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13 Dating Apps That Can Help You Find Your Soul Mate
Photo credit: Getty/John Francis From Cosmopolitan If you've been on any one app long enough (and, uh, who hasn't at this point?), you may have experienced the particularly effed-up déjà vu of seeing someone you've already swiped on reappear in your feed. It's bound to happen-even in the biggest city, there are only so many available people that suit your app parameters and preferences. Which is why it's a good thing you have options . With each different dating app platform comes, at the very least, a slightly different population of fish in the sea. It's also just generally good for your dating feng shui to try out different apps. Here are 13 non-Tinder dating apps to add to your rotation. Just maybe not all at once. 1. Bumble Created by Whitney Wolfe , one of the Tinder co-founders, Bumble 's shtick is that (in heterosexual matches), only women can start a conversation within 24 hours of matching with someone. Her match then has 24 hours to respond before the connection is lost. Hookups or relationships?: Both. What's great about it: If you're a woman who feels anxious about sending the first message, Bumble eliminates alllll of that fear. What you might not like: Bumble has been criticized for a lack of diversity among its users. Available for iPhone and Android 2. OkCupid More than a dozen years old, OkCupid is a veteran in the online dating space-like, this site existed before dating apps were even conceived of. Users can answer questions and rank how important compatible answers are among potential matches, allowing you to get as specific (or generic) as you want. Hookups or relationships?: Both. What's great about it: OkCupid allows you to get super specific and create a dating app space that works for you. Users can choose from a list of genders, sexual preferences, and designate exactly what kind of relationship they're looking for. What you might not like: While matches exist on the app, anyone can message anyone, regardless of match status. So you may be bombarded with a bunch of random messages. Story continues Available for iPhone and Android 3. Coffee Meets Bagel Coffee Meets Bagel capitalizes on the slow dating trend by limiting the number of matches you get each day. Users are given one match every day at noon (a "bagel," get it?) and then they have one day to match or decline. Hookups or relationships?: Relationships. What's great about it: By introducing only one match per day, Coffee Meets Bagel forces you to date more intentionally. There's no swiping here. What you might not like: At the same time, slowing things down this much might make you restless. If you're looking to find a hookup for this weekend, Coffee Meets Bagel probably isn't for you. Available on iPhone and Android 4. Her If you dream of a dating app with zero men, congrats! It exists. Her is made especially for women on all stops of the sexuality spectrum, and the app lets users name their gender identity and sexuality and filter users based on sexuality as well. Use Her to meet friends, find hookups, find a wife-whatever. Just don't expect to use it to find men. Hookups or relationships?: Both. What's great about it: Her is a dating app for that's well-catered to LGBTQ+ women. Users who aren't looking to date can also use it to find meet-ups and queer-centered events in their local city, which is ideal if you're not totally into app dating. What you might not like: A lot of the app is blocked off unless you're a premium user, so if you're not willing to pay $10 to 15 per month, you're stuck with the free version. Available on iPhone and Android 5. Hinge In a very intentional move to be Not Tinder, Hinge did away with swiping and rebranded as "the relationship app." So this is decidedly not a hookup app. Profiles are based around answers to a few questions generated by the app, and you can get attention by Liking or commenting on various aspects of a person's profile. Like Facebook, but inherently flirty. Hookups or relationships?: Probably relationships, but Hinge hookups definitely still happen. What's great about it: Hinge is doing a lot to stay on the cutting edge, including the recent launch of an anti-ghosting feature that's designed to remind a match to continue the conversation (or in other words, a not-so-gentle nudge to remind them you exist). What you might not like: People just looking for a hookup are better off on a different, less complex app. And if you plan to ghost, date elsewhere. Available on iPhone and Android 6. Ship Sick of doing your own swiping and wish an assistant could do it for you? Same, but none of us are rich enough for that (just assuming), and so Ship , a new-ish dating app from the Betches crew, does the next best thing: let your coupled-up friends find matches for you. The app lets single users invite their non-single friends to join, and then all of you are in a group chat where you can discuss intriguing profiles and swipe together. Hookups or relationships?: Both, depending on how raunchy your friends are. What's great about it: Ship eliminates your friends hating the next partner you introduce them to, because they've already met them (and helped you choose them) in the app. What you might not like: If you're super private about your dating life (fair) or you have friends with wildly different taste in partners than yours, maybe keep this option off your phone. Also, this is only available on iPhone-so green-text-bubble-people, you're outta luck. Available on iPhone 7. Zoe Made exclusively for queer women, Zoe is a super-simple, Tinder-esque app, just minus the horny dudes and couples hitting you up for threesomes. Hookups or relationships?: Both What's great about it: Zoe is gimmick free-it's just good ol' fashioned swiping and messaging. What you might not like: If you want super detailed profile info, like you get on Hinge or Her, you may not find it here. Available on iPhone and Android 8. Raya You've probably heard it whispered about among your minor celeb (or social climber) friends: Raya is an "exclusive" app meant to keep semi-famous people out of the riffraff on dating apps for Normals. That exclusivity basically just means all users are vetted through an application process with a waiting list (unless you're like, Bradley Cooper -oops, too soon?). If you're lucky enough to know someone already on the app, they can refer you to expedite your waiting process. If not, best of luck! Hookups or relationships?: Hookups (with hot people) What's great about it: If you love the idea of making out with minor celebs or hate the idea of ever kissing a regular person again, get ye to Raya. What you might not like: Yeah, Raya is "for celebs," but if you're thinking this is your key to meeting Chris Martin, you might be out luck. Some famouses are on here, but not, like, mega famous Hollywood people. They either don't need apps or are on one we mortals have never heard about. Available on iPhone and Android 9. Happn Ever been out in public somewhere, seen a cutie, been so paralyzed with nerves you can't physically walk up and say hello, and then gone home and feverishly tried to find said cutie online? Happn is for you. The deal here is to introduce you to people you've "crossed paths with"-the app is location-based. Every time you pass by another Happn user, their profile shows up on your feed. Hookups or relationships?: Both. What's great about it: Happn makes it easier to meet people you may have never noticed, but should have. Also, you probably have a few things in common with someone who frequents the same places as you. What you might not like: Even though Happn doesn't reveal your address or anything crazy like that, there's sort of a creepiness factor to seeing all the faces you crossed paths with in a day. Available on iPhone and Android 10. Badoo Particularly popular for its high international user base, Badoo originally started as a dating-based social networking site that's now pretty strictly a dating app. Available in more than 190 countries, you can find matches based on who's near you, search for partners in other countries, or simply swipe like you would on Tinder. Hookups or relationships?: Both, but this does make a good tool for facilitating international hookups. What's great about it: You can match with people from all over the world . So if you've got a big international trip planned, get ahead of the game and meet (cute) tour guides before you even take off. Also, like Hinge, Badoo has an anti-ghosting feature. Boo! What you might not like: This app has a lot of features. If you're more into straight swipe-based apps that only want to be seen people near you, Badoo may be overwhelming. Available on iPhone and Android 11. Wingman Want a matchmaker but can't afford one? Try Wingman instead. This app lets your friends find matches for you. So, they can sign up as a wingman, then create a profile for you (or vice versa). Hookups or relationships?: Relationships, unless you really want your friends finding your next fuck buddy for you. What's great about it: If your friends are constantly doing your swiping for you at dinner anyway, Wingman makes it easier (you don't even have to be sitting next to each other IRL for them to be your online matchmaker). Also, what a great test of friendship: If your BFF can't successfully set you up, who can? What you might not like: This is a fast way to learn how much your friends really know about you, so take that risk for what it is. Control freaks also may not be fans of handing all the power in their love lives over to someone else. Available on iPhone and Android 12. Feeld Geared toward "open-minded couples and singles," Feeld is commonly thought of as the threesome app. But actually, its list of gender identities and super-specific sexuality options make this a great app for finding exactly the sort of relationship you're into. Hookups or relationships? Hookups, or maybe a long-term poly or threesome situation. What's great about it: This is maybe the best low-key hookup app. Users can designate desires and interests on their profiles to maximize compatibility. So if, say, you're a single person who's toying around with hooking up with a couple, Feeld is for you. What you might not like: If you're looking for a long-term, monogamous relationship, you're probably better served by another app. Available on iPhone and Android 13. Once Created in France, Once is a slow dating app that only shows users one potential match per day. The idea is that people spend wayyyy too much time on dating apps, and everyone should be swiping smarter, not more. Hookups or relationships?: Relationships. What's great about it: People who are dying to break the bad habit of mindlessly swiping on the couch will love Once-you literally can't waste time swiping, because there are no swipes to be had. What you might not like: This definitely isn't for the chronically impatient or for people who are guilty of sending out mass Tinder messages in the hopes of findings a hookup, stat. Available on iPhone and Android ('You Might Also Like',) 16 Unexpected Fashion Rules That the Royal Family Follows The 8 Best Clarifying Shampoos for Getting Rid of Product Buildup Here's How to Flawlessly Conceal Your Acne |
Some GP Strategies (NYSE:GPX) Shareholders Are Down 40%
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GP Strategies Corporation(NYSE:GPX) shareholders should be happy to see the share price up 17% in the last quarter. But if you look at the last five years the returns have not been good. You would have done a lot better buying an index fund, since the stock has dropped 40% in that half decade.
See our latest analysis for GP Strategies
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the five years over which the share price declined, GP Strategies's earnings per share (EPS) dropped by 18% each year. The share price decline of 9.8% per year isn't as bad as the EPS decline. So investors might expect EPS to bounce back -- or they may have previously foreseen the EPS decline.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Thisfreeinteractive report on GP Strategies'searnings, revenue and cash flowis a great place to start, if you want to investigate the stock further.
GP Strategies shareholders are down 26% for the year, but the market itself is up 5.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9.8% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on GP Strategiesit might be wise to click here to see if insiders have been buying or selling shares.
But note:GP Strategies may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
The 7 Best Dow Jones Stocks to Buy for the Rest of 2019
It’s been a good year for theDow Jones Industrial Average. The index has gained over 12% so far in 2019, reversing a 5.6% decline seen last year. 25 of the 30 Dow Jones stocks have risen so far this year.
• 6 Stocks Ready to Bounce on a Trade Deal
That admittedly makes it a bit tougher to find value in the index’s components. But there are still a few Dow Jones stocks to buy left. Valuations for several components are reasonable — and maybe too reasonable. And given that nearly all of the Dow Jones stocks promise ownership of quality businesses with long-term track records of creating value, there are still good stocks to buy.
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Source: Shutterstock
UnitedHealth Group(NYSE:UNH) has been one of the Dow’s losers this year, dropping about 1.5% YTD. That comes after UNH was one of the index’s best stocks, rising from a little over $100 at the beginning of 2015 to $287 late last year.
In the context of those gains, the recent pause makes some sense. Stock chart aside, there are some risks here. A Democratic win in the 2020 U.S. presidential election could augur more government intervention into healthcare — and at the very least create some uncertainty for the stock. An increasingfocus on drug rebatescould pressure profits at the company’s Optum unit, a key source of growth. Investors sold off UNH aftera first quarter that was solid, but not quite up to the high bar UnitedHealth has set with recent performance.
Still,I recommended UNH stockback in February, at a higher price — and this still looks like an attractive long-term play. Valuation is reasonable, at less than 17x 2019 EPS estimates. Optum still is growing. UnitedHealth’s market lead seems secure. Even more government involvement in healthcare seems likely to strengthen UnitedHealth’s position rather than weaken it. Indeed, UNH stock did quite well in the wake of the passage of the Affordable Care Act.
UNH almost certainly isn’t going to come close to tripling over the next four-plus years, but there’s still reason to see 10%+ total returns annually, at least.
Source:swong95765 via Flickr (Modified)
Shares of energy giantChevron(NYSE:CVX) fell back in April when the companyannounced a planto buy out shale playAnadarko Petroleum(NYSE:APC). And CVX stock now trades at pretty much the same price it did after the decline.
But, of course, Chevron isn’t buying Anadarko. Itdropped outafterOccidental Petroleum(NYSE:OXY) madea higher offerfor Anadarko. Chevron not only dumped a deal investors didn’t like, but it received a cool $1 billion termination fee in the process.
And yet CVX stock trades where it didafterthe deal was announced. Lower crude prices might be a factor, but Chevron’s integrated model limits its exposure to oil prices (which is either good or bad news, depending on crude’s trend).
That alone suggests that CVX should be able to re-test recent highs around $126. And while that’s only ~4% upside, admittedly, there’s a nearly 4% dividend yield as well. Dividend aside, Chevron stock remains cheap, at less than 14x 2020 EPS estimates. And there might be another, better-liked, acquisition out there for Chevron to make.
• Check Out These 5 Fast-Growing Stocks to Buy Today
CVX stock probably isn’t going to be a huge gainer over the next six months — or even the next few years. But there’s a nice combination here of value, income and a company with options to improve shareholder returns going forward, no matter where oil prices go.
Source: Shutterstock
Chevron’s fellow energy component,Exxon Mobil(NYSE:XOM), looks attractive here as well. XOM stock trades at a similar valuation on an earnings basis, but its 4.7% dividend yield is higher than that of CVX. For the world’s largest energy company — and like Chevron, one withimpressive upstream/downstream diversification— that type of yield is rare, and attractive.
That said, there are some concerns. Most notably, XOM stock has been a terrible investment for basically this entire decade. The stock has risen 10%, total since the beginning of 2010. Investors have received healthy dividends, but Exxon stock still has badly underperformed the broader markets. More recent performance has been even worse: XOM stock touched its lowest levels in almost eight years back in December. And it’s fallen over 25% from 2014 highs; even with dividends, shareholders are in the red over that period.
That said, XOM stock is about as cheap as it ever gets. Its dividend yield hasn’t been this high in over 20 years. Meanwhile, even amid weak trading the past few years, investors who have tried to time the bottom — and sell at the top — generally have been able to take some profits. Longer-term investors can get in cheap.
It’s not a perfect bull case, and as I wrote just a few months ago, XOM stock isnot the playfor those betting on higher oil prices. Those who are looking for stocks to buy for income and value, however, should look closely at both XOM and CVX.
Source: Shutterstock
There are a number of stocks likeVisa(NYSE:V) in the current market. The argument isn’t over the health of the business, but rather the price investors are willing to pay. On a forward basis, Visa stock is second-most expensive of the Dow Jones stocks, just modestly behindNike(NYSE:NKE).
• 5 Undervalued Stocks to Buy
But as I wrote this week, Visa stockstill seems worth paying up for. The staggering returns of the last decade — nearly 1,000% including dividends — aren’t going to be replicated over the next ten years. But Visa still is growing earnings at a double-digit clip, with B2B (business-to-business), international, and domestic opportunities for more gains ahead. Visa stock isn’t cheap, but a “set it and forget it” long-term play rarely is.
Source: Shutterstock
On the other side of the Dow’s valuation spectrum isGoldman Sachs(NYSE:GS). Goldman Sachs stock is the cheapest in the Dow in terms of earnings, with its 7.4x forward multiple barely a quarter that of Visa and Nike.
And there are reasons why GS stock is cheap. Trading revenue has been uneven. The company’s investment banking business is losing share toMorgan Stanley(NYSE:MS). Investors on the whole aren’t giving much credit to financials, with more traditional banks too trading at cheap multiples.
That said, GS stock is not just cheap, but close to ridiculously so. Indeed, the stock trades below its tangible book value — the net value of its assets. That implies essentially zero value for the company’s franchise, which remains a Wall Street leader. (To be fair, investors simply could believe that the net value of the assets is going to come down if and when the economy turns.)
Meanwhile, Goldman Sachs continues to invest in newer efforts. CEO David Solomon has noted that its Marcus online banking effort has received “absolutely no credit” from investors. The same is true of thenew credit card venturewithApple(NASDAQ:AAPL). There are worries here with a market near all-time highs and an economy heading into year eleven of expansion. But Goldman Sachs stock seems to be pricing in much of the risk — and little of the upside.
Source: Shutterstock
Shares ofJPMorgan Chase(NYSE:JPM) hardly look expensive, either. JPM trades at 10.3x 2020 consensus earnings per share estimates. Like GS, the low multiple comes in part due to worries about the economic cycle, but JPM still receives a nearly three-turn premium to its rival on an earnings basis.
Of course, there’s a strong case that JPM deserves that premium. I still think this is the premier big bank stock to own, along withBank of America(NYSE:BAC). And after the last 2-3 quarters, JPMorgan Chase probably has pulled ahead of BofA.
There’s simply a lot to like here. The combination of retail and investment banking is a plus. Growth continues to be solid: Q1 numbers crushed expectations as the company posteddouble-digit EPS growth. The company’s delinquency rate, meanwhile, continues to decline and remainsamong the best in the industry.
• 6 Stocks Ready to Bounce on a Trade Deal
Again, near- to mid-term economic risks are a factor. Lower interest rates could pressure earnings in 2020. But I see this as a stock to buy andowned for decades, not just years, and the price at the moment remains attractive.
Source:Roy Luck via Flickr (modified)
This week, I called outDow(NYSE:DOW) as one of the DJIA’s5 worst stocks so far this year, but as I wrote, that was a bit of stretch. DOW stock actually has risen 2.7% in its few weeks on the public markets, but in terms of the broader story, it’s been a disappointment.
That broader story wasthe breakupof the formerDowDuPontinto DOW,Corteva(NYSE:CTVA), andDuPont(NYSE:DD). Many savvy value investors saw the three-way split driving significant value, with many estimates topping $80 of value per DowDuPont share. The figure, at the moment, is under $50.
There have been external pressures, to be sure. Adjusted earnings declined sharply in the first quarter. Trade battles between the U.S. and China aren’t helping. Neither are concerns about the global automotive industry. Cyclical worries are a factor here, too: other chemical stocks likeLyondellBasell Industries(NYSE:LYB) andWestlake Chemical(NYSE:WLK) are similarly cheap as investors discount potentially falling earnings.
That said, there’s a case to try and time the bottom here. DOW offers an attractive 5.5% dividend yield. It’s still a leader in many of its end markets. Global demand may be choppy, but it should rise over time.
This might be the most aggressive play in the index right now. DOW stock can take a beating if economic sentiment worsens. But personally, I’m not yet convinced that the smart money backing the DowDuPont split was necessarily wrong.
As of this writing, Vince Martin has no positions in any securities mentioned.
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Is Nautilus, Inc. (NYSE:NLS) A Volatile Stock?
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If you're interested in Nautilus, Inc. (NYSE:NLS), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. 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 sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta 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.
View our latest analysis for Nautilus
Zooming in on Nautilus, we see it has a five year beta of 1.12. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. If the past is any guide, we would expect that Nautilus shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Beta is worth considering, but it's also important to consider whether Nautilus is growing earnings and revenue. You can take a look for yourself, below.
Nautilus is a rather small company. It has a market capitalisation of US$69m, which means it is probably under the radar of most investors. It has a relatively high beta, suggesting it is fairly actively traded for a company of its size. Because it takes less capital to move the share price of a small company like this, when a stock this size is actively traded it is quite often more sensitive to market volatility than similar large companies.
Since Nautilus 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 NLS is a good investment for you, we also need to consider important company-specific fundamentals such as Nautilus’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 NLS’s future growth? Take a look at ourfree research report of analyst consensusfor NLS’s outlook.
2. Past Track Record: Has NLS 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 NLS's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how NLS 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. |
Imagine Owning Host Hotels & Resorts (NYSE:HST) And Wondering If The 16% Share Price Slide Is Justified
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The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment inHost Hotels & Resorts, Inc.(NYSE:HST), since the last five years saw the share price fall 16%.
See our latest analysis for Host Hotels & Resorts
In his essayThe Superinvestors of Graham-and-DoddsvilleWarren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
While the share price declined over five years, Host Hotels & Resorts actually managed toincreaseEPS by an average of 24% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past. Generally speaking we'd expect to see stronger share price increases on the back of sustained EPS growth, but other metrics may hold a clue to why the share price performance is relatively modest.
We note that the dividend has remained healthy, so that wouldn't really explain the share price drop. While it's not completely obvious why the share price is down, a closer look at the company's history might help explain it.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
Host Hotels & Resorts is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Host Hotels & Resorts willearn in the future (free analyst consensus estimates)
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Host Hotels & Resorts's TSR for the last 5 years was 4.8%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted thetotalshareholder return.
Host Hotels & Resorts shareholders are down 10% for the year (even including dividends), but the market itself is up 5.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 0.9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. If you would like to research Host Hotels & Resorts in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on 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. |
Here’s Where You Can Buy Mandy Moore's Super Chic Millennial Pink Plates
When she’s not climbing Mount Everest or starring in NBC’s tear-provoking show This Is Us, Mandy Moore is serving up some seriously gorgeous interior design #goals. If you followed along with the star’s recent home renovation on Instagram throughout 2017 and 2018, you might be familiar with her vintage-inspired taste that we can’t get enough of. During the final reveal of Moore’s renovated 1950s mid-century home in Pasadena, California, we spotted the most gorgeous millennial pink dishware displayed in the open shelving of her kitchen, and we know exactly where you can cop your own set. Moore’s dishes are from Year & Day ; you might recognize the brand as one that fashion influencer Eva Chen helped make Instagram famous (and former Bachelorette Jojo Fletcher uses it in her own kitchen). TREVOR TONDRO FOR ARCHITECTURAL DIGEST If you’ve been on the hunt for a full set of dishes that are minimal and chic at the same time, Year & Day’s product offering is it; you can mix and match the full semi-matte ceramics collection because the brand specifically made the line in four colors that all look good together: Daybreak (a light, dusty pink), Midnight (a deep navy blue), Fog (a light gray), and Moon (a traditional white, which is actually their best-selling color). Whether your style leans towards full-on monochromatic or mixing and matching, you can build whatever set works for your taste and family size based on Year & Day’s short customization quiz . And if you’re looking for a full overhaul of your daily dishware, Year & Day has everything you’ll need, including big and small plates, bowls, serving dishes, drinking glasses, wine glasses, flatware sets, and even flower vases. For her part, Moore stocks the Year & Day big plates in Daybreak , the serving bowls in Daybreak , and the matte gold flatware set — and you can conveniently shop everything below. And if you love the pink dishes as much as Moore does, don’t forget to check out the brand’s best-selling product (the coffee mugs in the same color ) which has sold out several times. Story continues Year & Day Buy It! Year & Day Big Plates in Day Break, $52 for four, yearandday.com Year & Day Buy It! Year & Day Serving Bowl in Day Break, $48, yearandday.com Year & Day Buy It! Year & Day Four-Person Flatware Setting in Matte Gold, $280, yearandday.com |
Here's Why I Think Harris (NYSE:HRS) Is An Interesting Stock
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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said inOne Up On Wall Street, 'Long shots almost never pay off.'
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies likeHarris(NYSE:HRS). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
Check out our latest analysis for Harris
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). That makes EPS growth an attractive quality for any company. Impressively, Harris has grown EPS by 31% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep upthatsort of growth, shareholders will be smiling.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While we note Harris's EBIT margins were flat over the last year, revenue grew by a solid 9.3% to US$6.6b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in thisfreereport showing analyst forecasts for Harris'sfutureprofits.
We would not expect to see insiders owning a large percentage of a US$23b company like Harris. But we are reassured by the fact they have invested in the company. With a whopping US$96m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to make me think that management will be very focussed on long term growth.
You can't deny that Harris has grown its earnings per share at a very impressive rate. That's attractive. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusivediscounted cashflow valuationof Harris. You might benefit from giving it a glance today.
Of course, you can do well (sometimes) buying stocks thatare notgrowing earnings anddo nothave insiders buying shares. But as a growth investor I always like to check out companies thatdohave those features. You can accessa free list of them here.
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. |
Women Still Lag Behind Men on Leisure Time
While men are likely to spend more time in the office, women still get the short end of the stick when it comes to finding leisure time for themselves, new research suggests.
Each year since 2003, the U.S. Department of Labor’s Bureau of Labor Statistics has been tracking how much time Americans spend at work, as well as taking part in other activities such as household chores, caretaking activities and sports and leisure. In 2018, the year for which the most recent data was released, 9,600 adults weresurveyedto determine how they spent their days.
Not surprisingly, work takes up a substantial amount of Americans’ time, with full-time workers averaging 8.5 hours of work on weekdays. Among adults working full time (typically 35 hours per week or more), men worked 8.2 hours per day compared with 7.9 hours for women.
But the time women spent outside of the office still arguably fell under the category of work, as they were more likely to be clocking hours cooking, cleaning and managing other household chores. On a given day, most women — 84% — spent some time handling household affairs, such as managing the household or doing chores, compared with 69% of men. Women also spend more time getting things done around the house, spending on average 2.6 hours on a given day doing household activities compared with 2.0 hours for men.
When it comes to actual housework or chores like laundry and cleaning, nearly half of women — 49% — spent time engaging in such activities on an average day while only 20% of men spent time doing so.
However, there were some chores that men were more likely to work on: Men tended to handle the lawn care, with 11% likely to do so on a given day compared with 7% of women. Also, while a higher percentage of women (69%) handled food preparation and cleanup on a given day than men (46%), the share of men pitching in on food prep increased by 11% since 2003.
Women continue to be the primary caretakers of children. In households with children under 6, women spent on average 1.1 hours per day providing physical care for the children, performing such tasks like feeding them or bathing them. In comparison, men spent on average 26 minutes per day caring for children.
With women picking up the slack at home, there is seemingly less time for leisure activities, the study found. On average, men spent 5.7 hours per day doing recreational activities, such as watching television, socializing and going to the gym. Women spent nearly an hour less per day on such activities, clocking in at 4.9 hours.
