sir.
Stephen Anderson--Maxim Group -- Analyst
Yes. So thank you, wanted to ask about the rewards program you have in the test. It's about 130 restaurants or so. I want to ask what progress you've seen, what you've learned from that experience and perhaps any plans to expand that program? Thank you.
Gene Lee--President and Chief Executive Officer
We continue to have the rewards program in test. We continue to analyze what's happening there. There's some really positive in that program. There's some challenges with that program. We're going to continue to observe this and figure out whether we can drive greater loyalty with it. If not, we'll dissolve it. And at this point in time, we have no plans to roll it out. We have no plans to dissolve it. We'll continue to observe the consumer behavior.
Stephen Anderson--Maxim Group -- Analyst
All right. Thank you.
Operator
Thank you for your question, Mr. Anderson. We do have a question from Brian Vaccaro with Raymond James. Your line is open, sir.
Brian Vaccaro--Raymond James -- Analyst
Thanks. I just wanted to -- I was hoping to circle back on third-party delivery. Gene, we've seen some concepts that had been hesitant historically sort of recently announced their launch in delivery. And it seems more broadly that the economics for restaurants and maybe particularly those large chains, could be improving. Would you agree with that? And I heard your earlier comments. But are we getting closer to the point where it makes sense to pursue that opportunity with the existing off-premise growth moderating here? Thank you.
Gene Lee--President and Chief Executive Officer
Well, no, I think that the economics are -- the burden of third-party delivery is being shifted to the company to the consumer. People are -- what I'm seeing is brands moving that burden away from themselves and on to the consumer. And at this point, I'm just a little uncomfortable with that, that what percentage is the consumer long term willing to pay of their overall check to have that convenience? And that has to be proved out to me over time that, that's something that we want to do. We're still in a value proposition and I'm just not sure. I'm watching what everybody is -- we're watching what everybody's doing, we continue to believe, especially in Olive Garden, that it's much better for us to focus on the catering and delivery part of this. We've just made -- we've just changed how we think about that. We took the -- the size, dollar size of the order now has moved from $100 to $75 and we've moved from 24-hour notice to 5:00 the day before. We think that, that is a strong move and we are very interested in delivering ourselves for -- to people who want to have a food experience delivered over $75. And again, the average order of that activity for us is well over $300. It's a highly rated from a satisfaction standpoint event. And we want to focus on that more so than trying to move a $15 entree. And so again, we're watching what's happening. We don't think that the economic burden has changed that much. We think it's just been shifted from the restaurant to the consumer.
Brian Vaccaro--Raymond James -- Analyst
Yes, understood. That makes sense. And just back to the changes you made on your existing off-premise, the pricing and the order time. When was that put in place? Was that literally like this quarter? Or was that partially through fiscal 4Q?
Gene Lee--President and Chief Executive Officer
It's just just being put in place now.
Brian Vaccaro--Raymond James -- Analyst
Okay, very helpful. Thank you.
Operator
Thank you for your question, Mr. Vaccaro. I will now turn conference back over to Kevin Kalicak for closing remarks.
Kevin Kalicak--Vice President of Investor Relations and Corporate Analysis
All right. Thanks, Jill. With that, that concludes our call. I want to remind everybody that we plan to release first quarter results on Thursday, September 19th before the market opens with the conference call to follow. Thanks again for participating in today's call.
Operator
That does conclude today's conference call. We thank you all for participating. You may now disconnect, and have a great rest of your day.
Duration: 58 minutes
Kevin Kalicak--Vice President of Investor Relations and Corporate Analysis
Gene Lee--President and Chief Executive Officer
Rick Cardenas--Senior Vice President, Chief Financial Officer
Michael Tamas--Oppenheimer & Company -- Analyst
David Tarantino--Robert W. Baird & Co. -- Analyst
David Palmer--Evercore ISI -- Analyst
Chris O'Cull--Stifel, Nicolaus & Company -- Analyst
Gregory Francfort--Bank of America Merrill Lynch -- Analyst
John Glass--Morgan Stanley -- Analyst
Matthew DiFrisco--Guggenheim Securities -- Anaalyst
Jeffrey Bernstein--Barclays Capital -- Analyst
Andrew Strelzik--BMO Capital Markets -- Analyst
Dennis Geiger--UBS -- Analyst
John Ivankoe--J.P. Morgan -- Analyst
Sara Senatore--Sanford C Bernstein & Co., LLC -- Analyst
Stephen Anderson--Maxim Group -- Analyst
Brian Vaccaro--Raymond James -- Analyst
More DRI analysis
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US long-term mortgage rates little changed; 30-year at 3.84%
WASHINGTON (AP) — U.S. long-term mortgage rates were little changed this week. The key 30-year, fixed-rate loan hovered around an average 3.8% for the third straight week.
Before leveling off, rates marked six straight weeks of declines putting them at historically low levels during this spring's homebuying season. Mortgage buyer Freddie Mac said Thursday the average rate on the benchmark 30-year mortgage ticked up this week to 3.84% from 3.82% last week. By contrast, a year ago the rate stood at 4.57%.
The average rate for 15-year, fixed-rate home loans slipped this week to 3.25% from 3.26%.
The declining rates have been a boon to potential purchasers during this season, and the number of prospective buyers seeking mortgages has increased in recent weeks.
Freddie Mac surveys lenders across the country between Monday and Wednesday each week to compile its mortgage rate figures.
The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates.
The average fee on 30-year fixed-rate mortgages fell to 0.5 point this week from 0.6 point.
The average fee for the 15-year mortgage declined to 0.4 point from 0.5 point.
The average rate for five-year adjustable-rate mortgages dipped to 3.48% from 3.51% last week. The fee held steady at 0.4 point. |
5 Reasons Grocery Outlet's IPO Will Succeed
2019 has been a big year forinitial public offerings. So far, most of this year's IPO crophave been unprofitable tech companiesand the resulting stock price performances have been a mixed bag.
Given this backdrop, it won't be hard for Grocery Outlet to stand out. This discount retailer is expected to price its IPO on June 20th and begin trading shortly thereafter under the ticker "GO". There is a lot to like about the company. It has a straightforward business model, it is growing quickly, and signs point to significantly more profitable growth ahead.
Grocery Outlet is a discount grocery store chain that franchises stores to independent operators. Store locations operate under the "Grocery Outlet" banner and entice customers with "extreme value" prices featuring 40% to 70% discounts on name brand products relative to prices offered by conventional retailers.
Discount retail has been one of the strongest consumer trends in recent years. Discount chains such asDollar General,Costco, andTJ Maxx(just to name a few) have proven out over time that consumers will continue to patronize stores that deliver good value. This cohort has been rewarded with strong financial results and stock price performance.
DG Total Return Pricedata byYCharts
Grocery Outlet is set to continue capitalizing on the trends supporting the discount retail model, but it is also differentiated from other chains. The company is able to offer even deeper discounts because it buys inventory opportunistically in bulk. This also results in rapid inventory turnover, where new items show up in its stores at heavy discounts and are sold out as quickly as they appear. High inventory turnover is good for business (because products sell quicker), but also encourages customers to frequently stop by stores because they never know what they will find on sale.
The other twist is that stores are franchised to independent operators. While stores are still under the "Grocery Outlet" banner, each location is responsible for its own operations, which includes staffing, merchandising, and local marketing. The corporate office is focused on sourcing cheap products and managing the operators. In return, the company gets a 50% share of store-level gross profits. This system is effective at incentivizing store-level operators to maximize financial results, which in turn maximizes results for the overall company.
As a discount retailer, Grocery Outlet has a straightforward and defensible business model. The company's strategy of providing "extreme value" and franchising stores help differentiate the company in the eyes of the consumer and maximize operating efficiency.
One of the biggest reasons people look to participate in an IPO is to invest in growing companies. The good news here is that Grocery Outlet has shown robust growth over a long period of time.
Grocery Outlet is not actually a new company. It was founded in 1946 and has mostly been under the stewardship of its founding family. However, roughly 10 years ago, private equity firms took a majority ownership stake in the business and accelerated its growth. Since 2006, the company's store count has more than doubled from 128 to 323 and revenue has grown at an even faster rate.
In recent years, the company has continued growing at a nice clip. From 2015 to 2018, Grocery Outlet grew its store count on average by 10.1% per year and its total revenue on average by 12% per year. Revenue has grown faster than store count because revenue per store has increased.
Most remarkable is how consistent sales growth has been. The company has generated positivesame-store salescomps for the last 15 consecutive years. This period includes the last economic recession and the slow recovery that followed.
Double-digit sales growth for a grocery store and healthy comp sales trends are nothing to sneeze at. The company expects its growth streak to continue, and based on its historical consistency, I wouldn't bet against that happening.
Image Source: Grocery Outlet.
Perhaps the most exciting part of the Grocery Outlet story is its remaining growth potential. As of March 30, 2019, the company had 323 stores in six states in the Western United States and Pennsylvania. This is a tiny store footprint compared to nationally recognized chains.
The company estimates that it can add another 400 stores in the states it already operates in. The next phase of Grocery Outlet's expansion would be in neighboring states, and the company estimates it can build an additional 1,200 stores in those neighboring states. In the long run, Grocery Outlet believes it has the potential to open as many as 4,800 locations across the entire United States.
The map below shows where Grocery Outlet currently operates (red) and what it refers to as neighboring states (orange).
Image Source: Grocery Outlet IPO Prospectus.
Grocery Outlet's growth estimates are aspirational but possible. The market for grocery stores is massive with several chains operating thousands of store locations and, in some cases, tens of thousands. However, to justify new stores, the company will need to compete and win market share from incumbents. This will be an uphill battle.
So far, the company has done a great job executing against its growth plan. In 2018, Grocery Outlet opened 26 new stores and expects to open 32 new stores in 2019. The current growth plan calls for expanding store count by 10% per year for the foreseeable future. Based on its current footprint, there is plenty of runway for this pace of growth to continue.
A defining characteristic of the current wave of IPOs is business unprofitability. That being said,Zoom Videohas been one of the most successful IPOs this year. Much of its success had to do withthe company's early signs of profitability. Grocery Outlet, too, is profitable. This is yet another factoid that will help the stock stand out in its early days of trading.
In 2018, Grocery Outlet generated net income of $15.9 million on sales of $2.2 billion -- implying a profit margin of just 0.7%. However, the company incurred $55.4 million of interest expense. The IPO funds are expected to eliminate a significant chunk of the company's debt load. This will be a tailwind to its profit margin and will most likely be viewed favorably by the public markets.
Some recent IPOs have involved early investors and company executives cashing out their stock in transactions where the companies in question do not actually receive funds. This is not the case in the Grocery Outlet IPO.
The Grocery Outlet IPO is intended to raise funds in order to pay down the company's debt -- providing greater financial flexibility to pursue growth. If the IPO prices toward the high end of its range, the company could receive as much as $300 million that will be primarily used to retire some of its over $850 million in debt.
Insiders will not sell a single share in this transaction. This is most likely because the insiders continue to believe in the company's business strategy and growth prospects. If patient insiders believe the business will be worth much more in the future, why would they sell? Company outsiders should view this as a positive indicator.
Grocery Outlet is expected to price its IPO on June 20th. The company is expected to sell 17.2 million shares translates to about 20% of shares outstanding. The IPO prospectus lists a share price range of $18 to $19 per share. This share price range has been increased from an initial range of $15 to $17, indicating strong investor demand for the offering.
Putting the pieces together, Grocery Outlet's IPO is poised for success. The company has a straight forward business model, a clear growth plan, and attractive financial characteristics. Finally, the fact that insiders are not selling shares is quite telling as to where they think the stock will go.
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Luis Sanchezhas no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool recommends Costco Wholesale and The TJX Companies. The Motley Fool has adisclosure policy. |
UPDATE 1-South African rand pauses rally as investors eye Ramaphosa speech
* Rand rally pauses ahead of Ramaphosa speech
* Stocks lifted by dovish Fed (Adds latest prices, analyst comments)
JOHANNESBURG, June 20 (Reuters) - South Africa's rand inched firmer late on Thursday following a rally to a five-week best after the U.S. Federal Reserve signalled possible interest rate cuts later this year.
Investors paused the rand buying spree and booked some profits ahead of President Cyril Ramaphosa's State of the Nation address at 1700 GMT, with the rand seen moving in either direction depending on the tone struck by Ramaphosa.
At 1530 GMT the rand was 0.1% firmer at 14.3000 per dollar, dipping back from a session-best 14.2000 hit earlier in the session, its firmest level since May 16.
Ramaphosa is expected to give details of an Eskom support package as pressure mounts on him to deliver on his election pledge to jump-start flagging growth and avoid losing the country's last investment-grade credit rating.
The rand was top of the emerging market currency pile for the week, but still lagged a number of its peers on a year-to-date basis, with analysts citing policy uncertainty and the risk of Pretoria losing the rating as key constraints.
"Given that the rand has been a clear underperformer in the recent past, this still represents a bit of a 'catch up' relative to the EM sample on a longer-term basis," analysts at Investec said in a note.
South Africa has overtaken Turkey and Argentina among emerging markets as investors' biggest worry, with the rand likely to suffer the backlash of intensifying volatility and short selling as a downgrade to "junk" looms larger.
"We still see scope for the rand's depreciation on Friday because of worries about weaker growth and possible rate cuts, with the USD/ZAR potentially breaking the 14.40 resistance level," said Juri Kren of Continuum Economics.
In fixed income, the yield on the benchmark government bond due in 2026 dipped 11 basis points to 8.07%.
On the bourse, stocks were up after Wednesday's dovish Fed message as appetite for risk saw equities surge globally.
The benchmark Johannesburg Stock Exchange Top-40 Index rose 0.81% to 52,961.96 while the broader All-Share Index closed 0.68% higher at 58,960.29.
Gold mining companies saw the biggest gains, with AngloGold Ashanti rising 7.47% to 241.99 rand and Gold Fields up by 3.66% to 76,48 rand.
(Reporting by Mfuneko Toyana and Naledi Mashishi;Editing by Catherine Evans) |
Noble Energy, Inc.'s (NYSE:NBL) Path To Profitability
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Noble Energy, Inc.'s (NYSE:NBL): Noble Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids worldwide. The company’s loss has recently broadened since it announced a -US$66.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$933.0m, moving it further away from breakeven. As path to profitability is the topic on NBL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for NBL’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Noble Energy
NBL is bordering on breakeven, according to the 18 Oil and Gas analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$420m in 2020. NBL is therefore projected to breakeven around a couple of months from now! How fast will NBL have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, NBL may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for NBL given that this is a high-level summary, however, take into account that by and large an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with NBL is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in NBL’s case is 66%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on NBL, so if you are interested in understanding the company at a deeper level, take a look atNBL’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
1. Valuation: What is NBL worth today? Has the future growth potential already been factored into the price? Theintrinsic value infographic in our free research reporthelps visualize whether NBL is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look atwho sits on Noble Energy’s board and the CEO’s back ground.
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. |
How to Invest Your First $1,000
These are good investments for beginners. Investing is easy. Figuring out where to invest is the hard part, especially for beginner investors who likely have better ways to spend their time than researching investments . If studying charts and ratios isn't your thing, you can still be successful. The key is to start early, headed in the right direction. "If you're moving fast but you're going down the wrong road, it's not helping you," says Susan Mitcheltree, principal at Berman McAleer. "To quote Jim Rohn, you can't change your destination overnight but you can change your direction." These nine investments for beginners will get you headed in the right direction for $1,000 or less. Index funds First things first: "Forget about trying to 'beat the market,'" says Stephen Caplan, a financial advisor at Neponset Valley Financial Partners. Many beginning investors learn the hard way that simple investment strategies are often better -- not to mention easier. Save yourself time, energy and unnecessary grief by opting for a straightforward strategy from the start, Caplan says. He points to low-cost index funds tracking the total U.S. and total international stock markets. "Through just these two vehicles, you'd be invested in about 10,000 companies across the world and would be paying under 0.1% in fees. To reduce risk, add a low-cost bond index fund to the mix." Target-date funds For an even more simplified strategy of investing for beginners, consider target-date funds . These retirement-planning tools are designed to be one-stop shops for retirement savers. "You have a solid, diversified portfolio within one fund that will slowly get more conservative as you get closer to retirement," says Daniel Patterson, a CFP and founder of Sweetgrass Financial Planning. "You don't have to worry about any of the technical details, such as what the proper portfolio allocation should be or when to rebalance." Many large investment firms offer target-date funds. Just look for the fund corresponding to your retirement year and call it a day, or a retirement plan. Story continues Balanced funds If you don't like the idea of your fund changing its allocation over time, target-risk or asset allocation funds are another good investment option for beginners. These funds maintain a set allocation of stocks to bonds indefinitely. Danielle L. Schultz, principal financial planner at Haven Financial Solutions in Evanston, Illinois, suggests anxious beginning investors use more moderate balanced funds like the Vanguard Wellington Fund (ticker: VWELX ), Fidelity Puritan ( FPURX ) or Vanguard Balanced Index ( VBINX ). "They're a bit more conservative than target-date funds for millennials and more aggressive than target funds for older ages, but don't gyrate as much while still earning solid returns," she says. Exchange-traded funds (ETFs) Funds are good investments for beginners because you get diversification at every level of investment, whether you invest $10 or $10,000. Some mutual funds add a road block, however, with minimum investments. This is where ETFs shine: Unlike mutual funds, the only minimum on an ETF is the share price, which is often far lower. "ETFs are one of the easiest ways to achieve diversification, largely due to how easy they are to purchase," says Kip Meadows, founder and CEO of Nottingham in Rocky Mount, North Carolina. They're built like a mutual fund but trade like a stock. There are ETFs for every sector and even passive index fund ETFs. No-transaction fee funds As a beginning investor, cost is "tremendously important," says Guy M. Penn, principal at St. Louis Private Advisors. "If every week you were to invest $100 and purchase a security with a $7 trading fee, you're immediately down 7% on your investment." To avoid fee drag, look for "no transaction fee" funds. Most of the larger investment firms will have a list of ETFs and mutual funds you can purchase for no trading commission. 401(k)s or 403(b)s While what you invest in is important, it would be negligent to talk about smart investments for beginners without mentioning the importance of where you invest. Because before you buy an investment, you need a place to keep it. One of the best places to start investing your first $1,000 is your employer-sponsored retirement plan. "401(k)s and 403(b)s often offer participants employer matching funds," Mitcheltree says, "which can boost contribution amounts for young investors who often have a lot of other demands on their paychecks." And most plans offer some of the investment options for beginners discussed in this article. Roth IRAs Another smart investment for beginners is a Roth IRA , especially if you don't have access to an employer-sponsored plan. You can invest in almost anything in a Roth IRA (including ETFs and mutual funds) and it'll grow tax-free. Just be aware that while Roth IRAs have many benefits, they do come with "some notable caveats, the biggest one being limited pre-retirement access to the money," Mitcheltree says. Likewise, you don't get a tax deduction today for the money you invest in a Roth. But since you won't have to pay taxes on it when you withdraw in retirement, Roth IRAs can be great places to house your first investments. Robo advisors For an investment house that comes with its own furniture, robo advisors make a great way of investing for beginners. These digital investment platforms use computers to curate and manage an investment portfolio for you. They often begin by asking you questions about your financial goals and risk tolerance, then suggest a portfolio that suits your needs. Most have very low -- or even no -- minimums, and charge lower fees than human financial advisors. If you find a robo advisor that offers automatic investments from your bank each month, you've got yourself set up for streamlined, long-term investment success. A financial advisor Sometimes the best investment for beginners is in an expert who can help you get on track and stay on it. A good financial advisor "will explain things simply, be clear about how they are compensated and have a plan to help you as the stock market and economy go topsy-turvy," says Todd Murphy, a facilitator at Yale School of Management and financial advisor at Prime Financial Services in Wilton, Connecticut. Investing your first $1,000 is just the beginning. It can pay to have someone to guide you through investing your next $1,000 and beyond. The best investments for beginners. -- Index funds. -- Target-date funds. -- Balanced funds. -- Exchange-traded funds. -- No-transaction fee funds. -- 401(k)s or 403(b)s. -- Roth IRAs. -- Robo advisors. -- A financial advisor. More From US News & World Report Build Your Investment Strategy With These 9 Questions 9 of the Best Investing Books for Beginners The Single Woman's Investment Guide |
IBM Blockchain team reportedly spared worst of firm’s layoffs as it redoubles DLT efforts
For all the criticism IBM's Blockchain project has faced over the years, its ability to grow - and maintain - its team may be one area where it excels.
Although IBM laid off 1,700 employees earlier this month, only a “very tiny, tiny percentage" of them came from the blockchain operation, sources close to the team told The Block.