With women likely to carry more of the workload at home, thegender pay gapbecomes even more meaningful since women often have other responsibilities that take away from the time they can spend in the workplace. If two adults in a household are working, it can be helpful to divide up the household tasks so both people are doing their fair share. Parents may also want to considerwhether it makes sense for one person to stay homewith the children and manage the household full time. |
'Avian incident' causes fire at California solar farm
SAN LUIS OBISPO, Calif. (AP) — An energy company says a so-called "avian incident" is responsible for a fire that cut 84% of the overall generating capacity at one of the largest solar farms in California. A regulatory filing Wednesday by Clearway Energy says the blaze caused up to $9 million worth of damage on about 1,200 acres (485 hectares) of the California Valley Solar Ranch in San Luis Obispo County. The filing says distribution poles and cabling will need to be repaired, but no solar panels were damaged. The report didn't specify how the June 5 incident occurred or say what exactly an "avian incident" is. An email to the company seeking comment wasn't immediately returned Thursday. Clearway says full operations are expected to resume July 1 at the 4,700-acre (1,902-hectare) solar farm on California's central coast. View comments |
10 Growth ETFs to Buy for Backside Protection, Too
Getty Images Growth exchange-traded funds (ETFs) are as straightforward as they sound: They're portfolios of growth stocks. By definition, a growth stock is any company with an above-average growth profile. In other words, they are companies whose revenues and earnings are expanding faster than the market average. They also often pay little or no dividends, opting instead to reinvest their cash flow in the business to maintain their growth. But they have their pitfalls; namely, when growth slows. Recently, outdoor gear maker Canada Goose ( GOOS ) lost more than 30% of its value in a single day after reporting lower-than-expected fourth-quarter earnings. Although revenues rocketed 40% higher year-over-year and profits jumped 20%, it still marked the company's slowest growth in eight quarters, prompting fears its tremendous growth was coming to an end. Whether that's true is up for debate. But if you owned GOOS stock, you couldn't have been pleased about the one-day plunge. This is why owning growth ETFs makes so much sense. By diversifying your growth-stock holdings through a fund, you're protecting your downside. Here are 10 growth ETFs to buy if you want to cut back on the risk of owning individual shares. SEE ALSO: The 19 Best ETFs for a Prosperous 2019 Schwab U.S. Large-Cap Growth ETF Market value: $7.8 billion Dividend yield: 1.1% Expenses: 0.04% If you're looking for a low-cost way to invest in U.S. large-cap growth stocks, the Schwab U.S. Large-Cap Growth ETF ( SCHG , $83.20) is one of the best options, at 0.04% in annual expenses. SCHG, which tracks the performance of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, selects growth stocks from 750 of the largest U.S. companies by market cap. Using six fundamental factors to determine their suitability as growth stocks (two projected, two current, and two historical) the index is whittled down. The ETF's portfolio of roughly 425 stocks gets it done, however, averaging 14.3% in annual gains since inception in December 2009. Story continues The ETF heavily emphasizes technology, health care and consumer discretionary stocks, which account for 58% of the fund's overall holdings. A third of the fund's net assets are wrapped up in the top 10 holdings, which are headed by Microsoft ( MSFT , 7.0%), Apple ( AAPL , 6.0%) and Amazon.com ( AMZN , 5.3%). As those names would indicate, SCHG leans big - almost 88% of the portfolio is in large-cap companies that are worth more than $15 billion. And those names don't move around much, with a 15% turnover ratio indicating that the entire portfolio turns over only once every six-plus years. SCHG has a weighted average market cap of $284.3 billion with a portfolio turnover of 14.93%, which means it turns the entire portfolio once every six years. Launched in December 2009, it has delivered an annualized total return of 13.8% since inception through May 31. Learn more about SCHG at the Schwab provider site. SEE ALSO: The 45 Cheapest Index Funds in the ETF Universe Vanguard Growth ETF Market value: $42.2 billion Dividend yield: 1.2% Expenses: 0.04% Vanguard Growth ETF ( VUG , $160.72) charges 0.04% annually, too, providing investors with another low-cost option to invest in large-cap growth stocks. And at more than $40 billion in assets under management, it's one of the largest growth ETFs you can buy. This fund tracks the performance of the CRSP US Large Cap Growth Index, which classifies growth stocks using six factors including three-year historical growth in earnings per share, three-year historical growth in sales per share, and return on assets. The result is a diversified group of 300-large cap growth stocks with a median market cap of more than $100 billion. In other words, the average VUG holding is a mega-cap stock . Tech stocks account for more than a third of the fund's $39.7 billion in total net assets, with consumer services and industrials the next highest sector weightings at 20.1% and 13.9%, respectively. VUG also looks similar to SCHG in that the top holdings account for 38% of the fund's total net assets and are led by Microsoft, Apple and Amazon.com. The growth characteristics are obvious. The portfolio's typical stock has averaged 16% earnings growth over the past five years - and they're priced like it, trading at nearly 27 times trailing-12-month profits. VUG, whose annual turnover is a glacial 10.8%, has averaged 15.7% annual returns over the past decade. Learn more about VUG at the Vanguard provider site. SEE ALSO: 8 Great Vanguard ETFs for a Low-Cost Core SPDR Portfolio S&P 500 Growth ETF Market value: $5.4 billion Dividend yield: 1.3% Expenses: 0.04% In Warren Buffett's 2018 letter to Berkshire Hathaway ( BRK.B ) shareholders, he wrote about his first investment in an American business in March 1942 - at age 11. He plunked down $114.75 that he had saved for five years. And he suggested that if he had put the money in a no-fee Standard & Poor's 500-stock index fund, it would have been worth $606,811 as of Jan. 31, 2019. Buffett is a big believer in regular investors keeping it simple by putting their savings into a low-cost S&P 500 index fund and a short-duration bond fund. Investors can nod to that idea - with a growth tilt, of course - via the SPDR Portfolio S&P 500 Growth ETF ( SPYG , $38.87). SPYG tracks the S&P 500 Growth Index, itself is a subset of the S&P 500 that invests in index companies exhibiting the strongest growth characteristics. It represents more than half the S&P 500 market capitalization. Most of SPYG's top holdings can be found in the previous two ETFs, but there's a key omission: Apple. Top three holdings instead are Microsoft (7.9%), Amazon.com (6.0%) and Google parent Alphabet ( GOOGL ), which makes up 5.1% across its two class shares. All told, top-10 holdings account for 32% of the ETF's assets. SPYG has delivered 16.3% annual returns on average over the past 10 years, which bests the S&P 500 by 1.7 percentage points annually. Learn more about SPYG at State Street Global Advisors' SPDR provider site. SEE ALSO: The 25 Best Low-Fee Mutual Funds to Buy Now Invesco Russell MidCap Pure Growth ETF Market value: $660.0 million Dividend yield: 0.2% Expenses: 0.39%* Mid-cap stocks tend to get ignored compared to large caps and small caps in much the same way a middle child tends to be overshadowed by the youngest and the oldest siblings. And even when investors try to get mid-cap exposure by investing in an all-cap fund, they're typically just getting a lot of large companies with a small allocation to the middle guys. That's a mistake. Mid-cap stocks have outperformed the more popular market capitalizations on a risk-adjusted basis. So to get sufficient exposure to mid-cap stocks, investors ought to invest in an ETF that actually focuses on market caps of this size. The Invesco Russell MidCap Pure Growth ETF ( PXMG , $59.75) comes much closer. PXMG tracks the performance of the Russell Midcap Pure Growth Index - a subset of Russell MidCap Index stocks that have been selected for their growth characteristics. The stocks in the index are included based on a composite value score (CVS) of three value and growth characteristics in both the short- and medium-term. The companies with a lower CVS tend to be the stocks that make the cut. At the moment, this portfolio includes 94 stocks that are heavily stacked in information technology, which makes up a whopping 43.9% of the ETF's $660 million in assets. Consumer discretionary is another 21.8% of the fund, and health care takes up 13% more. Despite the lumpy sector overweights, the fund isn't terribly concentrated in its top 10 holdings, which only make up less than 26% of the overall portfolio. These holdings include online payroll services provider Paycom Software ( PAYC , 3.3%) and Chipotle Mexican Grill ( CMG , 3.2%). * Includes 0.04% fee waiver good through at least Aug. 31, 2019. Learn more about PXMG at Invesco's provider site. SEE ALSO: The 7 Best ETFs to Beat Back Trade War Worries Vanguard Small Cap Growth ETF Market value: $9.4 billion Dividend yield: 0.7% Expenses: 0.07% Investors need to pay close attention to an ETF's attributes to ensure they're getting the type of exposure they require. Take Vanguard Small Cap Growth ETF ( VBK , $185.93). By name, VBK is a small-cap growth fund. However, it average market cap is $4.4 billion - more than double the small-cap growth benchmark Russell 2000 Growth Index. Not only that, but mid-cap stocks represent 68% of the portfolio's $9 billion-plus in total net assets. Small caps are relegated to the remainder. That said, Vanguard Small Cap Growth is an excellent way to invest in growth - just know that you're not getting true small-cap exposure. Not even close. VBK, which tracks the CRSP US Small Cap Growth Index, holds more than 620 U.S. small- and mid-cap stocks, and it does so for a meager 0.07% in annual expenses. VBK's average holding has grown its profits by almost 20% annually over the past five years. The top three sectors by weighting are industrials and healthcare at 19.7% apiece, and technology at 18.7%. Top 10 holdings account for just 6.3% of the entire portfolio, providing a significant amount of diversification. A "best ideas" ETF, then, it is not. In terms of performance, the fund has returned 15.5% annually on average over the past 10 years, and 10.2% annually over the trailing 15 years. Read more about VBK at Vanguard's provider site. SEE ALSO: The 5 Best Vanguard Funds for Retirees Janus Henderson Small Cap Growth Alpha ETF Market value: $32.4 million Dividend yield: 0.6% Expenses: 0.35% It's not always enough to merely invest in a basket of small-cap growth stocks to generate alpha (an investment's performance above an applicable benchmark). Sometimes it involves selecting a group of stocks that have sustainable growth for the long run. The Janus Henderson Small Cap Growth Alpha ETF ( JSML , $43.05) utilizes more than 45 years of fundamental research to identify what it calls "Smart Growth" companies that deliver risk-adjusted outperformance to other small-cap stocks. Launched in February 2016, JSML tracks the performance of the Janus Henderson Small Cap Growth Alpha Index. The index selects the top 10% of small-cap stocks from 2,000 smaller U.S. companies based on growth, profitability and capital efficiency. It uses 10 different factors that are equally weighted, and the index itself is rebalanced four times a year, with no stock allowed to represent more than 3% of the index. If you like tech, health care and industrial stocks, good news: The three sectors account for almost 73% of the portfolio. And this young fund, which got its start in February 2016, has averaged 17% returns annually to beat its benchmark by 80 basis points (a basis point is one one-hundredth of a percentage point). One last note: Janus Henderson does an excellent job on its website of breaking down what percentages of its assets are divvied into certain market capitalizations. Learn more about JSML at Janus Henderson's provider site. SEE ALSO: 10 Top Consumer Discretionary ETFs to Buy SoFi Select 500 ETF Market value: $47.3 million Dividend yield: N/A Expenses: 0.00%* The SoFi Select 500 ETF ( SFY , $10.16) is, at the moment, the cheapest growth ETF you can buy. It was launched in April by SoFi, the California personal financial services company run by former Twitter ( TWTR ) COO and CFO Anthony Noto, as one of two zero-fee ETFs . "When it comes to achieving financial independence, investing isn't a choice -- it's a requirement," Noto said amid the launch. "We designed these ETFs to make it as simple and easy as possible for anyone to start investing for the future, without any fees dragging on your returns." However, SFY's zero fees aren't quite what they seem. The fund charges 0.19% annually, but SoFi has agreed to waive those fees until June 30, 2020. But that's long enough to give SFY some traction in what is a crowded ETF field - the fund has accumulated more than $45 million in assets in just a couple months. Not charging a fee sets SoFi's offering apart, but to build assets over the long haul, it must deliver results. So, what are SFY investors working with? SoFi Select 500 tracks the performance of the Solactive SoFi US 500 Growth Index, the 500 largest U.S. companies selected from the Solactive US Broad Market Index, itself a group of 3,000 large U.S. companies. The 500 stocks are weighted by market cap, then adjusted based on three growth-oriented fundamental factors. The index is reconstituted and rebalanced once a year on the first Wednesday in May. (SoFi reduces trading costs by limiting reconstitution and rebalancing to once a year.) * Includes 0.19% fee waiver good through at least June 30, 2020. Learn more about SFY at SoFi's provider site. SEE ALSO: 9 Great Funds for This Roaring Bull Market Pacer U.S. Cash Cows Growth ETF Market value: $2.5 million Dividend yield: N/A Expenses: 0.60% A 2015 CFA Institute survey found that fewer than 20% of equity analysts use free cash yield in their investment decisions despite that over a 28-year span, (1988 to 2016), free cash flow yield delivered annualized returns that were higher than most financial metrics used by investment professionals. Pacer ETFs, understanding free cash flow and free cash flow yield are two cornerstones of healthy growth companies, launched the Pacer U.S. Cash Cows Growth ETF ( BUL , $24.50) - one of the ETF provider's Cash Cows ETF Series - in May. BUL tracks the performance of the Pacer US Cash Cows Growth Index, which is derived from the 50 companies with the highest free cash flow yields in the S&P 900 Pure Growth Index. Each stock is weighted based on market cap to a maximum of 5%. Above 5%, the weighting is redistributed among the other index constituents. The selection of stocks varies widely by size, from $1.2 billion to $250 billion, with a weighted average market cap of more than $65 billion. That is almost double the S&P 900 Pure Growth Index. Its free cash flow yield of 5.2% is roughly double the index metric, too. The index reconstitutes and rebalances itself four times a year on the third Friday in March, June, September and December. This is one of the youngest growth ETFs to buy - it only came to life in early May of this year - so it has virtually no track record to look at. But the fund's portfolio does offer an ideal combination of growth and value. Expenses of 60 basis points are on the high side, however. Learn more about BUL at Pacer's provider site. SEE ALSO: 11 of the Best Index Funds to Buy Today First Trust Multi Cap Growth AlphaDEX Fund Market value: $187.1 million Dividend yield: 0.3% Expenses: 0.69% First Trust developed the AlphaDEX family of ETFs to deliver similar correlation and risk characteristics as broad market indexes while generating outperformance via stock selection and weighting. The First Trust Multi Cap Growth AlphaDEX Fund ( FAD , $74.87) was launched in May 2007. It tracks the performance of the Nasdaq AlphaDEX Multi Cap Growth Index, which is constructed by selecting and weighting stocks from three Nasdaq indexes - one large-cap, one mid-cap and one small-cap. Nasdaq, which created the index and still administers it, ranks the stocks in each of the indexes using several growth and value criteria. Large-cap stocks account for 50% of the Nasdaq AlphaDEX Multi Cap Growth Index's weighting, mid-caps another 30% and small caps the remaining 20%. The ETF charges 0.69% annually for this enhanced-index treatment. That might sound expensive for a passive ETF, but remember that the index's methodology cherry picks the holdings. This means that although the top three sectors aren't much different than other growth funds - tech accounts for 26.2%, health care 16.6% and industrials 13.1% - some of FAD's holdings and prioritizations are quite different. This First Trust ETF has averaged 15.2% annual gains over the past decade. Learn more about FAD at First Trust's provider site. SEE ALSO: 13 Great Tech ETFs for Years of Stellar Gains WisdomTree Emerging Markets Quality Dividend Growth Fund Market value: $67.8 million Dividend yield: 2.7% Expenses: 0.32% It turns out you can have your cake and eat it too. The WisdomTree Emerging Markets Quality Dividend Growth Fund ( DGRE , $24.40) provides investors with an excellent combination of emerging markets, growth and even dividends. That immediately puts it among the top growth ETFs to buy if you're also trying to squeeze income out of your growth investments. The now-actively managed fund stopped tracking the performance of the WisdomTree Emerging Markets Quality Dividend Growth Index in October 2018. It now uses a model-based process to identify dividend-paying emerging markets' companies with strong corporate profitability and sustainable growth characteristics. The top three countries represented in DGRE are China, India, and South Korea at weightings of 26.8%, 12.1% and 11.6%, respectively. The top 10 holdings - which include international juggernauts including Tencent Holdings ( TCEHY ), Taiwan Semiconductor Manufacturing ( TSM ) and Samsung Electronics - account for a mere 16.6% of the fund's roughly $68 million in net assets. The rest is spread across 255 more holdings. Although DGRE got its start in August 2013, the change in mandate less than a year ago means it doesn't have a meaningful track record. However, as an actively managed ETF that only charges 0.32%, it ought to be on your radar if you're looking for quality and growth in emerging markets. The 2.7% dividend yield is enticing, too. Learn more about DGRE at WisdomTree's provider site. SEE ALSO: 7 Dividend ETFs for Investors of Every Stripe EDITOR'S PICKS The 19 Best ETFs for a Prosperous 2019 The 45 Cheapest Index Funds in the ETF Universe The Berkshire Hathaway Portfolio: All 48 Buffett Stocks Copyright 2019 The Kiplinger Washington Editors |
UPDATE 1-U.S. Cameron LNG loadings delayed after first cargo exported
(Adds Sempra comment)
By Ekaterina Kravtsova
LONDON, June 20 (Reuters) - Loadings of liquefied natural gas (LNG) cargoes from Sempra Energy's $10 billion Cameron export terminal in Louisiana are delayed after the first cargo from the project was exported last month to start up operations.
At least two commissioning cargoes, one for France's Total and another for Spain's Repsol, were delayed, according to industry sources and shiptracking data.
Sempra said on Thursday that Cameron continues to work through the normal startup process and LNG production will continue to fluctuate.
Market sources, however, said the plant has problems that are causing delays.
The plant has cooling system issues, one of the sources added.
Loading is now expected to resume in early July, two industry sources said.
Repsol, which hired the Shinshu Maru vessel from Novatek to load a Cameron cargo, has returned the ship back to Novatek, the two sources added. A third source said Novatek is agreeing a different charter for the vessel.
The Shinshu Maru was waiting in the Gulf of Mexico and was initially scheduled to load a cargo on June 8, which was later pushed out to June 19, shiptracking data showed. It left the gulf without a cargo on June 17.
Total's BW Everett is still waiting in the U.S. Gulf.
The Diamond Gas Sakura has arrived in the Gulf of Mexico to load a cargo for Mitsubishi and is signalling Cameron as destination on July 10.
Feedgas into Cameron dropped to zero on June 3, after rising to 580 million cubic feet (mmcf) per day before the loading of the first cargo. It was at around 100 mmcf/day on Thursday.
First cargo from the plant was loaded by Mitsui & Co Ltd in late May and was delivered to France this week.
There are three liquefaction trains at Cameron. The first started producing LNG in mid-May. Sempra has said it expects Cameron 2 and 3 will enter service in the first and second quarters of 2020.
Cameron is jointly owned by affiliates of Sempra, Total SA, Mitsui, and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp and Nippon Yusen Kabushiki Kaisha (NYK) . Sempra indirectly owns 50.2% of Cameron. (Reporting by Ekaterina Kravtsova; additional reporting by Scott DiSavino; editing by Alexandra Hudson and James Dalgleish) |
What Investors Should Know About Anixter International Inc.'s (NYSE:AXE) Financial Strength
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Investors are always looking for growth in small-cap stocks like Anixter International Inc. (NYSE:AXE), with a market cap of US$2.0b. However, an important fact which most ignore is: how financially healthy is the business? Assessing first and foremost the financial health is crucial, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. Nevertheless, potential investors would need to take a closer look, and I’d encourage you todig deeper yourself into AXE here.
Over the past year, AXE has ramped up its debt from US$1.3b to US$1.6b , which includes long-term debt. With this rise in debt, AXE currently has US$77m remaining in cash and short-term investments , ready to be used for running the business. On top of this, AXE has produced US$95m in operating cash flow during the same period of time, resulting in an operating cash to total debt ratio of 5.9%, meaning that AXE’s debt is not covered by operating cash.
Looking at AXE’s US$1.5b in current liabilities, the company has been able to meet these obligations given the level of current assets of US$3.2b, with a current ratio of 2.1x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Electronic companies, this is a reasonable ratio since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
AXE is a relatively highly levered company with a debt-to-equity of 84%. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. No matter how high the company’s debt, if it can easily cover the interest payments, it’s considered to be efficient with its use of excess leverage. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In AXE's case, the ratio of 4.34x suggests that interest is appropriately covered, which means that lenders may be willing to lend out more funding as AXE’s high interest coverage is seen as responsible and safe practice.
AXE’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. Since there is also no concerns around AXE's liquidity needs, this may be its optimal capital structure for the time being. This is only a rough assessment of financial health, and I'm sure AXE has company-specific issues impacting its capital structure decisions. You should continue to research Anixter International to get a better picture of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for AXE’s future growth? Take a look at ourfree research report of analyst consensusfor AXE’s outlook.
2. Valuation: What is AXE 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 AXE 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. |
Kroger Earnings: 6 Things for KR Stock Investors to Know
Kroger(NYSE:KR) reported its quarterly earnings results on Thursday late in the day, bringing in a profit that was stronger than what analysts called for, yet KR stock took a step backwards after hours.
Here aresix things that investorsshould know about the Cincinnati, Ohio-based company:
• The retail business said that for its first quarter of its fiscal 2019, it brought in a profit of $772 million, which tallied up to roughly 95 cents per share.
• Kroger added that on an adjusted basis when taking into account non-recurring gains, the business brought in a profit of 72 cents per share.
• The results were slightly stronger than what the Wall Street consensus estimate called for as the average guidance of eight analysts who were polled by theZacks Investment Researchsurvey was for the brand to amass a profit of 71 cents per share.
• The company added that it tallied up revenue of $37.25 billion for the first three-month period of the current fiscal year.
• This amount was stronger than what Wall Street predicted as four analysts polled by Zacks saw Kroger raking in sales of $36.86 billion.
• For its fiscal 2019, the retailer now sees its profit in the range of $2.15 to $2.25 per share after revealing its results for the quarter, which were positive overall.
KR stock is down about 2% on Thursday afternoon following the news, with the stock now selling at $23.18 per share.
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Is Healthcare Realty Trust Incorporated's (NYSE:HR) CEO Paid Enough Relative To Peers?
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In 2016 Todd Meredith was appointed CEO of Healthcare Realty Trust Incorporated (NYSE:HR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Healthcare Realty Trust
According to our data, Healthcare Realty Trust Incorporated has a market capitalization of US$4.3b, and pays its CEO total annual compensation worth US$3.1m. (This figure is for the year to December 2018). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$525k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.2m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Healthcare Realty Trust, below.
On average over the last three years, Healthcare Realty Trust Incorporated has shrunk earnings per share by 30% each year (measured with a line of best fit). It achieved revenue growth of 4.3% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested inthisfreevisualization of analyst forecasts.
With a total shareholder return of 12% over three years, Healthcare Realty Trust Incorporated shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
It looks like Healthcare Realty Trust Incorporated pays its CEO less than similar sized companies.
The compensation paid to Todd Meredith is lower than is usual at similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. Shareholders may want tocheck for free if Healthcare Realty Trust insiders are buying or selling shares.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
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. |
Bitcoin Breaks $9,300 as US Stock Market Sees Minor Uptrend
Monday, June 17 — most of the top 20cryptocurrenciesare reporting moderate losses on the day by press time, as bitcoin (BTC) passed the $9,300 mark again.
Market visualization courtesy ofCoin360
Bitcoin is currently up about 2.5% on the day, trading around$9,358at press time, according toCoin360. Looking at its weekly chart, the coin is up around 12.7%.
Bitcoin 7-day price chart. Source:Coin360
Yesterdaynews brokethat the Chicago Mercantile Exchange (CME) Group has released data showing that open interest inBitcoin futuresis rising.
Ether (ETH) is holding onto its position as the largest altcoin by market cap, which currently stands at just under $28.5 billion. The second-largest altcoin, Ripple’sXRP, has a market cap of $18 billion at press time.
Coin360 data shows that ETH has seen its value increase by a fraction of a percent over the last 24 hours. At press time, ETH is trading around $268. On the week, the coin has also gained over 2.2% of value.
Ether 7-day price chart. Source:Coin360
XRP is down by about three quarters of a percent over the last 24 hours and is currently trading at around$0.428. On the week, the coin is up about 6%.
XRP 7-day price chart. Source:Coin360
Among the top 20 cryptocurrencies, the only other ones who have seen gains are binance coin (BNB), which is about 3.8% up, and monero (XMR), which is about 2.5% up.
At press time, thetotal market capitalizationof all cryptocurrencies is $288.8 billion, nearly 8.8% higher than the value it reported a week ago.
As Cointelegraphreportedearlier today, Jerome Powell, the head of theUnited StatesFederal Reserve, has said that he recognizes both potential benefits and risks toFacebook’s recently-unveiled Libracryptocurrencyproject.
In traditional markets, theUnited Statesstock market is seeing slight gains so far today, with theS&P 500up 0.61% and theNasdaqup 0.5% at press time. The CBOE Volatility Index (VIX), on the other hand, has gained 4.33% on the day at press time.
Major oil futures and indexes are seeing discreet gains today, with WTI Crude down 1.37%, Brent Crude down 1.37% and Mars US up 0.4% at press time. The OPEC Basket is up 0.82% and the Canadian Crude Index has not seen its value change in the 24 hours by press time, according toOilPrice.
• ETH Hits 10-Month High as Crypto Markets See Solid Green
• Bitcoin Holds $9,100 Support While Top 20 Coins Trade Sideways
• Bitcoin Worth Over $9,200 as Top Cryptos See Growth
• Bitcoin Worth Over $8,400 as Most Top Altcoins See Losses |
Old spy satellite images show just how fast ice is melting from the glaciers in the Himalayas
Picture 3 million Olympic-size swimming pools full of water. That's how much ice melts from glaciers in the Himalayas each year, a new study suggests, and climate change is the primary cause. Even more concerning is that the ice melt has doubled in recent years: Himalayan glaciers have been losing the equivalent of more than a foot and half of ice each year since 2000 which is double the amount of melting that took place from 1975 to 2000. This is the clearest picture yet of how fast Himalayan glaciers are melting over this time interval and why, said study lead author Joshua Maurer, a Ph.D. candidate at Columbia Universitys Lamont-Doherty Earth Observatory. Overall, the Asian mountain range, which includes Mount Everest, has been losing ice at a rate of about 1% a year since 2000. The big melt: Global warming predicted to melt massive Himalayan glaciers, disrupt food production The melting also threatens the water supplies for hundreds of millions of people downstream who rely on it for hydropower, agriculture and drinking, across a large portion of Asia, said study co-author Jorg Schaefer, a climate geochemistry professor at Columbia. Disaster is in the making here, Schaefer said. Scientists used recently declassified Cold-War-era 3D satellite images to track the glacial retreat back to the mid-1970s. By analyzing 650 Himalayan glaciers, the researchers estimate that, of the regions total ice mass present in 1975, 87% remained in 2000, and 72% remained in 2016. Water, water everywhere: 390 billion tons of snow and ice melts each year as globe warms Rising temperatures are the primary cause of the melting, the study said, noting that average temperatures in the Himalayas were about 2 degrees warmer from 2000 to 2016 than they were from 1975 to 2000. This Jan. 3 1976 photo made by the National Reconnaissance Office shows Mount Everest at center. This and other once-classified Cold War era spy satellite images are showing scientists that glaciers on the Himalayas are now melting about twice as fast as they used to. The study shows that even glaciers in the highest mountains of the world are responding to global air temperature increases driven by the combustion of fossil fuels, said Joseph Shea, a glacial geographer at the University of Northern British Columbia who was not involved in the study. To stop the temperature rises, we have to cool the planet, Schaefer told the Guardian . We have to not only slow down greenhouse gas emissions, we have to reverse them. That is the challenge for the next 20 years. The study was published Wednesday in the peer-reviewed journal Science Advances, a publication of the American Association for the Advancement of Science. Contributing: The Associated Press This article originally appeared on USA TODAY: Old spy satellite images show just how fast ice is melting from the glaciers in the Himalayas View comments |
Young Americans are racking up debt for Instagrammable weddings
Weddings Debt-saddled Americans are giving rise to a new industry of financial tech companies: Those that provide loans for cash-strapped couples to pay for their weddings. The Washington Post reports that these companiesamongst them Prosper, Upstart, and Earnestare offering five-figure-plus loans with up to 30% interest. Unlike other types of personal loans (which, in 2019, typically have interest rates between 5% and 36%, according to personal finance site Value Penguin ), these loans are specifically for brides and grooms to help pay for their special day. According to the Post, these lenders say that, already in 2019, they have issued up to four times as many wedding loans as they did last year for couples paying for their own weddings. Meet all the Democratic candidates in the crowded 2020 race Whats driving this trend? It seems to be the confluence of several different factors. First, the majority of those taking out wedding loans are millennials , a demographic that is under substantially more financial pressure than previous generations. Millennials are spending more money on things like education (or, rather, paying off student debt), healthcare, and rent; their average net worth is $8,000, 34% less than Americans of the same age 20 years ago. That leaves a lot less money to spend on extravagant nuptials. On top of that, the average cost of a wedding is rapidly rising . According the Brides 2018 American Wedding Study, a wedding in 2017 cost around $27,000. A year later, in 2018, that number nearly doubled to $44,000. Screenshot from Earnest.com. Indians can worry less as the US denies capping H-1B visa quota Adding to that cost is the so-called wedding tax , the premium that party vendorssuch as photographers, caterers, and floristsplace on a product or service when its meant for a wedding. Its perhaps the rise in the cost of weddingpaired with the fact that couples are marrying later in lifethat has led to a shift in how American families actually pay for weddings. According to wedding industry site Brides.com , tradition holds that the brides family writes the check. But per the sites 2016 American Wedding Study , 73% of couples are now paying for or chipping in for their own weddings. Conceivably, there has also been a change in values that affects who bankrolls the affair: women are more often becoming financially independent before they get married, so they dont have to rely on their parents budget to achieve the blowout of their dreams. Story continues The last, and perhaps most insidious, factor: the advent of social media and its effect on weddings. The fervor for increasingly extravagant weddings has no doubt been fueled by wedding culture on platforms like Pinterest, Instagram, and Facebook. Its in these spaces where the aspiration for an out-of-this world wedding festers; influencersmany of whom have their weddings wholly financed by the brands they partner with are wont to share the whole affair on a highly-curated feed. View this post on Instagram I cry everytime I see this Wedding of my dreams @fedez A post shared by Chiara Ferragni (@chiaraferragni) on Sep 2, 2018 at 6:52am PDT Indeed, entire weddings and honeymoons have been faked as a PR stunts . Just today (June 20), the Atlantic reported that an influencers surprise wedding and the viral proposal that preceded it was actually pitched to brands like Goop and Flywheel for sponsorship months prior. And as the Post notes, the loans themselves are marketed as a way to fund extras like custom calligraphy, doughnut displays and Instagram-worthy venues. The result of all this? You guessed itmore debt. Many couples who choose to spend on a wedding defer or forgo investment in their financial future, which can be unwise financial decision to make in your 20s or 30s, where youre money is probably better spent on long-term investments. As personal finance expert Stefanie OConnell told the Post: You could spend $30,000 on a one-day celebration, or you could use it to put a down payment on a house. These loans sound great when youre planning your wedding, but afterward, I hear a lot of regret. Its unclear if the wedding industrial complex will continue snowballing, but considering the current state of affairsand the way lenders are capitalizing on itit seems that weddings arent going to be getting much cheaper anytime soon. Sign up for the Quartz Daily Brief , our free daily newsletter with the worlds most important and interesting news. More stories from Quartz: Tulsi Gabbard was a surprise breakout in first Democratic debate Young female doctors are at high risk for burnout and self-care is not the answer |
FreightWaves Research: Amazon's New Online Freight Platform Is Viewed Negatively By 8 Of 10 Carriers And Freight Brokers
Amazon.com, Inc.'s (NASDAQ:AMZN) entry into online freight matching is being met with skepticism and unease by much of the logistics industry, according to a market research report from the FreightWaves Freight Intel Group.
The report,Amazon and the Logistics Industry,builds on the news FreightWaves broke on Amazon's beta version of its online freight matching platform, freight.amazon.com. The platform allows shippers to view instant quotes based on zip-to-zip searches on lanes in New Jersey, New York and Pennsylvania.
The report's survey found that eight of 10 carriers and freight brokers think Amazon's entry into digital freight brokerage is ‘negative' for their market segments. Carriers, by a two-to-one margin, are more apt to view this development as ‘very negative' than freight brokers. On the other hand, seven of 10 shippers think it is a ‘positive,' though this view is tempered as only one in five believe it is a ‘very positive' development.
The market reaction to FreightWaves breaking this news was fast and furious. Within one business day after publication, transportation and logistics stocks experienced a sell-off that wiped out over $2.3 billion in equity value from the sector. This sell-off was led byC.H. Robinson Worldwide Inc.(NASDAQ:CHRW), which lost $920 million in market capitalization.
In researchingAmazon and the Logistics Industry, which is available on the SONAR platform, the FreightWaves Freight Intel Group surveyed 811 logistics professionals from carriers, freight brokers and shippers to garner their sentiment on how Amazon may impact the freight markets. The topics covered include: prospects for shipper adoption and why; types of freight brokers that are most at risk; and whether Amazon can really improve efficiencies and asset utilization in the freight markets.
Carriers and brokers are also concerned that Amazon's size and scale could allow it to push down freight rates. As one broker who took part in the survey stated,"As long as carriers get access to all of their freight as well, it has to be a volume play. Amazon will need to pay ‘market rates' just like other 3PLs. At the end of the day, I believe Amazon will compress the average margin for brokers, but they will not eliminate them from the market."
An analysis of the rates available from Amazon's online platform, freight.amazon.com, supports this respondent's thesis. Shipper quotes collected for 30 lanes indicate carriers shouldn't be as worried as brokers when it comes to Amazon's rates. On average, Amazon's quotes to shippers were within 50 basis points of DAT spot rates.
This indicates Amazon is most likely not charging a normal freight broker margin to shippers. This conclusion is based on two factors. The first is that charging shippers a flat rate while offering carriers rates well below spot is not a sustainable business model. The shipper and carriers Amazon would be left with would be "price takers" with little loyalty and a high turnover rate. The second and most likely reason is that Amazon is scaling up its carrier network for capacity as it grows its e-commerce business and gears up for one-day shipping for its Prime members.
As with many other Amazon ventures into new industries, the market reaction to its online freight platform was swift and severe. Stock market sell-offs like the one in late April when FreightWaves broke this news have become routine when Amazon enters, or reportedly enters a new industry.
These past situations are also examined in-depth inAmazon and the Logistics Industry. One of the most notable examples is Amazon's acquisition of Whole Foods, which shaved at least $50 billion in equity from the grocery retail sector in a single day.
As an added value of FreightWaves SONAR, the Freightwaves Freight Intel Group publishes in-depth research on "everything freight and logistics," as Senior Research Analyst and team member Seth Holm described the Group's mission. "We will be doing deep dives into topics that are most important to our industry, the inner workings of key topics and where the market is going," Holm said. "This will include new technology and companies that are changing how the freight markets operate."
The FreightWaves Freight Intel Group is comprised of a number of FreightWaves' Market Experts and research staff. The Group is producing white papers and research on topics of interest to those in the freight, transportation, logistics and supply chain ecosystems. As topics dictate, they will be supplemented by academic and industry experts with specific knowledge and/or expertise.
Image Sourced From Pixabay
See more from Benzinga
• Weekly Market Update: Reefer Volatility Keeps The Freight Market Interesting
• Blockchain Provides Trustability In The Age Of Mobility Services And Autonomous Vehicles
• Rio Tinto's Autonomous Trains Can't Work In North America…Yet
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. |
Estimating The Intrinsic Value Of Hammond Power Solutions Inc. (TSE:HPS.A)
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In this article we are going to estimate the intrinsic value of Hammond Power Solutions Inc. (TSE:HPS.A) by taking the foreast future cash flows of the company and discounting them back to today's value. I will be using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in theSimply Wall St analysis model.
View our latest analysis for Hammond Power Solutions
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. 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.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF (CA$, Millions)", "2019": "CA$7.67", "2020": "CA$7.53", "2021": "CA$7.48", "2022": "CA$7.49", "2023": "CA$7.54", "2024": "CA$7.62", "2025": "CA$7.72", "2026": "CA$7.84", "2027": "CA$7.96", "2028": "CA$8.10"}, {"": "Growth Rate Estimate Source", "2019": "Est @ -3.38%", "2020": "Est @ -1.78%", "2021": "Est @ -0.66%", "2022": "Est @ 0.12%", "2023": "Est @ 0.67%", "2024": "Est @ 1.05%", "2025": "Est @ 1.32%", "2026": "Est @ 1.51%", "2027": "Est @ 1.64%", "2028": "Est @ 1.73%"}, {"": "Present Value (CA$, Millions) Discounted @ 10.09%", "2019": "CA$6.96", "2020": "CA$6.21", "2021": "CA$5.61", "2022": "CA$5.10", "2023": "CA$4.66", "2024": "CA$4.28", "2025": "CA$3.94", "2026": "CA$3.63", "2027": "CA$3.35", "2028": "CA$3.10"}]
Present Value of 10-year Cash Flow (PVCF)= CA$46.85m
"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 1.9%. We discount the terminal cash flows to today's value at a cost of equity of 10.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = CA$8.1m × (1 + 1.9%) ÷ (10.1% – 1.9%) = CA$101m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CA$CA$101m ÷ ( 1 + 10.1%)10= CA$38.81m
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$85.66m. To get the intrinsic value per share, we divide this by the total number of shares outstanding.This results in an intrinsic value estimate of CA$7.3. Relative to the current share price of CA$7.98, the company appears around fair value at the time of writing. 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.
We would point out that 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 Hammond Power Solutions 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 10.1%, which is based on a levered beta of 1.366. 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.
Although the valuation of a company is important, 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. For Hammond Power Solutions, I've put together three further factors you should further research:
1. Financial Health: Does HPS.A have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of HPS.A? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every CA stock every day, so if you want to find the intrinsic value of any other stock 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. |
Canadian lender Desjardins says personal data of 2.9 million members breached
(Reuters) - Canadian lender Desjardins Group said on Thursday an unauthorized use of internal data by an employee led to breach of personal information including social insurance number, address and details of banking habits of more than 2.9 million members.
The issue came to light after Quebec's Laval police contacted the company confirming that personal details of its members had been shared with individuals outside the organization.
Desjardins, the largest association of credit unions in North America, said the concerned employee has been fired and as a precautionary measure it will offer affected members a credit monitoring plan and identity theft insurance for 12 months.
Last year, Bank of Montreal and Canadian Imperial Bank of Commerce said that cyber attackers may have stolen data of nearly 90,000 customers in what appeared to be the first significant assault on financial institutions in the country.
This story corrects to "last year" from "last month" in paragraph 4
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Arun Koyyur) |
Is Hornbeck Offshore Services, Inc.'s (NYSE:HOS) CEO Paid At A Competitive Rate?
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Todd Hornbeck has been the CEO of Hornbeck Offshore Services, Inc. (NYSE:HOS) since 2002. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Hornbeck Offshore Services
Our data indicates that Hornbeck Offshore Services, Inc. is worth US$49m, and total annual CEO compensation is US$4.6m. (This figure is for the year to December 2018). That's just a smallish increase of 0.05% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$638k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$452k.
As you can see, Todd Hornbeck is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Hornbeck Offshore Services, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Hornbeck Offshore Services has changed from year to year.
On average over the last three years, Hornbeck Offshore Services, Inc. has shrunk earnings per share by 25% each year (measured with a line of best fit). In the last year, its revenue is up 19%.
Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested inthisfreevisualization of analyst forecasts.
Given the total loss of 86% over three years, many shareholders in Hornbeck Offshore Services, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Hornbeck Offshore Services, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Shareholders may want tocheck for free if Hornbeck Offshore Services insiders are buying or selling shares.
Important note:Hornbeck Offshore Services may not be the best stock to buy. You might find somethingbetterinthis list of interesting companies with 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. |
Why Startups Like Brex Are Stockpiling Cash
As a two-year-old startup, Brex hasn’t yet endured a recession.
But the company, which issues corporate credit cards for tech companies, is still making contingency plans for one, CEO and co-founder Henrique Dubugras said Thursday at theFortuneBrainstorm Finance conference in Montauk, N.Y.
“You can do a few things to prepare. First thing is raising a lot of funding. We’re trying to do that part now, and set that aside for a rainy day so in the worst case scenario, you have enough money to pay back everyone,” Dubugras said, noting that Brex has raised about $315 million. “The second thing is modeling that in your risk model. In a downside scenario, if this happens how do I react, and to have controls and covenants.”
Dubugras, along with his co-founder Pedro Franceschi, originally founded Pagar.me — the Stripe of Brazil —which they sold in 2016 before starting Brex.
The two aimed to transform B2B payments by rethinking credit cards, and making it possible for ambitious entrepreneurs like themselves to get a corporate card quickly and easily, with higher credit limits, no personal guarantee, greater transparency and instant approvals. When it launched a card for ecommerce companies, the company worked closely brands such as Boxed, Amourt Vert, Hims, Reese Witherspoon’s Draper James, and more to tailor its offerings.