"The product team had no layoffs, there was nothing out of development. It was very limited on the blockchain side," one source who has direct contact with the Blockchain division said.
While IBM declined to give specific details about the degree to which the layoffs had impacted its blockchain operation, Jerry Cuomo, VP of IBM Blockchain Technology, told The Block:
"Blockchain skills are the priority...And we're full-steam ahead of blockchain." He added: "We plan to grow for a very long time."
Indeed, a quick search of online job-postings revealsblockchainjobs a-plenty at IBM across the world - from Australia toIndia. This corroborates withthe firm sayingit wanted to focus its hiring efforts in new businesses like "analytics, security and blockchain," and that the layoffs elsewhere were part of a"realignment plan."
That does not mean the blockchain division escaped any culling, however. Another source reported a handful of layoffs on the services (or consulting) side of the blockchain business, but confirmed the engineering side had been kept intact. The consulting arm is one of the blockchain team's three pillars and reportedly its main "cash-cow." It is, however, unrelated to the raw technological side of the business, which encompasses theIBM Blockchain Platformand the IBM Solutions products, which cover the Food Trust Network and the Stellar partnership.
IBM's $34 billion acquisition of software developer Red Hat is also set to close. Sources suggested this may lead to more changes in the blockchain team in the near future, as Red Hat's 13,000-strong team joins IBM's Hybrid Cloud unit. Red Hat developersare set to workalongside and to utilise IBM's blockchain team. |
Crude Oil Price Forecast – Crude oil markets explode to the upside
WTI Crude Oil The WTI Crude Oil market has rallied significantly during the trading session on Thursday, gaining as much is 5% early in your, reaching towards the 50 day EMA. However, there is a lot of resistance just above, and we may have, bit too far in the short term. Don’t fear though, there will be plenty of buying opportunities on pullbacks. The Iranians and the Americans chirping at each other isn’t going to help situations either, so I think at this point it’s only a matter of time before buyers would pick up any value that shows up. Crude Oil Forecast Video 21.06.19 Brent Brent markets of course did the same thing as we continue to see a line of crude oil volatility due to both Iran and the US dollar. As stimulus comes into play, it makes sense that crude oil should rally a bit as well. However, there is still concerns about demand so I don’t know if we have a longer-term breakout to fresh highs, or if we simply reevaluate the situation and go looking towards the $67.50 level. Again though, this is a market that may have gotten ahead of itself so look for short-term pullbacks as buying opportunities. Commodities will of course benefit, and obviously crude oil shouldn’t be any different. With that, I am bullish in the short term but I do think that eventually we will find sellers above, as we are probably going to start a huge consolidation area. Please let us know what you think in the comments below This article was originally posted on FX Empire More From FXEMPIRE: Crude Oil Weekly Price Forecast – Crude oil markets have bullish week GBP/USD Weekly Price Forecast – British pound bounces S&P 500 Weekly Price Forecast – Stock markets rally again for the week Forex Daily Recap – US Dollar Index Descended to a Three-Month Bottom Natural Gas Weekly Price Forecast – Natural gas markets spend the week falling again Silver Price Forecast – Silver continues to be volatile |
UPDATE 1-Slovenia sells Abanka to NKBM for 444 mln euros
(Adds quote, details)
LJUBLJANA, June 20 (Reuters) - Slovenia has sold the country's third largest bank, state-owned Abanka, to No. 2 lender Nova KBM (NKBM) for 444 million euros ($501 million), state privatisation body SDH said on Thursday.
Slovenian Sovereign Holding (SDH) said the transaction was expected to be completed by the end of the year, pending necessary approvals.
Nova KBM is a unit of U.S. investment fund Apollo Global Management, which owns 80% of the bank, while the European Bank for Reconstruction and Development (EBRD) holds the other 20%.
"This historic moment is an extraordinary opportunity for us and Abanka to create a strong united bank which is positive for the Slovenian economy," NKBM head John Denhof said in a statement after signing the sales deal.
NKBM and Abanka together will hold a market stake of 22.5%, according to balance sheet assets, just behind the country's largest bank Nova Ljubljanska Banka (NLB) with around 23%.
The government controlled more than 50% of the banking industry in 2013 when the country narrowly avoided an international bailout for its banks with a large government capital injection in several local banks, including Abanka.
The government promised to sell most banks in exchange for European Commission's approval of state aid to the banks in 2013 and 2014.
Abanka was the last of the state banks on sale. The government controls still owns about 12% of the banking sector as it owns development bank SID and a quarter of NLB.
($1 = 0.8864 euros) (Reporting by Marja Novak; Editing by Jan Harvey and Edmund Blair) |
If You Had Bought Myomo (NYSEMKT:MYO) Stock A Year Ago, You'd Be Sitting On A 73% Loss, Today
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Even the best investor on earth makes unsuccessful investments. But serious investors should think long and hard about avoiding extreme losses. We wouldn't blameMyomo, Inc.(NYSEMKT:MYO) shareholders if they were still in shock after the stock dropped like a lead balloon, down 73% in just one year. That'd be enough to make even the strongest stomachs churn. Myomo may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 36% in about a quarter. That's not much fun for holders.
Check out our latest analysis for Myomo
Because Myomo 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last twelve months, Myomo increased its revenue by 79%. That's a strong result which is better than most other loss making companies. So on the face of it we're really surprised to see the share price down 73% over twelve months. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
If you are thinking of buying or selling Myomo stock, you should check out thisFREEdetailed report on its balance sheet.
Given that the market gained 5.0% in the last year, Myomo shareholders might be miffed that they lost 73%. 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. The share price decline has continued throughout the most recent three months, down 36%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Shareholders might want to examinethis detailed historical graphof past earnings, revenue and cash flow.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of companies we expect will grow earnings.
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. |
Silver Price Forecast – Silver markets gap higher
Silver markets gappedhigher to kick off the trading session on Thursday as the Federal Reserve has become a lot more dovish, and that of course makes sense as the US dollar falls in value and Silver of course will react positively. However, we are a bit ahead of ourselves to look for short-term pullbacks to take advantage of as the $15 level should be supportive now. It was previous resistance, so it makes sense that “the ceiling will become the floor.”
The $15.50 level is resistance, and now that will be the next target. However, that we should have plenty of value between here and there and start buying. If we did break down below the $15.00 level, that would be horrific and very negative for the uptrend. That doesn’t look to be very likely, so I think at this point traders are starting to pick up bits and pieces of silver going forward. If you have the ability to buy physical silver, that is also a valid way to go, but the futures market of course is somewhat expensive so you need to be cautious about your entries. If you have CFD contracts available, that might be a way to go as well as you can size your position accordingly, because once we see a move like this it tends to get extraordinarily volatile. Selling is an even a thought at this point, as there is far too much in the way of an attitude shift over the last couple of days.
Please let us know what you think in the comments below
Thisarticlewas originally posted on FX Empire
• Crude Oil Weekly Price Forecast – Crude oil markets have bullish week
• Gold Weekly Price Forecast – Gold markets explode to the upside this week
• Gold Price Prediction – Gold Prices Trend Higher as Geopolitical Issues Brew
• US Stock Market Overview – Stocks Slip, but Settle Up Strong for the Week
• Silver Price Forecast – Silver continues to be volatile
• Natural Gas Weekly Price Forecast – Natural gas markets spend the week falling again |
Does Market Volatility Impact Moovly Media Inc.'s (CVE:MVY) Share Price?
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Anyone researching Moovly Media Inc. (CVE:MVY) might want to consider the historical volatility of the share price. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. 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 second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.
Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is 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 Moovly Media
As it happens, Moovly Media has a five year beta of 1.02. This is fairly close to 1, so the stock has historically shown a somewhat similar level of volatility as the market. Using history as a guide, we might surmise that the share price is likely to be influenced by market voltility going forward but it probably won't be particularly sensitive to it. Beta is worth considering, but it's also important to consider whether Moovly Media is growing earnings and revenue. You can take a look for yourself, below.
Moovly Media is a rather small company. It has a market capitalisation of CA$5.5m, which means it is probably under the radar of most investors. It doesn't take much money to really move the share price of a company as small as this one. That makes it somewhat unusual that it has a beta value so close to the overall market.
Since Moovly Media has a beta close to one, it will probably show a positive return when the market is moving up, based on history. If you're trying to generate better returns than the market, it would be worth thinking about other metrics such as cashflows, dividends and revenue growth might be a more useful guide to the future. In order to fully understand whether MVY is a good investment for you, we also need to consider important company-specific fundamentals such as Moovly Media’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Financial Health: Are MVY’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 MVY 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 MVY'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. |
Facebook’s Libra Gambit Forces Washington’s Hand on Crypto Policy
(Bloomberg) -- Facebook Inc.’s decision to create its own digital money –- with the grandiose ambition of establishing an alternative global financial system –- is jumpstarting a long simmering debate in Washington over how to regulate cryptocurrency.
For years, U.S. regulators and lawmakers have bickered over how to tackle the thorny issues surrounding the emergence of cryptocurrencies, like protecting consumers and preventing crime. But the entry of a big and controversial company like Facebook could force their hand.
At least six federal agencies that have some say in cryptocurrency oversight could slow, or even derail, Facebook’s plans, former regulators said. The company is already under the spotlight for a series of policy stumbles and scandals that have many lawmakers itching for a fight. Among Facebook’s missteps are major data breaches and letting Russians hijack its platform during the 2016 election to push President Donald Trump’s candidacy.
“Facebook is going to get whacked a number of different ways,’’ predicted Patrick McCarty, a former Commodity Futures Trading Commission official who teaches a class on cryptocurrencies at Georgetown University’s law school and lobbies on the issue. “The company went into another area that many in Congress are very skeptical about. It’s like they are doubling down on hot button issues.”
A number of Democrats on Capitol Hill swiftly criticized Facebook’s Tuesday announcement and called for additional scrutiny of the technology company. Representative Maxine Waters, the chairwoman of the House Financial Services Committee, said she would conduct hearings on the crypto plans, and demanded that Facebook hit the pause button “until Congress and regulators have the opportunity to examine these issues and take action.”
The Senate Banking Committee, led by Republican Chairman Mike Crapo, plans to hold a hearing next month. In its Wednesday announcement, the panel said the hearing would focus at least partly on privacy issues, showing lawmakers’ skepticism that Facebook can protect its users’ financial information.
“Facebook is too big and too powerful,” Senator Sherrod Brown, the top Democrat on the banking panel, said in a Thursday Bloomberg Television interview. “We want to shine a light on this and then figure out what Facebook is trying to do and then begin to move with the regulators to protect the financial system and protect the economy, especially with the attacks on privacy that Facebook is so well known for.”
Facebook, in a statement responding to the congressional outcry, said the company would address lawmakers’ concerns. And David Marcus, the Facebook executive leading the company’s cryptocurrency efforts, told Bloomberg last week that he has been in touch with regulators and central banks in multiple countries.
Despite the Bitcoin investment craze and a series of fraudulent initial coin offerings, Congress has not moved to pass legislation setting out an approach for dealing with the industry. That has left regulators like the Securities and Exchange Commission, the Federal Reserve, the CFTC and parts of the Treasury Department to sort it out among themselves.
Traditionally, Silicon Valley companies have tried to remain far below Washington’s radar until they were too large to ignore, a tactic aided by their physical distance on the West Coast as well as a lack of technological understanding by many policy makers.
Facebook is now long past that point, and it has been stepping up its lobbying efforts as it faces a slew of regulatory investigations and potential antitrust scrutiny. Senators Bernie Sanders and Elizabeth Warren are among the 2020 Democratic presidential contenders who have argued that the company should be broken up because it has too much power over many aspects of people’s lives.
The cryptocurrency project will likely provoke similar objections.
In a 12-page white paper detailing Facebook’s plans, the company and its partners described launching “a simple global currency and financial infrastructure that empowers billions of people” by next year.
The token will be called Libra and built on a new Blockchain infrastructure accessible from anywhere in the world. The companies have set up a non-profit organization in Switzerland to govern the payment network and hold a reserve of bank deposits and short-term government securities that will back the coin.
Read More: Why Facebook Is Minting a Coin and How You Can Use It
The goal is for Libra to maintain a stable value, so that consumers feel comfortable using it to buy things. Bitcoin, with its wild volatility, has never achieved that status.
Indeed, Facebook took pains to describe Libra as a method of payment rather than a speculative financial instrument like most digital coins. The company said that the currency would allow people to use their mobile phones to send money cheaply anywhere in the world.
What’s unclear from the paper, however, is what kind of government oversight the cryptocurrency will have.
That’s been a particularly sensitive topic in Washington, where policy makers have failed to agree on an overarching policy for regulating virtual money. That grey area has allowed many coins to flourish but also has enabled fraud and other criminal activity like money laundering.
Many government officials aren’t even sure how cryptocurrencies should be classified under the law and which agency might be responsible for them. Are they securities? Are they commodities? Are they just a newfangled form of cash?
Read More: Why Facebook Chose Stablecoins as Its Path to Crypto
Some have argued that digital coins should be monitored by the SEC because they often trade on exchange-like platforms and in some ways act like stocks. Others have pushed for the CFTC to oversee the products because they resemble currencies that underlie some futures products. Much of that jurisdiction would be in cases of fraud or manipulation rather than actually regulating the markets.
The Federal Trade Commission, which has some oversight of tech companies, could make the argument that it should regulate cryptocurrencies, lawyers who work on the issue said. The Federal Bureau of Investigation and the Internal Revenue Service also claim some jurisdiction.
Bank regulators, while not a primary cryptocurrency watchdog, have been involved in digital currency policy talks. Fed Chairman Jerome Powell told reporters on Wednesday that the central bank was one of a number of regulators that Facebook consulted before revealing its plans for Libra.
Powell, speaking at a press conference, said because digital currencies are in their infancy, they don’t yet pose monetary policy implications for the Fed. Still, he added that the central bank would want to ensure that there aren’t “safety and soundness” issues for the financial system should Facebook go forward with Libra.
Some cryptocurrency trading platforms operate as money services businesses, like PayPal or Western Union. Those firms have to register with the Financial Crimes Enforcement Network, an arm of the Treasury Department that combats money laundering, and also in the states where they operate.
Still, with a behemoth like Facebook getting in the game, former regulators said the federal government may have to come up with a better system than the current patchwork of oversight.
“Those issues might be really put to the test,” said Gary Goldsholle, a partner at Steptoe & Johnson in Washington who previously worked on digital token issues at the SEC.
(Adds comment from senator in seventh paragraph.)
--With assistance from Julie Verhage and Austin Weinstein.
To contact the reporters on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net;Ben Bain in Washington at bbain2@bloomberg.net
To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P. |
How MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Can Impact Your Portfolio Volatility
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Anyone researching MACOM Technology Solutions Holdings, Inc. ( NASDAQ:MTSI ) might want to consider the historical volatility of the share price. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. The first category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. 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 see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is 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. View our latest analysis for MACOM Technology Solutions Holdings What MTSI's beta value tells investors Looking at the last five years, MACOM Technology Solutions Holdings has a beta of 1.98. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. Based on this history, investors should be aware that MACOM Technology Solutions Holdings 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 MACOM Technology Solutions Holdings is growing earnings and revenue. You can take a look for yourself, below. Story continues NasdaqGS:MTSI Income Statement, June 20th 2019 Does MTSI's size influence the expected beta? MACOM Technology Solutions Holdings is a small cap stock with a market capitalisation of US$913m. Most companies this size are actively traded. It has a relatively high beta, which is not unusual among small-cap stocks. Because it takes less capital to move the share price of a smaller company, actively traded small-cap stocks often have a higher beta that a similar large-cap stock. What this means for you: Since MACOM Technology Solutions 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 MTSI is a good investment for you, we also need to consider important company-specific fundamentals such as MACOM Technology Solutions Holdings’s financial health and performance track record. I highly recommend you dive deeper by considering the following: Future Outlook : What are well-informed industry analysts predicting for MTSI’s future growth? Take a look at our free research report of analyst consensus for MTSI’s outlook. Past Track Record : Has MTSI 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 at the free visual representations of MTSI's historicals for more clarity. Other Interesting Stocks : It's worth checking to see how MTSI measures up against other companies on valuation. You could start with this free list of prospective options . 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. |
Why the new Ford Explorer has more in common with BMW and Mercedes
SKAMANIA COUNTY, Washington – Hypesters and hucksters have drained the term “clean sheet of paper” of much meaning when it comes to new products, but it applies to the 2020 Ford Explorer SUV.
Ford has scrapped the formula that made the three-row, family-carrying Explorer one of its most popular models for a decade and created an SUV whose engineering has more in common with vehicles from BMW and Mercedes than traditional competitors from Chevrolet, Honda and Toyota.
Based on a couple of days' driving on- and off-road in Oregon and Washington, the result is a comfortable interior, strong performance and appealing features.
The 2020 Explorer should be on sale any day now. Ford’s assembly plant in Chicago is shipping them to dealers, but Ford can’t sell them until it gets a certified fuel economy rating from the EPA.
The new Explorer has a rear-wheel-drive-based architecture and optional all-wheel drive. That’s a major change from the outgoing model, which had base models that were front-wheel-drive and optional AWD.
That means the 2020 model’s engine lines up in the same direction as the vehicle, while the 2010-19 Explorer engines sat crosswise, on the line between the front wheels.
In engineering terms, the 2020’s engine is called “longitudinal” or “north-south,” while the old Explorer had a transverse or east-west engine.
Pickups, and most luxury and performance vehicles, tend to have longitudinal engines because the layout lends itself to more power, better handling and towing.
Power and handling haven’t been a big deal to Explorer owners, but Ford is betting that’ll change as more and more SUVs crowd the market and automakers look for every advantage they can claim when they say theirs is different and better.
While Ford’s F-series and Ranger pickups also have rear-wheel drive with optional 4WD, they don't use the same platform or architecture as the Explorer. The Explorer's architecture will also underpin the Lincoln Aviator luxury SUV that goes on sale later this year.
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Here’s some of what you can expect from the 2020 Ford Explorer:
• Seating for six or seven.
• Prices from $32,765 to $58,250. The base model isn’t expected to go on sale until December, though. At launch, price will start at $36,675, excluding destination charges.
• Up to 5,600 pounds towing.
• A base 300-horsepower, 2.3L turbocharged four-cylinder engine.
• 360- and 400-hp twin-turbo V6s in the Platinum and ST, respectively.
• A hybrid with 310 hp and a battery under its floor to preserve passenger and cargo space. There’s no immediate plan for a plug-in hybrid.
• A 10-speed automatic transmission.
The 2020 Explorer barely shares a part with the old model, but its size hasn’t changed much. To fit standard garages, it only grew a tenth of an inch, to 198.8 inches, despite the wheelbase – the distance between the front and rear wheels – increasing by a whopping 6.3 inches.
Ford won’t provide figures comparing passenger space, but front seat room was excellent and then second-row captain’s seats and the third-row bench were comfortable in the vehicles I tested. Cargo space has decreased behind the third row. It’s bigger than the 2019 model when the second-row seats are folded.
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The mid-row seats slide forward to get into the rear, but kids will probably walk between the captain’s chairs that are standard on all models but the base. Assuming that, Ford put a low console with cupholders between the seats and engineered it to survive if a 200-pound-plus adult steps on it.
An 8-inch touchscreen in landscape orientation is standard, while a 10.1-inch touchscreen in portrait orientation is optional. The screens responded slowly in the pre-production models available for test. Ford said that should be fixed when sales begin, but check for yourself.
• Blind-spot alert
• Lane-keeping alert and assist
• Automatic front emergency braking
• Pedestrian detection
• Automatic high beams
• Rearview camera
Base model, rear-drive:$32,765
Base AWD:$34,765
XLT RWD:$36,675
XLT AWD:$38,675
Limited RWD:$48,130
Limited AWD:$50,130
ST AWD:$54,470
Platinum AWD:$58,250
Source: Autotrader
The Explorer’s competition includes the Chevrolet Traverse, Dodge Durango, Honda Pilot, Hyundai Santa Fe SL, Kia Telluride, Mazda CX-9, Nissan Pathfinder, Toyota Highlander and Volkswagen Atlas.
The vehicles I tested were well-equipped models likely to cost from the upper $40,000 to around $60,000. That’s at the high end of the segment, at least until Toyota launches a new version of its Highlander three-row SUV late this year. A hybrid system is a $4,150 add on available for the Limited model.
I drove Explorers with the 300-hp base four-cylinder engine; 365-hp and 400-hp 3.0L twin-turbo V6s; and the 310-hp hybrid, which has a 3.3L V6 in addition to an electric motor and lithium-ion battery.