Today Brex monitors the market daily, but Dubugras adds that he hasn’t seen signs of a recession, at least for now.
Earlier this month, Brex itself raised some $100 million in a funding round led by Kleiner Perkins. Startups have been raising cash because it’s been relatively easy to do so. In 2018, venture capital funding exceeded that of the dotcom era. About $131 billion in deals were completed in 2018, according toPitchbookand the National Venture Capital Association, compared to $100 billion in 2000. Much of the funding now gravitates to profitless startups that areburning cashfar faster than the tech giants in their early days.
What if the party stops? The young firms that expanded by racing through their cash will have to scale back or risk failure.
“There are other companies you look at and say I hope they have a lot of plan B, C, Ds,” said Silicon Valley Bank CEO Greg Becker on theFortunepanel. “More and more companies need to make sure they have that, even when they have a lot of capital.”
The bottom line: “Not everyone will win,” said Dana Settle, co-founder and partner at Greycroft Partners on the panel. “A lot of money will be lost.”
—Brainstorm Finance 2019: Watch the livestreamof the inaugural conference
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A former NFL athlete’s path from football to entrepreneurship
Chase Minnifield always dreamed of playing for the NFL. He wanted to follow the example of his father, Frank Minnifield, a former defensive back for theCleveland Browns. The younger Minnifield’s childhood dreams came true when the Washington Redskins drafted him.
“I had worked so hard for my first 20 years of life to try to get to that goal, to that opportunity,” he says. “It’s a tough journey to make it to that. Not many people make it.”
Unfortunately, reality did not match his expectations. Minnifield was plagued with injuries in the three and a half seasons he played for the Redskins. In his final NFL game, he suffered a concussion. The Redskins let Minnifield go and he never heard from another team.
“I was actually in disbelief,” he says. “I had anger toward the NFL and the system. I was young. I was good at what I did. I couldn’t believe that they didn’t want me and I wasn’t good enough anymore.”
Minnifield says he was lost after his forced exit from the NFL. Should he keep training and try to prove to everyone he could still play football? Should he try to do something else?
“It took me a year to come to those terms and say enough is enough of letting other people control my destiny and waiting for somebody else to give me an opportunity,” he says. “Create your own opportunity. Create your own destiny.”
Minnifield created his own destiny and foundedHelping Hand, LLC. The full-service apartment turnover company provides moving, waste removal, painting, cleaning and late-night security services for college dormitories and student housing complexes. With Helping Hand, Minnifield gives his former teammatesfranchisesin his company. He provides them the resources to help them scale, sustain and eventually own a branch of the company.
“I get messages from athletes all the time saying, 'I really appreciate the opportunity you are giving us,'” he says. “It is a tough transition and you don’t really know it until you get there. I didn’t know it until it hit me. But now that it hit me, I am trying to do everything I can to provide opportunities so it doesn’t hinder the next person as bad as it hindered me.”
Helping Hand has regional offices in 14 states including Pennsylvania, Ohio, Florida and Oklahoma. Since its launch, the company has provided services nationwide to schools including the University of Maryland College Park, the University of Pennsylvania and the University of Virginia.
Helping Hand wasn’t Minnifield’s only destiny after leaving the NFL. He is also president and founder ofEZ Turn, the only vendor management digital platform that enables property managers in the student housing business to more efficiently manage, invoice and communicate with contractors. In its first year, EZ Turn has acquired more than 30 clients and managed over $1 million in invoices. Minnifield’s work with EZ Turn landed him on the2019 Forbes 30 Under 30list.
“Technology is the way, I believe, to solve today’s problems,” he says. "If it’s not technology doing it now, it’s going to be technology doing it sooner or later. Making the world more efficient. That’s what EZ Turn does. It’s making the property management side of managing vendors and their team more efficient. Saving them time. Saving them headaches.”
The 30-year-old entrepreneur is excited about what the future holds. Minnifield says it’s his goal to have Helping Hand represented on every campus in America. Meanwhile, as EZ Turn continues to grow at a strong pace, he hopes that the company’s software platform will be beneficial in a multitude of industries. As he leads both companies and his non-profit foundation, Minnifield says he remains dedicated to championing athlete and minority entrepreneurship.
“I would consider myself a serial entrepreneur,” he says. “But first and foremost, I consider myself a leader. I want to continue to progress and give people hope. To be an example of what we can do, what we can become and just be that light for people.”
Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell
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Is Lions Gate Entertainment Corp. (NYSE:LGF.A) Trading At A 25% Discount?
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Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Lions Gate Entertainment Corp. (NYSE:LGF.A) as an investment opportunity by taking the expected future cash flows and discounting them to today's value. This is done using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. 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 Lions Gate Entertainment
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. 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.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF ($, Millions)", "2019": "$339.93", "2020": "$286.90", "2021": "$351.21", "2022": "$321.00", "2023": "$351.00", "2024": "$366.04", "2025": "$380.02", "2026": "$393.29", "2027": "$406.13", "2028": "$418.73"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x7", "2020": "Analyst x5", "2021": "Analyst x7", "2022": "Analyst x1", "2023": "Analyst x1", "2024": "Est @ 4.29%", "2025": "Est @ 3.82%", "2026": "Est @ 3.49%", "2027": "Est @ 3.26%", "2028": "Est @ 3.1%"}, {"": "Present Value ($, Millions) Discounted @ 11.94%", "2019": "$303.67", "2020": "$228.96", "2021": "$250.39", "2022": "$204.44", "2023": "$199.70", "2024": "$186.05", "2025": "$172.55", "2026": "$159.53", "2027": "$147.16", "2028": "$135.55"}]
Present Value of 10-year Cash Flow (PVCF)= $1.99b
"Est" = FCF growth rate estimated by Simply Wall St
The second stage is also known as Terminal Value, this is the business's cash flow after 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 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 11.9%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$419m × (1 + 2.7%) ÷ (11.9% – 2.7%) = US$4.7b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$4.7b ÷ ( 1 + 11.9%)10= $1.51b
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 $3.50b. The last step is to then divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of $16.09. Compared to the current share price of $12.1, 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.
We would point out that 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 Lions Gate Entertainment 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 11.9%, which is based on a levered beta of 1.545. 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.
Whilst important, DCF calculation 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 Lions Gate Entertainment, I've compiled three important aspects you should further examine:
1. Financial Health: Does LGF.A 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 LGF.A'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 LGF.A? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every US stock every day, so if you want to find the intrinsic value of any other stock 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. |
5 Boring Stocks to Buy This Summer
It’s summertime and the living is easy. Or at least it should be. These days, volatility is getting pretty crazy. While the Federal-Reserve-induced swings have been moving the market higher, it was just a few weeks ago that trade issues were sending stocks lower. This sort of extreme ebb and flow is not exactly the kind of environment that breeds restful nights of sleep. This is especially true if you are near or in retirement.
That is unless you focus on boring stocks.
Perhaps the best stocks to buy this summer are the ones you don’t have to think about. We’re talking about boring stocks that generate good revenues in good times and in bad. Nothing too flashily. No crazy exposure or reliance on trendy sectors of the market. Moreover, these stocks reward investors with plenty ofdividendsand buybacks. You can simply buy shares, collect your income and just forget about them.
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In the end, with volatility surging and the markets moving in a big way, the stocks to buy this summer are the boring ones. It’s the best strategy to get through and not get seasick.
• 10 'Buy-and-Hold' Stocks to Own Forever
With that said, here are five boring stocks to buy this summer.
Source: Shutterstock
One of the best stocks to buy this summer could beJohnson & Johnson(NYSE:JNJ). When it comes to the healthcare sector, there’s no bigger blue chip than JNJ. The firm’s empire spans more than 250 operating companies across a variety of healthcare subsectors. That includes consumer healthcare products and medical devices to advanced oncology and immunology drugs. JNJ really does it all.
And doing it all makes it a pretty boring stock as well.
Thanks to JNJ’s multiple product lines, the firm has been able to navigate some tough economic markets over the course of its history. When one of its product lines is suffering, another can pick up the slack. And the fact that JNJ sells its products in more than 60 countries is the icing on the cake. The firm’s adjusted earnings have continued toincrease for over 35 yearsbased on its deep product line. Moreover, it has been able to increase its dividend for the last 57 years straight. Currently, Johnson & Johnson yields 2.71%. That’s a very impressive track record that allows it to keep going during times of duress.
Now, there is some new risk at JNJ, such as it’s own going talc issues as well as a newpending opioid lawsuit. But even here, JNJ’s size and scope will help it navigate with relative ease.
All in all, JNJ could one of the best stocks to buy this summer.
Source: Shutterstock
According to the latest EPA survey, Americans generate more than 254 million tons of trash or recyclables per year. That’s a lot of garbage. But forRepublic Services(NYSE:RSG), that trash is a gold mine.
RSG is one of the largest trash haulers in the nation. That position provides it plenty of scales. And scale is important in the garbage industry. The problem is that hauling garbage is a relatively low-margined business. By having that scale, Republic is able to earn a little from all its operations. Moreover, it’s able to undercut most smaller mom and pop operators for winning key job bids. This base of operations, as well as ownership of its own landfills, has allowed RSG to quickly become a dividend champion — growing its payout by anaverage of 8% over the last three years.
But RSG is finding ways to boost its potential as well.
That includes boost higher-margined recyclable hauling as well as expanding into other areas of waste disposal. Republic now owns several saltwater disposal wells from the oil and gas industry and has moved into providing renewable energy. Turns out, landfills throw off plenty of natural gas that can beburned for energy production,while several of its sites are prime candidates for solar and wind power.
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Trash is boring, but RSG is turning that boring nature into gold.
Source: Shutterstock
The stocks to buy this summer could be the utilities. Perhaps nothing more boring than those firms that produce electricity, water, and natural gas. That includes top-notch utilitySouthern(NYSE:SO). SO is one of the largest-regulated utilities in the nation and provides power to more than9 million customersacross several states. This provides SO with plenty of steady cash flows that continue to fuel its growth and shareholder rewards.
The firm has paid dividends since the 1950’s and has raised its payout over the last 17 years straight.
Fueling that dividend growth has been the unregulated side of its businesses. A few years ago, Southern purchased pipeline and gas supplier AGL Resources. A similar buy of gas supplier NICOR followed. This moved Southern into the pipeline industry. It turns out this was a great decision. While the combination of FERC-regulated pipelines as well as unregulated gathering/trunk lines have helped boost SO’s overall profits since the buyouts.
Southern isn’t without its warts. The firm has continued to struggle with carbon capture projects and has taken a bath on its nuclear plants thanks tocost overrunsand bankruptcy of its contractor Westinghouse. This has pressured the firm in recent quarters.
However, the vast bulk of Southern is good, old-fashioned and boring power generation. And because of that, SO makes a great stock to buy for its high 4.6% yield this summer.
Source:Pictures of Money via Flickr
I think I’d rather watch paint dry than talk about the insurance industry. But when it comes to the boring stocks to buy, the insurance sector is often top-notch. The sector is able to make plenty of bank on its underwriting and the delicious float from its investments. One of the best could be insurerChubb(NYSE:CB).
CB is a multi-line insurer and has operations that span pretty much every sub-category of insurance. This includes property and casualty, accident and health, reinsurance, and life insurance. Chubb does it all and it does so across the globe.
What’s great about that multi-line approach is the CB is surprisingly profitable. Chubb takes a real hands-on approach to its underwriting- especially when it comes to reinsurance and insuring property/casualty lines for businesses. This has allowed it to have anamazing average combined ratio-a key metric of profitability in the insurance industry- that has come in 8.7 percentage points lower than many of its rivals over the last ten years. When you add in profits from its float investments, you have a real winner on your hands.
This has continued to drive CB’s dividend over its history. The firm has managed to raise its payout over the last 26 years straight. This includes arecent 3% bumpat the beginning of the summer. With continued float gains and smart underwriting, Chubb should continue to keep the gains coming.
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For investors, insurance is as boring as they come. But Chubb makes a great stock to buy for years of steady gains.
Source: Shutterstock
It turns out, the boring world of cookies, crackers and chewing gum provides perfect ballast to the market’s gyrations. That’s wonderful news for formerKraft-Heinz(NYSE:KHC) spin-outMondelez International(NYSE:MDLZ).
MDLZ features some of the world’s biggest brands in snack foods like Oreo’s, Nabisco and Cadbury candy. What’s great is that snack foods blend the line between being a staple and discretionary item. This allows them to have slightly higher margins than say, toilet paper. However, demand for these sorts of items stays pretty steady. Better still is that MDLZ is able to pass onprice increases relativelyeasy onto consumers. This has helped boost DLZ’s results in recent quarters.
But Mondelez has plenty of growth in the tank as well. The firm has continued to expand into higher-margined healthy snacks as well as emerging markets. And the firm has started to seriously consideradding cannabisto many of its foods as legalization approaches. Given its huge brand portfolio, this could be a major revenue driver in the future.
With a great combination of steady-like demand and plenty of growth potential, MDLZ could be a wonderfully boring stock to buy for this summer.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
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Top Democrat Slams Tech’s ‘Devastating’ Effect on Americans
(Bloomberg) -- A top Democrat in the U.S. House said Thursday that big tech has had “devastating effects” on everyday Americans. Speaking at an antitrust conference in Washington, Representative David Cicilline of Rhode Island, who has opened an investigation into competition in the technology industry, said Facebook Inc. and Alphabet Inc.’s Google have acquired competitors to corner their markets. Cicilline, who is also chairman of an antitrust subcommittee, said “you would be amazed” at the number of companies that have come forward with concerns about the potentially unfair way that big tech companies compete. Some have even expressed fear that the tech giants will respond with economic retaliation if the smaller companies’ concerns are made public, Cicilline said, without providing more detail. He said Congress has retreated from its active role in shaping antitrust law. Email messages seeking comment were left with Facebook and Google. Cicilline has become a leading figure responding to the rising calls from Democrats and some Republicans for tougher competition enforcement. The Judiciary Committee is investigating competition in technology markets while the Justice Department and the Federal Trade Commission have divided oversight of the biggest companies, the first step toward formal probes. Google and Apple Inc. went to the Justice Department, while the FTC will be responsible for Facebook and Amazon.com Inc. During a June 11 hearing that kicked off the House probe, lawmakers including Cicilline slammed online platforms for being unfair gatekeepers to content produced by traditional media outlets. “Concentration in the digital advertising market has pushed local journalism to the verge of extinction,” he said at the time. Seeking Solutions The major challenge of his investigation, Cicilline said Thursday, will be to find a solution to competition issues in the tech industry -- whether it’s changing antitrust laws or making sure enforcement agencies have enough resources to carry out their mission. The problems are easier to identify and harder “to develop solutions around,” he said. Story continues Cicilline said he has reached out to representatives of most of the major tech platforms and indicated that his hope is they will participate in a “meaningful way.” When asked whether he was prioritizing a company in the investigation, Cicilline said he wasn’t but mentioned Google and Facebook as particularly big and well-known. “We’ve seen some conduct of Facebook in particular, some pretty egregious behavior and a pattern of bad behavior, apology tour from the CEO and then back to bad behavior,” the representative said. His panel, Cicilline said, will explore why there hasn’t been a “serious antitrust investigation” in 20 years. “One thing I’m certain of is we are in this monopoly moment where I think people have begun to really understand the implications of this concentration in the marketplace. They expect us to address it in a thoughtful and responsible way.” Asked whether the agencies had failed, Cicilline said, “Yes. Congress has failed too, in fairness. This has been a failure by everyone.” Cicilline also weighed in on allegations of anti-conservative bias by large tech companies, which some Republicans including President Donald Trump have suggested could be a competition problem. Cicilline said there was “no evidence” to back that up. (Updates with Cicilline comments in third paragraph and details throughout.) To contact the reporters on this story: Naomi Nix in Washington at nnix1@bloomberg.net;Ben Brody in Washington, D.C. at btenerellabr@bloomberg.net To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Mark Niquette, Paula Dwyer For more articles like this, please visit us at bloomberg.com ©2019 Bloomberg L.P. |
Did Hedge Funds Drop The Ball On Leidos Holdings Inc (LDOS)?
Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Leidos Holdings Inc (NYSE:LDOS)has seen a decrease in activity from the world's largest hedge funds of late. Our calculations also showed that LDOS 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 review the latest hedge fund action regarding Leidos Holdings Inc (NYSE:LDOS).
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards LDOS 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,Southpoint Capital Advisorswas the largest shareholder of Leidos Holdings Inc (NYSE:LDOS), with a stake worth $121.8 million reported as of the end of March. Trailing Southpoint Capital Advisors was Samlyn Capital, which amassed a stake valued at $47.4 million. Two Sigma Advisors, Citadel Investment Group, and Alyeska Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Leidos Holdings Inc (NYSE:LDOS) has witnessed a decline in interest from the smart money, it's safe to say that there exists a select few money managers that decided to sell off their full holdings last quarter. It's worth mentioning that Jim Simons'sRenaissance Technologiesdumped the largest investment of all the hedgies tracked by Insider Monkey, totaling about $12.9 million in stock, and James Dinan's York Capital Management was right behind this move, as the fund said goodbye to about $6.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Leidos Holdings Inc (NYSE:LDOS). We will take a look at Qiagen NV (NYSE:QGEN), Aurora Cannabis Inc. (NYSE:ACB), EPAM Systems Inc (NYSE:EPAM), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks' market values are closest to LDOS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QGEN,23,375552,2 ACB,11,115927,2 EPAM,21,72308,-1 BIO,37,888698,2 Average,23,363121,1.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $363 million. That figure was $326 million in LDOS's case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand Aurora Cannabis Inc. (NASDAQ:ACB) is the least popular one with only 11 bullish hedge fund positions. Leidos Holdings Inc (NYSE:LDOS) 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 LDOS as the stock returned 16.8% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Mattel, Inc. (MAT)
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 Mattel, Inc. (NASDAQ:MAT).
Mattel, Inc. (NASDAQ:MAT)shareholders have witnessed an increase in hedge fund interest in recent months.MATwas in 21 hedge funds' portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with MAT holdings at the end of the previous quarter. Our calculations also showed that mat 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 take a look at the recent hedge fund action surrounding Mattel, Inc. (NASDAQ:MAT).
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in MAT 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.
The largest stake in Mattel, Inc. (NASDAQ:MAT) was held bySoutheastern Asset Management, which reported holding $465.9 million worth of stock at the end of March. It was followed by Ariel Investments with a $148 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Millennium Management.
As aggregate interest increased, key hedge funds have been driving this bullishness.Renaissance Technologies, managed by Jim Simons, initiated the biggest position in Mattel, Inc. (NASDAQ:MAT). Renaissance Technologies had $23.6 million invested in the company at the end of the quarter. Joel Greenblatt'sGotham Asset Managementalso made a $6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Talpins'sElement Capital Management, Anand Parekh'sAlyeska Investment Group, and Dmitry Balyasny'sBalyasny Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mattel, Inc. (NASDAQ:MAT) but similarly valued. These stocks are Viper Energy Partners LP (NASDAQ:VNOM), United Microelectronics Corp (NYSE:UMC), First Industrial Realty Trust, Inc. (NYSE:FR), and Haemonetics Corporation (NYSE:HAE). All of these stocks' market caps match MAT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VNOM,17,190764,7 UMC,15,86705,-2 FR,11,303801,-7 HAE,24,648117,4 Average,16.75,307347,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $704 million in MAT's case. Haemonetics Corporation (NYSE:HAE) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 11 bullish hedge fund positions. Mattel, Inc. (NASDAQ:MAT) 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 MAT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MAT were disappointed as the stock returned -18.4% 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 More Bullish On C.H. Robinson Worldwide, Inc. (CHRW)
There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
IsC.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)a worthy investment today? Money managers are taking an optimistic view. The number of bullish hedge fund positions inched up by 3 recently. Our calculations also showed that CHRW isn't among the30 most popular stocks among hedge funds.CHRWwas in 30 hedge funds' portfolios at the end of March. There were 27 hedge funds in our database with CHRW positions at the end of the previous quarter.
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 view the fresh hedge fund action regarding C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CHRW over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,AQR Capital Management, managed by Cliff Asness, holds the biggest position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). AQR Capital Management has a $95.1 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management's heels isRenaissance Technologies, managed by Jim Simons, which holds a $61.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions encompass Ken Griffin'sCitadel Investment Group, John Overdeck and David Siegel'sTwo Sigma Advisorsand Israel Englander'sMillennium Management.
As one would reasonably expect, key hedge funds have been driving this bullishness.Carlson Capital, managed by Clint Carlson, initiated the biggest position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). Carlson Capital had $18 million invested in the company at the end of the quarter. Ray Dalio'sBridgewater Associatesalso made a $8 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen'sPoint72 Asset Management, Jeffrey Talpins'sElement Capital Management, and Alec Litowitz and Ross Laser'sMagnetar Capital.
Let's also examine hedge fund activity in other stocks similar to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). These stocks are Nomura Holdings, Inc. (NYSE:NMR), CarMax Inc (NYSE:KMX), NRG Energy Inc (NYSE:NRG), and Textron Inc. (NYSE:TXT). This group of stocks' market values are similar to CHRW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NMR,5,36674,0 KMX,29,1641895,1 NRG,40,1792102,-9 TXT,24,665699,-4 Average,24.5,1034093,-3 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $1034 million. That figure was $408 million in CHRW's case. NRG Energy Inc (NYSE:NRG) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 bullish hedge fund positions. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) 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 CHRW wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CHRW were disappointed as the stock returned -9.4% 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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Is Eastman Chemical Company (EMN) A Good Stock To Buy?
Does Eastman Chemical Company (NYSE:EMN) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Eastman Chemical Company (NYSE:EMN)was in 30 hedge funds' portfolios at the end of March. EMN investors should be aware of a decrease in activity from the world's largest hedge funds lately. There were 33 hedge funds in our database with EMN holdings at the end of the previous quarter. Our calculations also showed that EMN 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 recent hedge fund action surrounding Eastman Chemical Company (NYSE:EMN).
At Q1's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards EMN over the last 15 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds,Citadel Investment Groupheld the most valuable stake in Eastman Chemical Company (NYSE:EMN), which was worth $103.4 million at the end of the first quarter. On the second spot was Diamond Hill Capital which amassed $94.8 million worth of shares. Moreover, Atlantic Investment Management, AQR Capital Management, and Bridgewater Associates were also bullish on Eastman Chemical Company (NYSE:EMN), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Eastman Chemical Company (NYSE:EMN) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few fund managers who sold off their entire stakes last quarter. Intriguingly, Ryan Caldwell'sChiron Investment Managementsold off the largest stake of all the hedgies monitored by Insider Monkey, worth about $18.5 million in stock. David Costen Haley's fund,HBK Investments, also dropped its stock, about $9.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Eastman Chemical Company (NYSE:EMN) but similarly valued. We will take a look at The Mosaic Company (NYSE:MOS), Burlington Stores Inc (NYSE:BURL), Jacobs Engineering Group Inc (NYSE:JEC), and The Ultimate Software Group, Inc. (NASDAQ:ULTI). This group of stocks' market valuations resemble EMN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MOS,29,770708,-8 BURL,31,1351671,1 JEC,33,1008926,0 ULTI,35,1420211,15 Average,32,1137879,2 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1138 million. That figure was $519 million in EMN's case. The Ultimate Software Group, Inc. (NASDAQ:ULTI) is the most popular stock in this table. On the other hand The Mosaic Company (NYSE:MOS) is the least popular one with only 29 bullish hedge fund positions. Eastman Chemical Company (NYSE:EMN) 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 EMN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EMN investors were disappointed as the stock returned -11.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Fidelity National Financial Inc (FNF) A Good Stock To Buy?
There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Fidelity National Financial Inc (NYSE:FNF).
IsFidelity National Financial Inc (NYSE:FNF)a buy here? Hedge funds are getting more optimistic. The number of bullish hedge fund bets moved up by 2 lately. Our calculations also showed that FNF isn't among the30 most popular stocks among hedge funds.FNFwas in 30 hedge funds' portfolios at the end of March. There were 28 hedge funds in our database with FNF positions at the end of the previous quarter.
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 take a gander at the new hedge fund action surrounding Fidelity National Financial Inc (NYSE:FNF).
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in FNF a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Fidelity National Financial Inc (NYSE:FNF) was held byAQR Capital Management, which reported holding $101.1 million worth of stock at the end of March. It was followed by Nitorum Capital with a $53.6 million position. Other investors bullish on the company included D E Shaw, Alyeska Investment Group, and Millennium Management.
As aggregate interest increased, key money managers were leading the bulls' herd.Nitorum Capital, managed by Seth Rosen, initiated the largest position in Fidelity National Financial Inc (NYSE:FNF). Nitorum Capital had $53.6 million invested in the company at the end of the quarter. Anand Parekh'sAlyeska Investment Groupalso initiated a $29 million position during the quarter. The other funds with new positions in the stock are Usman Waheed'sStrycker View Capital, Steve Cohen'sPoint72 Asset Management, and Dmitry Balyasny'sBalyasny Asset Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fidelity National Financial Inc (NYSE:FNF) but similarly valued. These stocks are NVR, Inc. (NYSE:NVR), China Eastern Airlines Corp. Ltd. (NYSE:CEA), Goldcorp Inc. (NYSE:GG), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). This group of stocks' market caps match FNF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVR,25,883152,-6 CEA,1,1543,-1 GG,35,871456,11 ALNY,26,753613,-2 Average,21.75,627441,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $627 million. That figure was $428 million in FNF's case. Goldcorp Inc. (NYSE:GG) is the most popular stock in this table. On the other hand China Eastern Airlines Corp. Ltd. (NYSE:CEA) is the least popular one with only 1 bullish hedge fund positions. Fidelity National Financial Inc (NYSE:FNF) 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 FNF as the stock returned 4.9% 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 PagSeguro Digital Ltd. (PAGS)?
Is PagSeguro Digital Ltd. (NYSE:PAGS) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
PagSeguro Digital Ltd. (NYSE:PAGS)shareholders have witnessed an increase in hedge fund sentiment recently.PAGSwas in 30 hedge funds' portfolios at the end of March. There were 24 hedge funds in our database with PAGS positions at the end of the previous quarter. Our calculations also showed that PAGS isn't among the30 most popular stocks among hedge funds.
If you'd ask most stock holders, hedge funds are assumed to be worthless, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers look at the aristocrats of this club, around 750 funds. These money managers direct the majority of all hedge funds' total capital, and by tailing their first-class equity investments, Insider Monkey has deciphered many investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We're going to take a peek at the latest hedge fund action surrounding PagSeguro Digital Ltd. (NYSE:PAGS).
At the end of the first quarter, a total of 30 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 PAGS over the last 15 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey,Melvin Capital Management, managed by Gabriel Plotkin, holds the largest position in PagSeguro Digital Ltd. (NYSE:PAGS). Melvin Capital Management has a $300.3 million position in the stock, comprising 3.5% of its 13F portfolio. The second most bullish fund manager is Daniel Patrick Gibson ofSylebra Capital Management, with a $215.4 million position; the fund has 12.7% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Dennis Puri and Oliver Keller'sHunt Lane Capital, Robert Pitts'sSteadfast Capital Managementand Christopher R. Hansen'sValiant Capital.
Consequently, specific money managers have jumped into PagSeguro Digital Ltd. (NYSE:PAGS) headfirst.Capital Growth Management, managed by Ken Heebner, established the biggest position in PagSeguro Digital Ltd. (NYSE:PAGS). Capital Growth Management had $40.7 million invested in the company at the end of the quarter. Alex Sacerdote'sWhale Rock Capital Managementalso initiated a $40.1 million position during the quarter. The other funds with brand new PAGS positions are Richard Driehaus'sDriehaus Capital, Jeffrey Hoffner'sEngle Capital, and Eli Cohen'sCrescent Park Management.
Let's now take a look at hedge fund activity in other stocks similar to PagSeguro Digital Ltd. (NYSE:PAGS). These stocks are 58.com Inc (NYSE:WUBA), Sea Limited (NYSE:SE), Spirit AeroSystems Holdings, Inc. (NYSE:SPR), and AGNC Investment Corp. (NASDAQ:AGNC). This group of stocks' market values are similar to PAGS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WUBA,24,528862,1 SE,50,2178777,36 SPR,29,2186164,-3 AGNC,15,233055,-6 Average,29.5,1281715,7 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $1282 million. That figure was $1280 million in PAGS's case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand AGNC Investment Corp. (NASDAQ:AGNC) is the least popular one with only 15 bullish hedge fund positions. PagSeguro Digital Ltd. (NYSE:PAGS) 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 PAGS as the stock returned 9.8% 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 Molina Healthcare, Inc. (MOH)
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Molina Healthcare, Inc. (NYSE:MOH) in this article.
Molina Healthcare, Inc. (NYSE:MOH)investors should pay attention to an increase in hedge fund interest in recent months.MOHwas in 30 hedge funds' portfolios at the end of the first quarter of 2019. There were 27 hedge funds in our database with MOH positions at the end of the previous quarter. Our calculations also showed that MOH isn't among the30 most popular stocks among hedge funds.
In the eyes of most traders, hedge funds are viewed as slow, old investment vehicles of years past. While there are greater than 8000 funds trading at present, We hone in on the bigwigs of this group, approximately 750 funds. These investment experts shepherd the majority of the smart money's total capital, and by shadowing their highest performing equity investments, Insider Monkey has deciphered many investment strategies that have historically beaten the broader indices. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's take a look at the recent hedge fund action regarding Molina Healthcare, Inc. (NYSE:MOH).
At Q1's end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in MOH a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Molina Healthcare, Inc. (NYSE:MOH) was held byRenaissance Technologies, which reported holding $524.6 million worth of stock at the end of March. It was followed by AQR Capital Management with a $102.5 million position. Other investors bullish on the company included Partner Fund Management, Two Sigma Advisors, and D E Shaw.
Consequently, some big names were breaking ground themselves.Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the most valuable position in Molina Healthcare, Inc. (NYSE:MOH). Polar Capital had $28.5 million invested in the company at the end of the quarter. Lee Ainslie'sMaverick Capitalalso made a $7.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Talpins'sElement Capital Management, Ben Levine, Andrew Manuel and Stefan Renold'sLMR Partners, and Josh Donfeld and David Rogers'sCastle Hook Partners.
Let's also examine hedge fund activity in other stocks similar to Molina Healthcare, Inc. (NYSE:MOH). These stocks are VICI Properties Inc. (NYSE:VICI), Alleghany Corporation (NYSE:Y), Carvana Co. (NYSE:CVNA), and DocuSign, Inc. (NASDAQ:DOCU). This group of stocks' market caps match MOH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VICI,37,1927451,-1 Y,23,306493,4 CVNA,41,1612623,7 DOCU,34,538816,11 Average,33.75,1096346,5.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $1096 million. That figure was $1026 million in MOH's case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Alleghany Corporation (NYSE:Y) is the least popular one with only 23 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) 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 MOH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MOH investors were disappointed as the stock returned -5.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Are Lions Gate Entertainment Corp.'s (NYSE:LGF.A) Interest Costs Too High?
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Stocks with market capitalization between $2B and $10B, such as Lions Gate Entertainment Corp. (NYSE:LGF.A) with a size of US$2.5b, do not attract as much attention from the investing community as do the small-caps and large-caps. However, history shows that overlooked mid-cap companies have performed better on a risk-adjusted manner than the smaller and larger segment of the market. Today we will look at LGF.A’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 LGF.A here.
See our latest analysis for Lions Gate Entertainment
LGF.A's debt levels surged from US$2.7b to US$3.0b over the last 12 months , which includes long-term debt. With this increase in debt, LGF.A's cash and short-term investments stands at US$184m to keep the business going. Moreover, LGF.A has produced cash from operations of US$428m in the last twelve months, leading to an operating cash to total debt ratio of 14%, meaning that LGF.A’s operating cash is less than its debt.
With current liabilities at US$1.7b, it appears that the company may not be able to easily meet these obligations given the level of current assets of US$1.4b, with a current ratio of 0.84x. The current ratio is calculated by dividing current assets by current liabilities.
With debt reaching 100% of equity, LGF.A may be thought of as relatively highly levered. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. But since LGF.A is currently unprofitable, there’s a question of sustainability of its current operations. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.
LGF.A’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 low liquidity raises concerns over whether current asset management practices are properly implemented for the mid-cap. Keep in mind I haven't considered other factors such as how LGF.A has been performing in the past. I suggest you continue to research Lions Gate Entertainment to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for LGF.A’s future growth? Take a look at ourfree research report of analyst consensusfor LGF.A’s outlook.
2. Valuation: What is LGF.A 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 LGF.A is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Here’s What Hedge Funds Think About Genesee & Wyoming Inc (GWR)
At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Genesee & Wyoming Inc (NYSE:GWR)shareholders have witnessed an increase in activity from the world's largest hedge funds of late. Our calculations also showed that GWR 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_745225" align="aligncenter" width="473"]
Noam Gottesman, GLG Partners[/caption]
Let's check out the fresh hedge fund action surrounding Genesee & Wyoming Inc (NYSE:GWR).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GWR over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Blue Harbour Groupheld the most valuable stake in Genesee & Wyoming Inc (NYSE:GWR), which was worth $154.8 million at the end of the first quarter. On the second spot was Cardinal Capital which amassed $88 million worth of shares. Moreover, Goodnow Investment Group, Scopus Asset Management, and Winton Capital Management were also bullish on Genesee & Wyoming Inc (NYSE:GWR), allocating a large percentage of their portfolios to this stock.
Consequently, some big names have jumped into Genesee & Wyoming Inc (NYSE:GWR) headfirst.Scopus Asset Management, managed by Alexander Mitchell, assembled the biggest position in Genesee & Wyoming Inc (NYSE:GWR). Scopus Asset Management had $40.2 million invested in the company at the end of the quarter. Steve Cohen'sPoint72 Asset Managementalso made a $10.2 million investment in the stock during the quarter. The other funds with brand new GWR positions are Clint Carlson'sCarlson Capital, Sara Nainzadeh'sCentenus Global Management, and Noam Gottesman'sGLG Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Genesee & Wyoming Inc (NYSE:GWR) but similarly valued. These stocks are Kemper Corporation (NYSE:KMPR), Stericycle Inc (NASDAQ:SRCL), Zynga Inc (NASDAQ:ZNGA), and Anaplan, Inc. (NYSE:PLAN). This group of stocks' market caps are closest to GWR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KMPR,8,83442,-7 SRCL,22,560523,3 ZNGA,35,799497,6 PLAN,22,625121,1 Average,21.75,517146,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $409 million in GWR's case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 8 bullish hedge fund positions. Genesee & Wyoming Inc (NYSE:GWR) 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 GWR as the stock returned 9.2% 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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Is Stericycle Inc (SRCL) A Good Stock To Buy?
Does Stericycle Inc (NASDAQ:SRCL) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Stericycle Inc (NASDAQ:SRCL)was in 22 hedge funds' portfolios at the end of March. SRCL investors should be aware of an increase in hedge fund sentiment lately. There were 19 hedge funds in our database with SRCL positions at the end of the previous quarter. Our calculations also showed that SRCL 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.
We're going to view the key hedge fund action regarding Stericycle Inc (NASDAQ:SRCL).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards SRCL over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Ariel Investmentsheld the most valuable stake in Stericycle Inc (NASDAQ:SRCL), which was worth $186.8 million at the end of the first quarter. On the second spot was Generation Investment Management which amassed $139.1 million worth of shares. Moreover, Polar Capital, Diamond Hill Capital, and Markel Gayner Asset Management were also bullish on Stericycle Inc (NASDAQ:SRCL), allocating a large percentage of their portfolios to this stock.
Now, key money managers have been driving this bullishness.Generation Investment Management, managed by David Blood and Al Gore, initiated the most valuable position in Stericycle Inc (NASDAQ:SRCL). Generation Investment Management had $139.1 million invested in the company at the end of the quarter. Constantinos J. Christofilis'sArchon Capital Managementalso initiated a $14.1 million position during the quarter. The following funds were also among the new SRCL investors: David M. Knott'sDorset Management, Steve Cohen'sPoint72 Asset Management, and David Brown'sHawk Ridge Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Stericycle Inc (NASDAQ:SRCL) but similarly valued. We will take a look at Zynga Inc (NASDAQ:ZNGA), Anaplan, Inc. (NYSE:PLAN), JetBlue Airways Corporation (NASDAQ:JBLU), and Janus Henderson Group plc (NYSE:JHG). This group of stocks' market valuations are similar to SRCL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZNGA,35,799497,6 PLAN,22,625121,1 JBLU,26,498119,-5 JHG,12,145597,-3 Average,23.75,517084,-0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $561 million in SRCL's case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 12 bullish hedge fund positions. Stericycle Inc (NASDAQ:SRCL) 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 SRCL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SRCL investors were disappointed as the stock returned -16.6% 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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Here’s What Hedge Funds Think About The Simply Good Foods Company (SMPL)
Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2019. What do these smart investors think about The Simply Good Foods Company (NASDAQ:SMPL)?
IsThe Simply Good Foods Company (NASDAQ:SMPL)a buy, sell, or hold? Prominent investors are taking a bearish view. The number of long hedge fund positions decreased by 3 in recent months. Our calculations also showed that SMPL isn't among the30 most popular stocks among hedge funds.SMPLwas in 22 hedge funds' portfolios at the end of the first quarter of 2019. There were 25 hedge funds in our database with SMPL holdings at the end of the previous quarter.
To most market participants, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, We choose to focus on the aristocrats of this club, about 750 funds. These investment experts control most of all hedge funds' total asset base, and by observing their top equity investments, Insider Monkey has spotted a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship hedge fund strategy outpaced 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.
[caption id="attachment_746893" align="aligncenter" width="473"]
Paul Marshall of Marshall Wace[/caption]
We're going to take a glance at the new hedge fund action regarding The Simply Good Foods Company (NASDAQ:SMPL).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in SMPL over the last 15 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel Lascano'sLomas Capital Managementhas the largest position in The Simply Good Foods Company (NASDAQ:SMPL), worth close to $41.9 million, corresponding to 4.5% of its total 13F portfolio. The second largest stake is held by Jim Simons ofRenaissance Technologies, with a $34.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions comprise D. E. Shaw'sD E Shaw, James Woodson Davis'sWoodson Capital Managementand Israel Englander'sMillennium Management.
Seeing as The Simply Good Foods Company (NASDAQ:SMPL) has witnessed a decline in interest from the smart money, logic holds that there were a few money managers that decided to sell off their positions entirely heading into Q3. At the top of the heap, Seth Rosen'sNitorum Capitaldropped the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $10.4 million in stock, and David Costen Haley's HBK Investments was right behind this move, as the fund dropped about $1.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q3.
Let's now review hedge fund activity in other stocks similar to The Simply Good Foods Company (NASDAQ:SMPL). We will take a look at Papa John's International, Inc. (NASDAQ:PZZA), TTEC Holdings, Inc. (NASDAQ:TTEC), Dril-Quip, Inc. (NYSE:DRQ), and Brinker International, Inc. (NYSE:EAT). This group of stocks' market caps are similar to SMPL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PZZA,22,361199,-1 TTEC,15,27264,0 DRQ,17,142274,-2 EAT,29,252843,3 Average,20.75,195895,0 [/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 $196 million. That figure was $203 million in SMPL's case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand TTEC Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 15 bullish hedge fund positions. The Simply Good Foods Company (NASDAQ:SMPL) 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 SMPL as the stock returned 6.1% 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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Hedge Funds Have Never Been This Bullish On Anaplan, Inc. (PLAN)
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 Anaplan, Inc. (NYSE:PLAN)? The smart money sentiment can provide an answer to this question.
IsAnaplan, Inc. (NYSE:PLAN)a splendid investment now? The best stock pickers are turning bullish. The number of bullish hedge fund bets went up by 1 in recent months. Our calculations also showed that PLAN 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 analyze the key hedge fund action regarding Anaplan, Inc. (NYSE:PLAN).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2018. On the other hand, there were a total of 0 hedge funds with a bullish position in PLAN a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Philippe Laffont'sCoatue Managementhas the number one position in Anaplan, Inc. (NYSE:PLAN), worth close to $356.5 million, accounting for 3.9% of its total 13F portfolio. The second largest stake is held by Bain Capital ofBrookside Capital, with a $61 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Ken Griffin'sCitadel Investment Group, Panayotis Takis Sparaggis'sAlkeon Capital Managementand Mick Hellman'sHMI Capital.
As one would reasonably expect, key hedge funds were breaking ground themselves.Hitchwood Capital Management, managed by James Crichton, assembled the most valuable position in Anaplan, Inc. (NYSE:PLAN). Hitchwood Capital Management had $15.7 million invested in the company at the end of the quarter. Ben Gambill'sTiger Eye Capitalalso made a $6.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Brian Ashford-Russell and Tim Woolley'sPolar Capital, Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital, and D. E. Shaw'sD E Shaw.
Let's check out hedge fund activity in other stocks similar to Anaplan, Inc. (NYSE:PLAN). These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), Janus Henderson Group plc (NYSE:JHG), ICU Medical, Inc. (NASDAQ:ICUI), and Wyndham Hotels & Resorts, Inc. (NYSE:WH). This group of stocks' market caps are similar to PLAN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBLU,26,498119,-5 JHG,12,145597,-3 ICUI,15,329228,-5 WH,40,790556,3 Average,23.25,440875,-2.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $441 million. That figure was $625 million in PLAN's case. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 12 bullish hedge fund positions. Anaplan, Inc. (NYSE:PLAN) 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 PLAN as the stock returned 7.4% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Entegris Inc (ENTG)
The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Entegris Inc (NASDAQ:ENTG).
Entegris Inc (NASDAQ:ENTG)was in 22 hedge funds' portfolios at the end of March. ENTG investors should pay attention to an increase in enthusiasm from smart money recently. There were 18 hedge funds in our database with ENTG holdings at the end of the previous quarter. Our calculations also showed that ENTG 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 take a peek at the recent hedge fund action regarding Entegris Inc (NASDAQ:ENTG).
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ENTG over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds,GMT Capitalheld the most valuable stake in Entegris Inc (NASDAQ:ENTG), which was worth $281.5 million at the end of the first quarter. On the second spot was RGM Capital which amassed $65.7 million worth of shares. Moreover, Daruma Asset Management, Polar Capital, and Royce & Associates were also bullish on Entegris Inc (NASDAQ:ENTG), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were leading the bulls' herd.Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the most outsized position in Entegris Inc (NASDAQ:ENTG). Polar Capital had $29.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $9.8 million investment in the stock during the quarter. The following funds were also among the new ENTG investors: Dmitry Balyasny'sBalyasny Asset Management, Paul Tudor Jones'sTudor Investment Corp, and Matthew Tewksbury'sStevens Capital Management.
Let's go over hedge fund activity in other stocks similar to Entegris Inc (NASDAQ:ENTG). We will take a look at CIT Group Inc. (NYSE:CIT), ADT Inc. (NYSE:ADT), Nuance Communications Inc. (NASDAQ:NUAN), and Prosperity Bancshares, Inc. (NYSE:PB). All of these stocks' market caps are closest to ENTG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIT,25,774051,-1 ADT,16,85421,1 NUAN,28,459833,-7 PB,9,103636,0 Average,19.5,355735,-1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $471 million in ENTG's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 9 bullish hedge fund positions. Entegris Inc (NASDAQ:ENTG) 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 ENTG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ENTG were disappointed as the stock returned -3.2% 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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US STOCKS-Rate-cut euphoria elevates S&P 500 to record high
(For a live blog on the U.S. stock market, click or type LIVE/ in a news window.)
* Stocks pare gains on Trump's Iran comment
* Energy up most among S&P 500 sectors
* Carnival Corp slides on 2019 profit warning
* Indexes: Dow +0.78%, S&P 500 +0.76%, Nasdaq +0.60% (Updates to afternoon)
By Noel Randewich
June 20 (Reuters) - The S&P 500 index touched a record high on Thursday, driven Wall Street's expectations that the Federal Reserve will cut interest rates as soon as next month to keep the U.S.-China trade war from stalling economic growth.
The U.S. central bank left rates unchanged at the end of its two-day policy meeting on Wednesday, but pledged to "act as appropriate" to sustain economic health.
Wall Street's main indexes have gained in recent weeks on expectations of a rate cut and hopes of a revival of trade talks between the United States and China at the Group of 20 meeting next week in Japan.
The benchmark S&P 500 index, which has risen about 7% so far in June, hit an intraday record high of 2,956.20 on Thursday.
"It was always going to be difficult for the Fed to live up to high market expectations. While the bar was set high, policymakers appear to have cleared it with ease while also leaving themselves with plenty of outs," said Craig Erlam, senior market analyst at OANDA in London.
A more-than-expected dovish Fed led to U.S. Treasury bond yields tumbling, with the benchmark 10-year yields dropping below 2% for the first time in more than 2-1/2 years.
The energy index jumped 1.92%, the most among the 11 major S&P sectors, as oil prices surged over 5% on renewed tensions in the Middle East after Iran shot down a U.S. military drone.
"This new high on the S&P 500 could be fool's gold," warned Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "We have this simmering tension in Iran that could spill over and create all kinds of global fears."
At 2:41 p.m. ET, the Dow Jones Industrial Average was up 0.78% at 26,710.42 points, while the S&P 500 gained 0.76% to 2,948.59.
The Nasdaq Composite added 0.6% to 8,035.07.
Apple rose 0.7% and briefly hit $200 for the first time since early May. The iPhone maker is viewed as a major potential casualty in Trump's trade war, should it worsen.
The technology sector rose 1.13%, boosting the S&P 500 by the most, with Oracle Corp leading the charge.
Oracle's shares jumped 8.1% after the business software maker forecast current-quarter profit above estimates. Its gain fueled the S&P 500 more than any other stock.
Cruise operator Carnival Corp slid 8.2%, the most among S&P companies, after cutting its profit forecast for the year on the Trump administration's sudden ban on cruises to Cuba and weakening demand in Europe over political uncertainty.
Rivals Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd dropped about 3% each.
Buoying sentiment was data which showed the number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to underlying labor market strength despite a sharp slowdown in job growth in May.
Advancing issues outnumbered declining ones on the NYSE by a 3.15-to-1 ratio; on Nasdaq, a 1.52-to-1 ratio favored advancers.
The S&P 500 posted 97 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 119 new highs and 40 new lows. (Additional reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru Editing by Nick Zieminski) |
Hedge Funds Have Never Been This Bullish On ViaSat, Inc. (VSAT)
The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards ViaSat, Inc. (NASDAQ:VSAT), and what that likely means for the prospects of the company and its stock.
IsViaSat, Inc. (NASDAQ:VSAT)a healthy stock for your portfolio? The smart money is buying. The number of bullish hedge fund positions improved by 3 lately. Our calculations also showed that VSAT 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.
[caption id="attachment_750220" align="aligncenter" width="473"]
Andrew Raab of FPR Partners[/caption]
We're going to view the new hedge fund action regarding ViaSat, Inc. (NASDAQ:VSAT).
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VSAT over the last 15 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,Baupost Group, managed by Seth Klarman, holds the most valuable position in ViaSat, Inc. (NASDAQ:VSAT). Baupost Group has a $1.0642 billion position in the stock, comprising 8.9% of its 13F portfolio. The second most bullish fund manager isFPR Partners, managed by Bob Peck and Andy Raab, which holds a $442.4 million position; the fund has 10.8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Crispin Odey'sOdey Asset Management Group, Mason Hawkins'sSoutheastern Asset Managementand Jeffrey Bronchick'sCove Street Capital.
As one would reasonably expect, specific money managers were leading the bulls' herd.Winton Capital Management, managed by David Harding, established the largest position in ViaSat, Inc. (NASDAQ:VSAT). Winton Capital Management had $11.7 million invested in the company at the end of the quarter. Jim Simons'sRenaissance Technologiesalso initiated a $5.7 million position during the quarter. The other funds with new positions in the stock are Steve Cohen'sPoint72 Asset Management, Joel Greenblatt'sGotham Asset Management, and Michael Platt and William Reeves'sBlueCrest Capital Mgmt..
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ViaSat, Inc. (NASDAQ:VSAT) but similarly valued. We will take a look at First Citizens BancShares Inc. (NASDAQ:FCNCA), PLDT Inc. (NYSE:PHI), ONE Gas Inc (NYSE:OGS), and Cinemark Holdings, Inc. (NYSE:CNK). This group of stocks' market values are closest to VSAT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCNCA,18,139967,-4 PHI,5,67170,0 OGS,15,100719,-2 CNK,20,226209,3 Average,14.5,133516,-0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $134 million. That figure was $2119 million in VSAT's case. Cinemark Holdings, Inc. (NYSE:CNK) 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. Compared to these stocks ViaSat, Inc. (NASDAQ:VSAT) 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 VSAT as the stock returned 15.3% 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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Dell Technologies Stock Wins Its Second Buy Rating in a Month
Every day, Wall Street analysts upgrade some stocks, downgrade others, and "initiate coverage" on a few more. But do these analysts even know what they're talking about? Today, we're taking one high-profile Wall Street pick and putting it under the microscope...
Six years after it disappeared from the public marketsin a private equity-backed buyout,Dell Technologies(NYSE: DELL)finallycame public againin December -- and in a blaze of glory.
Opening for trading on Dec. 28, 2018, at $46 per share, Dell rocketed to near $70 through May, giving investors a 52% profit in less than five months. But recent worries over the company's debt load (taken on long before the IPO, when it bought EMC three years ago, but still growing in the years since) and a slowdown in IT infrastructure spending among corporate clients have since sunk its shares -- which fell as much as 27.5% from their May highs to their low point earlier this week.
Noteveryoneis scared of Dell stock, however. In fact, this morning, one analyst said you should buy it.
Image source: Getty Images.
Deutsche Bankwas the brave soul that endorsed Dell today, and in fact, it's the second such analyst to do so this month. (Evercore ISI initiated coverage of Dell with an outperform rating and a $75 price target on June 5, according toStreetInsider.com.) With a $62 price target on its buy rating, Deutsche is actually a bit less optimistic about Dell than Evercore.
So why, exactly, does Deutsche like Dell?
The German banker says it has "4 main points" to make in Dell stock's favor.
First, Deutsche Bank addresses the risks: "Rising investor fears of slowing IT infrastructure spending are further magnified by Dell's high debt levels." And yet, the analyst says that the company can "consistently deleverage its balance sheet through a wide array of cash-generating actions," while at the same time potentially refinancing its debt (currently $55.1 billion) in order to save on interest costs -- freeing up even more cash with which to pay down debt.
Second, it would also help Dell pay down debt if it were generating a bit more profit. Presently,S&P Global Market Intelligencedata put the company's operating profit margin at a lowly 1.1% (and itsnetmargin is negative). But Dell is targeting a 12% operating profit margin, and Deutsche has "confidence" it can get there as the tech specialist sells more higher-margin storage and VMware services to its clients.
If the analyst is right about that, then Dell should eventually be able to turn its losses into profits. Indeed, Deutsche posits profits of as much as $11 per share by 2022.
Third, based on this assumption, Dell stock is currently trading at a mere five times projected profits three years from now. Yet according to Wall Street data, most analysts are looking for no more than $4.93 per share inGAAPearnings from the company in 2022 -- less than half of what the German banker seems to believe is possible. Deutsche calls these Wall Street estimates "conservative," which may be the understatement of the year.
Fourth and finally, the analyst argues that "the recent pullback in Dell's share price" offers investors a chance to buy into the stock before Wall Street realizes its mistake.
Thus, Dell's recent fall in share price appears to offer investors a proverbial second bite at the apple -- or so thinks Deutsche. But is the banker right about that?
First and foremost, let's point out the obvious risk to investing in Dell today. Itmayturn profitable in 2022. (Indeed, most analysts agree the company could start earning GAAP profits as early as next year.) But if Deutsche is wrong about theamountof that profit, well, $4.93 in GAAP earnings by 2022 would mean that Dell stock is trading for closer to 11 times earnings (three years away), not the five times earnings valuation that Deutsche suggests. In other words, it could be Deutsche, and not everybody else on Wall Street, that is off by a factor of two in its valuation.
As for today, Dell still isn't profitable yet, and valued on the $0.76 per share that analysts think it's likely to earn next year, the stock is currently trading for a whopping 70 times forward earnings.
That's not exactly cheap.
Dell shares get even more expensive when you factor debt into the picture. Add the company's $55.1 billion debt load to its $38.8 billion market cap, credit it for $9 billion in cash on the balance sheet, and Dell's totalenterprise valuecomes to a massive $84.9 billion -- and its forward (debt-adjusted) P/E ratio explodes upwards, to nearly 290 times FY 2020 earnings.
Deutsche may not be afraid of these numbers. But personally, I find that valuation downright scary -- and it's the No. 1 reason I won't be buying Dell Technologies stock today.
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What does Ligand Pharmaceuticals Incorporated's (NASDAQ:LGND) Balance Sheet Tell Us About Its Future?
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Small and large cap stocks are widely popular for a variety of reasons, however, mid-cap companies such as Ligand Pharmaceuticals Incorporated (NASDAQ:LGND), with a market cap of US$2.2b, often get neglected by retail investors. However, generally ignored mid-caps have historically delivered better risk-adjusted returns than the two other categories of stocks. This article will examine LGND’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Note that this information is centred entirely on financial health and is a top-level understanding, so I encourage you to look furtherinto LGND here.
Check out our latest analysis for Ligand Pharmaceuticals
LGND's debt levels surged from US$228m to US$649m over the last 12 months – this includes long-term debt. With this increase in debt, LGND currently has US$1.5b remaining in cash and short-term investments to keep the business going. Moreover, LGND has produced cash from operations of US$179m during the same period of time, leading to an operating cash to total debt ratio of 28%, meaning that LGND’s debt is appropriately covered by operating cash.
With current liabilities at US$187m, it appears that the company has been able to meet these commitments with a current assets level of US$1.6b, leading to a 8.39x current account ratio. The current ratio is the number you get when you divide current assets by current liabilities. However, a ratio above 3x may be considered excessive by some investors, yet this is not usually a major negative for a company.
LGND is a relatively highly levered company with a debt-to-equity of 60%. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can check to see whether LGND is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In LGND's, case, the ratio of 4.05x suggests that interest is appropriately covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
LGND’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. Since there is also no concerns around LGND's liquidity needs, this may be its optimal capital structure for the time being. Keep in mind I haven't considered other factors such as how LGND has been performing in the past. You should continue to research Ligand Pharmaceuticals to get a better picture of the mid-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for LGND’s future growth? Take a look at ourfree research report of analyst consensusfor LGND’s outlook.
2. Valuation: What is LGND 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 LGND 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. |
Gold Price Prediction – Prices Surge and Continue to Break Out Reaching 5-year Highs
Gold prices shot higher surge on Thursday as Iran shot down a US military drone which is an act of aggression. This comes on a dovish fed meeting that revealed on Wednesday that rates were likely to be lower in July. The Fed also reduced its growth forecast slightly but believe the Fed fund rate will be lower by 50-basis points by the end of 2019. Safe haven activity also helped gold prices surge as the 10-year yield dipped below the 2% handle.
Gold prices surged on Thursday, testing the March of 2014 highs at 1,393. The next test of target resistance is seen near the August 2013 highs at 1,433. Gold prices are likely to continue to climb now that they have broken out of a 5-year trading range. Momentum is positive as the RSI (relative strength index) has also broken out reflecting accelerating positive momentum. The current reading on the RSI which is a momentum oscillator is 82, well above the overbought trigger level of 70 which could foreshadow a correction. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The fast stochastic is printing a reading of 93, above the overbought trigger level of 80 which also could foreshadow a correction.
Iran reported on Thursday that it shot down a US military drone, which stoked fears. President Trump initially said Iran had made a huge mistake, but it could be somewhat who was just trigger happy. Oil prices jumped following the action. The Islamic Revolutionary Guard Corps said its air force brought down the American surveillance drone in a southern coastal region along the Strait of Hormuz. Separately, after the FOMC decision, implied yields across the Fed Funds futures strip have fallen. The January 2020 contract is now at 1.60%, which is fully pricing in three cuts this year. This weighed on the dollar paving the way for higher gold prices.
Thisarticlewas originally posted on FX Empire
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• Weekly Wrap – Central Banks, Stats, and Geopolitics Drove the Majors |
The U.S. Drone Shot Down by Iran Is a $200 Million Prototype Spy Plane
Bloomberg via Getty The U.S. military drone Iran shot down over the Persian Gulf on Thursday was a high-flying prototype model belonging to the Navy. The Navy for years has deployed the Broad Area Maritime Surveillance Demonstrator, or BAMS-D, drones on an emergency basis, stationing the 737-size unmanned aerial vehicles to watch over Syria and Iran. The unarmed BAMS-D drone was shot down by an Iranian surface-to-air missile system while operating in international airspace over the Strait of Hormuz, Navy Capt. Bill Urban, a U.S. Central Command spokesperson, told The Daily Beast via email. Iranian reports that the aircraft was over Iran are false, Urban added. Inside the U.S.-Iran Drone War The Pentagons decision to deploy the rare BAMS-D underscores the militarys urgency amid escalating tensions between the United States and Iran. Prior to the shoot-down, the Navy possessed just four copies of the BAMS-D, which is a naval variant of the RQ-4 Global Hawk that Northrop Grumman builds for the Air Force. A single Global Hawk sells for more than $200 million, counting the cost of its sensors. Operators control the drone from work stations on the ground, beaming commands via satellite to the pilotless aircraft. The Pentagon began developing the Global Hawk and its variants back in the '90s, hoping to replace Cold War-vintage U-2 spy planes. The idea was that a drone, with no pilot aboard, could stay aloft longer and fly riskier missions than a U-2 could do. The Global Hawk and its variants can circle at up to 65,000 feet for as many as 30 hours while simultaneously carrying a camera, an infrared sensor, and a radar that can track moving targets. In the end, the Air Force decided to keep the U-2 and build up a force of dozens of RQ-4s. The giant drones with the 131-feet wingspan have flown over Iraq and Afghanistan. In 2008, the Navy paid Northrop more than $1 billion to begin developing a version of the Global Hawk with modifications for tracking ships. Story continues Iranian Revolutionary Guard Shoots Down U.S. Drone in Gulf Crisis Northrop built the four BAMS-D drones as prototypes while it worked on the definitive MQ-4C version. The Navy plans to buy as many as 70 MQ-4Cs. The first copy could deploy for front-line patrols as early as this year. But apparently only the BAMS-Ds were ready when tensions escalated between the United States and Iran this summer. A pair of the drones could, in theory, watch over the Persian Gulf around the clock, beaming intelligence imagery to ships and ground stations in near real time. For years, the Navy has paid Northrop to station probably two BAMS-Ds at Al Dhafra air base in the United Arab Emirates. The drones have flown front-line missions while also feeding data into Northrops test program. In 2013, as the war in Syria grew bloodier, the Navy upped the value of Northrops contract in order to fly the BAMS-Ds 15 times per month, up from nine. A BAMS-D would fly overhead, keeping an eye out for Iranian forces, each time a major Navy warship slipped through the Strait of Hormuz, which is just 21 miles wide at its narrowest point. We use it on every strait transit, Adm. Jon Greenert, then the chief of naval operations, said of the drone . The theater commander loves it. But the BAMS-D is not invulnerable. While flying at 65,000 feet, the drone is beyond the reach of most, but not all, enemy air defenses. Iran possesses Russian-made S-300 surface-to-air missiles that can reach as high as 100,000 feet. Moreover, the BAMS-D is designed to descend periodically to low altitude in order to inspect ships. The Thursday shoot-down reduces the Navys fleet of high-flying drones to as few as three and could compel the service to change how it deploys the aircraft. But the loss of one BAMS-D is unlikely to compel the Pentagon to ground its spy planes. Now that Iran has directly attacked U.S. forces, American commanders need intelligence more than ever. Read more at The Daily Beast. Got a tip? Send it to The Daily Beast here Get our top stories in your inbox every day. Sign up now! Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more. |
Amazon Surveillance Coming to a Neighborhood Near You?
Amazon (NASDAQ: AMZN ) may soon be selling “surveillance as a service” to those who are worried about the safety of their neighborhoods. Amazon Surveillance Source: Amazon The online retailer recently attained a U.S. patent that would offer surveillance as a service in the form of an “unmanned aerial vehicle,” which is another way of saying “drone.” The device “may perform a surveillance action at a property of an authorized party” per the patent. Amazon’s patent may also “image the property to generate surveillance images,” per the text on the filing. The patent was filed on June 12, 2015 and it was granted on June 4 of this year, which would give consumers a drone-based surveillance system that is better than a regular video-camera installation that has a limit to its range, which means it could miss certain things or be destroyed by someone. InvestorPlace - Stock Market News, Stock Advice & Trading Tips The company’s patent adds that surveillance would be a “secondary task” of this drone-based device behind package delivery. Amazon suggests that a user may want to “subscribe to a surveillance system to provide surveillance as a service.” The business offers other home surveillance and security products, including the smart doorbell Ring with a video feed, which the company acquired for more than $1 billion in February 2018. In May 2018, the company rolled out Neighbors, a social network to report crimes by uploading videos directly from Ring security cameras. AMZN stock is up about 0.3% on Thursday following the company’s announcement. More From InvestorPlace 7 Value Stocks to Buy for the Second Half 6 Stocks Ready to Bounce on a Trade Deal 5 Stocks to Buy for $20 or Less Compare Brokers The post Amazon Surveillance Coming to a Neighborhood Near You? appeared first on InvestorPlace . |
Should You Buy Fletcher Building Limited (NZSE:FBU) For Its Dividend?
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Could Fletcher Building Limited (NZSE:FBU) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.
A slim 3.0% yield is hard to get excited about, but the long payment history is respectable. At the right price, or with strong growth opportunities, Fletcher Building could have potential. Some simple analysis can reduce the risk of holding Fletcher Building for its dividend, and we'll focus on the most important aspects below.
Explore this interactive chart for our latest analysis on Fletcher Building!
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. In the last year, Fletcher Building paid out 27% of its profit as dividends. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. Plus, there is room to increase the payout ratio over time.
In addition to comparing dividends against profits, we should inspect whether the company generated enough cash to pay its dividend. It's positive to see that Fletcher Building's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Remember, you can always get a snapshot of Fletcher Building's latest financial position,by checking our visualisation of its financial health.
One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. For the purpose of this article, we only scrutinise the last decade of Fletcher Building's dividend payments. This dividend has been unstable, which we define as having fallen by at least 20% one or more times over this time. During the past ten-year period, the first annual payment was NZ$0.38 in 2009, compared to NZ$0.16 last year. The dividend has shrunk at around 8.3% a year during that period. Fletcher Building's dividend has been cut sharply at least once, so it hasn't fallen by 8.3% every year, but this is a decent approximation of the long term change.
When a company's per-share dividend falls we question if this reflects poorly on either the business or management. Either way, we find it hard to get excited about a company with a declining dividend.
With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS are growing. In the last five years, Fletcher Building's earnings per share have shrunk at approximately 9.3% per annum. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend.
We'd also point out that Fletcher Building issued a meaningful number of new shares in the past year. Regularly issuing new shares can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
To summarise, shareholders should always check that Fletcher Building's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. Earnings per share are down, and Fletcher Building's dividend has been cut at least once in the past, which is disappointing. Ultimately, Fletcher Building comes up short on our dividend analysis. It's not that we think it is a bad company - just that there are likely more appealing dividend prospects out there on this analysis.
Given that earnings are not growing, the dividend does not look nearly so attractive. Businesses can change though, and we think it would make sense to see whatanalysts are forecasting for the company.
Looking for more high-yielding dividend ideas? Try ourcurated list of dividend stocks with a yield above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
JetBlue Can Now Expand Europe Long-Haul Strategy With Airbus XLR Order
JetBlue Airways’ European strategy became clearer Thursday when the airline committed to an airplane capable of flying not only from the U.S. East Coast to London or Dublin but also from Boston and New York to south, central, and northern Europe.
JetBlue became the third U.S. carrier to say it plans to fly Airbus’ newest narrowbody jet,the A321XLR.Airbus introduced the single-aisle airplane, which should fly as far as 4,700 nautical miles, this week at the Paris Air Show.American Airlines committed to 50 earlier in the week, whileFrontier Airlines said it would take 18.
In April JetBlue announced it would fly from itsBoston and New York focus cities to London by 2021.But JetBlue didn’t say where else in Europe it might fly, likely because it didn’t have the right aircraft for Continental Europe. For London JetBlue had committed to the A321LR (LR stands for long range), which has a 600-mile range gap compared to its XLR (or extra long range) cousin.
JetBlue said Thursday it will take 13 A321XLRs, with first delivery in 2023. This is in addition to13 A321LRs it ordered earlier this year.
“The fact they committed to XLRs means they are committing to a very long range aircraft,” said Jay Shabat, senior analyst at Skift Airline Weekly. “This truly does open up more European city pairs. They can go deeper into Europe form New York and Boston. You are even starting to talk about southern Europe too, including Italy.”
JetBlue has said it plans to update its cabin for long-range routes, and these airplanes are expected to have a new Mint business class, as well as a refreshed economy class. The airline wants to entice customers to switch fromlegacy carriers by offering a better product at lower prices.
JetBlue executives speak most often about Europe, but they long have been intrigued by routes into South America.
They’ve been limited by the fleet. But this yearJetBlue is taking delivery of the A321neo,the longest range aircraft it has ever flown. In December it will use the airplane on what will be its longest route, New York to Guayaquil, Ecuador.
Both the A321 LR and XLR will fly farther, allowing the airline to expand to deep South America. While New York to São Paulo still will be impossible, Shabat said the new airplane could fly from Fort Lauderdale, Fla., to Argentina and Brazil.
South America on its own is an intriguing market. It’s also counter-seasonal to Europe, making it a good place to send airplanes when leisure travelers don’t want to visit Europe.
“For them, South America is kind of a big deal too,” Shabat said. “You can put that airplane on JFK to Frankfurt in the summer and turn it around and send it to Brazil in the winter.”
One reason JetBlue executives like the Airbus A321LR is because it’s essentially the same aircraft the airline already flies on domestic U.S. routes, just with more range.
But the plane introduced this week is different. Airbus is increasing the range by installing an additional tank to hold more fuel, making it a structurally different airplane.
It sounds like a minor change, but JetBlue wouldn’t be able to take the extra tank out. If the airline decided it wanted to pull out of Europe someday, it could use the airplane on domestic routes, but it wouldn’t be ideal, Shabat said.
It’s an issue JetBlue CEO Robin Hayes addressed last year in an interview,after news broke that Airbus was considering building the airplane.
“All the LR really is, is a third auxiliary fuel tank, so you can always take it out of the airplane and fly the airplane in the rest of your network,” he said then. “The XLR has a fuel tank bladder, and it’s got some other changes that make it a different airplane.”