Ford has prohibited writing about the 400-hp ST performance model until later, but a reader might infer the difference the 35 extra-hp – a 9.6% for the math-averse – makes.
The new Explorer is quiet and smooth over bumps in all trims. The RWD-based chassis creates a good balance in the vehicle’s front-to-rear weight distribution.
Combined with responsive steering and firm brakes, the result is a vehicle that’s easy to drive fast and corners well for a tall – 5 feet 9 to 5 feet 10 inches, depending on trim – vehicle.
Acceleration is satisfying. There’s plenty of power for fast highway cruising, confident merges and sporty driving in the country.
The hybrid is quiet in EV mode, and has plenty of power for driving around town and up and down hills. Its automatic engine shutoff when idling is nearly imperceptible.
The Explorer is surprisingly capable off-road. Despite not having a low range of gears dedicated to off-roading, I went up and down steep dirt trails with ease. The SUV can ford up to 19 inches of water.
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Engines:
300-hp, 2.3L turbocharged, four-cylinder
365- or 400-hp, twin-turbo, 3.0L V6
310-hp hybrid with 3.3L V6 and an electric motor
Transmission:10-speed automatic
Length:198.8 inches
Wheelbase:119.1 inches
Height:69.9-70.2 inches
Width:78.9 inches
Curb weight:4,345-4,727 pounds
EPA fuel economy and electric range ratings:Still to be determined.
Contact Mark Phelan at 313-222-6731,mmphelan@freepress.com, or follow him on Twitter@mark_phelan.
This article originally appeared on Detroit Free Press:Why the new Ford Explorer has more in common with BMW and Mercedes |
UPDATE 3-U.S. Senate rejects Saudi arms sales in rebuke to Trump
(Adds companies, details, context)
By Patricia Zengerle
WASHINGTON, June 20 (Reuters) - The U.S. Senate on Thursday voted to block the sale of billions of dollars in military sales to Saudi Arabia, the United Arab Emirates and other countries, rejecting President Donald Trump's decision to sidestep Congress' review of such deals by declaring an emergency over Iran.
Trump has promised to veto the Senate action in order to proceed with the deals, worth some $8.1 billion. Senators would need 67 votes to override his veto, which looked unlikely after Thursday's votes. The first and second resolutions of disapproval passed 53-45 and a third vote covering the remaining 20 resolutions was 51-45.
Backers of the resolutions, led by Democrat Bob Menendez and Republican Lindsey Graham, said they sent a bipartisan message to Saudi Arabia that Washington is not happy about human rights abuses, including the murder of journalist Jamal Khashoggi at a Saudi consulate in Turkey.
Many also expressed deep concern with Saudi Arabia and the UAE over the war in Yemen, where the two countries are battling Iran-backed Houthi rebels. The United Nations has described the conflict in Yemen, which has killed tens of thousands of people including thousands of civilians, as the world's worst humanitarian crisis.
TENSIONS WITH IRAN
Hours before the vote, Iran shot down a U.S. military drone, escalating fears of wider military conflict. Washington said the incident was an "unprovoked attack" in international air space while Tehran said the drone was over its territory. Trump later said the attack apparently was a mistake by an Iranian "general or somebody."
Opposing the resolutions, the Senate's Republican majority leader, Mitch McConnell, cited tensions with Tehran. "The timing could not be worse for the Senate to send the wrong signal," he said.
Graham, normally a close Trump ally, underscored the unusual divide between the White House and some Republicans over Saudi Arabia in an emphatic Senate speech before the votes.
"You cannot have a strategic relationship with the United States and behave in a fashion that shows no respect for human dignity, no respect for international norms," Graham said.
Menendez, the top Democrat on the Senate Foreign Relations Committee, said the disapproval resolutions also reflected Congress' desire to preserve its powers to declare war and review major foreign weapons sales. Trump also used an emergency declaration strategy to circumvent Congress and try to get funding for a wall on the Mexican border.
Menendez scoffed at the administration's contention that the threat from Iran was an emergency that warranted so many weapons sales to third countries. "This is a power grab, pure and simple, with lasting implications for the role of Congress in the sale of arms around the world," Menendez said.
The resolutions are expected to pass the Democratic-controlled House of Representatives before reaching Trump's desk.
MORE LEGISLATION EXPECTED
Despite Trump's veto threat, members of Congress said they expect some Saudi-related legislation would come into effect this year.
Lawmakers are working on a separate measure "to hold Saudi Arabia accountable" for human rights abuses and Khashoggi's murder.
The Senate Foreign Relations Committee also is due to consider as soon as next week legislation that would take away the ability of Trump, or any president, to use emergency authority to sell arms to any country besides NATO members and certain other key partners without congressional review.
Among military equipment in the deals are Raytheon precision-guided munitions, support for Boeing Co F-15 aircraft and Javelin anti-tank missiles, which are made by Raytheon and Lockheed Martin Corp.
Other products involved are General Electric engines for use in F-16 fighter jets operated by the UAE, and a fuzing system for precision guided bombs from the U.S. unit of French firm Thales SA.
Other companies with products or services in the deals are Britain’s BAE Systems Plc and Europe’s Airbus.
In London on Thursday an English court ruled that Britain had broken the law by allowing arms sales to Saudi Arabia that might have been deployed in the war in Yemen, after activists said there was evidence the weapons had been used in violation of human rights statutes. (Reporting by Patricia Zengerle Editing by Bill Trott) |
Satoshi Nakamoto Apparent Author of Two Upcoming Books on Amazon
Two different books published underSatoshi Nakamoto’sname have recently appeared onAmazon.
According to Amazon, both of the books —Wave and Ripple Design BookandThe Official Bitcoin Coloring Book— are scheduled for release on June 28. The profile of the author makes it clear that he indeed claims to be the same Satoshi Nakamoto who created bitcoin (BTC):
“Satoshi Nakamoto is the renowned inventor of Bitcoin.”
The author’s profile also states that “100% of his book royalties to support STEM and environmental education programs serving underprivileged youth.” The store descriptions of the books themselves seemingly contain inside jokes about the cryptocurrency space and the myth of Satoshi Nakamoto.
Wave and Ripple Design Book, for instance,appearsto hint at both the Japanese roots of the bitcoin creator’s pseudonym, as well as to Ripple (XRP):
“A wonderful selection of wave and ripple designs curated by Satoshi Nakamoto. [...] Yuzan's designs were often used by Japanese craftsmen in the early 1900s to adorn their wares with wave and ripple patterns.”
The second book,The Official Bitcoin Coloring Book, contains less subtle jokes such as stating that it has been “printed on a brilliant white paper.” The product page also displays editorial reviews by Etheorum creator Vitallike Buttering, J.P. Morgain CEO Diamond James, and billionaire investor and Chairman of the Bored Buffet Warden, all misspellings of individuals and organizations famous within the space.
As Cointelegraph recentlyreported,manyhave claimed to be the mysterious Satoshi over the last 10 years, but their assertions have always been met with skepticism and have lacked any substantive evidence.
At the end of May, aChinesecitizen residing inCaliforniaclaimedcopyright to bitcoin’s white paper, claiming to be Satoshi Nakamoto. This copyright claim came on the heels of an identical one by Craig Wright, who has longdeclaredhimself to be the inventor of bitcoin, despite public backlash and his own periodicslip-upswhile maintaining that narrative.
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Delta bets on Korean Air, buys stake in its top shareholder
ATLANTA (AP) — Delta Air Lines says it's buying a 4.3% stake in Korean Air's largest shareholder to strengthen its joint venture with the Asian carrier. Delta said Thursday it invested in Hanjin-KAL and plans to increase its equity stake to 10%. The investment needs regulatory approval. Hanjin KAL owns 30% of Korean Air, according to FactSet. Delta isn't saying how much it paid for the stock. The two airlines launched a joint venture last year, selling seats on each other's flights and sharing the revenue. Delta CEO Ed Bastian says it's already one of his airline's most successful partnerships. Both carriers belong to SkyTeam, one of three alliances among global airlines. Atlanta-based Delta is the second-biggest U.S. carrier by revenue, behind only American Airlines. |
Is There An Opportunity With Morneau Shepell Inc.'s (TSE:MSI) 30% Undervaluation?
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
In this article we are going to estimate the intrinsic value of Morneau Shepell Inc. (TSE:MSI) by taking the expected future cash flows and discounting them to their present value. This is done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
See our latest analysis for Morneau Shepell
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF (CA$, Millions)", "2019": "CA$82.05", "2020": "CA$95.23", "2021": "CA$123.85", "2022": "CA$147.25", "2023": "CA$167.58", "2024": "CA$184.75", "2025": "CA$199.08", "2026": "CA$211.06", "2027": "CA$221.18", "2028": "CA$229.89"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x2", "2021": "Analyst x1", "2022": "Est @ 18.89%", "2023": "Est @ 13.81%", "2024": "Est @ 10.25%", "2025": "Est @ 7.76%", "2026": "Est @ 6.01%", "2027": "Est @ 4.79%", "2028": "Est @ 3.94%"}, {"": "Present Value (CA$, Millions) Discounted @ 8.07%", "2019": "CA$75.93", "2020": "CA$81.54", "2021": "CA$98.14", "2022": "CA$107.97", "2023": "CA$113.70", "2024": "CA$116.00", "2025": "CA$115.67", "2026": "CA$113.47", "2027": "CA$110.04", "2028": "CA$105.84"}]
Present Value of 10-year Cash Flow (PVCF)= CA$1.04b
"Est" = FCF growth rate estimated by Simply Wall St
After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 1.9%. We discount the terminal cash flows to today's value at a cost of equity of 8.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = CA$230m × (1 + 1.9%) ÷ (8.1% – 1.9%) = CA$3.8b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CA$CA$3.8b ÷ ( 1 + 8.1%)10= CA$1.76b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CA$2.80b. The last step is to then divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of CA$43.49. Compared to the current share price of CA$30.38, the company appears quite undervalued at a 30% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Morneau Shepell as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.1%, which is based on a levered beta of 1.027. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price to differ from the intrinsic value? For Morneau Shepell, I've put together three important aspects you should look at:
1. Financial Health: Does MSI have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Future Earnings: How does MSI's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with ourfree analyst growth expectation chart.
3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of MSI? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the TSE every day. If you want to find the calculation for other stocks justsearch 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. |
Is it Finally Time to Buy Energy Stocks?
• (0:30) - Why Are Energy Stocks So Disliked?
• (6:35) - Whats Going On With Big Oil Stocks?
• (8:00) - Tracey’s Top Picks: E&P Stocks To Watch
• (22:15) - Episode Roundup: XOM, CVX, OXY, APA, MTDR, SM, CNX
Welcome to Episode #146 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
What’s the most hated industry on Wall Street?
It’s not retail, it’s energy.
After selling off in late 2018, the exploration and production (E&P) stocks are taking a beating again in 2019. Some are trading near 52-week lows.
That has created a buying opportunity and the insiders are jumping in.
Are they buying at the bottom or will this be another false bottom since crude prices began to plunge in 2015?
Where Are the Insiders Buying This Time?
1.Exxon Mobil Corp. XOMshares are actually up 10.5% year-to-date. But while that is still trailing the S&P 500 on the year, which is up 16.7%, the insiders haven’t been buying in 2019. Insider buying has been quiet at all of Big Oil so far this year.
2.Apache Corp. APAshares have fallen 33% over the last year even though first quarter production in the Permian was at a new record, up 36% year-over-year. Did the insiders see this as a buying opportunity?
3.CNX Resources Corp. CNXshares have fallen 35.7% year-to-date even though the natural gas E&P has been buying back shares with cash and has reduced share count by 15%. It expects $500 million in free cash flow in 2020. Did the insiders think this was a deal this spring?
4.SM Energy Co. SMhas a market cap of just $1.3 billion but it still pays a dividend, currently yielding 0.9%. It recently raised its second quarter and full year production guidance thanks to better-than-expected well performance. Shares are trading near 52-week lows. Who was buying?
5.Matador Resources Company MTDRhas sunk 32% over the last year but has rebounded 15% year-to-date. In the first quarter, its total oil, natural gas and oil equivalent production were all at record highs. As of May 1, 70% of its oil production was hedged for the remainder of 2019. Do the insiders still think the shares are a value?
The insiders have to hold the stock for at least 6 months after they buy so insider buys are a long-term play, not a short term, on the stock and the company.
And the energy insiders have bought several times before when the shares have weakened, including in 2017 and 2018.
Is this time different?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of Apache in her own personal portfolio.]
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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 reportCNX Resources Corporation. (CNX) : Free Stock Analysis ReportExxon Mobil Corporation (XOM) : Free Stock Analysis ReportMatador Resources Company (MTDR) : Free Stock Analysis ReportApache Corporation (APA) : Free Stock Analysis ReportSM Energy Company (SM) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Hunter Biden allegedly fathered a child born in August 2018, is now facing paternity suit
A 28-year-old Arkansas woman has filed a paternity suit against Hunter Biden, 49, alleging he fathered a child born in August 2018. Lunden Alexis Roberts is seeking court-ordered proof that Biden is the biological father a well as child support and health insurance. The suit does not detail the circumstances or duration of their alleged relationship, and it has not yet been successfully served to Biden, her attorney said. "She really does not want this to be a media spectacle. She does not want this to affect Joe Biden’s campaign," Roberts' attorney, Clint Lancaster, told the Arkansas Democrat Gazette . "She just wants this baby to get financial support from the baby’s father." The supposed timeline is a bit complicated: Biden was married to Kathleen Buhle, the mother of his three children, from 1993 to 2017. At some point, he began a relationship with his sister-in-law, Hallie Olivere, whose husband Beau — Hunter's older brother — died in 2015. In spring 2019, it was announced that the couple had split, and days later, reports emerged that Biden had wed a South African woman named Melissa Cohen. He reportedly only knew her for a few weeks before they tied the knot. It's unclear at this point where Roberts allegedly fits into the relationship timelines. Her suit was filed two weeks after Biden's surprise May nuptials. Former U.S. Vice President Joe Biden, who is currently a leading Democratic nominee for the 2020 presidential election, confirmed to CBS News in June that his son had gotten re-married, but he did not give any additional statement beyond simply saying "yes." Previously, Joe and his wife, Jill, had expressed their support for Biden's relationship with their daughter-in-law, saying, "We are all lucky that Hunter and Hallie found each other as they were putting their lives together again after such sadness." |
Can We See Significant Institutional Ownership On The Merus N.V. (NASDAQ:MRUS) Share Register?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! The big shareholder groups in Merus N.V. ( NASDAQ:MRUS ) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership. Merus is a smaller company with a market capitalization of US$354m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about MRUS. See our latest analysis for Merus NasdaqGM:MRUS Ownership Summary, June 20th 2019 What Does The Institutional Ownership Tell Us About Merus? Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. Merus already has institutions on the share registry. Indeed, they own 22% of the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Merus, (below). Of course, keep in mind that there are other factors to consider, too. NasdaqGM:MRUS Income Statement, June 20th 2019 Our data indicates that hedge funds own 26% of Merus. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. Insider Ownership Of Merus The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Story continues 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. Shareholders would probably be interested to learn that insiders own shares in Merus N.V.. It has a market capitalization of just US$354m, and insiders have US$11m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying. General Public Ownership The general public holds a 11% stake in MRUS. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run. Private Equity Ownership With an ownership of 23%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public. Public Company Ownership We can see that public companies hold 15%, of the MRUS shares on issue. It's hard to say for sure, but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership. Next Steps: 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 deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free . But ultimately it is the future , not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future . 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 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. |
Apple Warns of iPhone Tariff Risks as China Supply Chain Exposed
(Bloomberg) -- Apple Inc. urged the Trump administration not to proceed with tariffs of as much as 25% on a new slate of products imported from China, saying it would reduce the company’s contribution to the U.S. economy.
The Cupertino, California-based technology giant made the plea in a letter to U.S. trade representative Robert Lighthizer this week. Tariffs will affect nearly all major Apple products, including iPhones, iPads, MacBooks, Apple Watches, AirPods, and the iMac, the company wrote. It would also hurt lower volume products like the HomePod speaker, some Beats headphones, wireless routers, the Apple TV box, cases, and iPhone replacement parts.
“We urge you not to proceed with these tariffs,” Apple said.
This is the first time Apple has specifically mentioned the iPhone on a list of products that would be impacted by tariffs. The smartphone generates about two-thirds of Apple sales and drives the purchase of other devices and services.
Apple is one of the largest job creators in the U.S., it said, responsible for more than 2 million positions. The company also said it is the biggest U.S. corporate taxpayer. Apple has pledged to make a direct contribution to the U.S. economy of more than $350 billion over five years, and said it’s on track to meet that goal.
The U.S. and China said their presidents will meet in Japan next week to relaunch trade talks after a month-long stalemate.
Apple spent decades building one of the largest supply chains in the world. The company designs and sells most of its products in the U.S., but imports them from China after assembly. That makes it one of the most exposed companies to tariffs. The company may be evaluating moving some production out of China to elsewhere in Asia, according to a recent Nikkei report.
Apple’s global supply chain has helped it efficiently pump out hundreds of millions of devices, making the company one of the most-profitable in the world. But the approach relies on cheap labor and the relatively free movement of goods between nations. The trade war between the U.S. and China is a threat to this lucrative status quo.
"What has benefited Apple in the past may turn full circle and harm their super-normal margins in the future," Neil Campling, head of TMT research at Mirabaud Securities Ltd., wrote in a note to investors on Thursday. "While Apple attempts to portray itself as pivoting to a services company the bare fact remains that more than 60% of profit is generated by the iPhone."
In the past, when it has been up against local taxes on the sale of products built elsewhere, Apple has re-located production within that country. Apple is now building iPhones in India to avoid a local tax in the region, while it conducted similar measures several years ago in Brazil for selling iPhones.
However, moving production out of China is not without risk. The company’s suppliers employ millions of people in China and its relationship with the government there is partly based on this contribution to the economy. Moving out of China could threaten some of these jobs, hurting the relationship with the government and raising potential roadblocks to sales of iPhones and services like Apple Music and iCloud in the country.
Last year, Apple told Lighthizer that tariffs could affect AirPods, some Macs and the Apple Watch. The company was granted a reprieve when the government said it would leave the Apple Watch from being impacted.
In its letter this week to the U.S. government, Apple said that the tariffs would weigh on its global competitiveness. It also stressed its impact on the U.S. economy. "The Chinese producers we compete with in global markets do not have a significant presence in the U.S. market, and so would not be impacted by U.S. tariffs," Apple said.
Apple’s letter was filed during the public comment period for proposed tariffs on about $300 billion in Chinese goods as the U.S. tries to finalize a deal with China that addresses the trade deficit, allegations of intellectual property theft and other trade practices.
Hundreds of U.S. companies and trade groups are appearing at a seven-day public hearing through June 25, mostly to oppose the duties as a tax on businesses and consumers. The duties could be imposed after a rebuttal period ends July 2.
--With assistance from Molly Schuetz.
To contact the reporters on this story: Mark Gurman in San Francisco at mgurman1@bloomberg.net;Mark Niquette in Columbus at mniquette@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Alistair Barr, Andrew Pollack
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P. |
Carnival Earnings: CCL Stock Sinks on Soggy Outlook
Carnival earnings for the second quarter of 2019 have CCL stock falling on Thursday.
Source:Via Carnival
The bad news forCarnival(NYSE:CCL) comes from its outlook for the full year of 2019. The company says that there are several headwinds it is facing that are hurting its outlook. Among these is a change in stance from the U.S. government on travel to Cuba.
Due to this and other factors, the Carnival earnings report for the second quarter of the year includes a new outlook. The company says that it is now expecting earnings per share for the year to range from $4.25 to $4.35.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
That new outlook for 2019 is below the company’s previous earnings per share guidance of $4.35 to $4.55. It also comes as a blow to CCL stock by easily sitting below Wall Street’s earnings per share estimate of $4.54 for the full year of 2019.
“Over the past five years we have demonstrated our ability to overcome multiple headwinds and deliver strong operational improvement,” Arnold Donald, President and CEO of Carnival, said in astatement. “This year our growth has been hampered by a confluence of events, which we are focused on mitigating.”
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The poor outlook drags down an already mixed Carnival earnings report. This includes earnings per share for the second quarter coming in at 66 cents. Revenue was also sitting at $4.48 billion for the period. Wall Street’s earnings per share and revenue estimates for the period were 61 cents and $4.53 billion for the quarter.
CCL stock was down 9% as of noon Thursday.
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As of this writing, William White did not hold a position in any of the aforementioned securities.