But there’s still some flexibility, Shabat said. First delivery is four years away, so if JetBlue executives change their mind before then, the airline should have the right to convert the order into a different type of aircraft. Airlines change their orders all the time, depending on market conditions.
Even this XLR order is just a conversion. JetBlue said it will take the 13 new planes by converting an earlier order from A321neos to A321XLRs.
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Lumentum Holdings Inc. (NASDAQ:LITE): What Does Its Beta Value Mean For Your Portfolio?
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Anyone researching Lumentum Holdings Inc. (NASDAQ:LITE) 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. 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 mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated 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.
Check out our latest analysis for Lumentum Holdings
With a beta of 1.04, (which is quite close to 1) the share price of Lumentum Holdings has historically been about as voltile as the broader market. If the future looks like the past, we could therefore consider it likely that the stock price will experience share price volatility that is roughly similar to the overall market. Beta is worth considering, but it's also important to consider whether Lumentum Holdings is growing earnings and revenue. You can take a look for yourself, below.
Lumentum Holdings is a reasonably big company, with a market capitalisation of US$3.8b. Most companies this size are actively traded with decent volumes of shares changing hands each day. It's not overly surprising to see large companies with beta values reasonably close to the market average. After all, large companies make up a higher weighting of the index than do small companies.
Since Lumentum Holdings 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. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Lumentum Holdings’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Future Outlook: What are well-informed industry analysts predicting for LITE’s future growth? Take a look at ourfree research report of analyst consensusfor LITE’s outlook.
2. Past Track Record: Has LITE 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 LITE's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how LITE 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. |
The sixth-largest city in India is running out of water as reservoirs run dry
People in India's sixth-largest city lined up with cans amid a widespread water shortage during an intense drought that dried lakes and depleted groundwater. Millions of people in Chennai were affected by the short water supplies, which sparked protests, work stoppages and business closures. The BBC reported that residents in Chennai, which was officially known as Madras until 1996, stood in line for hours as water tank trucks were brought into the city from towns miles away. Four of Chennai's main water reserves were completely dry, causing Chennai Metro Water to cut the water it supplies by 40%, The Guardian reported. According to Reuters , Chennai relies on monsoon season to supply its water for the year. Last year, a drought followed a 62% shortfall in monsoon rains, compared with 2017, in part causing the water crisis, State Rural Development Minister S.P. Velumani said Wednesday. Monsoon rains this year were delayed in parts of the country. Loading... 'Two-minute showers': Cape Town could be the first major city in the world to run out of water The Madras High Court blamed the Tamil Nadu state government for the crisis and said officials were passively waiting for rains rather than looking for solutions, The Guardian reported. Chennai, the capital of the state of Tamil Nadu in southern India, has a population of about 4.6 million, according to a 2011 census. The short water supplies come amid an intense heatwave in the country's northern and eastern regions. Climate change hitting US water: Already affecting us: Climate change evident in Southwest as heat, drought, fires, federal report says There were signs of hope. The Times of India reported Wednesday that a storm system was developing in the Bay of Bengal, which could bring rain to the city in a few days. Contributing: The Associated Press. Follow USA TODAY's Ryan Miller on Twitter @RyanW_Miller This article originally appeared on USA TODAY: The sixth-largest city in India is running out of water as reservoirs run dry |
Do Lennar's (NYSE:LEN) Earnings Warrant Your Attention?
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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies likeLennar(NYSE:LEN). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
View our latest analysis for Lennar
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). That makes EPS growth an attractive quality for any company. Over the last three years, Lennar has grown EPS by 12% per year. That's a pretty good rate, if the company can sustain it.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that Lennar's revenuefrom operationswas lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Lennar maintained stable EBIT margins over the last year, all while growing revenue 61% to US$21b. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not checkthis interactive chart depicting future EPS estimates, for Lennar?
We would not expect to see insiders owning a large percentage of a US$16b company like Lennar. But we are reassured by the fact they have invested in the company. Notably, they have an enormous stake in the company, worth US$316m. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.
One positive for Lennar is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Of course, just because Lennar is growing does not mean it is undervalued. If you're wondering about the valuation, check outthis gauge of its price-to-earnings ratio, as compared to its industry.
Of course, you can do well (sometimes) buying stocks thatare notgrowing earnings anddo nothave insiders buying shares. But as a growth investor I always like to check out companies thatdohave those features. You can accessa free list of them here.
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. |
Top Research Reports for Adobe, Charter Communications & HCA Healthcare
Thursday, June 20, 2019 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Adobe (ADBE), Charter Communications (CHTR) and HCA Healthcare (HCA). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>> Adobe ’s shares have gained +17% over the past year, underperforming the Zacks Software industry which has increased +27.4% over the same period. Adobe reported strong fiscal second-quarter results. The Zacks analyst thinks increasing demand for its creative products are driving top-line growth. Also, the company’s Adobe Document Cloud and Adobe Experience Cloud products, along with growing subscription for cloud application have aided results. It has been making great efforts toward establishing its presence in cloud-related software areas such as documents and marketing. Adobe’s market position, compelling product lines, continued innovation, solid adoption of Creative Cloud and Adobe marketing cloud are major positives. However, lower end-market demand and exposure to Europe remain overhangs. Additionally, high acquisition expenses do not bode well for its margin expansion. (You can read the full research report on Adobe here >>> ). Shares of Charter Communications have outperformed the Zacks Cable TV industry year to date (+39.5% vs. +28.5%).The Zacks analyst thinks the company’s residential and commercial Internet and voice customer growth continues to drive its top line. Increase in Internet speed at no extra cost is aiding subscriber growth. Additionally, Charter is looking to attract video customers by providing a new OTT video service. Notably, the company launched Spectrum TV Essentials in Charter’s footprint for Spectrum Internet users who do not avail Spectrum video services. However, commercial revenues continue to suffer due to migration of customers to Spectrum pricing and packaging from Legacy TWC and Legacy Bright House. Story continues Moreover, Charter continues to lose video subscribers primarily due to cord-cutting and intense competition from streaming service providers such as Netflix, HBO and Amazon. (You can read the full research report on Charter Communications here >>> ). HCA Healthcare ’s shares have outperformed the Zacks Hospital industry in the past year, gaining +20.9% vs. +6.3%. Moreover, it has witnessed its 2019 and 2020 earnings estimates move north over the past 30 days. The Zacks analyst thinks its top line has been growing over the last several quarters on the back of higher admissions, same facility emergency room growth and surgical growth, etc. Multiple acquisitions have helped the company gain a strong foothold in the industry, fueling its inorganic growth. A strong balance sheet and free cash flow are other positives for the company. A bullish 2019 guidance should instill investor’s confidence in the stock. However, high operating expenses persistently weigh on its margins. The company is expected to witness a rise in costs due to its constant growth-related investments. High leverage is another concern for the company. (You can read the full research report on HCA Healthcare here >>> ). Other noteworthy reports we are featuring today include Becton, Dickinson (BDX), Micron (MU) and Shopify (SHOP). Will you retire a millionaire? One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.” Click to get it free >> Mark Vickery Senior Editor Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>> Today's Must Read Adobe (ADBE) Rides on Creative Strength, Expenses A Concern Subscriber Gains, Wireless Initiatives Benefit Charter (CHTR) Rising Top-line Aid HCA Healthcare (HCA), High Costs Hurt Featured Reports Product Rollouts & Growing Merchant Base Aid Shopify (SHOP) Per the Zacks analyst, Shopify is benefiting from introduction of Fraud Protect and Shopify Ping solutions. SBA Communications (SBAC) Beats Market Blues with Firm Growth Per the Zacks analyst, SBA Communications is poised for solid growth with in-depth sector knowhow, scale and resources, despite being susceptible to earnings volatility due to industry consolidation. Cummins (CMI) Rides on Improved Demand Amid Expense Woes Per the Zacks analyst, Cummins gains from increased engine and component demand for heavy and medium-duty trucks in North America despite rising expenses. Weyerhaeuser (WY) Rides on Operational Excellence, Costs High Per the Zacks analyst, Weyerhaeuser's focus on operational excellence plans, like merchandising for value, are encouraging. New Product Innovation Aids Textron (TXT), Competition Hurts Per the Zacks analyst, Textron's new product launch will significantly expand its shares in the all-terrain vehicles industry. Buyout, Loans Aid Prosperity Bancshares (PB) Amid Margin Woe Per the Zacks analyst, acquisitions, loan growth and improving asset quality will support Prosperity Bancshares. Abercrombie's (ANF) Sturdy Comps Run to Propel Top-Line Per the Zacks analyst, its progress on strategic initiatives, alongside strength in Hollister brand and digital business should drive sales. New Upgrades J.B. Hunt (JBHT) Rides on Acquisitions, Dividends & Buybacks The Zacks analyst is impressed by the company's efforts to reward its shareholders through dividends and buybacks. J.B. Hunt's growth by acquisition strategy is also encouraging. LATAM Airlines' (LTM) Cost-Cut Plans & Dividends Bode Well The Zacks analyst is impressed with LATAM Airlines' efforts to cut non-fuel unit costs. The company's initiatives to reward its shareholders are encouraging too. New Program Wins, Global Expansion Benefits Plexus (PLXS) According to the Zacks analyst, Plexus benefits from new program wins as well as continuing global expansion. New Downgrades Weak Core Life Sciences Unit Hurts Becton, Dickinson (BDX) Becton, Dickinson has seen sluggishness in the core Life Sciences unit in recent times. The Zacks analyst is apprehensive of near-term headwinds in the company's Drug Coated Balloon business. Micron (MU) Battered by Falling Chip Prices, Trade Tussle Per the Zacks analyst, Micron is hurt by higher-than-expected drop in DRAM and NAND pricing. Moreover, the U.S.-China trade spat makes the demand environment highly volatile for the company. Low Gas Price, High Leverage to Weigh on Apache (APA) The Zacks analyst is worried over Apache's Permian gas output due to the extremely low prices of the commodity in West Texas. undefined undefined Shopify Inc. (SHOP) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report Charter Communications, Inc. (CHTR) : Free Stock Analysis Report Becton, Dickinson and Company (BDX) : Free Stock Analysis Report Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research |
Sallie Krawcheck Wants CEOs to 'Break the Wheel' to Solve the Diversity Crisis
Sallie Krawcheck isn’t here for your diversity groups and mentoring programs.
“Guys, we’ve been doing that for years and years and years. If it was gonna work, it would’ve worked,” she said of the common corporate salves to a pressing diversity crisis.
Instead, CEOs need to decide they’re going to “break the wheel,” the CEO of Ellevest, a digital financial advisor for women, said atFortune‘s Brainstorm Finance conference on Thursday. By that, she meant they must take dramatic, seismic action to address the problem. Business as usual isn’t gonna cut it, she said. “We’re so far behind the starting line; it hurts us all.”
The data underlying Krawcheck’s comments explain her sense of urgency—and frustration. Among the top firms in financial services and technology—the focus of the Brainstorm summit—women made up18%and14%of executive committees, respectively, last year. Those figure were only slightly better than 2014’s: 13% and 11%, according to management consultancy 20-first.
Krawcheck shared the Brainstorm stage with two leaders whose companies are attempting to follow her “break the wheel” advice.
Citigroupearlier this year disclosed that, on the whole, women at the firm globally earn 29% less than men. The revelation was an instance of voluntary, radical transparency as the bank was not required to publish the figure (though it did face shareholder pressure to do so).
“It was an inflection point for us,” said Raymond McGuire, who’s vice chairman of Citigroup and chairman of banking, capital markets, and advisory at Citi. The disclosure and the bank’s efforts to close the gap reflect its culture and values, he said. To get from good to great, he said, “you have to figure out how good you are.”
Edward Jones, meanwhile, recently introduced a program that incentivizes retiring financial advisors to refer their business to another advisor who’s a woman or person of color.
“The reason for this was to raise awareness,” said Edward Jones Managing Partner Penny Pennington, noting that 20% of the firm’s advisors are female. The firm is trying to “create an environment” that reflects the communities the firm serves and is empathetic to a broad group of people. Though Pennington admits there are “as many women who don’t like the idea as there are women who do like the idea.” Female critics of the initiative, she said, don’t want others to assume their practice is only growing because of some kind of special treatment.
Assertive, top-down leadership on diversity is—by its very nature—unlikely to please everyone. But that’s what’s needed, in Krawcheck’s view.
She says you can’t expect significant change—like the kind that will upend the social norm that only white men are leaders—to always bubble up from the bottom. “It really has to come from the top,” she said, “as in, ‘We’re just gonna freakin’ do this, and I don’t care if even some of the women don’t like it.'”
—Brainstorm Finance 2019: Watch the livestreamof the inaugural conference
—Andreessen Horowitz: HowFacebook’s Libra cryptocurrencywill be governed
—Welcome to the next generation ofcorporate phishing scams
—Western Union and Zelle dishon the competition and talk mobile payments
—Millennials arenot basement-dwelling potheads, says Wealthfront CEO
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Iran shoots down US surveillance drone, heightening tensions
TEHRAN, Iran (AP) — Iran's Revolutionary Guard shot down a U.S. surveillance drone Thursday in the Strait of Hormuz, marking the first time the Islamic Republic directly attacked the American military amid tensions over Tehran's unraveling nuclear deal with world powers. The two countries disputed the circumstances leading up to an Iranian surface-to-air missile bringing down the U.S. Navy RQ-4A Global Hawk, an unmanned aircraft with a wingspan larger than a Boeing 737 jetliner and costing over $100 million. Iran said the drone "violated" its territorial airspace, while the U.S. called the missile fire "an unprovoked attack" in international airspace over the narrow mouth of the Persian Gulf and President Donald Trump tweeted that "Iran made a very big mistake!" Trump later appeared to play down the incident, telling reporters in the Oval Office that he had a feeling that "a general or somebody" being "loose and stupid" made a mistake in shooting down the drone. The incident immediately heightened the crisis already gripping the wider region, which is rooted in Trump withdrawing the U.S. a year ago from Iran's 2015 nuclear deal and imposing crippling new sanctions on Tehran. Recently, Iran quadrupled its production of low-enriched uranium to be on pace to break one of the deal's terms by next week while threatening to raise enrichment closer to weapons-grade levels on July 7 if Europe doesn't offer it a new deal. Citing unspecified Iranian threats, the U.S. has sent an aircraft carrier to the Middle East and deployed additional troops alongside the tens of thousands already there. All this has raised fears that a miscalculation or further rise in tensions could push the U.S. and Iran into an open conflict 40 years after Tehran's Islamic Revolution. "We do not have any intention for war with any country, but we are fully ready for war," Revolutionary Guard commander Gen. Hossein Salami said in a televised address. Story continues The paramilitary Guard, which answers only to Supreme Leader Ayatollah Ali Khamenei, said it shot down the drone at 4:05 a.m. Thursday when it entered Iranian airspace near the Kouhmobarak district in southern Iran's Hormozgan province. Kouhmobarak is about 1,200 kilometers (750 miles) southeast of Tehran. The drone took off from the southern Persian Gulf and collected data from Iranian territory, including the southern port of Chahbahar near Iran's border with Pakistan, the Guard said in comments that appeared aimed at showing it could track the aircraft. The U.S. military has not commented on the mission of the remotely piloted aircraft that can fly higher than 10 miles in altitude and stay in the air for over 24 hours at a time. Iran used its air defense system known as Third of Khordad to shoot down the drone — a truck-based missile system that can fire up to 18 miles (30 kilometers) into the sky, the semi-official Fars news agency reported. Iranian state TV later broadcast video it described as the moment the Guard launched the surface-to-air missile that struck the U.S. drone. Chants of "God is great!" could be heard as a fireball appeared in the darkened sky. Typically, militaries worldwide call out to errant aircraft entering their airspace before firing. It's unclear whether Iran gave any warning before opening fire. The U.S. military says Iran fired on and missed another drone last week near the Strait of Hormuz, the narrow mouth of the Persian Gulf through which 20% of all global oil moves. The U.S. has been worried about international shipping through the strategic waterway since tankers were damaged in May and June in what Washington has blamed on limpet mines from Iran, although Tehran denied involvement.. On Wednesday in the United Arab Emirates, the U.S. Navy showed fragments of mines that it said bore "a striking resemblance" to those seen in Iran The RQ-4 Global Hawk was at least 34 kilometers from Iranian territory when it was shot down by an Iranian surface-to-air missile, said Air Force Lt. Gen. Joseph Guastella, commander of the U.S. Central Command. He said it was an attempt to disrupt U.S. efforts to monitor the Persian Gulf region. But Salami, speaking to a crowd in the western city of Sanandaj, described the American drone as "violating our national security border." "Borders are our red line," the Revolutionary Guard general said. "Any enemy that violates the borders will be annihilated." Iran's Foreign Ministry also said the drone entered Iranian airspace, and Foreign Minister Mohammad Javad Zarif tweeted it would take its case to the U.N. He later tweeted that Iran retrieved parts of the drone in its territorial waters. Russian President Vladimir Putin urged caution, warning any war between Iran and the U.S. would be a "catastrophe for the region as a minimum." Israeli Prime Minister Benjamin Netanyahu urged support for U.S. efforts to halt what he called escalating Iranian provocations. "In the last 24 hours, Iran has intensified its aggression against the United States and against all of us," he said. U.N. Secretary-General Antonio Guterres expressed concern and urged all parties to "avoid any action that could inflame the situation," said U.N. spokesman Stephane Dujarric. America stations some RQ-4 Global Hawks at the Al-Dhafra Air Base in the UAE, near the capital of Abu Dhabi. Associated Press journalists saw the drones on the base's tarmac during a March 2016 visit by then-Vice President Joe Biden. The U.S. military occasionally publishes images from there of the drones, which have a distinctive hump-shaped front and an engine atop the fuselage. Iran has claimed to have shot down U.S. drones before. In the most famous incident, in December 2011, Iran seized an RQ-170 Sentinel flown by the CIA to monitor Iranian nuclear sites after it entered Iranian airspace from neighboring Afghanistan. Iran later reverse-engineered the drone to create their own variants. Elsewhere in the region Thursday, Saudi Arabia said Yemen's Iranian-backed Houthi rebels fired a rocket at a desalination plant in al-Shuqaiq, a city in the kingdom's Jizan province. The state-run Saudi Press Agency quoted military spokesman Col. Turki al-Maliki as saying it caused no damage or casualties. The Yemeni rebel Al-Masirah satellite news channel earlier said the Houthis targeted a power plant in Jizan, near the kingdom's border with Yemen, with a cruise missile. A coalition led by Saudi Arabia, a key U.S. ally, has been battling the Houthis since March 2015 in Yemen, the Arab world's poorest nation now pushed to the brink of famine by the conflict. In recent weeks, the Houthis have launched a new campaign sending missiles and bomb-laden drones into Saudi Arabia. ___ Gambrell reported from Dubai, United Arab Emirates. Associated Press writer Deb Riechmann in Washington contributed. |
Imagine Owning Globalive Technology (CVE:LIVE) And Trying To Stomach The 91% Share Price Drop
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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 blameGlobalive Technology Inc.(CVE:LIVE) shareholders if they were still in shock after the stock dropped like a lead balloon, down 91% in just one year. That'd be a striking reminder about the importance of diversification. Globalive Technology hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 47% in the last 90 days.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Check out our latest analysis for Globalive Technology
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Globalive Technology saw its earnings per share drop below zero. Some investors no doubt dumped the stock as a result. Of course, if the company can turn the situation around, investors will likely profit.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination ofhistoric growth trends, available here..
While Globalive Technology shareholders are down 91% for the year, the market itself is up 1.0%. 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 47%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. If you would like to research Globalive Technology in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
But note:Globalive Technology may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
North Korea's Kim meets China's Xi, says awaiting US actions
BEIJING (AP) North Korean leader Kim Jong Un, meeting in Pyongyang with Chinese President Xi Jinping, said Thursday that his country is waiting for a desired response in stalled nuclear talks with the United States. "North Korea would like to remain patient, but it hopes the relevant party will meet halfway with North Korea to explore resolution plans that accommodate each other's reasonable concerns," he said, according to Chinese state broadcaster CCTV. Xi's trip to North Korea, the first by a Chinese president in 14 years, raises the possibility that China could help break a monthslong impasse in talks between the U.S. and North Korea over the North's nuclear weapons. Describing the issue as "highly complex and sensitive," Xi said his government is willing to play a constructive role in the denuclearization of the Korean Peninsula. "The international community expects the U.S. and North Korea to continue to talk and achieve results," he said, according to CCTV. The summit comes as both countries are locked in separate disputes with the United States China over trade and North Korea over its nuclear weapons. With Xi due to meet President Donald Trump next week in Japan, analysts say Kim may ask the Chinese leader to pass on a message that could revive the talks with the U.S. Xi's two-day state visit to North Korea, announced just three days ago, began with the synchronized pomp of all major events in the country. About 10,000 cheering people and a 21-gun salute greeted Xi and senior Chinese officials at an arrival ceremony at Pyongyang's airport. The CCTV evening news showed Xi and his wife Peng Liyuan waving to the crowd after emerging from their Air China plane, then being greeted by Kim and his wife, Ri Sol Ju before receiving flowers and watching goose-stepping troops march by. The crowd stood in tight formations, waving flowers and chanting slogans to welcome Xi. Other people lined the roads and cheered from overpasses as Xi's motorcade traveled to central Pyongyang, where he joined Kim in an open-top vehicle. Story continues Standing in the car, they waved to crowds as they rode to the square where the embalmed bodies of Kim's grandfather and father, the first two leaders of North Korea, lie in state. The Korean Central News Agency, which is an arm of the North Korean government, said newspapers in the country are praising Xi's visit. "Newspapers of the DPRK in their editorials on Thursday say that the Korean people warmly welcome with delight Xi Jinping, president of the People's Republic of China, who is coming to the DPRK with the warm friendship feeling of the fraternal Chinese people," the KCNA reported. Nuclear talks between the U.S. and North Korea broke down after a second summit between Kim and Trump in February in Vietnam ended in failure. A series of North Korean ballistic missile and nuclear tests in 2016 and 2017 alarmed the U.S., its Asian allies, Japan and South Korea, and even China. Last year, Kim turned to diplomacy, including his first meeting with Trump in Singapore. The talks with the U.S. have reached an impasse over a fundamental difference in approach. The U.S. is demanding that North Korea abandon its nuclear weapons entirely before international sanctions are lifted. North Korea is seeking a step-by-step approach in which moves toward denuclearization are matched by concessions from the U.S., notably a relaxation of the sanctions. "Over more than a year, the North Korean side has taken many positive measures to avoid escalation of the situation and manage and control the peninsular situation, but it hasn't received an active response from the relevant party," Kim told Xi on Thursday, according to CCTV. Xi is expected to endorse North Korea's calls for an incremental disarmament process. A commentary in China's official Xinhua news agency said China could play a unique role in breaking the cycle of mistrust between North Korea and the U.S, but that both sides "need to have reasonable expectations and refrain from imposing unilateral and unrealistic demands." A former North Korean diplomat who defected in 2016 said he thinks Kim wants to give Xi a message to deliver to Trump when the two meet at the upcoming G-20 summit in Japan. Thae Yong Ho said Kim may offer to abandon some of his nuclear facilities in a bid to set up a third summit with the U.S. president. But he cautioned that such a move would be only to buy time and not to denuclearize fully, as the U.S. is demanding. "The main purpose for the Kim Jong Un regime in negotiating is to keep North Korea as a new nuclear state in this region, there is no doubt about that," he said at a news conference in Tokyo, where he is promoting the Japanese translation of his book, "Password From the Third Floor," an inside look at North Korean diplomacy and the Kim regime. China is North Korea's most important foreign partner, though their relations grew somewhat rocky as Kim's efforts to build his country's nuclear weapons capabilities threatened regional stability. Kim met Xi four times in China as the talks with both the U.S. and South Korea got underway. A banner at the airport welcome ceremony read, "Long Live with Unbreakable Friendship and Unity Formed by Blood." The nations fought together in the 1950-53 Korean War against the United States, South Korea and their allies. China welcomed Kim's announcement last year that he was shifting the country's focus from nuclear weapons to economic development. ___ Associated Press writers Hyung-jin Kim in Seoul, South Korea, Mari Yamaguchi in Tokyo and researcher Yu Bing in Beijing contributed to this story. |
Harris, L3 win U.S. antitrust approval for merger
WASHINGTON, June 20 (Reuters) - Military communication equipment providers Harris Corp and L3 Technologies Inc have won U.S. antitrust approval for their merger, the Justice Department said on Thursday.
The government required the companies to sell Harris' night vision business in order to be given approval for the proposed transaction.
The deal was announced in October 2018.
(Reporting by Diane Bartz Editing by James Dalgleish) |
'Friday the 13th' is coming to Nintendo Switch... on a Tuesday
You'll soon be able to don Jason Voorhees' iconic hockey mask and try to wipe out a group of campers (or flee from the masked menace) on Switch, as there's at last a release date forFriday the 13th: The Gameon Nintendo's console. Itemerged back in Marchdeveloper Gun Media had a spring release window in mind for the Switch version, so it'll arrive a bit later than planned when it lands on August 13th.
When you do get your hands on the Ultimate Slasher Switch Edition, it'll include all released DLC save for exclusives for Kickstarter backers. The$40physical version also includes a limited-edition poster. There might not be any future updates though, as Gun Media isunable to make any changesbecause of a lawsuit regarding ownership of the franchise's characters. As such, it's only able to carry out maintenance and bug fixes onFriday the 13th. |
Are Investors Undervaluing Leggett & Platt, Incorporated (NYSE:LEG) By 29%?
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Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Leggett & Platt, Incorporated (NYSE:LEG) as an investment opportunity by taking the expected future cash flows and discounting them to their present value. I will use the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. 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 Leggett & Platt
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. 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 need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF ($, Millions)", "2019": "$359.70", "2020": "$407.60", "2021": "$453.30", "2022": "$477.10", "2023": "$523.30", "2024": "$556.80", "2025": "$586.32", "2026": "$612.87", "2027": "$637.32", "2028": "$660.34"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x1", "2020": "Analyst x1", "2021": "Analyst x1", "2022": "Analyst x1", "2023": "Analyst x1", "2024": "Est @ 6.4%", "2025": "Est @ 5.3%", "2026": "Est @ 4.53%", "2027": "Est @ 3.99%", "2028": "Est @ 3.61%"}, {"": "Present Value ($, Millions) Discounted @ 9.64%", "2019": "$328.07", "2020": "$339.07", "2021": "$343.93", "2022": "$330.16", "2023": "$330.29", "2024": "$320.54", "2025": "$307.85", "2026": "$293.50", "2027": "$278.37", "2028": "$263.06"}]
Present Value of 10-year Cash Flow (PVCF)= $3.13b
"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. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (2.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9.6%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$660m × (1 + 2.7%) ÷ (9.6% – 2.7%) = US$9.8b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$9.8b ÷ ( 1 + 9.6%)10= $3.91b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is $7.05b. The last step is to then divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of $53.67. Relative to the current share price of $38.2, the company appears a touch undervalued at a 29% 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.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the 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 Leggett & Platt 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 9.6%, which is based on a levered beta of 1.159. 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.
Although the valuation of a company is important, 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 Leggett & Platt, I've compiled three important aspects you should further research:
1. Financial Health: Does LEG 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 LEG'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 LEG? 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. |
Does Market Volatility Impact Lilis Energy, Inc.'s (NYSEMKT:LLEX) Share Price?
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If you own shares in Lilis Energy, Inc. (NYSEMKT:LLEX) 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. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market.
Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.
See our latest analysis for Lilis Energy
Looking at the last five years, Lilis Energy has a beta of 1.21. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. If this beta value holds true in the future, Lilis Energy shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Beta is worth considering, but it's also important to consider whether Lilis Energy is growing earnings and revenue. You can take a look for yourself, below.
With a market capitalisation of US$52m, Lilis Energy is a very small company by global standards. It is quite likely to be unknown to most investors. It takes less money to influence the share price of a very small company. This may explain the excess volatility implied by this beta value.
Since Lilis Energy 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. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Lilis Energy’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 LLEX’s future growth? Take a look at ourfree research report of analyst consensusfor LLEX’s outlook.
2. Past Track Record: Has LLEX 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 LLEX's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how LLEX 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. |
Iran to meet Europe, China, Russia in Vienna on June 28
BRUSSELS, June 20 (Reuters) - Senior officials from France, Germany, Britain, China, Russia and Iran will meet on June 28 in Vienna to discuss ways to save the 2015 nuclear accord with Tehran, the European Union said in a statement on Thursday.
The meeting will look at how to "tackle challenges arising from the withdrawal and re-imposition of sanctions by the United States on Iran," the EU said in a statement, referring to U.S. President Donald Trump's decision to quit the deal in May 2018. (Reporting by Robin Emmott Editing by Andrew Heavens) |
MYOS: UC Berkeley Study Results Should Help Open New, Large Market for Fortetropin
ByBrian Marckx, CFANASDAQ:MYOSREAD THE FULL MYOS RESEARCH REPORTYesterday, MYOS Rens Technology (MYOS) announced topline results from a study conducted at the University of California, Berkeley which further supports the role of (their proprietary) Fortetropin in the promotion of muscle growth. This study focused specifically on older adults – namely those between the ages of 60 and 75 years – and measured the change in the ‘fractional synthetic rate’ (FSR) of muscle proteins. FSR, in this context, essentially describes the speed at which the body builds new muscle proteins (i.e. the ‘building blocks’ of muscles).The randomized, double-blinded, placebo-controlled study included 20 subjects ages 60 to 75 years old. Subjects were randomized to consume either Fortetropin or (a macronutrient-matched) placebo for 21 days. Participants also ingested a (heavy water) tracer each day (which was used to measure the levels of Fortetropin and placebo in the muscles). Following the 21-day ingestion period, a biopsy was taken from each participant and FSR was measured.The results announced yesterday relate to the difference between the Fortetropin and placebo groups in the proportion of three specific proteins; myofibril proteins, cytoplasmic proteins and mitochondrial proteins. These are key building blocks of skeletal muscle fiber. The biopsy results showed that the proportion of each of these three proteins increased (33/38 myofibril proteins, 36/44 cytoplasmic proteins and 15/19 mitochondrial proteins) more among the Fortetropin subjects as compared to those given the macronutrient-matched placebo. The difference was statistically significant.View Exhibit IWhile we look forward to the complete study results, which are anticipated to be submitted for publication and presented at an industry conference later this year, we think the topline data does provide substantive additional support to previous data (that dates back to 1997) that has similarly shown that Fortetropin can significantly increase muscle growth. But while most of the earlier clinical data comes from studies of relatively young subjects and had focused largely on reduction in serum myostatin levels (which has been shown to down-regulate muscle growth) and on increase in weight-lifting strength, this study is clearly aimed at potentially opening up a new market for MYOS’ Fortetropin products – namely for sarcopenia, or age-related muscle loss. The lack of currently available therapies to treat the condition means this could represent a highly receptive market for Fortetropin-based products.Given the positive results of this UC Berkeley study, we expect we will hear more about MYOS’ plans to build further evidence around Fortetropin for older populations as well as their near-term plans for capitalizing on the related commercial opportunity. In fact, MYOS mentioned in yesterday’s press release that this study will “form the cornerstone of MYOS’ ‘Healthy Aging’ business unit.
ValuationWe have adjusted our DCF discount rate, from 15% to 14%, to reflect reduced failure-risk as a result of the positive topline data from this UC Berkeley study. The update moves our DCF-generated price target from $3.50/share to $3.75/share.SUBSCRIBE TO ZACKS SMALL CAP RESEARCHto receive our articles and reports emailed directly to you each morning. Please visit ourwebsitefor additional information on Zacks SCR.DISCLOSURE: Zacks SCR has received compensation from the issuer directly or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $30,000 annually for these services. Full DisclaimerHERE. |
Need To Know: Livent Corporation (NYSE:LTHM) Insiders Have Been Buying Shares
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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares inLivent Corporation(NYSE:LTHM).
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard Universitystudyfound that 'insider purchases earn abnormal returns of more than 6% per year.'
See our latest analysis for Livent
Independent Director G. D’Aloia made the biggest insider purchase in the last 12 months. That single transaction was for US$850k worth of shares at a price of US$17.00 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$7.01). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders bought 77500 shares for a total of US$1.3m. Livent may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Livent is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Livent insiders own about US$5.7m worth of shares (which is 0.6% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
The fact that there have been no Livent insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Livent stock. Therefore, you should should definitely take a look at thisFREEreport showing analyst forecasts for Livent.
But note:Livent may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
U.S. government should consider halting Facebook cryptocurrency project -lawmaker
WASHINGTON, June 20 (Reuters) - The U.S. government should consider forcing Facebook Inc to freeze work on its new cryptocurrency project, a senior U.S. lawmaker said on Thursday.