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The postCarnival Earnings: CCL Stock Sinks on Soggy Outlookappeared first onInvestorPlace. |
President Trump undecided on inviting Raptors to White House
President Donald Trump isn’t sure whether he’ll invite the Toronto Raptors to the White House. When asked, Trump said he would have to “think about it.” Trump said it was an “interesting question,” and that the team played “phenomenal basketball.” He then congratulated Canadian Prime Minister Justin Trudeau and reiterated that he would “think about it.” The relevant portion of the interview begins around the 8:10 mark: Trump says that he will bring up the case of detained Canadians Micheal Spavor and Micheal Kovrig with the Chinese President XI and that he's thinking about inviting the Raptors to the White House. Here is the full avail #cdnpoli https://t.co/Sb69sJpPfs — Mackenzie Gray (@Gray_Mackenzie) June 20, 2019 It has become customary for the President to invite professional sports champions to the White House in recent years. For Trump, however, getting NBA teams to accept that invite has proved difficult. The Golden State Warriors have declined that invite multiple times. Trump was so insulted he eventually revoked the team’s invite. The whole situation resulted in LeBron James calling Trump a “ bum .” It’s unclear whether that played into Trump’s uncertainty about whether to invite the Raptors to the White House. There’s also the issue of the Raptors playing in Canada, though the team features plenty of players who were born in the United States, including Kawhi Leonard and Kyle Lowry. Raptors coach Nick Nurse has already said the team is working on a meeting with Trudeau. On Wednesday, Nurse said he had not heard from the White House, but added, “We’re Canada’s team anyway, right?” ——— 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: NBA mock draft 5.0: What will Pelicans do? Report: Davis, Lillard to feature in ‘Space Jam 2’ Authorities: Ortiz wasn’t intended target of shooting How Celtics shockingly combusted so quickly View comments |
20-year-old crypto millionaire: Facebook Calibra is going to be ‘huge’ for crypto
Facebook (FB)finally announcedits long-awaited cryptocurrency offering Calibra this week, and one Bitcoin (BTC) millionaire thinks it will be huge.
The social network on Tuesdayofficially unveiled Calibra, a cryptocurrency system launching in 2020 that includes a stablecoin called Libra, as well as a digital wallet inside Messenger and WhatsApp that will let users store, send and receive Libra. Pegged to a basket of government-issued currencies to avoid pricing volatility, Libra will launch with at least 29 partners, including Visa (V), Mastercard (MA), Uber (UBER), and Spotify (SPOT), and be governed by an independent council. According to 20-year-old Bitcoin millionaire Erik Finman, Calibra is an “amazing” product that will help legitimize cryptocurrency and bring mainstream attention to the overall space.
“This is going to be huge for the cryptocurrency space — it’s a huge deal,” says Finman, founder of the bitcoin investing platform CoinBits. “If cryptocurrency wasn’t obvious before, it’s really obvious now. It’s here to stay, and it’s here forever. This isn’t just a project anymore or something that’s in the gallows of the internet.”
Finman carved out a reputation among crypto enthusiasts for investing in Bitcoin (BTC) back in 2011 at $12 a coin using $1,000 his grandmother gave him. The 20-year-old’s investment ballooned to $4 million during Bitcoin’s all-time high in 2017, earning him the nickname “the teenaged bitcoin millionaire.” Incidentally, Finman also won a bet with his parents: if he became a crypto millionaire before he turned 18, he could skip college.
But as exciting as Calibra sounds, it also raises some “scary” possibilities, Finman adds.
“There’s a part of me, again, that says that [Calibra] is great for the credibility of cryptocurrency,” Finman emphasizes. “And while that’s probably the best thing from Mark Zuckerberg’s point of view, it could also be the worst thing depending on how Calibra evolves. Look at all the crazy stuff Facebook’s been doing with your privacy and security.”
Besides using Facebook user data towards its sophisticated advertising products, the social network has also come under fire over the last 18 months for incidents regarding user privacy. The Cambridge Analytica scandal from March 2018, for instance, resulted in voting firm Cambridge Analytica gaining access to the information of up to 87 million Facebook users without their consent. Indeed, Facebook anticipates paying a $3 billion to $5 billion fine from the Federal Trade Commission for its privacy lapses.
In itswhite paperpublished this week, Facebook added that Calibra will be independently governed by the Libra Association Council, based in Geneva. And while the group will serve as the entity through which the Libra Reserve—a reserve of "financial assets" for backing Libra — is managed, Finman indicates this more “centralized” model could be used for Facebook’s benefit. After all, Libra will be stored in digital wallets hosted by Facebook-owned services such as Messenger and WhatsApp.
“That's very much against the mood in which cryptocurrency was invented, which was, you know, freedom, decentralization, no one to shut it down, and no centralized control,” Finman contends. “The Libra Association and Facebook basically control the development of Calibra. It’s scary, inherently, because it’s run by a massive giant entity, and it’s scary, especially with the reputation Facebook has.”
Only time will tell whether Finman’s fears are founded.
More from JP:
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Should You Be Adding Merck (NYSE:MRK) To Your Watchlist Today?
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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 as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.
So if you're like me, you might be more interested in profitable, growing companies, likeMerck(NYSE:MRK). 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.
See our latest analysis for Merck
As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. It certainly is nice to see that Merck has managed to grow EPS by 25% per year over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Merck is growing revenues, and EBIT margins improved by 9.9 percentage points to 28%, over the last year. Ticking those two boxes is a good sign of growth, in my book.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
The trick, as an investor, is to find companies that aregoing toperform well in the future, not just in the past. To that end, right now and today, you can checkour visualization of consensus analyst forecasts for future Merck EPS100% free.
We would not expect to see insiders owning a large percentage of a US$220b company like Merck. But we do take comfort from the fact that they are investors in the company. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$139m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!
You can't deny that Merck has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider buying impresses me, and suggests that I'm not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. Now, you could try to make up your mind on Merck by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in 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. |
Here’s What Hedge Funds Think About Maxim Integrated Products Inc. (MXIM)
A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell's pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Maxim Integrated Products Inc. (NASDAQ:MXIM) during the quarter.
IsMaxim Integrated Products Inc. (NASDAQ:MXIM)worth your attention right now? Hedge funds are getting more optimistic. The number of bullish hedge fund bets rose by 3 in recent months. Our calculations also showed that MXIM isn't among the30 most popular stocks among hedge funds.MXIMwas in 27 hedge funds' portfolios at the end of March. There were 24 hedge funds in our database with MXIM positions at the end of the previous quarter.
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 take a glance at the recent hedge fund action regarding Maxim Integrated Products Inc. (NASDAQ:MXIM).
Heading into the second quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in MXIM 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.
Of the funds tracked by Insider Monkey, Ken Griffin'sCitadel Investment Grouphas the largest position in Maxim Integrated Products Inc. (NASDAQ:MXIM), worth close to $79.7 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager isRenaissance Technologies, managed by Jim Simons, which holds a $57.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism encompass John Overdeck and David Siegel'sTwo Sigma Advisors, Israel Englander'sMillennium Managementand Noam Gottesman'sGLG Partners.
As one would reasonably expect, key hedge funds were leading the bulls' herd.BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, assembled the largest position in Maxim Integrated Products Inc. (NASDAQ:MXIM). BlueCrest Capital Mgmt. had $1.4 million invested in the company at the end of the quarter. Dipak Patel'sAlight Capitalalso initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace'sMarshall Wace LLP, Jeffrey Talpins'sElement Capital Management, and Andrew Feldstein and Stephen Siderow'sBlue Mountain Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Maxim Integrated Products Inc. (NASDAQ:MXIM) but similarly valued. These stocks are Nasdaq, Inc. (NASDAQ:NDAQ), Arthur J. Gallagher & Co. (NYSE:AJG), Regions Financial Corporation (NYSE:RF), and Equifax Inc. (NYSE:EFX). This group of stocks' market caps are similar to MXIM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDAQ,16,83129,-5 AJG,28,321793,6 RF,41,787954,-1 EFX,24,1247020,2 Average,27.25,609974,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $331 million in MXIM's case. Regions Financial Corporation (NYSE:RF) is the most popular stock in this table. On the other hand Nasdaq, Inc. (NASDAQ:NDAQ) is the least popular one with only 16 bullish hedge fund positions. Maxim Integrated Products Inc. (NASDAQ:MXIM) 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 MXIM, though not to the same extent, as the stock returned 0.8% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Are Investors Undervaluing Huami Corporation (NYSE:HMI) By 25%?
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How far off is Huami Corporation (NYSE:HMI) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. I will use the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
Check out our latest analysis for Huami
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF (CN\u00a5, Millions)", "2019": "CN\u00a5338.24", "2020": "CN\u00a5352.81", "2021": "CN\u00a5366.33", "2022": "CN\u00a5379.16", "2023": "CN\u00a5391.56", "2024": "CN\u00a5403.73", "2025": "CN\u00a5415.82", "2026": "CN\u00a5427.95", "2027": "CN\u00a5440.18", "2028": "CN\u00a5452.60"}, {"": "Growth Rate Estimate Source", "2019": "Est @ 4.98%", "2020": "Est @ 4.31%", "2021": "Est @ 3.83%", "2022": "Est @ 3.5%", "2023": "Est @ 3.27%", "2024": "Est @ 3.11%", "2025": "Est @ 2.99%", "2026": "Est @ 2.92%", "2027": "Est @ 2.86%", "2028": "Est @ 2.82%"}, {"": "Present Value (CN\u00a5, Millions) Discounted @ 9.12%", "2019": "CN\u00a5309.98", "2020": "CN\u00a5296.31", "2021": "CN\u00a5281.96", "2022": "CN\u00a5267.45", "2023": "CN\u00a5253.11", "2024": "CN\u00a5239.17", "2025": "CN\u00a5225.75", "2026": "CN\u00a5212.92", "2027": "CN\u00a5200.71", "2028": "CN\u00a5189.13"}]
Present Value of 10-year Cash Flow (PVCF)= CN¥2.48b
"Est" = FCF growth rate estimated by Simply Wall St
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 9.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = CN¥453m × (1 + 2.7%) ÷ (9.1% – 2.7%) = CN¥7.3b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CN¥CN¥7.3b ÷ ( 1 + 9.1%)10= CN¥3.04b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CN¥5.52b. The last step is to then divide the equity value by the number of shares outstanding. This results in an intrinsic value estimate in the company’s reported currency of CN¥90.03. However, HMI’s primary listing is in China, and 1 share of HMI in CNY represents 0.145 ( CNY/ USD) share of NYSE:HMI,so the intrinsic value per share in USD is $13.04.Relative to the current share price of $9.77, the company appears a touch undervalued at a 25% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Huami as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.1%, which is based on a levered beta of 1.072. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price to differ from the intrinsic value? For Huami, I've put together three further aspects you should further research:
1. Financial Health: Does HMI have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Future Earnings: How does HMI's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with ourfree analyst growth expectation chart.
3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of HMI? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks justsearch 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. |
U.S. lawmakers spar over Trump plan to freeze vehicle fuel rules
By David Shepardson
WASHINGTON, June 20 (Reuters) - Trump administration officials at a congressional hearing on Thursday defended their controversial proposal to freeze fuel efficiency requirements at 2020 levels through 2026, a plan opposed by automakers and Democrats.
The hearing comes as the administration prepares in the coming months to finalize a dramatic rewrite of fuel efficiency standards through 2026 and strip California of the right to set its own vehicle emissions rules.
The final regulation potentially faces a multi-year legal battle that could leave automakers in limbo about future emissions and fuel efficiency requirements and could decrease the number of U.S. electric vehicles offered by automakers for sale.
At a joint hearing of two House Energy and Commerce subcommittees, Democrats cast the administration plan as a blow against efforts to combat climate change and as a boon for oil companies.
The Trump administration plan aims to roll back emission standards set by former President Barack Obama. The Obama administration said a dramatic jump in fuel efficiency requirements was a key part of its climate agenda and would save motorists $1.7 trillion in fuel costs over the life of the vehicles, but cost the auto industry about $200 billion over 13 years.
Trump administration officials argued that its plan will save lives because it will reduce the forecasted cost of new vehicles and prod more people to sell older less safe models. Environmentalists and others disagree with that analysis.
Representative Frank Pallone, who chairs the Energy and Commerce Committee, said the Obama standards was "our single most important action taken to combat climate change, and a key part of our commitment to the Paris Agreement. So, naturally, the Trump Administration is trying to gut those standards as part of its reckless anti-climate agenda."
'WE LIKE BIG THINGS'
Transportation accounts for 30% of U.S. greenhouse emissions and light cars and trucks account for 60% of that figure.
Republicans cast the issue as one that divides rural areas that used more trucks from urban areas that are more likely to buy electric vehicles.
"We like big things. We like big trucks. We like big engines," said Representative John Shimkus, an Illinois Republican. "We like to haul trailers... to haul horses and feed and hay and all those things that have to happen in rural America."
The Obama-era rules called for a fleetwide fuel efficiency average of 46.7 miles per gallon by 2026, compared with 37 mpg under the Trump administration’s preferred option unveiled in August 2018.
Environmental Protection Agency Administrator Andrew Wheeler said in a letter to lawmakers on Thursday that California did not negotiate in good faith and the only counterproposal offered was to extend compliance by one year. He also said the proposal was made without consent of the state's governor or other officials.
Mary Nichols, who heads the California Air Resources Board, will also testify on Thursday. The Trump proposal will cost Americans millions in fuel costs, kill jobs, add smog, undermine the auto industry and worsen the climate crisis, according to her written testimony.
"We have been open to accommodations that would adjust compliance timing and flexibility, that would create new paths to promote innovative technologies and zero emission vehicles, and that would benefit the public,” she said.
Deputy National Highway Traffic Safety Administrator Heidi King told lawmakers on Thursday that the Obama plan was not feasible because of changes in gas prices and a shift to larger vehicles by more U.S. buyers.
California and 17 other states have vowed to sue to block any freeze of the emissions requirements.
Earlier this month, 17 major automakers including General Motors Co, Volkswagen AG and Toyota Motor Corp, urged the White House to resume talks with California to avoid a lengthy legal battle. Automakers back a compromise, warning that the lack of a deal could lead to "an extended period of litigation and instability."
The carmakers urged a compromise “midway” between the Obama-era standards that require annual decreases of about 5% in emissions and the Trump administration’s proposal. Reuters reported in April that officials expect the final rule will include a small increase in the yearly fuel efficiency requirements.
Representative Debbie Dingell, a Michigan Democrat in a district with many auto plants, implored officials to return to the bargaining table with California. "I am really not interested in a pissing contest between California and this administration," she the officials at the hearing.
King was skeptical of that idea. "I don't know whether that would achieve the goal," she told Dingell. (Reporting by David Shepardson Editing by Bill Berkrot) |
Here’s What Hedge Funds Think About Annaly Capital Management, Inc. (NLY)
Hedge funds are known to underperform the bull markets but that's not because they are bad at investing. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. Hedge funds underperform because they are hedged. The Standard and Poor’s 500 Index returned approximately 12.1% in the first 5 months of this year through May 30th (including dividend payments). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the same 5-month period. An average long/short hedge fund returned only a fraction of this due to the hedges they implement and the large fees they charge. Our research covering the last 18 years indicates that investors can outperform the market by imitating hedge funds' stock picks rather than directly investing in hedge funds. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Annaly Capital Management, Inc. (NYSE:NLY).
Annaly Capital Management, Inc. (NYSE:NLY)was in 21 hedge funds' portfolios at the end of March. NLY has seen an increase in activity from the world's largest hedge funds lately. There were 16 hedge funds in our database with NLY positions at the end of the previous quarter. Our calculations also showed that NLY isn't among the30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to take a look at the new hedge fund action surrounding Annaly Capital Management, Inc. (NYSE:NLY).
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the fourth quarter of 2018. By comparison, 19 hedge funds held shares or bullish call options in NLY a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds,Renaissance Technologiesheld the most valuable stake in Annaly Capital Management, Inc. (NYSE:NLY), which was worth $171.6 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $37.6 million worth of shares. Moreover, Two Sigma Advisors, Balyasny Asset Management, and Adage Capital Management were also bullish on Annaly Capital Management, Inc. (NYSE:NLY), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds have jumped into Annaly Capital Management, Inc. (NYSE:NLY) headfirst.Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Annaly Capital Management, Inc. (NYSE:NLY). Balyasny Asset Management had $21.9 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson'sAdage Capital Managementalso made a $20.5 million investment in the stock during the quarter. The following funds were also among the new NLY investors: Anand Parekh'sAlyeska Investment Group, Joseph Samuels'sIslet Management, and Richard Driehaus'sDriehaus Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Annaly Capital Management, Inc. (NYSE:NLY) but similarly valued. We will take a look at Western Digital Corporation (NASDAQ:WDC), Principal Financial Group Inc (NASDAQ:PFG), Teleflex Incorporated (NYSE:TFX), and Icahn Enterprises LP (NASDAQ:IEP). All of these stocks' market caps are closest to NLY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WDC,33,387729,8 PFG,15,62018,-3 TFX,19,765454,4 IEP,5,12864139,-1 Average,18,3519835,2 [/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 $3520 million. That figure was $339 million in NLY's case. Western Digital Corporation (NASDAQ:WDC) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 5 bullish hedge fund positions. Annaly Capital Management, Inc. (NYSE:NLY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 NLY wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NLY were disappointed as the stock returned -10.6% during the same 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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4 Gold and Silver Stocks That Are Soaring
Global equities are pushing higher on Thursday, with U.S. large-caps hitting new record highs as the Federal Reserve continues its dovish turn. On Wednesday, in its latest policy announcement, the central bank laid the groundwork for a likely rate cut at its next policy decision in July.
This comes amid aggressive rate-cut expectations in the futures market. And it follows a similar dovish turn by the European Central Bank earlier in the week. The era of ultra-cheap money is about to enter a new chapter. And assets across the board — cyclical, defensive, commodities — are perking up as buyers bid up anything that isn’t nailed down.
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Gold stock and silver stocks are probably having the most violent reaction to the news as the U.S. dollar weakens. Precious metals are enjoying a number of tailwinds, from geopolitical tensions to a seemingly unending federal deficit to the Fed’s policy pivot. As a result, a number of mining stocks are perking up. Here are four that are ready to buy now:
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Shares ofYamana Gold(NYSE:AUY) are pushing up and over their 200-day moving average for the first time since April, capping a 33% rise off of the late May lows. Watch for a return to the late-January highs near $2.90, which would be worth a gain of more than 20% from here. The rise comes after a number of analyst downgrades earlier in the year, including a markdown from RBC Capital Markets in April. Whoops.
The company will next report results on July 25 after the close. Analysts are looking for earnings of two cents per share on revenues of $442.8 million. The company last reported on May 1, with earnings of three cents per share beating estimates by a penny on a 10.5% decline in revenues.
Shares of gold stockKinross Gold(NYSE:KGC) are pushing up and out of a multi-month trading range going back to December to cap a 30% rise off of the early May lows. Watch for a return to the highs hit in 2017 and again in 2018 near $4.80, which would be worth a gain of more than 25% from here.
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The company will next report results on Aug. 7 after the close. Analysts are looking for earnings of two cents per share on revenues of $815.7 million. When the company last reported on May 7, earnings of seven cents per share beat estimates by five cents on a 12.4% decline in revenues.
Helca Mining(NYSE:HL) is a silver and precious metals miner operating out of Idaho that is enjoying a share price move above its 50-day moving average and looks set for a test of its 200-day average, which would be worth a gain of nearly 30% from here. Management recently announced it was taking action to reduce spending in an effort to move to a cash-neutral basis.
The company will next report results on Aug. 8 before the bell. Analysts are looking for a loss of three cents per share on revenues of $158.1 million. When the company last reported on May 9, a loss of four cents per share missed estimates by two cents on a 9.2% rise in revenues.
Shares ofCoeur D Alene Mines(NYSE:CDE) are up over 10% as I write this, extending away from their 50-day moving average to close in on the 200-day moving average last touched last summer. A return to the tight early 2018 trading range would be worth an easy double from here. Shares are already up nearly 50% from here.
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The company will next report results on July 24 after the close. Analysts are looking for a loss of 10 cents per share on revenues of $169 million. When the company last reported on May 1, a loss of 11 cents per share missed estimates by two cents on a 5.1% decline in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
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Hedge Funds Have Never Been This Bullish On Quotient Limited (QTNT)
"The end to the U.S. Government shutdown, reports of progress on China-U.S. trade talks, and the Federal Reserve’s confirmation that it did not plan further interest rate hikes in 2019 allayed investor fears and drove U.S. markets substantially higher in the first quarter of the year. Global markets followed suit pretty much across the board delivering what some market participants described as a “V-shaped” recovery," This is how Evermore Global Value summarized the first quarter in itsinvestor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.
Quotient Limited (NASDAQ:QTNT)investors should pay attention to an increase in enthusiasm from smart money lately.QTNTwas in 20 hedge funds' portfolios at the end of the first quarter of 2019. There were 19 hedge funds in our database with QTNT holdings at the end of the previous quarter. Our calculations also showed that qtnt isn't among the30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are seen as worthless, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, Our experts choose to focus on the masters of this club, approximately 750 funds. These investment experts handle the lion's share of all hedge funds' total capital, and by observing their top stock picks, Insider Monkey has brought to light a number of investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per year 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.
[caption id="attachment_735677" align="aligncenter" width="473"]
Sander Gerber of Hudson Bay Capital[/caption]
Let's take a look at the fresh hedge fund action encompassing Quotient Limited (NASDAQ:QTNT).
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the fourth quarter of 2018. On the other hand, there were a total of 12 hedge funds with a bullish position in QTNT a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Polar Capitalheld the most valuable stake in Quotient Limited (NASDAQ:QTNT), which was worth $57.2 million at the end of the first quarter. On the second spot was Cormorant Asset Management which amassed $41.4 million worth of shares. Moreover, Highbridge Capital Management, Broadfin Capital, and Hudson Bay Capital Management were also bullish on Quotient Limited (NASDAQ:QTNT), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves.Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Quotient Limited (NASDAQ:QTNT). Citadel Investment Group had $2.1 million invested in the company at the end of the quarter. Efrem Kamen'sPura Vida Investmentsalso made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw'sD E Shaw, Gavin Saitowitz and Cisco J. del Valle'sSpringbok Capital, and Jim Simons'sRenaissance Technologies.
Let's check out hedge fund activity in other stocks similar to Quotient Limited (NASDAQ:QTNT). These stocks are SurModics, Inc. (NASDAQ:SRDX), FutureFuel Corp. (NYSE:FF), Plug Power, Inc. (NASDAQ:PLUG), and Mobileiron Inc (NASDAQ:MOBL). This group of stocks' market caps are similar to QTNT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SRDX,17,128689,0 FF,15,53636,1 PLUG,7,43583,1 MOBL,17,126183,1 Average,14,88023,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $166 million in QTNT's case. SurModics, Inc. (NASDAQ:SRDX) is the most popular stock in this table. On the other hand Plug Power, Inc. (NASDAQ:PLUG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Quotient Limited (NASDAQ:QTNT) is more popular among hedge funds. 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 QTNT as the stock returned 11.8% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published atInsider Monkey.
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9 ETFs for the 'Short' Investor to Buy
An opposite strategy for investors. So far, the stock market has continued its strong run. Year-to-date the S&P 500 index is up about 18% and has more than tripled from its Great Recession lows roughly a decade ago. However, some investors remain concerned the performance is not destined to last. Beyond worries about how the economy and Wall Street move in cycles, there are specific concerns, such as slowing corporate profits at home and the threat of trade wars abroad. The good news is there are several exchange-traded products that allow investors to hedge risks or even to profit with a well-timed, tactical trade. Here are nine ETFs that go up when the market goes down. ProShares Short S&P 500 (ticker: SH ) The most popular "short" fund, this ProShares fund is a simple inverse of the S&P 500 index of large-cap U.S. stocks. Since S&P 500 index funds are the preferred vehicle for many investors looking to play the domestic stock market, SH is not just the place for those looking to bet against the market, but also those who see the move as a form of insurance. The thinking is that if the market keeps climbing, SH will slowly decay in value while the rest of your portfolio throws off big profits. But if things ever go south for your other positions, you will see a very nice payday here to help soften the blow. ProShares Short Russell 2000 ( RWM ) A companion to the aforementioned short S&P 500 fund is this ProShares fund that targets small-cap stocks instead. This is a particularly interesting fund for investors who are looking to hedge a more unique portfolio of hand-picked stocks and tend to hold smaller names that may not be as easy to offset through an S&P 500 short fund. Similarly, those who are bearish on stocks may prefer RWM to an inverse S&P fund because small caps are the first to roll over since they don't have the deep pockets or the big name recognition of major U.S. equities behind them. iPath US Treasury Long Bond Bear Exchange Traded Note ( DLBS ) Though its formal name is admittedly complex, DLBS targets popular bond investments instead of U.S. stocks. Specifically, DLBS is tied to long-dated U.S. Treasury bonds that commonly make up the backbone of any low-risk or income-oriented portfolio. Story continues The fund is a bit pricier than the typical exchange-traded product, with 0.75% in annual expenses or $75 per year on $10,000 invested. However, investors looking to hedge their bond portfolio don't have a simple way to do so on their own -- and those looking to swing-trade a decline in bonds for a quick profit have even less. Direxion Daily Total Bond Market Bear 1X Shares ( SAGG ) If you don't want to only bet against the typical long-dated government bonds, SAGG offers an inverse play on the entire bond market across maturity and including corporate bonds as well as Treasurys . Once again, there aren't easy ways for speculators to cash in via a tactical investment like this and it's equally difficult for bond investors to find a good way to hedge. That makes SAGG a very specialized but useful tool that has a place in certain portfolios. DB Gold Short ETN ( DGZ ) Sponsored by investment giant Deutsche Bank, this exchange-traded product seeks to deliver the opposite performance of gold bullion prices. While hands-off investors may find this a bit of a weird flavor, anyone who has played the market for long enough knows that gold is an investment that is different than anything else on Wall Street. There are short-term speculators who bank on the precious metal, as well as long-term investors looking for a hard asset that will withstand the test of time. Thanks to DGZ, both kinds of investors can also take a position on the other side of a gold trade. ProShares Short Real Estate ( REK ) Looking to yet another different asset class, REK is benchmarked to some of the biggest publicly traded real estate investments . And just as there are investors with a unique focus on gold, there are also those who spend much time on plotting the ups and downs of real estate. There has been a particular focus in 2019 about the slowing housing market, with home prices plateauing. And since the U.S. real estate market tends to be a key indicator of broader economic trends, it's easy to see why this fund is on some investors' radar. Direxion Daily CSI 300 China A Share Bear 1X Shares ( CHAD ) Emerging markets are an important asset class for many investors seeking growth and the biggest among these is China . That makes CHAD an important tool to hedge international risk -- or, based on current headlines about an economic slowdown in the region or a trade war, an important path to profit from China's short-term decline. Linked to so-called "A-Shares" that are mainland Chinese companies and generally limited from international investors, this Direxion fund is as pure a downside play as you can get on the region with one single and easy-to-trade investment. AdvisorShares Ranger Equity Bear ETF ( HDGE ) All of these strategies offer different benefits based on your specific portfolio holdings. But the AdvisorShares fund takes a much different approach, with a more active style that bets against individual equities based on their unique characteristics. Though the ticker implies this is a great way to hedge, it is also a powerful way to profit from the struggles of objectively bad companies that are posting weak profits and slumping. Unlike inverse ETFs tied to a generic index like the S&P 500, at times this ETF even manages to squeak out a gain when the broader stock market is rising because of its focus on the least attractive companies. Direxion Daily S&P 500 Bear 3X Shares ( SPXS ) Last but not least is the most aggressive of the inverse funds on this list -- a three-times leveraged fund tied to the S&P 500 that seeks to deliver three times the daily returns of the popular benchmark, but in the opposite direction. In other words, if the market drops 3% this exchange-traded product is meant to rise 9%. If you're feeling bearish, it's easy to see the appeal. Just remember the structure of this fund is complex and not designed as a long-term holding. Furthermore, it's important to know that if you bet wrong and the market actually goes up, you'll wind up losing three times as much with this short fund. ETFs for the "short" investor to buy. -- ProShares Short S&P 500 ( SH ) -- ProShares Short Russell 2000 ( RWM ) -- iPath US Treasury Long Bond Bear Exchange Traded Note ( DLBS ) -- Direxion Daily Total Bond Market Bear 1X Shares ( SAGG ) -- DB Gold Short ETN ( DGZ ) -- ProShares Short Real Estate ( REK ) -- Direxion Daily CSI 300 China A Share Bear 1X Shares ( CHAD ) -- AdvisorShares Ranger Equity Bear ETF ( HDGE ) -- Direxion Daily S&P 500 Bear 3X Shares ( SPXS ) More From US News & World Report 7 Smart Consumer ETFs to Buy for Stability 9 Ways to Buy Treasurys With ETFs 8 Emerging Markets Funds to Buy and Hold |
Here’s What Hedge Funds Think About Molson Coors Brewing Company (TAP)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider Molson Coors Brewing Company (NYSE:TAP) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Molson Coors Brewing Company (NYSE:TAP)investors should pay attention to a decrease in enthusiasm from smart money of late.TAPwas in 27 hedge funds' portfolios at the end of the first quarter of 2019. There were 28 hedge funds in our database with TAP holdings at the end of the previous quarter. Our calculations also showed that TAP 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.
We're going to check out the new hedge fund action encompassing Molson Coors Brewing Company (NYSE:TAP).
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TAP over the last 15 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey,Ariel Investments, managed by John W. Rogers, holds the largest position in Molson Coors Brewing Company (NYSE:TAP). Ariel Investments has a $66 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot isArlington Value Capital, led by Allan Mecham and Ben Raybould, holding a $34.4 million position; 2.4% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish consist of Ric Dillon'sDiamond Hill Capital, Seth Rosen'sNitorum Capitaland Noam Gottesman'sGLG Partners.
Due to the fact that Molson Coors Brewing Company (NYSE:TAP) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that elected to cut their full holdings in the third quarter. At the top of the heap, Dmitry Balyasny'sBalyasny Asset Managementsaid goodbye to the largest stake of the 700 funds followed by Insider Monkey, totaling close to $16.7 million in stock. Joel Greenblatt's fund,Gotham Asset Management, also said goodbye to its stock, about $14.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to Molson Coors Brewing Company (NYSE:TAP). These stocks are Brookfield Infrastructure Partners L.P. (NYSE:BIP), Comerica Incorporated (NYSE:CMA), Masco Corporation (NYSE:MAS), and IDEX Corporation (NYSE:IEX). This group of stocks' market caps resemble TAP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BIP,7,28125,-1 CMA,36,579378,0 MAS,40,1105245,6 IEX,16,321069,-3 Average,24.75,508454,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $508 million. That figure was $318 million in TAP's case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 7 bullish hedge fund positions. Molson Coors Brewing Company (NYSE:TAP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 TAP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TAP were disappointed as the stock returned -8.2% during the same 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 Kohl’s Corporation (KSS) A Good Stock To Buy?
Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Kohl's Corporation (NYSE:KSS)? The smart money sentiment can provide an answer to this question.
Hedge fund interest inKohl's Corporation (NYSE:KSS)shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare KSS to other stocks including Yandex NV (NASDAQ:YNDX), Alliant Energy Corporation (NYSE:LNT), and InterContinental Hotels Group PLC (NYSE:IHG) to get a better sense of its popularity.
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 review the key hedge fund action regarding Kohl's Corporation (NYSE:KSS).
Heading into the second quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KSS over the last 15 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Kohl's Corporation (NYSE:KSS) was held byAQR Capital Management, which reported holding $464.1 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $332.8 million position. Other investors bullish on the company included Millennium Management, Samlyn Capital, and Two Sigma Advisors.
Seeing as Kohl's Corporation (NYSE:KSS) has witnessed a decline in interest from hedge fund managers, it's safe to say that there were a few funds that slashed their full holdings heading into Q3. It's worth mentioning that Robert Pohly'sSamlyn Capitalsaid goodbye to the largest stake of the 700 funds tracked by Insider Monkey, comprising close to $13.4 million in stock, and Stanley Druckenmiller's Duquesne Capital was right behind this move, as the fund dumped about $9.8 million worth. These transactions are interesting, 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 - not necessarily in the same industry as Kohl's Corporation (NYSE:KSS) but similarly valued. These stocks are Yandex NV (NASDAQ:YNDX), Alliant Energy Corporation (NASDAQ:LNT), InterContinental Hotels Group PLC (NYSE:IHG), and DENTSPLY SIRONA Inc. (NASDAQ:XRAY). This group of stocks' market caps match KSS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YNDX,30,843757,7 LNT,17,608429,-11 IHG,5,21218,-2 XRAY,31,1834188,4 Average,20.75,826898,-0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $827 million. That figure was $1189 million in KSS's case. DENTSPLY SIRONA Inc. (NASDAQ:XRAY) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 5 bullish hedge fund positions. Kohl's Corporation (NYSE:KSS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 KSS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on KSS were disappointed as the stock returned -26.9% during the same 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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Here’s What Hedge Funds Think About RPM International Inc. (RPM)
Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged during the first quarter. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 40% and 25% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the first 5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
RPM International Inc. (NYSE:RPM)investors should pay attention to a decrease in hedge fund interest in recent months. Our calculations also showed that rpm 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 glance at the recent hedge fund action regarding RPM International Inc. (NYSE:RPM).
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in RPM 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.
More specifically,Hound Partnerswas the largest shareholder of RPM International Inc. (NYSE:RPM), with a stake worth $200.4 million reported as of the end of March. Trailing Hound Partners was Diamond Hill Capital, which amassed a stake valued at $70.1 million. Starboard Value LP, Echo Street Capital Management, and SAYA Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because RPM International Inc. (NYSE:RPM) has experienced a decline in interest from the smart money, it's safe to say that there was a specific group of fund managers that decided to sell off their positions entirely in the third quarter. Interestingly, Steve Cohen'sPoint72 Asset Managementdropped the largest investment of the 700 funds watched by Insider Monkey, valued at about $21.1 million in stock. John Osterweis's fund,Osterweis Capital Management, also cut its stock, about $20.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to RPM International Inc. (NYSE:RPM). These stocks are US Foods Holding Corp. (NYSE:USFD), Nordson Corporation (NASDAQ:NDSN), L Brands Inc (NYSE:LB), and NICE Ltd. (NASDAQ:NICE). This group of stocks' market caps match RPM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,40,1340524,-1 NDSN,13,33215,-6 LB,32,709689,-3 NICE,17,236328,2 Average,25.5,579939,-2 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $580 million. That figure was $384 million in RPM's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Nordson Corporation (NASDAQ:NDSN) is the least popular one with only 13 bullish hedge fund positions. RPM International Inc. (NYSE:RPM) 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 RPM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RPM investors were disappointed as the stock returned -5.8% 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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‘Star Trek’ actress Marina Sirtis reveals she was molested at age 3 by her babysitter’s teen sons
Star Trek alum Marina Sirtis is freeing herself from a long-kept secret. “I was sexually molested when I was 3,” the actress, now 64, revealed for the first time publicly in an interview with U.K.’s The Times . “My mom used to leave me with a baby-minder and it was her teenage sons who molested me,” she recalled of her days growing up in poverty in London with her Greek parents. “I never told anyone because even at 3 you know it’s shameful and you think somehow it’s your fault.” She said her “mother never knew,” adding, “It would have killed her.” Sirtis connects the abuse to an “eating disorder for 20 years from the age of 13, which is a fairly common response to molestation.” And “having had an eating disorder, I won’t diet” to this day, she said. The actress credits years of therapy for helping her finally come to terms with her painful childhood. However, she didn’t seek treatment until she moved to the U.S. when she was in her 30s, which is also when she was cast as Counselor Deanna Troi in Star Trek: The Next Generation , which ran from 1987 to 1994. She went on to appear in four Star Trek movies. “When I finally did get into therapy in L.A. — everybody in L.A. is in therapy, it’s a given — everyone in my group had been sexually assaulted at some point in their lives,” she said. “What happened to me was awful and I have never talked about it before in public, but I feel that there comes a time when I have to say something and that time is today.” Sirtis said had she stayed in England, she probably never would have sought treatment due to the “stoicism of the British character. I would have been a very different person, emotionally and psychologically, if I hadn’t gone to America.” Marina Sirtis, at the 2018 Star Trek Convention in Las Vegas, reveals she was molested at age 3. (Photo: Getty Images) While Sirtis has remained in the U.S. since — with her husband of 25 years rock musician Michael Lamper — she’s actually considering moving to London permanently. For one reason, she’s enjoyed being back at “home” while making her West End debut in the play Dark Sublime, about an actress who used to be in a British sci-fi show who develops a friendship with a fan. (“This play is absolutely me,” she said.) Story continues The other reason is that she feels Trump’s America is no longer for her. “I travel a lot all over the States and I’ve seen the change in people and it’s not good,” she said. “It’s like Trump has picked off the scab and the pus is pouring out. I also don’t want to live in a country where my husband sleeps with a loaded gun by the side of the bed, to protect me, he says. Gun ownership is a huge issue for me.” Read more on Yahoo Entertainment: Kathy Griffin begs Obama to 'come back' to White House Mila Kunis and Ashton Kutcher shut down rumors that they've split: 'It's over between us?' George Takei says U.S. border camps are concentration camps: 'Yes, we are operating such camps again' Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyle’s newsletter. |
Investors Most Bearish Since 2009: Hedge With These ETFs
The S&P 500 Index is less than 1% shy of a record, but fund managers are unsure of this ascent, per a survey from Bank of America Merrill Lynch. The survey of 179 global managers supervising around half trillion dollars in assets indicated that pessimism has stemmed from concerns over U.S.-led trade-war fears and a looming global recession. Probably, this is why some view this bull market as the most-hated one.
Probably corroborating the fears, the chief of European Central Bank, Mario Draghi, said the bank may cut interest rates and add more economic stimulus to the economy should the need arise. The Fed is also widely expected to cut rates later this year.
At the time of writing, according to CME FedWatch tool, there is a 48.5% chance of a 50-bp rate cut in the Sep 18 meeting, followed by a 33.4% probability of a 25-bp rate cut, 12.3% likelihood of a 75-bp rate cut and only 5.8% probability of a no-rate-cut scenario (read: ETF Strategies to Win If Powell Enacts Rate Cuts).
Coming to China’s trade war front, analysts do not expect a resolution in the upcoming G-20 meeting. Things suddenly took a turn for the worse for Europe. Trump took to Twitter after Draghi announced the possibility of more stimulus, which lowered the euro against the greenback. President Trump nearly accused Euro zone of resorting to unfair trade practices via currency game. So, tensions prevail over the geopolitical landscape.
Moreover, investors should note that though low rates are good for stocks and bonds, “lower interest rates will simply enlarge the bubble.” Volume is still low in the market as evident from 1.18 times relative volume ofSPDR S&P 500 ETFSPY. This means there is less faith in the ongoing rally, per an article published on MarketWatch.
Probably this is why the below-mentioned, low-volatility, buy-write and diversified products are trading at a 52-week high. Investors can resort to these products at their highs to hedge their portfolio.
Russell 1000 Low Vol ETF SPDRONEV
The underlying Russell 1000 Low Volatility Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors high-value, high-quality, and low-size characteristics, with a focus factor comprising low-volatility characteristics. It charges 20 bps in fees.
JPM U.S. Minimum Volatility ETF (JMIN)
The underlying JP Morgan US Minimum Volatility Index measures the performance of U.S. equity securities selected using a rules-based process that is designed to have lower volatility than the Russell 1000 Index. It charges 12 bps in fees.
Flexshares Real Assets Allocation Index Fund (ASET)
The underlying Northern Trust Real Assets Allocation Index reflects the performance of a universe of inflation sensitive securities operating in the following sectors: global infrastructure, global real estate and global natural resources. The fund charges 57 bps in fees.
Fidelity Low Volatility Factor ETF (FDLO)
The underlying Fidelity U.S. Low Volatility Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with lower volatility than the broader market. It charges 29 bps in fees (read: Why You Should Bet on Low Volatility ETFs in June).
SSGA US Large Cap Low Vol Index SPDRLGLV
The underlying SSGA US Large Cap Low Volatility Index is designed to track the performance of U.S. large capitalization companies that exhibit low volatility. It charges 12 bps in fees.
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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 reportFidelity Low Volatility Factor ETF (FDLO): ETF Research ReportsSPDR Russell 1000 Low Volatility Focus ETF (ONEV): ETF Research ReportsSPDR S&P 500 ETF (SPY): ETF Research ReportsSPDR SSgA US Large Cap Low Volatility Index ETF (LGLV): ETF Research ReportsFlexShares Real Assets Allocation Index Fund (ASET): ETF Research ReportsJPMorgan U.S. Minimum Volatility ETF (JMIN): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report |
Should You Think About Buying Harmonic Inc. (NASDAQ:HLIT) Now?