Representative Maxine Waters, who chairs the House of Representative Financial Services Committee, said in a CNBC interview the government needs to study cryptocurrencies and Facebook's initiative, dubbed Libra, further before permitting it to proceed. "We should ask them, as we are doing, or force them in any way that we can to place a moratorium on this new cryptocurrency that they’re putting into place," she said, without offering specifics. (Reporting by Pete Schroeder) |
‘Creepshow’: 2 Grammy Winners Join Cast Of 'Shudder' Revival
Shudder ’s Creepshow adds two Grammy winners, Big Boi of OutKast and Kid Cudi, to the Season 1 ensemble for the revival of the venerable horror anthology brand. Also announced: Jeffrey Combs (Star Trek) , Bruce Davison (X-Men) , and DJ Qualls (The Man in the High Castle) are also on board for the series that invokes the title of the 1982 horror classic written by Stephen King and directed by George A. Romero. Kid Cudi and Combs will star in the episode Bad Wolf Down , written and directed by Rob Schrab. Davison will star in Night of the Paw, written by John Esposito. Big Boi is featured in The Man in the Suitcase, written by Christopher Buehlman and directed by Dave Bruckner. DJ Qualls will star in The Finger, a previously unannounced Creepshow story written by David J. Schow and directed by showrunner Greg Nicotero (The Walking Dead) .. Related stories 'Black Christmas': Cary Elwes Joins Blumhouse Remake Of 1974 Cult Film 'Amityville 1974': Wonderfilm Green Lights Prequel Tale, Casey La Scala To Direct 'Black Christmas': Sophia Takal Set To Direct Blumhouse Remake Of 1974 Slasher The new series has numerous connections that trace back to the Reagan Era franchise. The series features adaptations of a King story as well as one by his son, Joe Hill, who portrayed the comic-book loving kid Billy in the original. Adrienne Barbeau, Tom Savini, John Harrison are among the “legacy” participants with ties to the 1982 film or its 1987 sequel. Showrunner Greg Nicotero (The Walking Dead) visited the first film’s set as a teenager and contributed make-up effects to Creepshow 2 . Shudder’s Creepshow is produced by the Cartel with Monster Agency Productions, Taurus Entertainment, and Striker Entertainment: Stan Spry, Jeff Holland, and Eric Woods are executive producers for the Cartel; Greg Nicotero and Brian Witten are executive producers for Monster Agency Productions; Robert Dudelson, James Dudelson and Jordan Kizwani are executive producers for Taurus Entertainment; Russell Binder is executive producer and Marc Mostman co-executive producer for Striker Entertainment. Creepshow will premiere on Shudder later this year. Sign up for Deadline's Newsletter . For the latest news, follow us on Facebook , Twitter , and Instagram . |
Bakkt brings on Google UX expert as it builds its consumer app for spending cryptocurrency
Bakkt has brought on a former Google consultant as it inches closer to releasing a product.
Chris Peterson, formerly a UX consultant for Google, joined cryptocurrency venture Bakkt earlier this month as the firm works on rolling-out a mobile application for a digital asset wallet, dubbed Bakkt Pay, according to a person familiar with the situation.
Bakkt, the brainchild of Intercontinental Exchange's Kelly Loeffler and Jeff Sprecher, was announced withgreat fanfare in August 2018, promising a platform that would help people invest bitcoin in their 401(k)s. To start, Bakkt said it would launch a physically-delivered futures product tied to bitcoin, butregulatory headwinds have pushed the launch date back by several months.
The firm is still working on getting the much talked-about future off the ground, but at the same it is working on its mobile application for possible release in the next couple of months, according to sources. Peterson, who has been an independent UX consultant for 20 years, is helping Bakkt expand its brand outside of its role as a futures provider. He is involved in the roll-out of the app. Previously, he consulted Google's cloud team on the firm's redesign of the help system for all of its products.
The firm hinted at its ambitions to build a mobile app in a January job posting fora mobile app developer for the “Bakkt product suite."It also revamped its website to better reflect the businesses it is involved in:
A spokesman for ICE did not respond to an email seeking comment.
Bakkt, which raised $182 million from investors such as Galaxy Digital and CMT Digital, is under pressure to ship a product. Recently, COO Adam White said in a blog post that it would begin testing itsbitcoin futures product on July 22. The blog post revealed new details about Bakkt's platform, including its intention to insure the custody of bitcoin for as much as $100 million.
Still, it is unclear when any product from Bakkt will be released, leaving market observers wondering "When Bakkt?" |
A Closer Look into the Socially Responsible, ESG ETF Theme
This article was originally published onETFTrends.com.
Responsible investing matters to the investment process and investors can look to exchange traded fund strategies to incorporate them into a diversified portfolio.
On the recent webcast,How to Better Understand ESG Investing for Your Clients, Jordan Farris, Managing Director, Head of ETF Product Development, Nuveen; and Manica Piputbundit, Senior Director, Responsible Investing, Nuveen, delved into the responsible investment theme, including the quickly growing environmental, social and governance, or ESG, category.
Responsible investing is an investment philosophy that incorporates environmental, social and governance factors into the portfolio management process with the objective of enhancing long-term performance, managing risk and aligning client values.
Environmental, Social, and Governance, or simply ESG, typically refers to the factors and issues investors consider regarding a firm’s sustainable business practices. ESG factors provide an additional way to assess and influence company or issuer performance that may enhance long-term value or help to mitigate downside risk.
To help investors better understand ESG investments, the environmental factor covers criteria like climate change, greenhouse gas emissions, resource depletion, including water, waste and pollution, and deforestation. The social factor covers working conditions, including child labor, community & indigenous populations, operations in conflict zones, health and safety, employee relations and diversity. Lastly, the governance principles relates to corruption, political lobbying and donations, board diversity and structure, and tax strategy.
Looking ahead, the millennials demographics could be a major factor in responsible investing ahead. Over the next three decades, around $30 trillion will be transferred to millennials, whom are two times as likely to adjust their investment decisions based on values as compared to the older generation.
Potential investors, though, should not categorize socially responsible investing as some kind of feel-good strategy without any real returns. Responsible investing provides the potential for enhancing long-term performance through incorporating material ESG factors into investment decisions; addresses changing client preferences related to exclusions, best-in-class emphasis, thematic priorities and positive impacts; increases the understanding and management of material ESG-related risk factors; and fulfills growing market requirements, including policy tools and market initiatives covering the relationship between finance and ESG issues.
For example, when considering the impact of climate change to global financial markets, institutional investors are now asking how climate change risks and opportunities are managed in investment portfolios. Regulators and advocacy groups are already scrutinizing fossil fuel investments, carbon asset risk, and proxy voting record on climate change. Looking at the long-term, climate change creates potential financial performance risk for carbon-intensive assets in the transition to a low carbon economy, as well as physical risks and macroeconomic risks over the long term. Consequently, investors may look to renewable energy and other clean technologies that are swiftly becoming cost competitive.
To help investors better access the ESG investment theme, Nuveen’s Nushares has adopted an investment methodology that follows a four fundamental element ESG strategy, including ESG rating or captures an issuer’s performance on key ESG risks relative to peers; controversy score or an issuer’s exposure and response to event-driven controversies; controversial business involvement or issuer’s activity in industries that may cause significant social harm like tobacco; and low carbon criteria or the carbon intensity of an issuer based on involvement in certain industries.
Nushares offers ESG-focused ETFs across the domestic equity market by market cap and style, international equity and fixed income markets. The ESG ETF suite includes theNuveen ESG U.S. Aggregate Bond ETF (NUBD) ,Nuveen ESG Large-Cap ETF (NULC),Nuveen ESG Large-Cap Value ETF (NULV) ,Nuveen ESG Large-Cap Growth ETF (NULG) ,Nuveen ESG Mid-Cap Value ETF (NUMV) ,Nuveen ESG Mid-Cap Growth ETF (NUMG) ,Nuveen ESG Small-Cap ETF (NUSC) ,Nuveen ESG International Developed Markets Equity ETF (NUDM) andNuveen ESG Emerging Markets Equity ETF (NUEM) .
Financial advisors who are interested in learning more about environmental, social and governance principles canwatch the webcast here on demand.
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Does Lexington Realty Trust (NYSE:LXP) Have A High Beta?
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If you're interested in Lexington Realty Trust (NYSE:LXP), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second 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 are more sensitive to general market forces than others. 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. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.
View our latest analysis for Lexington Realty Trust
As it happens, Lexington Realty Trust has a five year beta of 0.96. This is fairly close to 1, so the stock has historically shown a somewhat similar level of volatility as the market. If the future looks like the past, we could therefore consider it likely that the stock price will experience share price volatility that is roughly similar to the overall market. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Lexington Realty Trust fares in that regard, below.
Lexington Realty Trust is a reasonably big company, with a market capitalisation of US$2.3b. Most companies this size are actively traded with decent volumes of shares changing hands each day. It's not overly surprising to see large companies with beta values reasonably close to the market average. After all, large companies make up a higher weighting of the index than do small companies.
It is probable that there is a link between the share price of Lexington Realty Trust and the broader market, since it has a beta value quite close to one. However, long term investors are generally well served by looking past market volatility and focussing on the underlying development of the business. If that's your game, metrics such as revenue, earnings and cash flow will be more useful. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Lexington Realty Trust’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Future Outlook: What are well-informed industry analysts predicting for LXP’s future growth? Take a look at ourfree research report of analyst consensusfor LXP’s outlook.
2. Past Track Record: Has LXP 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 LXP's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how LXP 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. |
Favorable Fundamentals For The 5G ETF
TheDefiance 5G Next Gen Connectivity ETF(NYSE:FIVG) debuted in early March as the first exchange traded fund dedicated to the 5G communications theme.
While FIVG has taken some lumps, as have other growth and technology assets, there is no denying there is appetite for 5G funds. FIVG'snearly $87 millionin assets under management confirm as much.
What Happened
FIVG tracks the BlueStar 5G Communications Index and features exposureto eight industries, such as radio access network equipment makers, cloud-core firms, mobile network providers, satellite operators and real estate companies with 5G exposure, among others.
The depth of the new ETF could position it take advantage of multiple areas in which expanding 5G capabilities are expected to be critical and lucrative. Among other opportunities, 5G is expected to be a boon for mobile gaming.
“The gaming industry in particular should benefit from the new opportunities that 5G presents,” said IHS Markitin a recent note. “Because online gaming requires low latency and fast speeds for an optimal user experience, 5G will deliver a vastly improved gaming experience. IHS Markit predicts that revenue from mobile gaming will jump to $83 billion in the next five years. Moreover, cloud gaming will also benefit since 5G removes the need for high-cost hardware.”
Why It's Important
5G's applications to mobile gaming intersect with several other fast-growing markets, including cloud computing, augmented and virtual reality and more.
“5G will offer countless opportunities for improved streaming experiences, thanks to faster speeds, lower latency, stronger reliability, higher capacity, and better mobility,” according to IHS Markit. “Given such vast improvements, IHS Markit predicts that there will be 1 billion 5G mobile subscriptions by 2023.”
What's Next
As is the case with so many thematic ETFs, FIVG is an avenue to tap future growth expectations now. Importantly, there is validity to the fund's underlying thesis, one that is backed by scores of favorable data points. Mobile gaming is just one factor in 5G's favor, but it underscores the vast investment potential of the new communications backbone.
“While streaming video and gaming will improve in the short term because of the faster speeds and lower latency that 5G offers, the long-term possibilities are perhaps even more compelling.” said Markit. “For example, immersive, 'choose your own adventure' experiences and AR stand to benefit a great deal from 5G. Augmented reality in particular should show continued improvement on 5G because AR has the entire smartphone footprint at its disposal. IHS Markit predicts AR revenue to grow to over $3 billion in the next five years.”
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I Ran A Stock Scan For Earnings Growth And Lexington Realty Trust (NYSE:LXP) Passed With Ease
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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested inLexington Realty Trust(NYSE:LXP). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
See our latest analysis for Lexington Realty Trust
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. As a tree reaches steadily for the sky, Lexington Realty Trust's EPS has grown 29% each year, compound, 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. Unfortunately, Lexington Realty Trust's revenue dropped 6.2% last year, but the silver lining is that EBIT margins improved from 35% to 38%. That's not ideal.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
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 Lexington Realty Trust EPS100% free.
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Lexington Realty Trust insiders have a significant amount of capital invested in the stock. With a whopping US$63m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to make me think that management will be very focussed on long term growth.
You can't deny that Lexington Realty Trust 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. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want tocheck if Lexington Realty Trust is trading on a high P/E or a low P/E, relative to its industry.
Although Lexington Realty Trust certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then thisfreelist of growing companies that insiders are buying, could be exactly what you're looking for.
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. |
Kroger Co (KR) Q1 2019 Earnings Call Transcript
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Kroger Co(NYSE: KR)Q1 2019 Earnings CallJun 20, 2019,10:00 a.m. ET
• Prepared Remarks
• Questions and Answers
• Call Participants
Operator
Good morning, and welcome to The Kroger Company First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Rebekah Manis, Director, Investor Relations. Please go ahead.
Rebekah Manis--Director, Investor Relations
Thank you, Gary. Good morning, and thank you for joining us. Before we begin, I want to remind you that today's discussions will include forward-looking statements. We want to caution you that such statements are predictions and actual events or results can differ materially. A detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis is contained in our SEC filings. The Kroger assumes no obligation to update that information. Both our first quarter press release and our prepared remarks from this conference call will be available on our website at ir.kroger.com.
After our prepared remarks, we look forward to taking your questions. In order to cover a broad range of topics from as many of you as we can, we ask that you please limit yourself to one question and one follow-up question if necessary. Thank you.
I will now turn the call over to Kroger's Chairman and Chief Executive Officer, Rodney McMullen.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thank you, Rebekah, and good morning, everyone. And thank you for joining us.
With me to review Kroger's first quarter 2019 result is Chief Financial Officer, Gary Millerchip. We started the conversation with you last quarter by acknowledging that we had our work cut out for us. We are energized by that challenge, and our team brought that energy to the first quarter. There are several examples in the first quarter results that reflect the disciplined focus and progress we are making on our transformation plan Restock Kroger.
All of this work starts with our customer obsession focus. That is why we are building an omnichannel platform to serve customers with anything, anytime, anywhere. That is why we're focused on redefining the experience grocery customers can expect to have in our stores and online, improved upon by existing -- exciting partnerships that create additional value.
That said, while the second year of Restock Kroger is off to a solid start, we know we can do better when it comes to our identical sales results. To that end, it's important I say it right upfront, that by further intensifying our customer focus, Kroger's quarter-to-date identical sales are trending better than the first quarter and moving toward the guidance range.
One of our most powerful competitive advantage is also one of our best ongoing performers. Kroger's own brand products grew 3.3%, and unit share gained 66 basis points to reach 28.9% share in the quarter. The focus on shifting the mix to Simple Truth and premium brands such as Private Selection led to double-digit gains in the quarter in those brands.
We know that our customers love our brands, and that they are hungry for innovative new products that they can only get by coming to and shopping with Kroger. In our quest to put food first and serve as America's food authority, we are bringing new taste, trends, and experiences to our customers.
In the first quarter, we introduced 219 fantastic Our Brand items. Our customers' favorite new items fall in line with the key food and flavored trends we predicted for 2019, including Private Selection Pork Belly Bites, Private Selection, Artisan and Jerky, and Kroger Deluxe Unicorn Swirl Ice Cream.
New items delivered over $225 million in incremental sales during the first quarter. Customer obsession is also why we're building a platform to serve customers anything they want, anytime they want, and anywhere they want. Our customers don't distinguish between an in-store and online experience. Rather they typically have a food-related need or a problem to solve and want the easiest, most seamless solution.
Our digital sales grew 42% in the first quarter. We also expanded our coverage area to reach 93% of our customers in the first quarter. This means 93% of the customers who shop Kroger in a brick-and-mortar store also can shop with us for pickup or delivery. By the end of this year, everyone in America will have the ability through our modalities to shop with Kroger, whether they decide to come into a store, use our pickup or delivery services or ship.
Our efforts are positioning Kroger to be the leading omnichannel retailer in the food industry. Since 2014, we've gone from no digital sales dollars to a 2018 annual run rate of about $5 billion, which will trend toward a $9 billion digital sales run rate in the future. I call this out because, while we are only in the middle of our transformation, it's important to frame up the magnitude of the progress that we've made.
2019 is another pivotal year for our partner for customer value pillar and Restock Kroger. We continue to improve the customer experience in our stores and across our digital properties by partnering with industry innovators such as Home Chef, Microsoft, Ocado and Walgreens. All of these partners accelerate our ability to provide customers anything, anytime, anywhere.
Each partner shares our passion for exploring the nexus between technology and innovative customer experiences. We were excited to break ground last week in Ohio on America's first customer fulfillment center powered by Ocado. Kroger's partnership with Ocado, well, for the first time introduced transformative format of e-commerce fulfillment and logistics technology in America. This in turn means Kroger customers will get fresher food faster than ever before.
We intend to open additional customer fulfillment facilities to create a seamless customer experience replicating the model to serve everyone across America. We're also making progress building out our alternative business for profitable growth. We've made several organizational structural changes to allow deeper concentration on alternative profit stream, while also maintaining our laser focus on delivering for our customers in the core business.
Kroger is creating a virtuous cycle built upon the rich collection of proprietary data generated from our customer traffic to improve the customer experience, which then supports new margin-rich, asset light businesses. We expect alternative profit streams to continue to grow and contribute an estimated incremental $100 million in net operating profit in 2019 and continue to accelerate into 2020. This will be generated primarily from the more mature alternative profit streams such as Kroger Personal Finance, our media businesses and customer data insights.
There are other initiatives within our alternative business portfolio that are in earlier stages of incubation. For example, we recently announced the formation of rock PearlRock Partners, a platform to identify, invest in, and help grow the next generation of leading consumer product brands. Initiatives such as PearlRock Partners are expected to have a small impact during Restock Kroger and then contribute more meaningfully to our results after 2020.
Following up on our commitment we made in March to our financial stakeholders, Gary will provide additional transparency about where alternative profits will flow through our financial statements during his remarks. One of the challenges transforming the company is finding the right leaders at the right time, to guide and coach people through complex and often difficult change.
The underlying principle is to respect the company's past while creating the future. We've secured Kroger's continued success in the next chapter of retail by proactively managing several pivotable next generation leadership successions, including the essential CFO and CIO roles. We've also focused several senior most executive roles, most notably leaders of our new business development, including partnerships and Kroger's alternative business portfolio to support the transformation of our growth model. Every leadership transition is deliberate, carefully managed, and made in partnership with Kroger's Board of Directors. I'd like to again congratulate all of our new Senior Vice Presidents and underscore my confidence in their ability to lead Kroger forward.
Another important area of leadership for Kroger is in the environmental, social and governance areas, which is a natural extension of our Zero Hunger Zero Waste plan and is gaining recognition from a growing number of investors. As America's grocer, we are committed to setting the table for sustainable future. A year ago, we took a deeper look on how plastic is affecting our communities and environment, and became the first major US retailer to announce the phase out of single-use plastic grocery bags, starting with our QFC division in the Pacific Northwest.
Earlier this month, Kroger announced our commitment to be the exclusive US grocery retail partner for Loop. Loop is a new system that uses durable package -- product packaging to help reduce single-use plastics. TerraCycle introduced Loop at the World Economic Forum in Davos in January to much fanfare and medial interest.
Many familiar suppliers and brands are included in the platform and the list continues to expand. Loop hygienically cleans and sanitizes the empty packaging that was previously sold to the consumer and sends it back to the suppliers to refill for another use. Because the retail industry is transforming, we proactively launched Restock Kroger to deliver for customers and our shareholders. Plainly stated, Restock Kroger is all about transforming our growth model.
The second year of Restock Kroger is off to a solid start. The entire company is focused on redefining the grocery customer experience, improving upon our exciting partnerships that create value. We are investing in our associates more than ever before and building a purpose-driven culture. And we are also on track to generate the free cash flow and incremental adjusted FIFO operating profit targets for 2019. As I said earlier, we recognize we have work to do and remain focused on delivering on our Restock Kroger commitments.
Now, I'd like to turn it over to Gary Millerchip, who's been in the CFO role since April. Gary?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Thanks, Rodney, and good morning, everyone.
Our first quarter results demonstrate the strength and diversity of Kroger's multi-faceted business model. Overall, we are leveraging Kroger's unique assets, our scale, unmatched customer data insights and our knowledge of food to build even stronger connections with our customers across all modalities; in-store, pickup, delivery and ship.
As Rodney discussed, we have a few headwinds during the first quarter, including sales, which we know must be stronger. We also experienced pharmacy gross margin pressure similar to others in the industry. Because of our multi-faceted business model, we delivered an adjusted EPS result of $0.72 per diluted share.
I'd like to highlight a few areas of our business that were particularly strong during the quarter. Our Brands contributed to both, as a sales driver and a profit leader. The entire Kroger team brought discipline to controlling costs during the first quarter and delivered on our Restock Kroger savings plan. And alternative profit businesses exceeded budget, setting us up to deliver our incremental operating profit target for 2019.
On that note, last quarter, we committed to providing you with greater transparency on our alternative businesses and their contribution to Restock Kroger. As Rodney said at the top of the call, we expect alternative profits to contribute an incremental $100 million in operating profit in 2019. You will see this growth reflected through the gross margin line of our financial statements. Certain amounts that we've traditionally recognized as reductions to OG&A expenses and merchandising costs are now being reflected as sales.
This treatment more appropriately reflects the nature of these items and is consistent with others in the industry. In the first quarter, this affected identical sales by 3 basis points and we have provided more detail in our 8-K filing. Please refer to Table 8 for a deeper explanation on the reclassification.
Through the first quarter of 2019, alternative businesses are ahead of our expectations with media business and Kroger Personal Finance leading the way. We expect incremental operating profit growth to vary throughout the year, reflecting the continued acceleration of our media business and the seasonality of certain businesses during peak holiday selling periods. For example, our gift card business is very seasonal and therefore, growth will be most visible in respective quarters.
Kroger reported identical sales without fuel of 1.5% during the first quarter. The timing of SNAP disbursement negatively affected results by 15 basis points. Several departments outperformed the company in the quarter, including key beverage categories, pet, natural foods, and we had another strong quarter from our pharmacy business.
We recognized that getting into our identical sales guidance range will require an acceleration of identical sales throughout the rest of our fiscal year. We are diligently working to improve performance, and build on the positive identical sales trend momentum we are seeing thus far in our second quarter.
Additionally, as we move through the second quarter, we will begin to cycle investments made during the same period last year, which we expect to be a tailwind. Adjusted FIFO operating profit for the first quarter was $957 million and in line with our expectations for the quarter. Gross margin was 22.2% of sales for the first quarter and FIFO gross margin, excluding fuel, decreased 40 basis points from the same period last year, primarily due to industrywide lower gross margin rates in pharmacy. This represents a sequential improvement in the level of margin investments compared to the second half of 2018.
The LIFO charge for the quarter was $15 million. Our associates have done an amazing job managing shrink, which improved during the first quarter compared to the prior year. This represents the seventh consecutive quarter of shrink rate improvement. OG&A cost as a rate of sales, excluding fuel in 2019 and 2018, first quarter adjustment items decreased 12 basis points.
This quarter's decrease is primarily due to the execution of Restock Kroger initiatives and planned real estate transactions. And by planned, I mean these transactions were contemplated in our EPS guidance for the year. Our results highlight the continued progress we are making with Restock Kroger savings program, building on the $1.1 billion of savings and benefits achieved in our prior fiscal year. We are committed to continuing to find additional improvements and efficiencies in our business.
Retail fuel profit growth was in line with our expectations for the quarter, but we still expect fuel operating profit to be a headwind overall in 2019, particularly in the second half of the year. Our cents per gallon fuel margin in the first quarter was $0.23 compared to $0.18 in the same quarter last year. The average retail price of fuel was $2.62 versus $2.63 in the same quarter last year. Fuel is an important part of our strategy to drive customer engagement, especially among our most loyal households. We continue to increase our investment in fuel rewards, and saw a positive gallon growth with our loyal customers in the first quarter.
Turning now to talent development. We are supporting associates in a variety of ways, including investments in wages, training and development. We continue to invest in our associates as part of Restock Kroger. Today, I'm pleased to share our recently updated average hourly rate is over $20 per hour with comprehensive benefits factored in, benefits that many of our competitors don't offer.
The most recent example of our investments in wages was our Monday announcement of a newly ratified labor contract, covering store associates in Indianapolis. The ratified agreement with UFCW Local 700 raises starting wages for most clerks and associates will receive regular wage increases every six months.
This is part of our continued effort to rebalance pay and benefits, while also focusing on certifications and performance incentives, career opportunities and training. We are also very energized by the significant interest we're seeing from associates in Feed Your Future, our industry-leading education assistance program launched just over a year ago.
Feed Your Future is available to all associates full or part-time after six months of service. Among all the participants, more than 80% are hourly store associates. As a result of our investments in talent development, we are significantly improving employee retention in one of the tightest labor markets in years. In addition to the new labor agreement covering Kroger associates in Indianapolis, we also ratified a new labor agreement with the UFCW covering King Soopers associates in Denver and Kroger associates in Louisville, Kentucky during the first quarter.
We are currently negotiating with the UFCW for contracts covering store associates in Las Vegas, Memphis, Portland, Seattle and Southern California. Our objective in every negotiation is to find a fair and reasonable balance between competitive costs and compensation packages that provide solid wages, good quality, affordable healthcare and retirement benefits for our associates. We continue to strive to make our overall benefits package relevant to today's associates.
Our financial results continue to be pressured by inefficient healthcare and pension costs, which some of our competitors do not face. We continue to communicate with our local unions and the international unions, which represent many of our associates on the importance of growing our business in a profitable way, which will help us create more jobs and career opportunities and enhance job security for our associates.
Key component of Restock Kroger is generating strong free cash flow. Our financial strategy is to use free cash flow to drive growth while also maintaining our current investment grade debt rating and returning capital to shareholders. We actively balance the use of cash flow to achieve these goals. We reduced net total debt by $1.7 billion during -- since the end of fiscal year 2018. Kroger's net total debt to adjusted EBITDA ratio is 2.54, down from 2.83 at the end of 2018. The company's net total debt to adjusted EBITDA ratio target range is 2.3 to 2.5. We have prioritized getting our net total debt to EBITDA ratio back into the target range and use proceeds from the sale of You Technology and the Turkey Hill Dairy business to help us do so.
I'd like to take a few moments to talk a little bit more about YouTech. This is a great example of how Kroger leveraged the unique assets I mentioned earlier to create significant value for our shareholders. We acquired the business for a nominal value several years ago and developed it into a market leader in digital coupons. When the business reached a point where the potential value to someone else was higher than the future value to Kroger, we sold the business to maximize shareholder return.
As part of the terms of the sale, we protected the value to Kroger to a long-term services agreement with Inmar. YouTech is a great illustration of how we are leveraging our unique assets to create new asset-light, margin-rich businesses to drive incremental value for our shareholders.
Before I turn it back to Rodney, I'd like to discuss an accounting change that affects our financial reporting and reiterate our guidance for 2019. You may have noticed in our 8-K filing that we adopted the new leasing standard at the beginning of the fiscal year. This added nearly $7 billion of lease-related assets and liabilities to our balance sheet. The rating agencies already calculate and include a liability for operating leases in their ratings assessments. And this new standard is not expected to affect rent expense or earnings for the year.
Finally, I would like to reiterate our guidance for the year. For 2019 identical sales growth, excluding fuel, we continue to target identical sales that range from 2% to 2.25%. We continue to expect adjusted net earnings to range from $2.15 to $2.25 per diluted share, and adjusted FIFO operating profit to range from $2.9 billion to $3 billion for 2019. Kroger's EPS growth will come from adjusted FIFO operating profit growth in 2019, which positions us well to deliver on Restock Kroger.
Rodney, back to you.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, Gary. We feel optimistic at the start of the second quarter. Sales momentum is building, and we are laser focused on serving our customers. We are clear-eyed about the challenges ahead and confident in our ability to deliver on our plans both for the year and our long-term vision to serve America through food inspiration and uplift.
Now, we look forward to your questions.
Operator
We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Robby Ohmes with Bank of America Merrill Lynch. Please go ahead.
Robby Ohmes--Bank of America Merrill Lynch -- Analyst
Well, thanks. Good morning, guys.
W. Rodney McMullen--Chairman and Chief Executive Officer
Good morning.
Robby Ohmes--Bank of America Merrill Lynch -- Analyst
Rodney, my question is, could you talk a little bit about, now that you're quarter into this year, how your price investment plan is trending? Is it more or less than what you were expecting? And maybe remind us what kind of price investment year 2019 is expected to be? And maybe weave that into how that plays out into the expectation for accelerating IDs?
And then also maybe weave in just -- the environment you're seeing out there competitively. We're seeing signs of the promotional environment in produce being a little more aggressive than it's been in a while. If you could weave the picture together for us, that would be great.
W. Rodney McMullen--Chairman and Chief Executive Officer
Okay. Thanks, Robby. If you look at price investments overall, we're tracking really pretty consistent where we expected it to be. We are continuing to cycle the investments we made during last year. So the flow-through of that will continue to be helpful. If you look at the '19 investments, it would be a reasonable amount. It would not be as much as what we did in '18. Because as you recall, when we had the tax law changes, we accelerated some of our '19 investments into '18 to give customers some of the value from the lower tax rate.
When you look at the environment overall, there's always puts and takes. And overall, we would say it's pretty consistent with where it was before. You will always see a specific area or category get more. But when you look at it, all in all, it looks pretty consistent with before. On accelerating the identicals, it really is one of the things on space optimization. Now it's becoming a tailwind versus a headwind.
Obviously, that's been -- has taken us longer than we expected, so that's been a positive. Just in terms of basic execution in the stores, our teams are doing a great job of improving the customer experience, which is adding momentum as well. And it's making sure that we use our data to target the right things to work on. So, it's all of those things coming together and then being a little bit better at telling the customer our story.
Robby Ohmes--Bank of America Merrill Lynch -- Analyst
Terrific. Thanks so much.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, Robby.
Operator
The next question comes from Judah Frommer with Credit Suisse. Please go ahead.
Judah Frommer--Credit Suisse -- Analyst
Hi. Thanks for taking the question. Maybe first just a follow-up on IDs. Can you help us with the cadence throughout the quarter? It sounded like when you gave the quarter-to-date update with fourth quarter earnings that you were running better than where you finished the quarter and obviously, things are expected to accelerate. So beyond remodels, has there been enough contribution from the rollout of online grocery and the impact of inflation relative to your expectations?
W. Rodney McMullen--Chairman and Chief Executive Officer
Inflation was higher in the first quarter than before, but pretty consistent with expectations. When you look at the first quarter overall, sales were moving up nicely and continuing to make tracking as expected and making great progress up through Easter. Right after Easter, we hit a wall. And I always hate to use weather as an excuse for anything, but there is no doubt that when you look at the weather categories, we saw quite a bit of impact just because -- if you look at Mother's Day, the things around Mother's Day and grilling out and all those things.
As I mentioned, SNAP was a slight headwind, but not a huge amount. When you look at it in total for the quarter, we continue to have great growth in loyal household growth. And if you look at spend per item, we saw people continuing to move up scale and continue to purchase bigger packs. And as I mentioned earlier, we are looking at the second quarter. So far it's only three weeks. So, we are moving closer to the '19 guidance.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Rodney, the only thing I would add (Multiple Speakers). Sorry, I think the question was asked around digital to as part of the overall performance. And we continue to see strong results and certainly in line with what we expected during the first quarter from the way customers are engaging through the seamless digital experience that are encouraging both in terms of ordering online to pickup at the store and also ordering online to ship to home or deliver to home.
Judah Frommer--Credit Suisse -- Analyst
Okay. And if I could quickly follow up on media. It sounds like trends are going kind of in line with, or above plan there. Clearly, some of your big box competitors have made moves in the media space, sometimes acquiring external assets. Is that something you feel like you need to do there because they are leaning into these retailer-led platforms to help your conversations with vendors? Or does it serve as more competition?
W. Rodney McMullen--Chairman and Chief Executive Officer
Yeah. For us, we view it as additional partners helping CPGs, that help them better spend their money. And when we really look at it, we're able to help CPGs to understand. And you remember the old adage that half of my media is wasted, I just don't know which half. And our teams are able to do a great job on being able to help media companies understand where you spend money and what's the behavior of the customer. And we view the market as big enough to where there's plenty of opportunity for the market to grow overall and for the other companies that you referenced for all of us to be successful, just because it's such a large market.
So, when we look at the opportunity, it's incredibly exciting. I know some of the early partners are really happy with the results and we're just getting started. In terms of acquiring somebody, so far we've been able to partner with world-class companies to really accelerate our journey. Now whether that changes over time, I think it's to be determined.
Judah Frommer--Credit Suisse -- Analyst
Great. Thanks.
Operator
The next question comes from Edward Kelly with Wells Fargo. Please go ahead.
Edward Kelly--Wells Fargo Securities -- Analyst
Yeah. Hi, guys. Just first a clarification. The planned real estate transaction in the quarter, if I look at the cash flow statement, there is about a $57 million gain. Is that the amount that we should be thinking about that contributed to the quarter?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Hi, Ed. It's Gary. That's right. We -- as we mentioned in the prepared notes, we actually had this transaction planned as part of the guidance for the year and part of our business plan. I think you're aware, but real estate has always been part of our overall strategy as to how do we make the best use and leverage the assets that we have available to us and that we're creating, as we build out a store around the shopping center and as we start to really make the most of being that anchor tenant in many of the places that we operate.
So for many years, we've had real estate transactions in our results. Often there can be some losses as well as a gain sometimes during those quarters. We felt that this quarter because it was a bigger amount than it would normally be, it was important that we were transparent, especially as obviously a healthy OG&A rate to look better overall in the quarter because of that one-time transaction. But it was absolutely contemplated and it was part of our expectation. It's actually in the first quarter as well.