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Harmonic Inc. (NASDAQ:HLIT), which is in the communications business, and is based in United States, saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a 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? Let’s take a look at Harmonic’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Harmonic
Good news, investors! Harmonic is still a bargain right now. According to my valuation, the intrinsic value for the stock is $8.31, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Harmonic’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 79% over the next couple of years, the future seems bright for Harmonic. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
Are you a shareholder?Since HLIT is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor?If you’ve been keeping an eye on HLIT for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy HLIT. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Harmonic. You can find everything you need to know about Harmonic inthe latest infographic research report. If you are no longer interested in Harmonic, 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. |
The Kia Seltos Is Yet Another Small Crossover to Fit between the Soul and Sportage
Photo credit: Kia From Car and Driver A new Kia SUV called the Seltos has made its global debut after being previewed by a concept a few months ago. The Seltos appears to be sized between Kia's subcompact Soul and compact Sportage models. Kia has yet to confirm the Seltos officially for the U.S. market, but all signs point to yes. The Kia Seltos is a new small SUV that's set to go on sale in the rest of the world later this year. Kia isn't saying whether or not it's coming to the U.S., but we're confident it will make its way to our shores eventually; since we last reported on this model, Kia has filed a trademark for the name Seltos in the U.S. Although we do not have dimensions yet, the Seltos appears to be around the same size as the Hyundai Kona . Its chunky lines and tall proportions give it a more upright look than the more low-slung Hyundai, however, and the Seltos' styling is completely unique, with a somewhat polarizing front-end lighting treatment but a fairly generic rear fascia. Photo credit: Kia The two engine choices most likely to be offered on the U.S. version of the Seltos are shared with the Kona. They include a naturally aspirated 2.0-liter inline-four with 147 horsepower and a turbocharged 1.6-liter inline-four with 175 horsepower. The former pairs with a six-speed automatic transmission and the latter with a seven-speed dual-clutch automatic transmission. There's also a diesel engine that will be available in other markets, but there's no way it will come to the U.S. Kia isn't mentioning anything about all-wheel drive at this point, but we assume it will be part of the Seltos' package given that the Kona is available with standard front-wheel drive or with all-wheel drive as a $1400 option. Look for more U.S.-specific information about the Kia Seltos to come out later this year, as we expect it to go on sale in America sometime in 2020. ('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 |
3 Tech Stocks for Dividend Investors to Buy
Tech stocks are likely to remain some of the most desirable on the market for years to come. But investors who want to be a part of the technology industry don’t just have to search for high-flying growth stocks. Instead, tech-minded investors can take a page out of the income investing book and focus on companies with solid dividends.
Finding a strong dividend-yielding tech stock might seem difficult, but investors should not feel too intimidated. For example, Apple AAPL and some of the other biggest names in tech, pay dividends. And dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener, which is a great one-stop screening tool for investors of all kinds.
By limiting our search to companies in our “Computer and Technology” sector with Zacks Rank #2 (Buy) or better rankings, we can ensure that we are finding the highest quality stocks to buy right now. Throw in your preferred dividend yield and you will find some of the best tech stocks for dividend investors to target.
With all that said, check out these three dividend-paying tech stocks to buy right now:
1. CDW Corporation CDW
CDW is a multi-brand technology solutions powerhouse that works with enterprise-level firms, governments, and more across the U.S., Canada, and the UK. The Lincolnshire, Illinois-based company’s portfolio is made up of over 1,000 brands and 100,000 products that range from security offerings to cloud computing solutions. CDW is coming off a better-than-projected first quarter of 2019 and has seen its stock price soar 37% in 2019. Shares of CDW opened at $106.48 on Thursday, not too far off their 52-week high.
Along with its strong first quarter and impressive price movement, CDW declared a new quarterly cash dividend of $0.295 per common share, which marked a 40% increase over last year’s dividend. The tech firm currently pays a $1.18 annualized dividend, with a 1.12% yield. Looking ahead, our current Zacks Consensus Estimates call for the company’s adjusted fiscal 2019 earnings to climb 11.6% on 7.3% revenue growth. Meanwhile, the firm’s price/sales ratio of 0.92 marks an impressive discount compared to its industry’s 2.15 average. And CDW has seen its earnings estimate revision activity trend completely upward recently for fiscal 2019 and 2020, which helps CDW earn a Zacks Rank #2 (Buy). The firm also sports an “A” grade for Momentum and “Bs” for both Value and Growth.
2. Applied Materials, Inc. AMAT
Chip stocks got a boost earlier this week on optimism regarding a possible resolution to the ongoing U.S.-China trade war. This helped lift shares of Applied Materials, which are now up roughly 31% in 2019. Despite the climb, AMAT stock still rests 14% below its 52-week high at $43.44 per share through late morning trading Thursday. Like many other chip firms, Applied Materials’ 2019 earnings and revenue are projected to fall, thanks to a multitude of factors within the historically cyclical semiconductor industry
Despite the current downturn, the semiconductor equipment maker’s long-term outlook is more positive. The firm’s 2020 revenues are projected to jump 8.5% above our current-year estimate to help lift earnings 18.3% higher than 2019’s estimate. Meanwhile, AMAT’s board recently approved a 5% increase to its quarterly cash dividend from $0.20 to $0.21 per share to help lift its yield to 1.98%. On top of that, Applied Materials’ P/E of 14.29 matches its industry’s average and its price/sales ratio of 2.52 represents a discount against its industry’s 3.07. AMAT is Zacks Rank #2 (Buy) right now, based, in large part, on its positive longer-term earnings estimate revision activity.
3. Microsoft MSFT
Microsoft stock counties to hit new all-time highs, which it did once again Thursday. Shares of MSFT are now up 37% in 2019 and touched $137.66 in morning trading. The tech titan is currently the world’s most valuable public firm, with a market cap just over $1 trillion. Microsoft’s legacy Windows and Office businesses have evolved and continue to drive growth. In recent years, however, MSFT’s cloud computing unit has grabbed Wall Street’s attention as the firm’s division, highlighted by Azure, has turned Microsoft into the second largest cloud player behind only Amazon AMZN.
In recent weeks, Microsoft has detailed some of its plans to enter the nascent cloud gaming market in an effort to expand its video game strength for the next era, as Google GOOGL aims to break in this fall. This includes a partnership with gaming rival Sony SNE. MSFT’s current full-year earnings are projected to climb 18% on the back of 13.1% revenue growth. Microsoft has paid out a $0.46 per share quarterly dividend throughout fiscal 2019, for an annualized payout of $1.84 a share. Microsoft’s current dividend represented a 9.5% jump from the prior year’s quarterly payout, while its yield sits at 1.36%. MSFT is a Zacks Rank #2 (Buy) that also rocks a “B” grade for Growth and an “A” for Momentum.
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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 reportAmazon.com, Inc. (AMZN) : Free Stock Analysis ReportAlphabet Inc. (GOOGL) : Free Stock Analysis ReportCDW Corporation (CDW) : Free Stock Analysis ReportSony Corporation (SNE) : Free Stock Analysis ReportApple Inc. (AAPL) : Free Stock Analysis ReportMicrosoft Corporation (MSFT) : Free Stock Analysis ReportApplied Materials, Inc. (AMAT) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
What You Must Know About Highwoods Properties, Inc.'s (NYSE:HIW) Beta Value
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If you own shares in Highwoods Properties, Inc. (NYSE:HIW) 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 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.
Check out our latest analysis for Highwoods Properties
Looking at the last five years, Highwoods Properties has a beta of 0.89. The fact that this is well below 1 indicates that its share price movements haven't historically been very sensitive to overall market volatility. If history is a good guide, owning the stock should help ensure that your portfolio is not overly sensitive to market volatility. Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see Highwoods Properties's revenue and earnings in the image below.
Highwoods Properties is a reasonably big company, with a market capitalisation of US$4.7b. Most companies this size are actively traded with decent volumes of shares changing hands each day. It is a little unusual to see big companies like this trade on low beta values. Oftentimes there is some other clear influence on the share price, overshadowing market volatility.
Since Highwoods Properties is not heavily influenced by market moves, its share price is probably far more dependend on company specific developments. It could pay to take a closer look at metrics such as revenue growth, earnings growth, and debt. In order to fully understand whether HIW is a good investment for you, we also need to consider important company-specific fundamentals such as Highwoods Properties’s financial health and performance track record. I urge you to continue your research by taking a look at the following:
1. Future Outlook: What are well-informed industry analysts predicting for HIW’s future growth? Take a look at ourfree research report of analyst consensusfor HIW’s outlook.
2. Past Track Record: Has HIW 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 HIW's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how HIW measures up against other companies on valuation. You could start with thisfree list of prospective options.
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. |
Sluggish Sales Growth Is Good Enough for Oracle
Database giantOracle(NYSE: ORCL)managed to grow sales in its fiscal fourth quarter, enough to easily beat analyst estimates. Some of its cloud software products performed well, while hardware and services revenue slumped, and currency had a significant negative effect.
Oracle also beat expectations for earnings, although extensive share buybacks were responsible for most of the per-share growth. Oracle poured a staggering $36.1 billion into share buybacks during fiscal 2019.
Oracle reported fourth-quarter revenue of $11.1 billion, up 1.1% year over year and $210 million higher than the average analyst estimate. Currency was responsible for some of the sluggishness -- revenue would have grown by 4% if not for changes in currency exchange rates.
Oracle's segments were a mixed bag, with only cloud license and on-premise license sales growing significantly:
[{"Segment": "Cloud services and license support", "Revenue": "$6.80 billion", "Growth (YOY)": "0%", "Growth (YOY, constant currency)": "3%"}, {"Segment": "Cloud license and on-premise license", "Revenue": "$2.52 billion", "Growth (YOY)": "12%", "Growth (YOY, constant currency)": "15%"}, {"Segment": "Hardware", "Revenue": "$994 million", "Growth (YOY)": "(11%)", "Growth (YOY, constant currency)": "(8%)"}, {"Segment": "Services", "Revenue": "$823 million", "Growth (YOY)": "(7%)", "Growth (YOY, constant currency)": "(4%)"}]
Data source: Oracle.
Unfortunately, Oracle makes it difficult to tell how its overall cloud business is doing, since it splits cloud revenue between two segments. The company used to report numbers for cloud software as a service, cloud infrastructure as a service, and cloud platform as a service, but itadopted this less transparent reporting schemeabout a year ago.
Image source: Oracle.
Certain parts of Oracle's cloud business are growing quickly. Fusion enterprise resource planning and human capital management cloud revenue grew by 32%, and NetSuite enterprise resource planning cloud revenue was also up 32%. The company also boasted that itsAutonomous Databaseattracted more than 5,000 new trials during the quarter.
Oracle reported non-GAAP earnings per share of $1.16, up 21% year over year and $0.08 ahead of analyst expectations. Non-GAAP net income was up just 3.2% year over year, with the rest of the growth coming from a lower share count. Oracle has managed to reduce its share count by nearly 16% over the past year thanks to aggressive share buybacks.
Looking ahead to the first quarter of fiscal 2020, Oracle is expecting constant-currency revenue growth between 1% and 3%, assuming a 1% currency headwind. Reported revenue will grow between 0% and 2% under that assumption. Non-GAAP EPS is expected to land between $0.80 and $0.82, up 12% to 14% year over year.
Oracle's cloud growth hasn't been enough to produce anything but very slow overall growth in recent quarters. The company's attempts to challengeAmazonin the infrastructure-as-a-service market haven't been all that successful.
Oracle's primary business is still database software, and preventing its on-premise database customers from fleeing to Amazon Web Services is important for the long-term health of the business. Earlier this month, Oracle andMicrosoftannounced a new partnershipthat will connect Microsoft's Azure cloud platform with Oracle Cloud. The deal allows customers to connect Azure services with Oracle cloud services, running some workloads on Microsoft's cloud and some on Oracle's cloud.
Oracle and Microsoft compete in the database market, as well as the cloud infrastructure market, but Microsoft has been much more successful building a cloud platform that can rival AWS. This deal is an indication that Oracle now recognizes that its own cloud platform isn't enough to stem the flow of customers to AWS.
This deal could help Oracle's core business, giving customers a way to adopt the Autonomous Database while still having access to a rich set of cloud services from Microsoft. At this point, Oracle isn't going to catch up in the cloud infrastructure market, so protecting its database business is a top priority.
Investors were pleased with Oracle's fourth-quarter results, despite the fact that earnings growth was largely due to an unsustainable level of share buybacks. The stock was up close to 8% Thursday morning, a surprisingly big move given the sluggish growth.
Earnings growth will almost certainly slow down eventually as Oracle draws down the cash on its balance sheet to pay for share buybacks. Whether the cloud business can drive enough growth to keep investors on board remains to be seen.
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Slack Goes Public Today: 5 Things to Know
Around 117 million Slack shares will start trading today at around $26 a piece on NYSE under the “WORK” ticker symbol. The company has grown by monetizing its corporate messaging service that was initially developed for internal use.
It’s a Direct Listing
This means the going-public event is not tied to the need to raise cash (it has $800 million+ on its balance sheet) but rather the need to provide liquidity to existing shareholders (many institutional shareholders will be offloading some of their holdings) as well as income to employees who will be able to cash their RSUs.
Sometimes, this sort of coming out party indicates that all is not well at the company. This may not be the story for Slack, which has been trading quite a bit in the private market where it was last valued at $16.7 billion. However, the lack of a lock-in period allows early investors to cash out quickly, pulling down prices soon after the shares start trading, which can lead to a certain amount of volatility.
Morgan Stanley, Goldman Sachs and Allen & Co. are advising the company and Citadel Securities is serving as its market maker.
According to Slack’s S-1 filing, its biggest outside shareholders are Accel (24% share), Andreessen Horowitz (13.3%), Social Capital (10.2%) and SoftBank (7.3 %).
Financials Reflect Tech Company in Growth Phase
In its fiscal year ending January 2019, Slack generated $400.6 million in revenue, which was up over 80% from 2018. This allowed it to lower its losses from $181.0 million in 2018 to $140.7 million last year. The cash burn rate of $41.1 million in the year suggests that balance sheet cash may be enough to take the company to profitability, especially given the strong revenue generating capability.
While less than a 100,000 companies currently subscribe to the service, the number has grown 49% in 2019. There are also another 500,000 organizations with three or more employees trialing a free subscription plan. Not all subscribers are small however. More than 65 are Fortune 100 companies while 575 are big companies paying more than $100,000 a year (this group accounted for 40% of revenue and grew 93% in 2019).
Bloomberg Intelligence estimates that Slack could generate up to 65% of its revenue in 2020 from free-to-premium conversion. Since the company expects to generate $590 million in revenue, conversions would come to $383.5 million in that case.
The User Ecosystem Appears Healthy
The company has more than 10 million daily active users. In the week ended January 31, 2019, these users spent 50 million hours sending more than a billion messages. While the user count pales in comparison to service providers like Netflix NFLX or Spotify SPOT, which are pretty well known on Wall Street, the number could grow quickly given the large number of organizations currently on trial.
Moreover, Slack’s subscriptions aren’t exactly comparable: the growth in large organizations is particularly encouraging because wins from this group will bring in a substantially higher number of users, and therefore, revenue.
There Are Significant Competitors
While Slack’s workplace communications business is growing rapidly, there are competing services from Microsoft MSFT and Alphabet GOOGL that are part of their enterprise suite. Cisco CSCO, which provides unified communications services and Facebook FB, which has been exploring the business software market are other contenders in the space.
Follow-on Offering Can’t Be Ruled Out
Growth companies typically need a lot of cash as they have to invest in the business to keep the growth rates up. If the market is conducive; in this case, if the shares are stable and show healthy appreciation, raising some more cash won’t hurt.
You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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‘Bad Trip’ Trailer: Eric Andre’s NSFW Prank Movie Is ‘Jackass’ With Tiffany Haddish
From the mixed up minds that brought you “The Eric Andre Show” and “Jackass” comes an NSFW road trip buddy comedy with real-life — and high stakes — pranks. The newly released Red Band trailer for Eric Andre’s latest wild creation opens with an ominous voiceover: “Warning: The following pranks are performed by professional actors on real people who are in for the surprise of their lifetime. Enjoy your trip.” Viewers may be in for the surprise of a lifetime as well when this zany genre mash-up hits theaters in the fall. While “ Bad Trip ” doesn’t need much of a plot, the trailer sets up two best friends, played by Eric Andre (“The Eric Andre Show”) and Lil Rel Howery (“Get Out”), who embark on a last-minute road trip. Billed as a “hidden camera comedy,” they steal Andre’s sister’s car ( Tiffany Haddish ) while she is in jail, though she quickly breaks out tunnel-style, much to the shock and awe of a group of white onlookers. (“I’ll kill every single one of you white motherfuckers,” she warns.) Related stories 'The Kitchen' Trailer: Melissa McCarthy, Tiffany Haddish, and Elisabeth Moss Become 1970s Criminals 'Tuca and Bertie' Voice Cast Guide: From Tiffany Haddish to Richard E. Grant The trailer opens with Andre’s clothes being sucked off by a very powerful vacuum, exposing himself fully as he is fond of doing, and ends with a disgruntled onlooker yelling at Haddish: “People from the streets don’t hang people from roofs!” In between, you can find Howery sinking slowly into a waste-filled porta potty as two women look on disgusted, and Andre crashing through a sliding glass door as a terrified woman frantically hits the floor. The script was written by “Jackass” and “Bad Grandpa producer Jeff Tremaine, but with any luck “Bad Trip” will be elevated by the presence of two women: “American Dad!” writer Kathryn Borel and Jenna Park both served as writing consultants. “Bad Trip” is directed by Kitao Sakurai, who wrote and directed the indie crime thriller “Aardvark” before cutting his teeth on “The Eric Andre Show.” His 2018 silent comedy short, “The Passage,” was produced by Super Deluxe and hailed for its absurdist and avant-garde humor. Story continues Orion Pictures will release “Bad Trip” on October 25. Check out the NSFW Red Band trailer below. Sign up for Indiewire's Newsletter . For the latest news, follow us on Facebook , Twitter , and Instagram . |
What Kind Of Shareholders Own China HGS Real Estate Inc. (NASDAQ:HGSH)?
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The big shareholder groups in China HGS Real Estate Inc. (NASDAQ:HGSH) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'
With a market capitalization of US$39m, China HGS Real Estate is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions are not on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about HGSH.
View our latest analysis for China HGS Real Estate
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of China HGS Real Estate, for yourself, below.
China HGS Real Estate is not owned by hedge funds. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders own more than half of China HGS Real Estate Inc.. This gives them effective control of the company. Given it has a market cap of US$39m, that means they have US$27m worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover(for free)if they have been buying or selling.
With a 30% ownership, the general public have some degree of sway over HGSH. 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 always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, backed by strong financial data.
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. |
This Might Be The Leveraged Gold ETF To Consider
For traders loving leverage with gold miners exchange-traded funds, theDirexion Daily Gold Miners Index Bull 3X Shares(NYSE:NUGT) has been the place to be.
NUGT, currently one of the most popular leveraged ETFs, is up 53% in June, indicating up has been the path of least of resistance with the fund that attempts to delivertriple the daily returnsof the NYSE Arca Gold Miners Index.
What Happened
As was notedlast week, traders have been embracing NUGT's bearish cousin, theDirexion Daily Gold Miners Index Bear 3X Shares(NYSE:DUST), in a big way, a theme that has continued over the past several days. There might be some merit to DUST, if the time is right, but waiting for that time could prove painful in the coming days.
“First, consider that last week's gain for the ETF, totaling 5.8%, was its third consecutive weekly advance — marking NUGT's longest weekly win streak since around the time of the stock market's late-December lows,”according to Schaeffer's Investment Research. “As a result, the bullishly leveraged ETF notched a Friday close above its descending 80-week moving average for the first time since the week prior to the November 2016 U.S. presidential election.”
Why It's Important
Data confirm traders remain fond of the bearish DUST. For the five days ending Monday, June 17, traders plunked down $36.54 million into DUST, a figure that swells to $91.69 million for the 10-day span ending June 17,according to Direxion data.
The long DUST thesis could be imminently tested. If the Federal Reserve signals a dovish tone following its two-day meeting today, potentially setting the stage for interest rate cuts this year, the dollar is likely to decline and gold will move higher. NUGT and traditional gold miners ETFs often overshoot spot gold's price action in both directions.
Bottom line: the Fed could pinch DUST bulls, and do so as soon today.
What's Next
Assuming the Fed delivers for gold bugs, technical issues could stymie NUGT.“What's more, NUGT intensified an ongoing assault on its 320-day moving average,” according to Schaeffer's. “The fund closed four straight days above this level for the third time in 2018, and has closed eight of the last nine trading days above this trendline. Again, the leveraged gold mining tracker hasn't enjoyed a streak like that above its 320-day since the fourth quarter of 2016.”