Edward Kelly--Wells Fargo Securities -- Analyst
Any other planned real estate transactions like this contemplated for the full year?
Gary Millerchip--Senior Vice President and Chief Financial Officer
I think we are always obviously looking at opportunities and especially where it can help our free cash flow and where we can arbitrage the profitability of the real estate that we own currently. So, I wouldn't get into specific details around any of the overall plans that we have, but we do certainly look for those opportunities where they exist. But they're not contemplated within the guidance that we shared.
W. Rodney McMullen--Chairman and Chief Executive Officer
And Ed, this is Rodney. If there was anything material, we would share it as well so that everybody would know. And as Gary had mentioned in the guidance.
Edward Kelly--Wells Fargo Securities -- Analyst
Rodney, my real question here is for you and it's on the IDs. And bigger picture, you used to consistently outperform a broader peer set and industry data like Nielsen. And to me, one of the biggest issues right now with your company is that, that actually no longer seems to be happening.
Your IDs are just north of 1% this quarter, despite the fact that you have digital in there, specialties in there now. You are lapping some optimization. You invested a lot last year. I guess, why do you think the share gains have slowed so much? And I know you're focused on improving momentum but what specific adjustments are you making?
W. Rodney McMullen--Chairman and Chief Executive Officer
What -- it really is, for us, to step up our game. And if you look at the customer experience, we've made significant improvement in some of the basic customer experience. What we find is there's a lag between when you make those improvements and when the customer starts rewarding you with their checkbook.
And -- so part of the -- and this is using the data that we track every week. How are we doing in terms of the friendliness of our associates, in stock, and all of those pieces. And the progress that we've made is stronger than our progress in our identicals.
The other part is some of the things I mentioned before. It's just cycling, space optimization and the other projects and getting a return from the remodels that we're doing. And using the data in a continued sophisticated way but even growing upon that is what we've had in the past.
Edward Kelly--Wells Fargo Securities -- Analyst
All right. Thanks, guys.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, Edward.
Operator
The next question comes from Rupesh Parikh with Oppenheimer. Please go ahead.
Erica Eiler--Oppenheimer & Company -- Analyst
Good morning. This is actually Erica Eiler on for Rupesh. Thanks for taking our questions. So, I actually wanted to touch on food inflation. Could you maybe give a little bit more granular in terms of what you're seeing currently and your expectations going forward? And then maybe you could talk about -- are you seeing prices being passed through to the shelf at this point?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Sure. I'll be happy to talk about that. So as you know, when we talked about our guidance for the year, our expectation was that we'd see inflation in the range of 0% to 1%. That is what we built our plan around. And I would say if you look at Q1 results and exclude pharmacy and fuel from the calculation, we would be at the top end of that range. Certainly as we are seeing those cost increases come through, we have a very robust process within our cost of goods team to really look at ways in which we can mitigate those cost increases and ensure that we're able to maintain profitability in the business.
Where we are seeing the legitimate reason for those costs coming through, we are generally being successful in passing them on to the customer through the pricing strategy. And I would say that's generally what we saw during the first quarter and would be our strategy during the rest of the year. One of the things that obviously we feel is an important advantage for us is the significant market share that we have with our own brand products. And so ensuring that we're using that to really manage and balance as we see price increases come through. And of course, it's a great set of knowledge for us, knowing what the true cost of product is and how to effectively manage those cost increases.
Erica Eiler--Oppenheimer & Company -- Analyst
Okay. That's helpful. And then -- oh, no, keep going.
Gary Millerchip--Senior Vice President and Chief Financial Officer
I was just going to say, I think our outlook for the year in general would be similar to what we've been experiencing except for, of course, some of the challenges and uncertainties that are being created by some discussion on potential trade impacts and obviously, some things like the swine flu that was also out there. So, there are obviously one or two items that we're watching very closely because they have the potential to impact inflation in a more meaningful way.
W. Rodney McMullen--Chairman and Chief Executive Officer
Yeah. And tariffs from China is a pretty minimal effect on us and a lot of it can be managed. Tariffs from Mexico would be harder to manage. Hopefully something works out there. As you know, overall from a philosophy standpoint, we always believe that at the end of the day, tariffs just cause costs to go up for customers.
Erica Eiler--Oppenheimer & Company -- Analyst
Okay. That's great additional color. And then just quickly on gross margins. Can you talk about the dynamics going on with pharmacy right now in the industry as it relates to gross margin and how you're thinking about kind of those dynamics going forward?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Sure. First of all, I'd like to just maybe give a little bit more context on our pharmacy business too because it's certainly a very important part of our business. It drives a lot of loyalty overall with the customer and we continue to get extremely strong customer satisfaction ratings.
It's a part of our business that generally is continuing to grow script counts and grow sales very strongly as we mentioned during the quarter. And it ties very closely for us to our health and wellness strategy and as we start to think about food as medicine, we think it's a very important connection. The business today is profitable for us and generates a high ROIC. But as you mentioned, we are certainly seeing some pressure in the industry. There's a couple of things at play really within the gross margin pressure that we saw in Q1, which as I mentioned wouldn't be unique to us.
The first is, there is a generic supply challenge, and therefore, the cost of supplying product has gone up significantly. And secondly, as we've renegotiated our PBM agreements, three of the big ones going through the renegotiation process, there's an increase in cost there that's also placing some pressure on gross margin.
That being said, our pharmacy team has been extremely proactive in developing plans to mitigate that both from a how do we buy most effectively, but also how do we create more efficiency in the pharmacy business. And we continue to see significant efficiency improvements in the cost to fill a pharmacy order and our pharmacy team are doing a really nice job of finding ways to offset some of those pressures.
W. Rodney McMullen--Chairman and Chief Executive Officer
And as I mentioned before, it's also the nice thing about having a multi-faceted business where other things -- the growth in our own brands and other things that I mentioned. In total, we still had great results. And also as we move forward, we see health and wellness as a huge opportunity in terms of, from an alternative business standpoint and creating new partnerships to be able to help America live a healthier life.
And as Gary mentioned, everything that we see, discussions with a lot of different healthcare providers, we increasingly see food as medicine. And if you look at our OptUP app and some of those things, we're able to help people eat healthier and we see that as an opportunity even bigger in the future than it's been in the past.
Erica Eiler--Oppenheimer & Company -- Analyst
Okay. Great. Thank you so much.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thank you.
Operator
The next question comes from John Heinbockel with Guggenheim Securities. Please go ahead.
John Heinbockel--Guggenheim Securities -- Analyst
Hey, Rodney, can you address the topic of the organization's capacity for change, right? So, you've got a lot of change going on. You've got people in new roles. Do you think that -- all of that, other than may be space optimization, is impacting execution in any way and maybe impacting your top line growth?
And then as you go forward, if there might be some of that, is there a way to sort of streamline things, prioritize so that maybe there's -- you impact the organization's ability to manage that change better? Curious to your thoughts on that.
W. Rodney McMullen--Chairman and Chief Executive Officer
Yeah, a great question, John. And it's something that we talk about, obviously, routinely. It was one of the reasons that we made some of the organizational changes that we made and moving alternative business to its own stand-alone area because we wanted to make sure that we had -- it's a huge opportunity. We had dedicated people focused on it, and we didn't have people that were responsible for the daily interaction with the customer trying to do both.
And one of the things I always like to, for us, to ask ourselves, is it center of plate or corner of plate. And if it's center, that's incredibly important. So, I feel incredibly good about the people that we put in place and making sure that the clarity is separating from all the pieces. We have recruited some external talent over the last several months to help supplement the internal talent we already had in terms of some of our operating areas, some of our Vice Presidents. And on our digital team, we've recruited a ton of talent from the outside to accelerate our digital journey.
So it's -- to me, I think it's a great question. We spend a lot of energy on it. When you look at the operating side of the business, we have a lot of new people enroll over the last couple of years. It always takes a little while for new talent to hit their stride. And I feel really good about how they're growing and the progress we're starting to make on the customer connection attributes and it's starting to show up in loyal customer growth. So it's making progress. We feel really good about the talent we have in place, and we're starting to make some accelerated progress.
John Heinbockel--Guggenheim Securities -- Analyst
And then, I know it's early, but what have you learned with the Walgreen test in Cincinnati, particularly as you kind of look forward to opening up the Ocado sheds in non-Kroger markets? Have you learned anything definitive or not yet?
W. Rodney McMullen--Chairman and Chief Executive Officer
It's still very, very early. And I would say the thing that has been an incredibly positive is Walgreens. Their team and their store teams are a fantastic partner. And both of us are learning things that customer likes and dislike together. And we really see it as something that we continue to understand the customer desires and changes and adapting to that. And it's pretty early on. I know, Gary, you're much closer to it from a day-to-day basis. So, I'll let you add some of the specific color.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Yeah. Sure. I think some of the things that we're learning and we like so far, John, with what we're seeing. First of all, by having the level of convenience now that we have with those 13 stores in Northern Kentucky alongside 10 of our own stores with the pick-up service, we're getting great feedback on both the fact that we're even a different level of convenience than we were before and this ability to get in and out really quickly is certainly something that is resonating very well with the customers that are using the service.
We're also starting to see some positive feedback from customers around the speed of in and out for those small shopping trips and the ability to be able to get what I need for today and what I need for tonight, whether it's for lunch or dinner and that's certainly a real positive. What we find generally with the small format stores, there is a ramp up as customers become more comfortable with their shopping behavior. We've seen that with our own small format stores and we've seen over the years with convenience stores. So the biggest thing for us now is really pouring over the data and making sure that we're using a data-driven approach to continue to enhance the service and the experience.
John Heinbockel--Guggenheim Securities -- Analyst
Okay. Thank you.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, John.
Operator
The next question comes from Michael Lasser with UBS. Please go ahead.
Michael Lasser--UBS -- Analyst
Good morning. Thanks a lot for taking my question. Can you give us more clarity on how the past full year operating profit guidance works? Thus far, you're trending a little below your ID sales range, even currently in the current quarter.
It sounds like the pharmacy gross margin pressure has been greater than you expected and you got a real estate gain in the first quarter and yet your profits were still down. So, what's the path that you could take from here to get to your operating profit guidance for the full year? And at what point do you see more risk that it would be harder to get to that level?
W. Rodney McMullen--Chairman and Chief Executive Officer
Yeah, I'll make a couple of comments, and I'll let Gary fill in on the details. Some of the -- if you look at the positives, we had great expense control. The other thing I think is always important to remember is we sold the Turkey Hill Dairy business. We sold the C-store business during the first quarter. And we sold YouTech, all of which affected operating profit when you look at year-on-year in the first quarter. So, I think it's important to remember that as well. And as I mentioned, the alternative profit exceeded expectations in the first quarter as well.
With that, Gary, I'll let you fill in more of the details.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Yeah, I think that's a very important point you made around the adjustments to get the year-over-year comparison correct, Rodney, so thank you for raising those. I think beyond what you already shared, the key components I would add, we are obviously excited about where alternative profit is heading and still see that as a potential upside.
I think the other piece that I mentioned in the prepared comments is our team has done a phenomenal job of looking for how do we continue to generate cost savings and efficiency in the business. And we still believe there are more levers that we are pulling and will continue to pull that give us the ability to make sure that we're continuing to strengthen the financial model as we're continuing to drive the sales momentum that Rodney described in his opening comments as well.
So for us, I think it is really about making sure that we're connecting more strongly with the customers and driving sales, but certainly very focused on how do we make sure we're creating the most efficient operating model. And we continue to find additional opportunities whether it's in store productivity, pharmacy productivity, as I mentioned earlier. We still think there's a lot of upside in goods not for resale and cost of goods. As so as we continue on this journey to make sure we're building the most efficient retail operation, we do believe there are levers that we can continue to pull throughout the year and into 2020.
Michael Lasser--UBS -- Analyst
And then my follow-up question is on your price investment. Recognizing that there's been a lot of noise in your IDs over the last couple of quarters, given the disruption from the store remodels. Do you think your price investments are as effective as they might have been in the past? And if they are, will you have to reaccelerate your price investments in the coming quarters to drive higher IDs from here?
W. Rodney McMullen--Chairman and Chief Executive Officer
One of the things that we always think is very important to remember is customers decide where to shop based on things more than just price. And we feel very good about where our price is relative to the market and relative to our competitors. And remember, customers also look at regional players when they're looking at their price as well.
When you look at overall, the customer decides where to shop based on what's the experience they get from associates, what's the freshness of the fresh department. And we continue to rate strong in terms of -- if you look at produce, meat, seafood, deli, those areas of our business and the experience in terms of a great checkout experience and speed.
And when you look at rewards, we do a fantastic job with rewards that are exclusive to each individual customer where we use our data to make targeted offers based on that particular customer. And then, obviously, fuel is an important part of that overall equation. So the customer decides where to shop based on the overall experience. And we feel great and we continue to make progress when you look at that total experience. And if you look at, as I mentioned before, we had solid growth, strong growth in our loyal shoppers.
Michael Lasser--UBS -- Analyst
Thank you very much, and good luck.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, Michael.
Operator
The next question comes from Kelly Bania with BMO Capital Markets. Please go ahead.
Kelly Bania--BMO Capital Markets -- Analyst
Hi. Good morning. Thanks for fitting me in here. Had a just...
W. Rodney McMullen--Chairman and Chief Executive Officer
Good morning.
Kelly Bania--BMO Capital Markets -- Analyst
Good morning. Had a couple questions on operating profit. I first wanted to ask just about your three-year plan. I didn't really see anything specific in the release about it. And I don't want to read too much into it. But can you comment on your thoughts on that $400 million plan? As you've pointed out in the past, I think the Street is skeptical of getting to that, given the huge acceleration it implies next year. But maybe just could you comment on that?
And then on your other comments about Turkey Hill, and there's a lot of moving pieces between the Turkey Hill divestiture, the Home Chef acquisition and now with this real estate transaction, that was $57 million, I think. So, that's about 14% of the $400 million plan that we weren't aware of. So, can you help us understand these moving pieces? How much they add or subtract to that operating profit plan so we can kind of model this out a little bit more clearly?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Sure. Yeah, I think as you think about the Restock Kroger plan, as you know, when we built the plan out, we identified $4.45 billion of overall savings and value that we expected to create and then would invest $4.05 billion to support the business growth, whether that was in our associates or in pricing or the customer experience and digital capabilities.
I would say as we look at where we are in the journey, we're feeling very good about the -- what we've learned through the process around where we unlock and how we create that $4.45 billion of value. As you've heard us talk about, alternative profit streams are right where we expected them to be. If anything, slightly ahead of plan at this point, and we see continued great upside for growth there.
As we look at the cost savings, we obviously weren't successful in exceeding our plan last year at $1.1 billion of cost savings. And we are identifying, I would say more cost savings as we're working through the plan this year that we believe can continue to accelerate our progress there in becoming a more efficient operator.
I do think as we've shared all the way along and Rodney's been consistent in his comments that we do have to make sure that we are continuing to build momentum in sales. That's an important part in generating more leverage through the growth in sales that we're committed to achieve in the second half of this year and obviously into 2020.
So, I think as you pull those three pieces together, we still feel we have a very clear path to get there. And I would say in the levers that we intended to pull where we are in the journey with those levers, we're feeling very confident around them. And as we continue to build momentum in the sales line that Rodney referenced, we're still committed to the $400 million of incremental FIFO operating profit.
Kelly Bania--BMO Capital Markets -- Analyst
And any comment on the Home Chef, Turkey Hill, the real estate? How those are part of the $400 million, the exact impact of those?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Yeah. So, we will probably do a little bit of calculation to make sure we're baselined in the right place against where the starting point was. So, we were at $3.1 billion, if we recall in 2017, down to $3.5 billion. There may be a couple of -- they are certainly not going to be drastic and material in the impact they would have on the baseline, but there certainly will be a need for us to clarify what the baseline would be with the various changes that have happened and what that then means to what $400 million means incrementally by 2020.
We certainly don't contemplate as we think about the run rate and the value that we'll be generating in 2020. The one-off transactions would be a major driver of the value that we expect to create. We built the Restock Kroger plan with the mindset that it builds momentum into beyond 2020. We're not focused on getting to a specific number for 2020 that doesn't drive the value. But the Home Chef certainly isn't in the $400 million. And the Turkey Hill sale gain certainly isn't included in there.
So, none of these one-off transactions are -- that's why we kind of stripped those out from the performance and what we shared is our progress in the year. None of those are in 2020, would we expect there to be individual asset sales or disposals that are going to create a gain that would be, if you like filling the gap between where we are today and where we expect to be in 2020.
Kelly Bania--BMO Capital Markets -- Analyst
Okay. Maybe just a couple follow-ups to that, I guess. Can you share with us where you see your FIFO operating profit with all the adjustments, these -- I guess five quarters through the plan? And then in terms of alternative profit, so I think you said in the past there was a 20% increase this year. Does that equate to the $100 million that you're now talking about, and can you remind us what the last year and next year is kind of planned at?
W. Rodney McMullen--Chairman and Chief Executive Officer
Well, on alternative profit, in the quarter, the growth was -- last year was 20%. This quarter would have been a little bit above 20%. And if you go back and look at '17, if I remember right, Gary, and you'll remember better than I would, I think it was 13% or so?
Gary Millerchip--Senior Vice President and Chief Financial Officer
Yes.
W. Rodney McMullen--Chairman and Chief Executive Officer
So it's continuing to accelerate as we learn how to do it. And if you look at like the media business, we've recruited professionals that know how to grow that business. So, we're actually accelerating where we are. On the five quarters and stuff, I think we're probably -- it would be better off for Gary and Rebekah to follow up, to make sure that we get the specifics of the question so that we can help -- be a little bit more helpful than on the fly.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Right. Absolutely.
Kelly Bania--BMO Capital Markets -- Analyst
Thank you.
W. Rodney McMullen--Chairman and Chief Executive Officer
Thanks, Kelly.
Operator
The next question comes from Chris Prykull with Goldman Sachs. Please go ahead.
Christopher Prykull--Goldman Sachs -- Analyst
Good morning, guys. Thanks for taking my question.
W. Rodney McMullen--Chairman and Chief Executive Officer
Morning.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Morning.
Christopher Prykull--Goldman Sachs -- Analyst
So, I guess firstly on the composition of gross margin, the change year-over-year and maybe the cadence, the rest of the year, a couple components to that. So, how much of the 40 basis point non-fuel decline can be attributed to pharmacy? Should we expect a similar headwind for the rest of the year or will that improve?
You mentioned alternative profits can be lumpy. Anything to keep in mind from a margin contribution seasonally? And then you;re lapping some supply chain investments in the fourth quarter. I understand that. Any sense for mix shift toward Our Brands and the contribution there?
W. Rodney McMullen--Chairman and Chief Executive Officer
I'll start, and I'll let Gary finish. On the supply chain investments, in the first quarter, we continue to have significant start-up costs with facilities in Las Vegas, Michigan, and Northern Kentucky that serves our online business. And the investment in the first quarter for those facilities was pretty similar to the fourth quarter in terms of an investment. Obviously, those facilities are in the middle of their ramp-up.
If you look at Our Brands, I always tell people Our Brands margin typically is 600 basis points to 800 basis points higher than national brand. Obviously, it's a higher sales part and when you look at the gross margin per item, it's usually a $0.01 or $0.02 higher on a cents per item profit basis. In terms of Rx in the balance of the year, Gary, I'll let you go into a little bit of the details there.
Gary Millerchip--Senior Vice President and Chief Financial Officer
Yeah. So certainly, as we mentioned in the prepared remarks, a meaningful part of the gross margin decline in the quarter was the gross margin pharmacy pressure you mentioned and also Kroger Specialty Pharmacy with its continued growth. Those two combined would have been a meaningful portion of the reduction.
We're feeling really good about the fact that we saw a significant deceleration in gross margin decline in Q1 versus the second half of the year. And as we guided to for the whole year, we do expect that to be the case. We don't expect to have another quarter like we had in Q3 and Q4 last year.
That being said, obviously, we manage the business very dynamically. It's important that we're able to adapt on price and continue to invest were it makes sense and where the customers tell us they really value it and it will drive retention and growth in our loyal customer base.
So, we tend to really focus on how we're managing the business to make sure that we're achieving the overall operating profit guidance and EPS that we shared. We do think there will continue to be some pressure in the Rx margin as the year progresses on.
As I mentioned earlier, the team there is doing a very good job in making sure that we're finding ways to manage that pressure and also introduce our cost saving initiatives that balance out the impact of that. So, we certainly would expect the impact to be less in the rest of the year as the team continues to execute on a plan to drive strong sales growth and drive improvements in overall profitability.
W. Rodney McMullen--Chairman and Chief Executive Officer
And alternative profit is always strongest in the fourth quarter because of gift cards and the other-related items. We have time for one more question.
Operator
And that question will come from Chuck Cerankosky with Northcoast Research. Please go ahead. And Mr. Cerankosky dropped out of the -- dropped his line.
And the next question will be from Michael Montani with Evercore ISI. Please go ahead.
Michael Montani--Evercore ISI -- Analyst
Great. Thanks for taking the question. Just on the core gross margins for the grocery and consumable business. Can you talk about what you saw after you back out some of the supply chain investments in the pharmacy? What are you seeing in the core could there? And then the follow-up is on tonnage. Did you have growth there in the quarter given the 1% inflation, 1.5% comp? Just give us some color there incrementally on the trend if you could. Thank you.
W. Rodney McMullen--Chairman and Chief Executive Officer
Yeah. If you look at on the tonnage on the equivalized units, it would have been continued growth. We continue to see customers going, buying bigger packs across the whole category. When you look at core gross margin, it would be a little bit of investment, but as Gary mentioned, we had continued meaningful improvement in cost of goods through negotiation and other things, which funded quite a bit of investment as well.
Gary, anything you want to add to that?
Gary Millerchip--Senior Vice President and Chief Financial Officer
I think you said it well, Rodney.
W. Rodney McMullen--Chairman and Chief Executive Officer
Okay.
Michael Montani--Evercore ISI -- Analyst
Great. Thank you.
W. Rodney McMullen--Chairman and Chief Executive Officer
Okay. Thanks, Michael.
Before we end today's call, one of the things that's exciting about our earnings call is that many of our associates listen in to better understand and gain insights into our business. And of course, many of our associates are shareholders as well. So as always, before we end today's call, I'd like to share a few final comments directed to our associates and how all of us live our purpose every day.
As America's grocer, Kroger takes seriously our role in celebrating our uniquely American heritage during the patriotic season between Memorial Day and Independence Day. It always makes me feel incredibly proud that Kroger employs so many men and women who have served or currently serve in the armed forces.
I got a chance to personally live our purpose last Saturday with our Veterans Associate Resource Group who put on a 5K run to raise money for veterans. While I certainly didn't finish first and nowhere close to last either, I would like to add in the race, I did have a different kind of first. Touring a specifically designed tiny house that our caring associates dreamed up and then built for a deserving local veteran and his family.
The home was built to green technology standards, made from recycled materials and features solar panels, demonstrating our associates' commitment to and passion for Kroger's Zero Hunger/Zero Waste social impact plan. In addition to the home, our Cincinnati Dayton division donated a Kroger gift card and a bag of our brands products to turn a new tiny house into a home and it really felt great.
One of the many ways Kroger shows our gratitude and appreciation to all of our service members and their family is through our long-standing commitment to the USO. Kroger is the single largest donor to the USO, contributing over $22 million over the past decade.
In keeping with this commitment, we will be presenting the USO with a $1 million donation at a barbecue for the troops event we are hosting at Fort Stewart in July. It is our honor and privilege as America's grocer to serve America's heroes.