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Aston Martin Wants to Set a Renegade Nurburgring Lap Record With the Valkyrie
Aston Martin Wants a Renegade Valkyrie Ring Record Aston Martin Less than a week ago, Aston Martin confirmed it would be taking its 1160-horsepower V-12 hybrid-powered Valkyrie hypercar racing at the 24 Hours of Le Mans in 2021 . It seems the Circuit de la Sarthe isn't the only place where the British company will attempt a lap record: In an interview with Australia's CarSales.com , CEO Andy Palmer confirmed the Valkyrie road car will go to the Nurburgring, as well as Silverstone and Spa, to set lap records—perhaps under some unconventional conditions. "We already know it will be f**king quick there," Palmer told Carsales.com . "I'm thinking maybe we'll do something cool—like turning up to an open session, something crazy like that." Usually when a manufacturer wants to set a record at the Nurburgring Nordschleife, it rents out the full track, along with timing and safety crews. This gives manufacturers free reign of the track, but it can be extremely costly, and track rentals are in high demand during the months when the weather is good. The open sessions Palmer refers to are the Ring's "tourist" events, where anyone with a driver's license and a road-legal vehicle can pay a fee to do a lap. Tourist sessions can involve heavy traffic, as throngs of drivers (of widely varying skill!) rush the track. And during tourist sessions, drivers can't actually run a complete lap: They enter the track toward the end of its longest straightaway, past the start-finish line, and exit several hundred meters before the start-finish. Drivers are required to exit at the end of every lap, meaning it's impossible to get a complete lap of the full course during tourist sessions. So if the challenges are so steep, why bother? When asked if a Nurburgring lap time really matters, Palmer brought up an interesting point: "I'd really love to say 'no,' in most cases a Nurburgring lap is not important," he told CarSales.com. "However, in some markets, I'm thinking China strangely, a time around the Nurburgring is important to the prowess of a supercar. Story continues "In reality we're not developing it for that," Palmer continued. "It's not what it's meant for but we'll probably end up setting a time." Currently, the Nurburgring production lap record is held by the 770-horsepower Lamborghini Aventador SVJ with a time of 6:44.97. That car also has a mid-mounted V-12 engine, though it lacks hybrid assistance. Palmer confirmed to CarSales.com that Aston Martin will take the Valkyrie to attempt to set production car lap records at Silverstone and Spa Francorchamps—both Formula 1 tracks. "Silverstone and Spa are so far where all the development work on our Valkyrie simulators have been done," Palmer told CarSales.com. "It's amazing how fast you can take Eau Rouge —it's not flat, but only needs a small lift, so far we've found that the biggest limitation has been the road tires." We can't wait to see this car on the move. You Might Also Like You Need a Torque Wrench in Your Toolbox Tested: Best Car Interior Cleaners The Man Who Signs Every Car |
Boris Johnson ally denies 'dark arts' used to block Michael Gove
Jeremy Hunt and Boris Johnson are battling it out to be the next PM (PA Images) A supporter of Boris Johnson denied his team rigged the vote so Jeremy Hunt joined him in the final two in the race to be Prime Minister. MP Johnny Mercer denied any dark arts were deployed to stop Michael Gove getting through the contest. Mr Mercer told the Today Programme: :Im pretty close to Mr Johnson and the operation and the campaign, and I just havent seen it I havent seen it going on, Im not convinced its possible. Admitting some MPs may have voted for different people at different times, he added: I dont think theres some sort of underhand operation and people like Mel Stride, who ran Michaels operation, he has accepted that as well. Its a great story for the media, of course, as a sort of continuation of the drama from years ago, but in reality I dont think it exists. Boris Johnson support Johnny Mercer denied Boris Johnson supporters rigged the vote to block Michael Gove from the final two (PA Images) Yesterday Tory MPs voted for Mr Johnson and Mr Hunt to battle it out in the race to be Britains next Prime Minister. Michael Gove was eliminated from the competition by a margin of just two votes after Tory MPs held their fifth ballot to chose the partys next leader on Tuesday afternoon. After the result was announced, rumours began to circulate that Mr Johnsons team lent votes to Mr Hunt as they viewed him as an easier opponent in the final two. It followed a day of speculation in Westminster that Mr Johnsons camp would attempt to engineer a way to prevent Mr Gove making the final pair. Tory former minister Greg Hands, a supporter of Jeremy Hunt, dismissed suggestions. He told Sky News: "I don't agree with that. I've not seen any evidence, it's a secret ballot obviously, but I've not seen anything. "I talked to a lot of MPs... and I've seen no evidence of that. I've seen this as a contest squarely and fairly fought." Michael Gove was knocked out of the contest to become PM (Photo credit should read TOLGA AKMEN/AFP/Getty Images) Some 160 MPs voted for Mr Johnson. Mr Hunt received 77 votes and Mr Gove was knocked out of the contest after receiving the fewest with 75. The remaining pair will now take part in a series of hustings around the country in the next few weeks before Conservative Party members vote for the next leader, who will automatically become PM. Story continues The next Prime Minister will be installed in the week beginning 22 July. Andrew Gwynne MP, Labour's national campaign coordinator, said on Twitter: "What a choice: the man who broke the NHS or the man who wants to sell it to Donald Trump. "A handful of unrepresentative Conservative members should not be choosing our next prime minister. People should decide through a general election." Mr Johnson tweeted to thank his supporters after charging to victory. Im deeply honoured to have secured more than 50 per cent of the vote in the final ballot. Thank you to everyone for your support! I look forward to getting out across the UK and to set out my plan to deliver Brexit, unite our country, and create a brighter future for all of us. pic.twitter.com/i5D4ByurAM Boris Johnson (@BorisJohnson) June 20, 2019 Mr Johnson is currently the runaway favourite to become Prime Minister. He is the most popular candidate with Conservative Party members, with considerably more saying he would make a better Prime Minister than Jeremy Hunt. So Boris Johnson and Jeremy Hunt go head to head for the crown. We found earlier this week that Conservative party members, who will have the final say, think... Boris Johnson: 77% good leader, 19% poor leader Jeremy Hunt: 56% good leader, 37% poor leader https://t.co/kOij64uIho pic.twitter.com/0CueQgHEwW YouGov (@YouGov) June 20, 2019 RACE FOR NUMBER 10: MORE FROM YAHOO UK *********** Jeremy Hunt: Can the true blue Tory see off his rivals and land keys to No.10? Boris Johnson: Hes the bookies favourite
But can he deliver? *********** After he was eliminated, Michael Gove said on Twitter: Naturally disappointed but so proud of the campaign we ran. Huge thanks to my brilliant campaign team. Its been an honour to be able to set out a vision for the future of our great country. Many congratulations to Boris and Jeremy! |
‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief
Bank of England governor Mark Carney said that distributed ledger tech (DLT) projects have the potential to “unlock billions of pounds in capital and liquidity” — and that they might one day see closer cooperation with the central bank itself.
Carney spoke on June 20 during an appearance at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London, according topublished remarks. In the speech, which centered on new forms of financial products and services, Carney stated that “the Bank of England is announcing plans to consult on opening access to our balance sheet to new payment providers,” going to on remark that “this access could empower a host of new innovation.”
It was at this point that Carney invoked work being done on the blockchain and DLT front, telling attendees:
“In wholesale markets, consortia of broker dealers are working to develop settlement systems using distributed ledger technology that could overhaul how markets operate. These consortia, such as [Utility Settlement Coin], propose to issue digital tokens that are fully backed by central bank money, allowing instant settlement. This could also plug into ‘tokenised assets’ – conventional securities also represented on blockchain—and smart contracts. This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses.”
On their face, the comments offer a hint — however brief — that companies using DLT might one day be able to tap directly into the Bank of England’s services.
Fnality, the firm behind the Utility Settlement Coin (USC) initiative, raised just over $63 million in new funding, as TheWall Street Journalreported in early June.
During his appearance, Carney returned to a topic he touched on earlier this week: the subject of Facebook’s newly-unveiled cryptocurrency, Libra. In the wake of the announcement, Carney remarked that he expects Libra to abide by high standards of compliance and regulation, and on Thursday, he restated that sentiment.
“The Bank of England approaches Libra with an open mind but not an open door, said Carney. “Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”
Libra, if it achieves its ambitions, would be systemically important,” he went on to say, continuing:
“As such it would have to meet the highest standards of prudential regulation and consumer protection. It must address issues ranging from anti-money laundering to data protection to operational resilience. Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability.”
“Our citizens deserve no less,” he concluded.
On Wednesday, Carney’s American counterpart, U.S. Federal Reserve chairman Jerome Powell,saidthat Facebook had met with representatives of the Fed and that the project was “something we’re looking at.”
“I would echo what Governor Carney said which is that we will wind up having quite high expectations from a safety and soundness and regulatory standpoint if they do decide to go forward with something,” Powell said during a press conference.
Image Credit:Editorial credit: Twocoms / Shutterstock.com |
Do Institutions Own Shares In Northern Vertex Mining Corp. (CVE:NEE)?
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The big shareholder groups in Northern Vertex Mining Corp. (CVE:NEE) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.
Northern Vertex Mining is not a large company by global standards. It has a market capitalization of CA$45m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about NEE.
View our latest analysis for Northern Vertex Mining
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.
As you can see, institutional investors own 6.6% of Northern Vertex Mining. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Northern Vertex Mining's historic earnings and revenue, below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Northern Vertex Mining. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our most recent data indicates that insiders own some shares in Northern Vertex Mining Corp.. As individuals, the insiders collectively own CA$1.6m worth of the CA$45m company. It is good to see some investment by insiders, but I usually like to see higher insider holdings. It might be worth checkingif those insiders have been buying.
The general public, who are mostly retail investors, collectively hold 58% of Northern Vertex Mining shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
With a stake of 31%, private equity firms could influence the NEE board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
It's always worth thinking about the different groups who own shares in a company. But to understand Northern Vertex Mining better, we need to consider many other factors.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric 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. |
Hungary has no evidence of Huawei threat, plans rapid 5G rollout: minister
By Gergely Szakacs
BUDAPEST (Reuters) - Hungary has no evidence that equipment from Chinese telecoms giant Huawei poses a security threat, a government minister said on Thursday, adding that Budapest was mulling incentives to accelerate the rollout of a high-speed 5G network.
The United States and some of its Western allies believe Huawei Technologies' equipment could be used for espionage, and see its expansion into central Europe as a way to gain a foothold in the European market. Huawei denies the accusations.
Washington is concerned in particular about the expansion of Huawei, the world's biggest maker of telecoms equipment, in Hungary and Poland.
Budapest has so far shrugged off the security concerns and on Thursday Innovation and Technology Minister Laszlo Palkovics told Reuters that Hungary had yet to receive any evidence beyond what he called accusations leveled at Huawei.
"We have taken a rather pragmatic stance, the same, in fact, as Germany," Palkovics said. "It has not been proven that Huawei's technology would pose any risk to Hungary, as we have seen no (data) to support that."
"Until it is proven that Huawei, or Cisco or any other technology poses any threat to our community, that is Hungary, NATO or the European Union, we will handle Huawei's technology as any other technology," he added.
Palkovics' comments follow the Hungarian telecoms regulator NMHH's publication this week of the draft documentation for the sale of more than 400 megahertz of 5G spectrum later this year. This fires the starting gun on the rollout of a high-speed wireless network expected to serve self-driving cars and real-time communication between machines.
He said the country expected the auction to raise about 70 billion forints ($244.67 million).
Huawei employs around 2,000 people in Hungary, where it has invested $1.2 billion since 2005 according to company figures. Its European Supply Centre near Budapest, launched in 2009, is Huawei's biggest production base outside China, the group says.
Prime Minister Viktor Orban's government has strengthened business ties with Beijing over the past years.
FAST ROLLOUT
Acknowledging that Hungary's technological acumen lagged that of its U.S. and German allies, Palkovics said Budapest was studying the example of Germany where he said an assessment system was developed to precisely identify possible security threats. Germany is Hungary's biggest foreign investor.
"I am positive, that if it were to become obvious that (there is a security risk), Hungary is a member of NATO, which entails a spate of commitments, which we will follow, but so far, there has been no information to support that," he said.
Deutsche Telekom unit Magyar Telekom has installed Huawei and Cisco Systems Inc equipment at a 5G test base in western Hungary.
Asked whether Huawei could participate without restrictions in the rollout of Hungary's 5G network, Palkovics said:
"Once other, technologically more advanced countries launch the rollout that way, we will follow suit. If they do not, we will not either."
Palkovics said the government was planning talks with telecoms companies and other players in the sector on ways to facilitate a faster rollout of 5G.
The minister said he had met representatives of Germany's Siemens and car maker BMW, which plans to build a 1 billion euro factory in eastern Hungary, for talks on possible uses of 5G technology.
"In Germany, Siemens and BMW have proposed that there should be an available spectrum for in-house applications. These companies are also present in Hungary and they have proposed the same," he said, adding that these frequencies would be allotted in a second stage of the Hungarian 5G tender.
(Reporting by Gergely Szakacs; editing by Emelia Sithole-Matarise) |
'RHOA' star Porsha Williams Splits with Fiancé Dennis McKinley
“Real Housewives of Atlanta” star Porsha Williams has reportedly ended her engagement with fiancé Dennis McKinley. According to Us Weekly , the reality star and McKinley are dunzo are a year of dating. The two first revealed their relationship in June 2018. A couple months after they announced they were together, Porsha revealed she was pregnant with her first child. She and Dennis would eventually get engaged in September and welcomed daughter, Pilar, in March. Rumors started to swirl when the “RHOA” recently unfollowed McKinley on social media ... only to refollow later. She also raised eyebrows when she captioned a vacation photo, "Finally got to take a much needed vacation with my family ... Perfect relaxing, destination for families or couples." Williams is no longer following McKinley on his Instagram and he is not following her. The two were last seen out in public back in May for a charity event. Unfortunately, relationships aren't the only drama in the Bravo star's life, as she is also dealing with financial issues after the Georgia Department of Revenue slapped Williams with a lien over unpaid 2017 state taxes. The lien claims she failed to pay $19,935 in taxes but the bill grew with interest and other fees to a total of $27,846.34. Williams was accused by the IRS of owing unpaid taxes for 2009 ($405.39), 2011 ($174.72), 2012 ($4,611.76) 2015 ($37,524.65) and 2017 ($197,907.58) for a grand total of $240,624.10. She quickly handled that debt and dropped the full $240k to end her beef with the IRS. Williams now only has to handle the state tax debt. |
UPDATE 3-Walmart to pay $282 mln to settle seven-year global corruption probe
(Adds details from Walmart filing and latest DOJ filing)
By Nandita Bose
WASHINGTON, June 20 (Reuters) - Walmart Inc said on Thursday it will pay $282 million to settle a seven-year-long investigation into whether its overseas units in Mexico, Brazil, China and India violated the U.S. Foreign Corrupt Practices Act.
The retailer will pay more than $144 million to settle charges by the Securities and Exchange Commission and about $138 million to resolve parallel criminal charges by the U.S. Department of Justice, according to court and regulatory filings.
In a separate regulatory filing, Walmart said the $282 million was part of a "global settlement" and ended all FCPA-related investigations into the retailer and its overseas businesses.
The Justice Department launched an investigation of the retailer after a series of New York Times articles in 2012 described alleged bribes paid by Walmart in Mexico to obtain permits to build stores there.
The reports spurred a wide-reaching investigation by the department into the behavior of Walmart subsidiaries around the globe, including in Mexico, Brazil, China and India.
"Walmart profited from rapid international expansion, but in doing so chose not to take necessary steps to avoid corruption,” Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division said on Thursday.
"In numerous instances, senior Walmart employees knew of failures of its anti-corruption-related internal controls involving foreign subsidiaries, and yet Walmart failed for years to implement sufficient controls comporting with U.S. criminal laws," he added.
The Justice Department said the failures led Walmart's subsidiaries in Mexico, India, Brazil and China to hire third-party intermediaries and allowed these middlemen to make improper payments to government officials to obtain store permits and licenses.
Walmart did not voluntarily disclose the conduct in Mexico and only disclosed the conduct in Brazil, China and India after the government had already begun investigating the situation in Mexico, the department added.
Charles Cain, chief of the SEC Enforcement Division’s FCPA Unit, said "Walmart valued international growth and cost-cutting over compliance."
The retailer's chief executive said on Thursday Walmart had enhanced its "policies, procedures and systems and invested tremendous resources globally into ethics and compliance."
Walmart also said it had spent over $900 million on related matters, including FCPA inquiries, investigations and its global compliance program, in the past seven years.
WALMART BRAZIL PLEADS GUILTY As part of the settlement, Walmart Brazil has entered a guilty plea in the U.S. District Court for the Eastern District of Virginia, the retailer said.
According to court filings, from around 2009 to 2010, Walmart Brazil knowingly led its parent to maintain false records, which then made it into the company's consolidated financial statements.
Walmart Brazil and its employees recorded $527,000 in payments to an intermediary for assistance in acquiring construction permits, as a payment to certain construction companies, the court filings show.
The intermediary's ability to obtain licenses and permits quickly "by sorting things out like magic" earned the middleman the nickname "sorceress" or "genie" within Walmart Brazil, the court filings said.
In June 2018, the retailer sold a majority stake in its Brazilian operations to private equity firm Advent International.
Walmart has also entered into a non-prosecution agreement with the Justice Department. That means the department will not prosecute the company, if it meets obligations set forth in the agreement for three years.
In October, the retailer agreed to pay $160 million to settle a class action by investors unhappy with the way Walmart handled the foreign bribery investigation. Walmart admitted no wrongdoing as part of that settlement. (Reporting by Nandita Bose in Washington; Additional reporting by Sarah Lynch in Washington and Jonathan Stempel in New York Editing by Sonya Hepinstall and Tom Brown) |
The Latest: Boris Johnson, Jeremy Hunt in UK leader runoff
LONDON (AP) — The Latest on choosing Britain's next prime minister (all times local): 6:10 p.m. Boris Johnson and Jeremy Hunt will compete to become Britain's next prime minister in a runoff vote by members of the governing Conservative Party. Johnson, a former U.K. foreign secretary, and Hunt, who holds that office now, are the last candidates standing after a series of elimination votes by Conservative lawmakers. Home Secretary Sajid Javid and Environment Secretary Michael Gove were culled from the race on Thursday. Johnson got 160 of the votes cast by 313 Tory lawmakers in the final round, and is strong favorite to win the ballot of some 160,000 party members. Hunt, who got 77 votes, will seek to halt Johnson's momentum by picking away at Johnson's plans for Brexit as the two speak to meetings of party members across the country. The winner is due to be announced in late July, and will replace Theresa May as party leader and prime minister. ___ 1:10 p.m. The contest to become Britain's next prime minister is down to its final three candidates, with Environment Secretary Michael Gove and Foreign Secretary Jeremy Hunt chasing front-runner Boris Johnson for a spot in a deciding runoff. Johnson gained 157 of 313 votes cast by Conservative lawmakers Thursday in their fourth round of voting. Gove received 61, leapfrogging Hunt, who has been in second place until now but got 59. Home Secretary Sajid Javid came fourth with 34 votes and drops out. A second vote Thursday will select the final two contenders, who will go to a by-mail ballot of all 160,000 Conservative Party members nationwide. The winner is due to be announced in late July, and will replace Theresa May as party leader and prime minister. ___ 9 a.m. Britain's governing Conservatives were set to pick two candidates who will square off to become the country's next prime minister. Tory lawmakers will vote to eliminate two contenders from a four-strong field that includes ex-foreign minister and London mayor Boris Johnson, current Foreign Secretary Jeremy Hunt, Environment Secretary Michael Gove and Home Secretary Sajid Javid. Story continues Johnson has a commanding lead after three rounds of voting that cut the list from an initial 10 contenders. The three others are battling to join him in a runoff to be decided by 160,000 Conservative Party members nationwide. All the candidates are vowing to lead Britain out of the European Union, a challenge that defeated outgoing Prime Minister Theresa May. She quit as Conservative leader earlier this month after failing to win Parliament's backing for her Brexit deal. The winner of the contest, due to be announced the week of July 22, will become Conservative leader and prime minister. ___ Follow AP's full coverage of Brexit and the Conservative Party leadership race at: https://www.apnews.com/Brexit |
Explainer: Initial exchange offerings flourish in crypto market
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Initial exchange offerings (IEOs) are currently the most popular fundraising trend in the cryptocurrency industry, which has seen poster child bitcoin surge more than 150% in 2019. As the name suggests, initial exchange offerings are conducted over crypto trading platforms and exchanges.
Binance was the first major cryptocurrency exchange to join the IEO wave, with the introduction of Binance Launchpad this year. A handful of IEOs has been done before but in much smaller exchanges.
In January, the Binance platform conducted the sale of the BitTorrent (BTT) token, or digital currency, raising $7 million in just the first 14 minutes of sale opening. San Francisco-based BitTorrent is a software company specializing in peer-to-peer file-sharing.
BACKGROUND ON CRYPTOCURRENCIES
Bitcoin is the original cryptocurrency created in 2008. It is a form of electronic currency, independent of traditional banks, that allows users to send money directly from one computer to another even on another side of the world.
Bitcoin's popularity fueled the creation of more than 2,000 cryptocurrencies and spurred the launch of an entire global industry on blockchain, a distributed ledger technology that drives it.
Cryptocurrencies are also traded on digital currency exchanges, which are all online, many of them available on mobile phone applications. People buy cryptocurrencies from these exchanges by just signing up from their websites.
Bitcoin on Thursday traded at $9,400 on the BitStamp exchange.
People buy cryptocurrencies primarily for speculation because they have gone up in price so much in the last three years. Some like developers buy specific currencies to gain access to certain networks that are relevant to them.
Since 2008, the biggest financial names have entered the cryptocurrency space, from IBM to Goldman Sachs, and most recently Facebook, which launched the blueprint for its own cryptocurrency on Tuesday.
But cryptocurrencies are risky. Because they are virtual currencies, they can be hacked or disappear forever if you lose the keys to the online wallets used to store them. And with no clear regulatory body overseeing the digital currency industry, funds would be difficult to recover once you lose them.
WHAT'S THE DIFFERENCE BETWEEN AN IEO AND ICO?
IEOs are a byproduct of initial coin offerings (ICOs), which took off in 2016. ICOs are also a way to raise capital, bypassing banks and venture capital firms.
But IEOs take place on cryptocurrency exchanges which, for a fee, effectively act as middlemen, performing functions such as due diligence on a project, "know your customer" screening, marketing and selling tokens to customers.
ICOs, on the other hand, are undertaken by start-ups themselves, shouldering the token offering costs and selling these currencies on their websites. They have raised nearly $29 billion for cryptocurrency companies since 2016, but slowed sharply this year amid a regulatory crackdown on fraudulent and illegal offerings led by the U.S. Securities and Exchange Commission.
The limit on the amount of tokens that can be bought at IEOs - usually capped at $20,000 - has enhanced the attractiveness of these offerings to retail investors and has prevented bigger investors from monopolizing them.
Investors that want to participate in IEOs just go to the exchange's website.
"An IEO is like Goldman Sachs crashing into Nasdaq," said Steven Nerayoff, chief executive officer of consulting and investment firm Alchemist, suggesting that exchanges like Nasdaq have taken on investment banking functions, such as vetting IEOs and marketing them to customers.
"It's a new breed of fundraising that could potentially change what's happening in finance ... but regulations have to be figured out."
HOW MUCH HAVE IEOS RAISED SO FAR?
Start-ups doing IEOs, however, are raising millions of dollars quickly, sometimes within seconds, reminiscent of a trend seen at the peak of ICOs in early 2017.
For instance, Veriblock, a blockchain project leveraging bitcoin's network, raised $7 million in April through an IEO on the Bittrex exchange in 10 seconds.
Blockhain, which underpins bitcoin and most cryptocurrencies, is a digital database with information that can be publicly shared within a large decentralized network.
IEOs have raised $1.5 billion so far this year, according to cryptocurrency tracker CoinSchedule, compared with just $836 million raised from ICOs since January. Crypto exchange operators interviewed by Reuters said hundreds of start-ups are lining up to do IEOs, more than they could possibly handle.
U.S. file-sharing firm BitTorrent, which conducted an IEO on Binance Launchpad, officially kicked IEOs into high gear at Binance, the world's largest cryptocurrency exchange by volume.
"IEOs are helpful for projects like us because we don't have the time to do compliance," said Justin Sun, founder and chief executive officer of TRON, a blockchain-based company focused on building a decentralized internet. TRON purchased BitTorrent for $120 million in 2018.
WHAT DO IEOS MEAN FOR EXCHANGES?
IEOs typically mean more revenues for exchanges. Exchanges that will host an IEO will typically do the vetting process of a project for a fee. They also get fees when the token starts trading on their exchange.
Market observers said IEOs came at a time when cryptocurrency exchanges struggled as digital currencies slumped and cryptocurrency buyers dwindled. IEOs gave them some form of lifeline.
For some exchanges, however, IEOs mean more users for their trading platform and some of them are willing to undertake the screening process of a project even without a listing fee.
By doing IEOs, we attract communities to trade on Beaxy," said Artak Hamazaspyan, chief executive officer at digital asset exchange Beaxy Digital, which opened its trading platform to IEOs. "If I list a project and it's not listed anywhere else, I get all these communities to join us."
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Jennifer Ablan and Nick Zieminski) |
Google rolls out updated business profiles for Google Maps and Search
Google (GOOG,GOOGL) has rolled out a number of new features for businesses to make their profiles more unique when they appear in Google Search and Google Maps.
The Mountain View, California-based tech giant announced on Thursday new features for Google My Business, its free tool that lets businesses create and edit their business profiles that show up in Google Search and Google Maps. In addition to letting businesses list information, such as its address, hours, phone number, website and customer reviews, now businesses will be able to upload cover photos, display logos, and photo captions, as well send customers who choose to “follow” their business digital offers and discounts.
“We really needed to create a way for businesses to get online so they can get found by the millions of people searching for places every single day,” said Peter Chane, senior director of SMB Product Management for Google.
Here are the new features Google announced for Google My Business:
Welcome Offers:According to Google, more than half of online customers are looking for an offer or discount. To help meet that demand, Google My Business will now let shoppers click a new “Follow” button near the top of a business’ profile. Shoppers who follow a business can receive a digital coupon, such as a 20% off discount for a meal at a restaurant or 10% off a first haircut.
Cover photos and logos:Businesses can also choose a “cover photo,” a preferred photo that will show up atop their online business listing in a Google search. (Previously, a random photo of a business merely showed up as the first photo on a business profile.) Likewise, businesses will also now be able to upload their logos, which will show up at the top right-hand side of their profiles.
Photo displays and captions:Google also updated the business profile so more recently-taken photos show up in general. Businesses can now add photo captions to provide consumers with additional context.
Short names and URLs:Business owners can now claim a “short name.” The unique name generated by Google can also be used to create a distinct web URL for referring customers back to a business’s Google profile. According to Google, customers in the coming months will also be able to search for businesses by their short names inside of Google Maps.
According to Google, over 150 million local businesses have created online business profiles through Google My Business since the tech giant launched the ability to do so five years ago. The Mountain View, California tech giant also said it “enables” more than 3 billion “connections” between merchants and customers every month through businesses’ online Google profiles.
It’s technically free for businesses to create and manage their profiles through Google My Business, but for the tech giant, it’s an important tool to keep internet users engaged with Google, which remains the number one most-trafficked website in the world, according to the internet tracking site Alexa, with users spendingan average of eight minutes and six seconds on Googleeach day. Keeping users engaged increases the likelihood that they will click on an ad placed on Google, through which the tech giant generated almost 85% of its revenues during first-quarter 2019.
Google’s dominance in areas including advertising, search, and mobilehas gotten the tech giant in troublewith regulators several times in the past. This March, the tech giant was fined$1.7 billion by the European Commissionfor its allegedlly anti-competitive search practices, which included forbidding publishers from placing search ads from competitors on their search results pages. (Google is currently challenging the fine.) The company alsoappealed a $5 billion finefor unfair business practices around its Android operating system.
Meanwhile, in the U.S., the Justice Department plans to investigate Google’s online search practices and how those practices affect its rivals, according to aWall Street Journal reportin early June, citing anonymous sources familiar with the matter.
More from JP:
• Facebook’s Mark Zuckerberg drops 39 spots on Glassdoor’s top CEO list
• Facebook faces these 4 challenges as it launches its own cryptocurrency
• How Dropbox is working with Slack, Google and Zoom to make you a better employee
• SF landlords dropping big cash to garages into pricey apartments |
HD Supply Holdings, Inc. (NASDAQ:HDS): The Best Of Both Worlds
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HD Supply Holdings, Inc. (NASDAQ:HDS) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of HDS, it is a company with great financial health as well as a an impressive history of performance. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at thereport on HD Supply Holdings here.
In the past couple of years, HDS has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did HDS outperformed its past performance, its growth also surpassed the Trade Distributors industry expansion, which generated a -7.0% earnings growth. This is an optimistic signal for the future. HDS's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. HDS seems to have put its debt to good use, generating operating cash levels of 0.31x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For HD Supply Holdings, I've compiled three relevant aspects you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for HDS’s future growth? Take a look at ourfree research report of analyst consensusfor HDS’s outlook.
2. Valuation: What is HDS 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 HDS is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of HDS? Exploreour interactive list of stocks with large 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. |
Slack Stock Price Soars In Direct Listing Debut, as Valuation Hits $21 Billion
A parade of initial public offerings from Silicon Valley this year have garnered mixed receptions from investors. Slack Technologies Inc.took a different routeon Thursday, and saw its shares soar asit went public without an IPO.
Slack opened at $38.50 on the New York Stock Exchange Thursday, well above the reference price of $26 that was set for the shares. The stock traded at $40.60 at 2:48 p.m. in New York, giving the company a market value of $20.6 billion. The fully diluted valuation is even higher.
That’s a huge increase from Slack’s last private funding round in August, which valued the company at $7.1 billion. Thursday’s debut makes Slack one of the most valuable technology companies to reach U.S. markets this year, following in the footsteps ofUber Technologies Inc.andLyft Inc.
Slack,which makes software for workers to chat and collaborateon projects, directly listed its shares on the New York Stock Exchange, bypassing the usual fundraising process of an IPO and allowing shareholders to sell right away without a lockup period.
A parallel for this unusual type of stock listing is Spotify Technology SA. The music-streaming provider went public using a similar maneuver last year, the last high-profile company to do so. Spotify’s stock is up 14% since then.
Goldman Sachs GroupInc., Morgan Stanley and Allen & Co. advised Slack on the listing, the same trio of banks that lined up when Spotify went public.
Slack Chief Executive Officer Stewart Butterfield said Thursday that the company chose not to have a traditional IPO for a pragmatic reason: It didn’t need the cash. “We’re not ideological crusaders on this stuff,” he said. The direct listing process is a more efficient way to price a stock, he said, “but I don’t think anything comes close to not having to dilute existing shareholders by 10%.”
Butterfield said he also wanted to avoid the lockup period. “Especially in a period when you’re locked up, when the supply is so constrained, the psychological impact of that can be a big negative,” he said. “Giving employees the option early is more important.”
Butterfield was at the New York Stock Exchange, which was festooned with a Slack banner that read “Your work is our work,” and where a band outside played jazz for the occasion. Earlier that morning, he rang the opening bell, and posted photos on social media, writing, “Got a little cold, but everything is allll right.”
This year is on track to be the busiest for public listings in more than a decade. Some have been warmly received. Pinterest Inc. has risen about 50%, and Zoom Video Communications Inc. has nearly tripled in value. But the two biggest, Uber and Lyft, are trading below their IPO prices.
Investors—and private companies considering a similar path to the public markets—will be closely watching the reception to the debut. Slack had been hoping to avoid the first-day pop that often accompanies IPOs and the price swings that can follow.
Citadel Securities andMorgan Stanleyworked behind the scenes to help kick things off Thursday morning, gathering buy and sell orders to assess a first-trade price.
In Slack’s dual-class share structure, super-voting Class B shares must be converted to Class A common shares before they can be sold. On Wednesday, Slack said 194 million shares had been converted to common stock, which signals the number that could be sold.
Slack going public ends a long journey that started with Tiny Speck, a small video game maker. The company, led by Butterfield, was making a game called Glitch, but it didn’t take off. The team, however, had built an internal tool to chat and share files with each other. They had an inkling that the software could be useful to other teams. In 2014, they launched Slack. Now Butterfield, its co-founder and chief executive officer, isworth more than $1 billion.
One of Slack’s earliest believers was Accel, a venture firm that now owns about 24% of the company. Andrew Braccia, an Accel partner and Slack board member, had worked with Butterfield at Yahoo! Bloomberg Beta, the venture capital arm of Bloomberg LP, is also a Slack investor.
The service has spread from Silicon Valley into offices around the world, and it does much more than chat. Users can share files, build automated workflows, host video calls, poll colleagues and keep a to-do list. Those who use it tend to adapt quickly, but it has struggled to convey exactly what it is to most of the world, Butterfield said in a recent conference call. “We have to work hard to explain Slack to all the people who have never used it before,” he said. Butterfield called it “one of our biggest challenges and greatest opportunities.”
Slack faces competition from some of the world’s most valuable companies, includingMicrosoftCorp.,AlphabetInc. andFacebookInc. Slack did prevail, however, over another rival: HipChat, a product from Atlassian Corp. Last year, Slack and Atlassian struck a deal in which Slack bought the assets for HipChat, which was eventually wound down, and Atlassian took a stake in Slack.
Ten million people use Slack every day, according to the company. Many workers rely on a free version of the software, but as of April, 645 companies paid more than $100,000 a year for the service. Those big customers make up about 43% of Slack’s revenue, the company said. Like other big-name public debuts this year, Slack is not profitable. It lost $139 million on $401 million of revenue in the fiscal year that ended in January.
In contrast tothe flagrant cash burning of companies like Uber or Lyft, Slack’s losses have been fairly consistent. But its revenue growth rate has slowed from 110% two years ago to a projected 50% for the fiscal year ending next January.
Butterfield said he thinks that the practice of direct listing has the potential to catch on more widely after this week. “I think if this works out in terms of volatility and volume, I would expect anyone who doesn’t really want to raise money will follow that path of just listing,” he said.
—4 things investors need to knowabout Slack’s direct listing
—What, exactly, is Slack?And more FAQ.
—Slack’s CEO was raised in a log cabin—andnow he’s worth $1.3 billion
—When thenext recession hits, four good things could happen
—Tech’s4 biggest bash burnershave torn through $23.9 billion
—Listen to our new audio briefing,Fortune500 Daily
Don’t miss the dailyTerm Sheet,Fortune‘s newsletter on deals and dealmakers. |
Were Hedge Funds Right About Flocking Into The Gap Inc. (GPS) ?
While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding The Gap Inc. (NYSE:GPS).
The Gap Inc. (NYSE:GPS)was in 27 hedge funds' portfolios at the end of the first quarter of 2019. GPS has experienced an increase in activity from the world's largest hedge funds recently. There were 20 hedge funds in our database with GPS holdings at the end of the previous quarter. Our calculations also showed that GPS isn't among the30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are assumed to be worthless, old investment tools of years past. While there are over 8000 funds trading at present, Our experts choose to focus on the aristocrats of this group, about 750 funds. It is estimated that this group of investors orchestrate most of the smart money's total asset base, and by keeping an eye on their highest performing picks, Insider Monkey has revealed a few investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy outstripped 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.
We're going to analyze the recent hedge fund action encompassing The Gap Inc. (NYSE:GPS).
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in GPS a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically,AQR Capital Managementwas the largest shareholder of The Gap Inc. (NYSE:GPS), with a stake worth $100.1 million reported as of the end of March. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $46.1 million. Citadel Investment Group, Renaissance Technologies, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers have been driving this bullishness.Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in The Gap Inc. (NYSE:GPS). Balyasny Asset Management had $15.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitalalso initiated a $12.5 million position during the quarter. The other funds with new positions in the stock are David Harding'sWinton Capital Management, Robert Pohly'sSamlyn Capital, and Joel Greenblatt'sGotham Asset Management.
Let's also examine hedge fund activity in other stocks similar to The Gap Inc. (NYSE:GPS). These stocks are AXA Equitable Holdings, Inc. (NYSE:EQH), Vedanta Ltd (NYSE:VEDL), AEGON N.V. (NYSE:AEG), and WestRock Company (NYSE:WRK). This group of stocks' market caps are similar to GPS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EQH,35,1030862,9 VEDL,6,50111,-1 AEG,10,30774,-1 WRK,23,460835,-6 Average,18.5,393146,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $318 million in GPS's case. AXA Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 6 bullish hedge fund positions. The Gap Inc. (NYSE:GPS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 GPS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GPS were disappointed as the stock returned -20.6% during the same 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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Here’s What Hedge Funds Think About Mid America Apartment Communities Inc (MAA)
At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Mid America Apartment Communities Inc (NYSE:MAA) makes for a good investment right now.
Mid America Apartment Communities Inc (NYSE:MAA)shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 21 hedge funds' portfolios at the end of March. At the end of this article we will also compare MAA to other stocks including The Liberty SiriusXM Group (NASDAQ:LSXMA), The Liberty SiriusXM Group (NASDAQ:LSXMK), and Autohome Inc (NYSE:ATHM) to get a better sense of its popularity.
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.
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Paul Marshall of Marshall Wace[/caption]
We're going to view the recent hedge fund action surrounding Mid America Apartment Communities Inc (NYSE:MAA).
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAA over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds,Renaissance Technologiesheld the most valuable stake in Mid America Apartment Communities Inc (NYSE:MAA), which was worth $162.6 million at the end of the first quarter. On the second spot was Diamond Hill Capital which amassed $67.1 million worth of shares. Moreover, Fisher Asset Management, Millennium Management, and Adage Capital Management were also bullish on Mid America Apartment Communities Inc (NYSE:MAA), allocating a large percentage of their portfolios to this stock.
Seeing as Mid America Apartment Communities Inc (NYSE:MAA) has faced bearish sentiment from hedge fund managers, it's safe to say that there was a specific group of money managers that elected to cut their entire stakes heading into Q3. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitalsold off the largest investment of the 700 funds watched by Insider Monkey, worth an estimated $2.6 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund dumped about $0.9 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mid America Apartment Communities Inc (NYSE:MAA) but similarly valued. These stocks are The Liberty SiriusXM Group (NASDAQ:LSXMA), The Liberty SiriusXM Group (NASDAQ:LSXMK), Autohome Inc (NYSE:ATHM), and Huazhu Group Limited (NASDAQ:HTHT). This group of stocks' market valuations resemble MAA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSXMA,41,1344969,2 LSXMK,45,2653274,0 ATHM,16,1251641,2 HTHT,14,196127,-1 Average,29,1361503,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1362 million. That figure was $356 million in MAA's case. The Liberty SiriusXM Group (NASDAQ:LSXMK) is the most popular stock in this table. On the other hand Huazhu Group Limited (NASDAQ:HTHT) is the least popular one with only 14 bullish hedge fund positions. Mid America Apartment Communities Inc (NYSE:MAA) 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 MAA as the stock returned 4.6% 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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Is Apartment Investment and Management Co. (AIV) A Good Stock To Buy?
At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Apartment Investment and Management Co. (NYSE:AIV) makes for a good investment right now.
Hedge fund interest inApartment Investment and Management Co. (NYSE:AIV)shares was flat at the end of last quarter. This is usually a negative indicator. 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 Gildan Activewear Inc (NYSE:GIL), Store Capital Corporation (NYSE:STOR), and Santander Consumer USA Holdings Inc (NYSE:SC) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the latest hedge fund action surrounding Apartment Investment and Management Co. (NYSE:AIV).
Heading into the second quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in AIV a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically,Renaissance Technologieswas the largest shareholder of Apartment Investment and Management Co. (NYSE:AIV), with a stake worth $350.9 million reported as of the end of March. Trailing Renaissance Technologies was Zimmer Partners, which amassed a stake valued at $121 million. Balyasny Asset Management, Winton Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Apartment Investment and Management Co. (NYSE:AIV) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers that decided to sell off their full holdings in the third quarter. Interestingly, Ken Heebner'sCapital Growth Managementsaid goodbye to the largest investment of the 700 funds tracked by Insider Monkey, totaling an estimated $16.7 million in stock, and Ray Dalio's Bridgewater Associates was right behind this move, as the fund dumped about $1.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Apartment Investment and Management Co. (NYSE:AIV) but similarly valued. These stocks are Gildan Activewear Inc (NYSE:GIL), Store Capital Corporation (NYSE:STOR), Santander Consumer USA Holdings Inc (NYSE:SC), and HD Supply Holdings Inc (NASDAQ:HDS). This group of stocks' market valuations resemble AIV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GIL,27,562233,2 STOR,22,1022248,-2 SC,22,748622,1 HDS,30,939166,-1 Average,25.25,818067,0 [/table]
View table here if 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 $818 million. That figure was $628 million in AIV's case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Apartment Investment and Management Co. (NYSE:AIV) is even less popular than STOR. 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 AIV, though not to the same extent, as the stock returned -0.6% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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