Thank you to all of our customers, associates and suppliers who make our business successful every day of the year. That completes our call today. Thanks for joining.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Duration: 62 minutes
Rebekah Manis--Director, Investor Relations
W. Rodney McMullen--Chairman and Chief Executive Officer
Gary Millerchip--Senior Vice President and Chief Financial Officer
Robby Ohmes--Bank of America Merrill Lynch -- Analyst
Judah Frommer--Credit Suisse -- Analyst
Edward Kelly--Wells Fargo Securities -- Analyst
Erica Eiler--Oppenheimer & Company -- Analyst
John Heinbockel--Guggenheim Securities -- Analyst
Michael Lasser--UBS -- Analyst
Kelly Bania--BMO Capital Markets -- Analyst
Christopher Prykull--Goldman Sachs -- Analyst
Michael Montani--Evercore ISI -- Analyst
More KR analysis
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Methode Electronics Inc. (MEI) Q4 2019 Earnings Call Transcript
Logo of jester cap with thought bubble. Image source: The Motley Fool. Methode Electronics Inc. (NYSE: MEI) Q4 2019 Earnings Call Jun 20, 2019 , 11:00 a.m. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Welcome to the Methode Electronics Fiscal Year 2019 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. For this quarterly conference call, the Company has prepared a PowerPoint presentation entitled Fiscal 2019 Fourth Quarter and Full Year Earnings, which can be found at methode.com in the Investor Relations section. (Operator Instructions) As a reminder, this conference is being recorded. This conference call does contain forward-looking statements, which reflect management's expectations, regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to a safe harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statements to conform the statements to actual results or changes in Methode's expectations on a quarterly basis or otherwise. Forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that cause these actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitation, the following. Dependence on a small number of large customers, including two large automotive customers, dependence on the automotive, appliance, commercial vehicle, computer and communications industries, international trade disputes resulting in tariffs, changes in US trade policy, success of Pacific Insight, Procoplast and Grakon, and/or our ability to implement and profit from new applications of the acquired technology, ability to successfully benefit from acquisitions and divestitures, customary risks related to conducting global operations, significant adjustments to expense based on the probability of meeting certain performance levels in our long-term incentive plan, recognition of goodwill impairment charges; ability to keep pace with rapid technological changes; ability to withstand business interruptions; investment in programs prior to the recognition of revenue; timing; quality and cost of new program launches; ability to withstand price pressure; including pricing reductions; currency fluctuations; ability to successfully market and sell Dabir Surfaces products; dependence on our supply chain; dependence on the availability and price of materials; income tax rate fluctuations; fluctuations in our gross margins; breach of our information technology systems; ability to avoid design or manufacturing defects; ability to compete effectively; ability to protect our intellectual property; debt levels and the effect on operations and liquidity; and costs and expenses due to regulations regarding conflict minerals. Story continues Additionally, this conference call will present both GAAP and non-GAAP financial measures. A reconciliation of these measures is included in today's earnings release, which you can find on our Investor Relations website. I would now like to turn the call over to Don Duda, President and CEO. Please go ahead, sir. Donald W. Duda -- Director, President and Chief Executive Officer Thank you, Christine, and good morning everyone. Thank you for joining us today for our fiscal 2019 fourth quarter and full year financial results conference call. I'm joined today by Ron Tsoumas, our Chief Financial Officer. Both Ron and I have comments, and afterwards, we will take your questions. To start, I will ask you to turn to Slide 4. In fiscal 2019 we continued on our deliberate path to transform the Company into a higher margin business that should command a higher multiple compared to the typical automotive suppliers today. Methode has been focused on this objective for some time and the acquisition of the Grakon solidifies our Industrial segment, clearly setting us on a path to diversify into new end markets, expand our customer base and product line offering and reduce our automotive concentration. In fiscal 2019, Methode eclipsed $1 billion in revenue for the first time in our history, despite the decline in global passenger car production and tariff-induced headwinds as well as the introduction of the new European emission and testing standards, all of which reduced our automotive sales by $47 million for the fiscal year compared to fiscal 2018. Through our acquisitions and continued investment in technologies and vertical integration, we have positioned Methode to become a one-stop shop for LED lighting solutions, integrated user interfaces and sensors. Today, these complementary products, technology and manufacturing capabilities will allow us to capitalize on important trends in both the automotive and industrial segments, safety, autonomous and electrification. OEMs are tracking less about discrete functionality and more about feedback control. And this is where our sensor solutions can bring innovation and unique custom solutions. For instance, our magneto-elastic sensing technology already deployed to provide pedal assist on e-bikes, steering of systems, sport and recreation vehicles, clutch plate position and active roll control for automobiles, can also be utilized to measure and manage trailer weight and towing dynamics to improve safety for both automobiles and commercial vehicles. Additionally, lighting has become one of the most critical elements for automotive and commercial vehicle OEMs to innovate and differentiate their vehicles to attract customers and drivers. Pacific Insight's innovation and technology in RGB LED based ambient and direct lighting has expanded Methode's presence within the interior, providing enhanced functionality, styling and safety. Grakon's exterior lighting capabilities support Advanced Driver Assistance Systems. These new opportunities in interior and exterior lighting provide opportunity for market share gains across Methode. Finally, our expertise in both power distribution and automotive manufacturing, allows us to meet the electric vehicle OEMs high voltage power requirements which are validated to automotive requirements. Combining these two expertise from a single supplier, provides brand differentiating ideas and system critical best-in-class solutions to the customers. Our innovative solutions to the EV market provide a tremendous opportunity for growth through both increased market penetration and content per vehicle. Next, I'd like to take a moment to update you on our Grakon integration efforts. As we've talked about in the past, one of the synergies in the acquisition was to present Grakon customers, the breadth of Methode's technologies and solutions as their customers have been requesting to see Methode's capabilities since the acquisition closed. We just concluded the first of -- two of a number of planned Tech Days with Grakon's commercial vehicle OEM customers. Through functioning product demos, we illustrated a broad range of Methode's HMI, lighting, power distribution and sensor capabilities. Our Tech Day events were visited by management, engineering, purchasing and their design studios. We also demonstrated our expertise in forward lighting and some of the potential applications of our Magneto-elastic sensor technology. The Methode Grakon team will continue with three additional onsite Tech Days over the summer. Finally on this Slide, as I will touch more in a few minutes, Dabir passed the milestone of $1 million in revenue and we continued to make significant progress in both the number of Dabir Surfaces sold and lowering the average evaluation time. Looking at the financials on Slide 5. Consolidated sales improved year-over-year 6.8% in the quarter and 10.1% for the year. In the fourth quarter of this year, non-GAAP adjusted income from operations increased 23.6% over last year. For the year, non-GAAP adjusted income from operations grew 14.6% over last year. These figures exclude expenses for initiatives to reduce costs and improve profitability and acquisition related costs in the applicable periods. Non-GAAP adjusted consolidate gross margins improved year-over-year 210 basis points in the fourth quarter and 100 basis points for the year. This excludes expenses for initiatives to reduce costs and improve profitability as well as acquisition related purchase accounting adjustments in the applicable periods. Next, I'll be referring to Slide 6, to look at the key drivers to our sales performance this year versus last year. For the fourth quarter, Grakon and organic growth contributed $55 million in sales more than offsetting reduced vehicle production volumes that our customers impacted by the shift away from passenger cars. Fourth quarter sales were also negatively impacted by the continued late start of a major appliance program and reduced data program volumes in the Interface segment, as well as an unfavorable currency impact. Looking at the full year sales on Slide 7, acquisitions and organic growth including new launches contributed $196 million in sales, again more than offsetting the global auto slowdown and production headwinds as well as pricing reductions and the adoption of a new accounting standard regarding revenue recognition which affected the accounting of tooling sales. Consolidated sales were also negatively impacted by the late start of the major appliance program and reduced data program volumes, Interface segment as well as currency headwinds. Now let's move on with an update on Dabir on Slide 8. As we look back on this past year, at Dabir, our revenue increased fourfold to $1 million in fiscal 2019. Additionally, our number of paying customers doubled from 8 to 16 growing to 20 already this fiscal year. We also moved from the Dabir being predominantly utilized in the cardiovascular operating in the last fiscal year to be adopted in other areas of the hospital network such as general surgery, transplant, ICU, plastics, neurology and electrophysiology. Additionally, as this slide shows, our overall evaluation period has been reduced from 85 days to an average of 69 days due to product awareness and better acceptance in the marketplace. Even as we continue to add new customers this fiscal year, we will be focused on expanding within our current customer base as we go from the operator room to other departments and from a single hospital to the entire hospital system. Finally, the key internal measure we used to judge Dabir's progress is number of surfaces sold, which has increased year-over-year 5 times from 79 in fiscal 2018 to 462 in fiscal 2019. Excluding controller sales and leases, revenue attributed to Surface alone has grown from 64,000 in fiscal 2018 to over 476,000 in fiscal '19. As we noted in the release this morning, we anticipate revenues of $3 million to $5 million this year for Dabir. At this point, I'll turn the call over Ron, who will provide more detail on financial results and review guidance. Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Thank you, Don, and good morning everyone. On a GAAP basis, fourth quarter net income decreased $14.2 million to $22.6 million or $0.60 per share from $36.8 million or $0.98 per share for the same period of last year. For fiscal '19, GAAP net income increased $34.4 million to $91.6 million or $2.43 per share from $57.2 million or $1.52 per share in fiscal '18. As you'll recall in fiscal '18, we incurred $53.7 million of tax expense related to US tax reform. For the fourth quarter, tax expense increased $13.5 million or $0.36 per share mainly due to a decrease in investment tax credits of $8.9 million this fiscal year and a tax benefit of $3.1 million in the fourth quarter of fiscal 2018 related to US tax reform. This resulted in an effective tax rate of 24.9% in the fourth quarter. For the full year, tax expense decreased by $54.6 million mainly as a result of lower tax expense of $58.5 million from last year partially offset by lower investment tax credits of $7.8 million year-over-year in this fiscal year. The net impact of these two factors was a benefit to fiscal 2019 net income of $50.7 million or $1.35 per share. This resulted in an effective tax rate of 11.6% for fiscal '19. Lower than anticipated investment tax credits for the year had the effect of increasing our effective tax rate from the guidance range of 9% to 11% which we provided throughout the year. Negatively impacted fourth quarter and full year GAAP net income was increased intangible asset amortization, stock-based compensation and interest expenses, reduced passenger car demand and production globally and currency rate fluctuations. Full year GAAP net income was also negatively impacted by increased acquisition related costs, initiatives to reduce costs and improve profitability, net tariff expense and lower international government grants. Fourth quarter and full year GAAP net income benefited from results from Grakon and lower SG&A expenses excluding Grakon, while the full year benefited from results from acquisitions and lower legal expenses. Moving to Slide 9. In the fourth quarter, automotive and currency headwinds provided -- proved to be greater than anticipated. Additionally, sales at the very lower end of our guidance range were a key contributor to lower results, but the lower year-over-year investment tax credits, I just discussed were nearly as impactful. Tariff mitigation efforts and currency headwinds also negatively impacted our results. Moving to Slide 10. Non-GAAP adjusted gross margins improved 100 basis points year-over-year in fiscal 2019 and exclude expenses for initiatives to reduce costs and improve profitability and purchase accounting adjustments related to the inventory. Gross margins were negatively impacted by an unfavorable sales mix and customer pricing reductions in the automotive segment as well as significantly reduced sales in the Interface segment, partially offset by a favorable sales mix in the Industrial segment. Non-GAAP selling and administrative expenses as a percentage of sales decreased 40 basis points in fiscal 2019, and exclude the acquisition related costs, expenses for initiatives to reduce overall costs and improve operational profitability and long term incentive plan accrual adjustments in the applicable periods. A main contributor to the improvement was lower legal expenses of $5.1 million. Shifting to EBITDA on Slide 11. The company generated $155 million of EBITDA in fiscal 2019 or 15.5% of sales versus $153 million or 16.8% of sales in the same period last year. However, adjusting for expenses for initiatives to reduce overall costs and improve operational profitability, acquisition related costs and long term incentive plan accrual adjustments in the applicable periods, adjusted EBITDA improved year-over-year to $185 million or 18.5% of sales in fiscal '19 versus $154 million or 16.9% of sales in fiscal '18. A few other financial items to review. Year-over-year, intangible asset amortization expense in fiscal '19 increased $10.5 million or 187.5% to $16.1 million, primarily due to amortization expense related to our Pacific Insight, Procoplast and Grakon acquisitions. In fiscal 2019, we invested approximately $50 million in CapEx mainly to support programs and launches in North America and Europe. Expense for depreciation and amortization for fiscal 2019 was $43.3 million. Let's move to Slide 12. Free cash flow for fiscal 2019 was $85.1 million. Our debt-to-EBITDA ratio which is used for our bank covenants is approximately 1.7. Moving to Slide 13. I'll finish up my remarks with guidance. As a reminder, the guidance ranges for fiscal 2020 are based upon management's expectation regarding a variety of factors and involve a number of risks and uncertainties which have been detailed in this morning's release in the Form 10-K. As we announced this morning, we anticipate fiscal 2020 sales to be in the range of $1.13 billion to $1.17 billion. Pre-tax income in the range of $150.3 million to $164.3 million, and earnings per share in the range of $3.25 per share to $3.55 per share. Although, we normally do not give quarterly guidance, we anticipate sales for the first quarter will likely be lower than the other three quarters due to the fact that the majority of our new automotive and e-bike program launches will not be at full production volumes. Additionally, the delayed laundry care program is anticipated to launch in our third quarter. We estimate that our effective tax rate will be in the range of 18% to 21% in fiscal 2020. The higher tax rate is due to new provisions under the US tax reform namely GILTI, and the mix of earnings from our businesses. For fiscal 2020 we are anticipating capital investment to be in the $48 million to $54 million range and depreciation and amortization to be between $51 million and $54 million. Finally, we expect fiscal 2020 free cash flow to be between $122 million and $136 million. In conclusion, please move to Slide 14 to take a look at our key drivers of our anticipated EBITDA performance for fiscal 2020. Looking at fiscal '19 EBITDA of $155 million and getting the EBITDA from new automotive and laundry program launches of about $19 million. Adding EBITDA from a full year of Grakon, which adds another $19 million, subtracting the impact of the loss of EBITDA from reduced passenger car reductions which we estimate to be about $12 million. Adding the benefit of initiatives to reduce costs and improve profitability of about $11 million and adding one-time costs we incurred in fiscal 2019 for acquisitions and restructuring for about $29 million. Don, that concludes my comments. Donald W. Duda -- Director, President and Chief Executive Officer Ron, thank you very much. Christine, we are ready to take questions. Questions and Answers: Operator Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Thank you. Our first question comes from line of Chris Van Horn with B. Riley FBR. Please proceed with your question. Christopher Van Horn -- B. Riley FBR -- Analyst Good morning. Thank you for taking my call. Donald W. Duda -- Director, President and Chief Executive Officer Good morning, Chris. Christopher Van Horn -- B. Riley FBR -- Analyst I was wondering if you could get a little bit of detail of what you're assuming for automotive production. Are you using either LMC or IHS as kind of a benchmark or we've heard from some other suppliers that they might be kind of handicapping that either direction based on what they see from their mix in terms of how they're thinking about production rates. Donald W. Duda -- Director, President and Chief Executive Officer We use LMC and probably the correct term, we do handicap that up and down based on our knowledge of the customers' demand. But we for the most part, use that and then we'll occasionally we will double check with IHS, if we see a number that doesn't look right to us. But generally we're looking at LMC. Christopher Van Horn -- B. Riley FBR -- Analyst Okay. Got it. And then so it seems like you've got some visibility into the back half of your fiscal '20 as you mentioned in the comments in terms of, is that you see program launches for you on the automotive side or is there a macro or -- a macro event that you're seeing? What's kind of driving that comment? Donald W. Duda -- Director, President and Chief Executive Officer I think for the most part we take a conservative approach to worldwide auto and again handicapping LMC and maybe we handicap it more to the negative than to the positive. But we do have the visibility of the launches we know when the launches will come, we know what the ramp up is, like the variable there is do they launch at the volumes that we've predicted. And then also we talked about -- Ron talked about the delay in the laundry program that's going to launch in October. So as we showed up on one chart, those launches contribute to our income and EBITDA for the year. Although again more in the second, third and fourth quarter than in this for the first quarter. We've also built in a decline in Class 8 sales in the second half of the year. Christopher Van Horn -- B. Riley FBR -- Analyst Okay. Got it. Very helpful. Thanks for that color. And then obviously tariff you're assuming some tariffs in your guidance here. Maybe you could highlight it. What are your mitigation efforts there if at all or do you intend to pass along some of that to the end customer? How do you see the tariff playing out assuming it actually happens? Donald W. Duda -- Director, President and Chief Executive Officer Well I mean from a Chinese tariffs we're there. I mean we've built in 25% and that equates to about $8.5 million. We have -- we are sharing some of the expenses with our customers and we've provided them a mitigation plan, some of which is just shipping into Mexico for Mexican production versus shipping into the US and then transferring to Mexico. And then some of it is using our other plants for manufacturing. And when we're in the I would say the trial period of those very shipments and gets fairly complicated from a tariff standpoint of what constitutes a material transformation. So we've communicated with our customers, here's what we can do for you. Here's the time frame. And if we can do it center of that $8.5 million, will be reduced obviously if China and the US come to terms, that'll help also. Christopher Van Horn -- B. Riley FBR -- Analyst Okay. Got it. And then last for me just on capital deployment, you obviously you're generating some decent free cash here. And just curious I know you pay dividend but have you considered buybacks and anything else you're considering from a capital deployment standpoint? Donald W. Duda -- Director, President and Chief Executive Officer I think we always do look at our various options and discuss that with the board. Our preference right now is to pay down debt and we have the capability of doing that. So that would probably the number one deployment. I don't rule out another acquisition if one came about. But right now the main uses obviously our capital uses to support our businesses and our program launches but -- and the dividend but we're focusing on debt reduction. Christopher Van Horn -- B. Riley FBR -- Analyst Okay. Thanks so much for the time guys. Appreciate it. Donald W. Duda -- Director, President and Chief Executive Officer Thank you, Chris. Operator Our next question comes from line of Steve Dyer with Craig-Hallum. Please proceed with your question. Ryan Sigdahl -- Craig-Hallum -- Analyst Hey, guys, Ryan Sigdahl on for Steve. Donald W. Duda -- Director, President and Chief Executive Officer Good morning. Ryan Sigdahl -- Craig-Hallum -- Analyst To start, what does revenue guidance imply for organic growth? And then secondly given the challenging automotive environment, what gives you the confidence to significantly outperform that? I know the EBITDA bridge shows new awards and whatnot but a little more color there would be helpful. Donald W. Duda -- Director, President and Chief Executive Officer Sure. I mean, the bridge shows $19 million of organic growth, that's what we're anticipating. But to the question, what gives us confidence in let's call it our legacy auto business? I mean we do have the benefit of releases from the customer. We know the launch schedules are. Could there be a further decline in Europe? Yes, I mean, when you're looking out, you're fairly confident in your first three months, the second three months get a little fuzzier and then the second half of the year, it could be up or it could be down. So, I don't know if we can add any more colors to the math. We tend to be conservative but we saw in our fourth quarter that our European revenues were down further than we thought they would be. Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer That's been baked into the forecast for this year. Donald W. Duda -- Director, President and Chief Executive Officer Yes. And if I -- if you're a run rate guy and I am and I can take the fourth quarter and you take out all the noise and you multiply it by 4 and well OK but at least (ph) we are not there completely but we're getting there. And then I've also got the benefit of looking at the first quarter. So, based on that we're confident in the numbers that we put out in guidance. Ryan Sigdahl -- Craig-Hallum -- Analyst And then as it relates to GM's truck and SUV platform transitioning from K2 to the T1, any thoughts there I guess based on what you're seeing from current forecasts on, is that a flattish type production this year or do you think that can grow? Donald W. Duda -- Director, President and Chief Executive Officer In an area that I really have to be careful because now I'm talking for the customer and we can't do that. So, I would refer you to what GM has put out. I really can't go any further than that. Ryan Sigdahl -- Craig-Hallum -- Analyst Fair enough. As it relates to EBITDA, the bridge on Slide 14 is very helpful, so appreciate that. By my math based on the other guidance that implies kind of the midpoint of guidance assumptions, is it $221 million? If I recall correctly... Donald W. Duda -- Director, President and Chief Executive Officer Yes, that's correct. Ryan Sigdahl -- Craig-Hallum -- Analyst Okay. If I recall correctly for accrual accounting for the long term incentives, it requires at least 75% confidence in achieving that. Is that correct? And then does that kind of imply the midpoint is on -- fairly on the conservative side I guess based on that 75% confidence level? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Yes. It's actually a good question. It's 70% confidence level that Don and I have to attest to, to the target number of $221 million. And for the accrual purposes for the accounting rules, that's where the plan is capped out. And that's what we accrue true on the long term incentive accrual. So that's why we just maintained it. Ryan Sigdahl -- Craig-Hallum -- Analyst Great. I'll leave it there. Thanks guys. Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Thank you. Operator (Operator Instructions). Our next question comes from the line of David Leiker with Robert W.Baird. Please proceed with your question. David Leiker -- Robert W. Baird -- Analyst Good morning, everyone. Donald W. Duda -- Director, President and Chief Executive Officer Good morning, David. David Leiker -- Robert W. Baird -- Analyst I want to start with a comment you made about the quarterly pattern and first thanks for sharing it. If what I heard -- if what I heard is correct, you're saying your Q1 revenues are going to be the lowest revenue number for the year, is that right? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer That's correct. David Leiker -- Robert W. Baird -- Analyst Yes, well, Q1 is going to also benefit from Grakon where... Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer I'm sorry, David, go ahead. David Leiker -- Robert W. Baird -- Analyst Grakon sales I mean is going to -- is going to be added into that number versus last year as well though? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Oh sure, absolutely. David Leiker -- Robert W. Baird -- Analyst Well I touched it off what you said. Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Q1 tends to be one of our slowest quarters. David Leiker -- Robert W. Baird -- Analyst Right. Okay. I just wanted to make sure I heard that correctly. And then as we look at this -- the laundry program, is this the timing of this? It's been it seems to be a little bit of a moving target. How confident are you that that's going to hit when you're thinking it's going to start to hit? Donald W. Duda -- Director, President and Chief Executive Officer That's a very good question because it has been delayed in the past. We're starting to see movement toward launch. There is -- there is -- you can start to see releases and meaningful footprints to the customer hitting their projected launch date which I think is October. So that doesn't mean it doesn't change, but we're starting to see some positive signs. Let's put it that way. David Leiker -- Robert W. Baird -- Analyst And you're at the point right now where you're ready to go. They just have to say start shipping, right? Donald W. Duda -- Director, President and Chief Executive Officer Absolutely. David Leiker -- Robert W. Baird -- Analyst Okay. And then you also dropped in there on Interface, a commentary about some of the legacy data products. Can you talk a little bit about what's going on there? What's the size of that? What's the run off or impact of that? Donald W. Duda -- Director, President and Chief Executive Officer It's 1 gig transceivers which have been under tremendous price pressure for three, four, five years, if not longer. Ultimately that will wind down. And we're seeing slower sales than we thought maybe even a year ago, 10 gig is improving but not enough to offset the 1 gig product. So, it's noteworthy, it's not going to make a break the year but it was just a worthy of a commentary. David Leiker -- Robert W. Baird -- Analyst Can you give us some sense of scale of how large that is for you right now? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer The two combine about $15 million in sales annually. David Leiker -- Robert W. Baird -- Analyst The one in the 10 combined? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Yes. David Leiker -- Robert W. Baird -- Analyst Okay. Donald W. Duda -- Director, President and Chief Executive Officer Fair go, but it could go to 12 or 10. David Leiker -- Robert W. Baird -- Analyst And then when we look at your sensor business how large is that today in terms of the revenue contribution for you when you take the whole portfolio of sensors? Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer $40 million, now going to $20 million to $80 million some, $85 million... Donald W. Duda -- Director, President and Chief Executive Officer And we anticipate actually it will go higher to $100 million. David Leiker -- Robert W. Baird -- Analyst Okay. And then you didn't make any comments about any new contract wins or anything, any color you can offer there? Donald W. Duda -- Director, President and Chief Executive Officer It's been relatively slow and we've kind of anticipated that. We have some very good bookings early in '19. And I don't want to say that the automakers are in reuse mode, but that's potentially why we've seen less large -- excuse me -- we had bookings but not enough that we wanted to comment on. We've had lows like this before. One thing I'll comment on is our move into lightning and our EV business has really allowed us to expand our beautiful content, I often say we don't really measure ourselves by what the desire (ph) is doing, we measure by what programs and what our content is. I'll give you two examples I can't name the customers but if we were just looking at HMI business, we'd be in the -- one customer would be in about the $60 per vehicle content and you start to add EV and lighting to that and we're over $122 million in both business. That's the European customer. We've got another European customer, very similar going from $26 per car to $96. So our expansion of the lighting and in our prominence in EVs is definitely helping us with our dollar content per vehicle. But again, nothing to speak of this quarter. David Leiker -- Robert W. Baird -- Analyst Okay, great. That's all. Thanks. Donald W. Duda -- Director, President and Chief Executive Officer Thank you, David. Operator Thank you. It appears we have no further questions at this time. I would now like to turn the floor back over to Mr. Duda for closing comments. Donald W. Duda -- Director, President and Chief Executive Officer Christine, thank you very much and I'll ask -- I thank everyone for participating today. Have a good day. Operator Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day. Duration: 36 minutes Call participants: Donald W. Duda -- Director, President and Chief Executive Officer Ronald L.G. Tsoumas -- Vice President of Corporate Finance and Chief Financial Officer Christopher Van Horn -- B. Riley FBR -- Analyst Ryan Sigdahl -- Craig-Hallum -- Analyst David Leiker -- Robert W. Baird -- Analyst More MEI analysis All earnings call transcripts AlphaStreet Logo More From The Motley Fool 10 Best Stocks to Buy Today The $16,728 Social Security Bonus You Cannot Afford to Miss 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own) What Is an ETF? 5 Recession-Proof Stocks How to Beat the Market This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. Motley Fool Transcribers has no position in any of the stocks mentioned. 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Assisted suicide: Mercy or malpractice?
The 360 is a feature designed to show you diverse perspectives on the day’s top stories. Speed read What's happening: Last week, Maine became the eighth state in the country to legalize assisted suicide . The new law allows doctors to prescribe a fatal dose of medication to terminally ill patients who are expected to die within six months. The law stipulates that the patient must be of sound mind and must take the medication themselves. It includes a number of steps, such as a second medical opinion and waiting periods, to protect against misdiagnosis or coercion. Similar stipulations exist in other states that allow for assisted suicide. Oregon became the first state to legalize assisted suicide — also frequently called "aid in dying" — in 1997. The issue spurred significant controversy in the 1990s, in large part from the actions of Dr. Jack Kevorkian , a medical pathologist who helped about 130 terminally ill people end their lives. He spent eight years in prison for second-degree murder stemming from one case. Why there's debate: Advocates for assisted suicide see it as form of mercy that saves a terminally ill person from what can often be a prolonged, painful and expensive natural death. They also argue that patients should have the ultimate say over how their lives end without having to consider nonmedical forms of suicide. Opponents believe there is too much risk of people being manipulated in choosing assisted suicide, either by family members or insurance companies. The American Medical Association says the practice is "fundamentally incompatible with the physician’s role as healer." Some doctors who support the principle have concerns about its practice, such as the availability of life-ending drugs and the lack of scholarly research on the topic. There are also fears that existing laws could be expanded until they resemble euthanasia laws in the Netherlands , where assisted suicide is permitted for patients as young as 12 and for those with psychiatric disorders. A number of religions forbid assisted suicide in all cases. Story continues What's next: Although assisted suicide is legal in just a handful of states and Washington, D.C., support for the idea is spreading. Maine is the fifth state to legalize the practice since 2015. Several other states have considered similar legislation recently. In March, an "aid in dying" bill came up short in the Maryland state Senate by a single vote. Perspectives Patients should have the right to decide how their lives end. "Suicide may be a sort of failure, but deciding how one wants to end one’s life must be the ultimate human right. If people need help to handle it with dignity, doctors should offer them help, not condemnation." — Simon Jenkins, The Guardian A doctor speaks of his father's experience. "Sadly, it took my father's suffering to teach me what medical school did not: At a certain point, the suffering of ongoing treatment does not constitute a life worth living. I hope other patients and families might consider these issues while they still can. … I hope, too, that if I ever have to confront this decision, I will be allowed to make a choice." — Dr. Robert Klitzman, CNN Valid worries about abuse and coercion haven't come true. "Fears about abuse of the elderly or those with disabilities have not materialized, and, with [several U.S. states] having more than 40 years of combined experience with assisted death, there have been no instances of documented abuse or coercion." — Editorial, Washington Post A terminal patient hopes to avoid a horrible natural death. "I anticipated having months left to live, but now my doctors say it may just be weeks. I want to rob cancer of its prize. I want to go out on my own terms. That’s why I want the option of medical aid-in-dying to peacefully end my suffering from the very possible end-of-life scenarios for me: gasping for air or choking on my own blood." — Kevin Roster, USA Today America's broken health care system shouldn't be trusted to fairly implement assisted suicide. "We are told that doctor-assisted suicide should be a choice for patients who have tried everything. This ignores the fact that having access to ‘everything’ is a luxury that not everyone has." — Lisa Blumberg, Connecticut Mirror Lack of oversight allows space for misuse and abuse. “Nowhere in the laws is there any sort of guidance for how to do it. There is no oversight to make sure that it’s happening in a safe way." — Palliative care physician Laura Petrillo to the Atlantic Assisted suicide undermines core principles of the medical profession. "If we allow this form of euthanasia into our health care system, it will inevitably corrode and destroy the values that define the health professions and lead to public trust in them. … No one will be immune to its long term corrosive and destructive effects on the health care system." — Dr. Joseph Marine, Baltimore Sun Assisted suicide means accepting that terminal patients have no value left. "The person lying in a hospital bed might be distraught and convinced that he will be better off leaving living to others. But it can’t be denied that even a tiny slice of time can be used to accomplish much. A smile can be shared, a kind word spoken; an apology can be offered, or a regret confronted; repentance can be achieved or peace made with an alienated friend or relative." — Rabbi Avi Shafran, Fox News Laws don't protect vulnerable people from being coerced into suicide. "Proponents of assisted suicide like to point to the myriad of 'safeguards' in their laws, but the reality is once the prescription is picked up from the pharmacy, there is absolutely no oversight in the law to protect the ill person from someone else who wants to hurry their death along, be it an insurance carrier, an heir or a caregiver." — Mike Reynolds, Bangor Daily News Read more 360s Parkland student loses Harvard offer: Fair or unjust? Do body cameras make the police and the public safer? Should sex offenders be chemically castrated? |
Shipping Titan Peter Livanos Lays Out His Vision For LNG's Future
The Livanos family name holds a revered place in Greek shipping history. Its prominence continues under Peter Livanos, owner of privately held Ceres Shipping and chairman of publicly listed liquefied natural gas (LNG) shipping companyGasLog Ltd(NYSE:GLOG).
When ocean shipping titans of Livanos' stature make a public appearance, it is an ‘E.F. Hutton moment' – when they talk, people listen. On June 19,Livanos spoke at length at the Marine Money Week conference in New York, opening up on his entry into the family business, his decision to focus on LNG shipping, and his current market outlook.
Peter Livanos is the son of George P. Livanos, who built up Greece's largest merchant fleet in the 1980s and 1990s. Hoping his son would follow in his footsteps, George gave Peter the capital to buy his first ship. Peter instead used the money to buy luxury car manufacturer Aston Martin, of James Bond fame.
"It was one of my early mistakes, the first of many," he recalled in a discussion moderated by Michael Tusiani, chairman emeritus of consultancy Poten & Partners.
"I was trying to develop a certain independence from a very successful man, my father. He was not only a good businessman but a great father. When I inevitably failed, he came to my rescue and in so doing, re-engaged me in the shipping business, which is something that I came to love and still do."
The rewards and risks of LNG
Livanos inherited Ceres Shipping after his father passed away in 1997, and in 2000, he made a strategic decision to change the business focus to LNG. "My view was that in order to achieve the right value return for what I believed was a very high-quality operating platform that my father had created, we needed to move into a more upscale sector," he explained.
"The commodity tanker and dry cargo spaces in which we'd had a strong presence had become and continue to be ‘price takers.' There is very little value ascribed to the differentiation in the way the ships are operated. We felt, and I continue to believe, that a superior operating platform can give you an enhanced value proposition in the LNG space."
With enhanced value prospects come increased risks. LNG is "potentially riskier" than tankers and bulkers, he believes.
"The traditional markets are commoditized and quite cyclical and go through periods of boom and bust, but you're always able to modify your capital allocation through the sale of assets or the acquisition of assets.
"In the LNG space, you depend very much on your ability to use your assets in a profitable manner to make your value return. There is a very limited ability to monetize your capital," he said. In other words, in LNG shipping, you make the majority of your money from the cash flow from operations, not from buying and selling ships.
"In addition to that, your ability to use your assets in the LNG space very much depends on a small number of strategic counterparties. If you have a tanker and find your ship unemployed for some reason, you can always find a cargo if you lower the price. In the LNG space, there can be no cargo at any price, and the effects of sitting and waiting [unemployed] are significantly more expensive than they would be with a commodity [tanker or bulker] ship."
What makes Livanos so bullish in the face of those risks is his faith in the LNG commodity itself. "I believe the LNG shipping industry is on a journey not dissimilar to that of the tanker industry in the 1950s – a journey that's in lock-step with the commodity.
"I believe natural gas has a very important role to play as the world becomes more environmentally aware and that it also has a very important role to play as a transportation fuel. I believe that 10 years from now, the LNG industry has the potential to double, both in terms of the scale of the shipping fleet and the number of end-users."
Long-term chartering and spot trends
The caveat, as always, is that the number of new ships that are built can outpace even very strong demand, depressing rates and leaving some vessels unemployed.
LNG shipping employment is divided into the spot market, in which rates can fluctuate dramatically between lows of $30,000-40,000 per day and highs nearing $200,000 per day, and the much steadier long-term contract market, which is currently garnering rates of around $70,000 per day.
Long-term charters had traditionally been for 15 to 20 years in duration plus extension options, but the ‘new normal' is for durations of 7 to 12 years. Asked whether $70,000 per day is sufficient for a charter of only seven years, Livanos responded, "You have to measure the charter rate against the cost of acquiring a newbuilding. A newbuilding used to cost in the mid-$200 million range. Now it's slightly below $200 million. So, at the moment, I believe rates are giving an adequate return on the assets.
"Of course, I'd like to see rates higher, and I believe we probably will see higher rates in the next couple of years," he continued.
The headwind is that new entrants into the LNG ship-owning arena are having to lower their long-term charter rates to break into the business. "There are some new entrants who have taken rates that we as an established player did not feel were appropriate, and which we would not have taken," he said.
GasLog Ltd andGasLog Partners(NYSE:GLOP) recentlyremoved their ships from the Cool Pool– a co-operative commercial arrangement focused on the spot market – due to greater confidence in the long-term charter market.
"The Cool Pool committed us to a very short-term revenue strategy and while we will continue to have ships in the spot market, our movement out of the Cool Pool is because of a shift in our view towards a more medium- and long-term revenue strategy," disclosed Livanos.
LNG shipping capacity in the spot market is comprised of vessels ordered speculatively and not attached to a particular liquefaction (export) project, as well as vessels that were ordered with long-term charters attached to a specific project that are delivered by yards before the project itself is online.
With 117 conventional LNG ships currently under construction, representing 22 percent of the on-the-water fleet, Livanos was asked how spot rates would be affected and whether all of these deliveries could be absorbed.
"The answer is ‘yes,' but not right away. Everyone can see that the commodity is in a macro growth trend, but it's not going to be a smooth line. There have been and there will continue to be hiccups in the supply/demand balance.
"I believe we will go through a period of relatively tight [vessel] supply in the next two years, but I also believe that two or three years from now, we may find ourselves in a very similar position to what we saw in 2014, when there were more than enough ships to meet demand.
"There will be volatility. We will ultimately use all 117 of those ships, and the others that will be ordered, but there will be times when there is a mismatch – and one should be incredibly cautious about that, because it is very expensive to own a ship that is not working."
Technological change and obsolescence
On a positive note, today's high number of newbuilding orders should be offset somewhat by the retirement of older vessels, particularly given the rapid pace of technological change.
"In all of my years in shipping, I don't believe there has ever been a technology curve as steep as in LNG shipping between 2000 and today. We saw fundamental changes in propulsion twice, dramatic improvements in [cargo] containment systems, efficiency improvements, and a fundamental shift [upward] in the size of the ships. The LNG ship you build today is significantly different than a ship built 10 or 15 years ago.
"I don't think technology is ever capped. However, I do believe we've reached a flattening of the technology improvements for LNG shipping. There will inevitably be more improvements, but at this stage, I believe we've taken most of the meat off the bone."
There are now an estimated 200 vessels powered with old-fashioned steam turbines that are due to come off of their long-term charters over the next five years. Livanos pointed out that around 70 of these vessels were built before 2000.
Will charterers re-employ those archaic assets given all of the more efficient modern-built ships they will have to choose from? Livanos responded, "I suspect that would be a bit like putting your mother on a DC-6 to fly to California. It works, but you probably wouldn't do it."
Image Sourced From Pixabay
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Carnival Lowers Guidance on Voyage Disruptions and Other Factors
Carnival Corporation(NYSE: CCL) sailed into multiple headwinds in its fiscal second quarter of 2019, and consequently dialed back earnings estimates for the full year. Shareholders reacted with dismay, pushing Carnival shares down by 10% at midday on Thursday following the earnings release. Let's dive into the quarter's details below, and review the various pressures that have crimped the cruise line's prospects for fiscal 2019. Note that all comparative numbers in the discussion that follows are presented against the prior-year quarter.
Metric Q2 2019 Q2 2018 Growth (YOY) Revenue $4.8 billion $4.4 billion 9.1% Net income $451 million $561 million (19.6%) Diluted earnings per share $0.65 $0.78 (16.7%)
Data source: Carnival Corporation. YOY = year over year.
• Increased capacity utilization and higher onboard spending resulted in a near double-digit jump in the organization's top line.
• Despite the improved revenue, an escalation in operating expenses proved a drag on net income and earnings per share. Notably, the commissions and transportation expense category rose 6% to $613 million, while fuel expense jumped 13.4% to $423 million.
• The company noted that the higher fuel expense, coupled with the impact of foreign currency translation, decreased earnings per share by $0.09 against the prior-year period.
• Net revenue yields (net revenue divided by total available passenger cruise days) improved by 0.6% in constant currency terms, ahead of management's guidance for flat performance.
• Operating marginslipped by 220basis pointsto 10.6% due to the income statement headwinds mentioned above.
Carnival shared a bevy of internal and external factors on Thursday that caused management to lower full-year per share earnings estimates. Most visibly, the U.S.'s recent regulatory change regarding travel to Cuba is expected to impact per share earnings by $0.04 to $0.06. This impromptu change in policy in early June left Carnival and its competitors scrambling to reroute customers who were en route to the island nation.
Of more significant impact are the voyage disruptions faced by the Carnival Vista following a recent technical issue affecting the ship's maximum cruising speed. Carnival has canceled the July 6, July 13, and July 20 departures of the Vista. This disruption is anticipated to drag on full-year earnings per share (EPS) by $0.08 to $0.10.
The company noted that booking trends are under pressure in continental Europe due to "ongoing geopolitical and macroeconomic headwinds," which investors can read as the continuing uncertainty surrounding Brexit. Carnival expects that lower yields in Asia and Europe will offset positive yield performance in its North American and Australian brands.
These headwinds, combined with the fuel and currency impacts discussed above, caused management to reduce full-year fiscal 2019 adjusted EPS to $4.25 to $4.35, versus a previous projection of $4.35 to $4.55.
As for the third quarter, Carnival anticipates that net revenue yields will be flat to slightly down versus the comparable prior-year period. Net cruise costs are expected to rise between 0.5% and 1.5%. However, fuel costs and foreign currency translation will provide a per share benefit of $0.03 in the coming quarter. The company expects adjusted EPS in the third quarter of $2.50 to $2.54, versus $2.36 in the third quarter of fiscal 2018.
Though investors balked at the change of course regarding Carnival's financial outlook, management stressed that an encounter with suddenly choppy waters doesn't undermine the cruise line's longer-term prospects. To this point, I'll leave you with the perspective provided by CEO Donald Arnold in today's earnings press release:
Over the past five years we have demonstrated our ability to overcome multiple headwinds and deliver strong operational improvement. This year our growth has been hampered by a confluence of events, which we are focused on mitigating. Generating over $5 billion of cash flow and with a robust business model, our business is strong and we remain confident over time we will deliver double-digit earnings growth and growth in return on invested capital.
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Asit Sharmahas no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has adisclosure policy. |
Are America’s Malls Dying?
The so-called retail apocalypse has caused upheaval for America's malls. A number of mall-based chains have already closed, and store closures are on a record pace in 2019. The reality, however, is that many chains have managed to adapt to avoid these issues. In reality, retail losers are chains that aren't well run.
To catch full episodes of all The Motley Fool's free podcasts, check out ourpodcast center. A full transcript follows the video.
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This video was recorded on June 18, 2019.
Shannon Jones:Apparently we are going to the mall today. I must say, I'm not a huge mall fan now that I'm no longer in my teenage years. But now that I have a child who is nine years old, I find myself more and more at the mall. So I'm excited about today's topic.
Dan Kline:Yeah, you're in the mall zone. My kid is 15, I have a son, and he grew out of his 'every time, every day, let's go to the mall,' arguing with me about buying $30 T-shirts and $200 sneakers. Thankfully, those days appear to be behind me.
Jones:Oh, thanks, I have so much to look forward to, Dan!
Kline:[laughs] Yes, you do!
Jones:Today's show is all about shopping malls. You've likely heard about the death of the American shopping mall, probably have witnessed it in your own town as well. But today we're diving into what that looks like and which mall stocks are doing well, as well as the ones that aren't.
Dan, to kick things off, I feel like I see headlines nearly every day, things like "The American Retail Apocalypse" or "Malls See Tsunami of Store Closures in 2019." Can you just give us some context? How bad is it, especially this year compared to years prior?
Kline:It's bad, but it's also being misplayed. The retail apocalypse is the idea that every store is going to die because people don't want to go to the mall, they don't want to go to big box retailers, they're just going to buy everything fromAmazonon their phone. That's true for bad retailers. If you're a retailer who did nothing to address the fact that these trends are happening, then you're in real trouble. But if you're a retailer that embraced omnichannel, that gave people fun reasons to go to their stores, that made a transformation, then you're just fine. That's kind of what's happening in America's better malls. Yes, we're seeing store closures. If you go to the mall month after month, you're going to see more changes than you used to see over the years, because we've had bankruptcies like Payless that had a store in pretty much every mall. That's a big opening, and something has to go in there. We'll talk a little bit later about what's filling them.
We've had about 5,000 store closures this year, through March. That's ahead of last year, and we're on path for a record pace. We've also had about 2,500 store openings. We're not seeing too many retailers open thousands, even hundreds of stores. What we are seeing is a lot of retailers being very selective and opening in the A malls or the best places. Mind you, those 5,000 closings are not all in closed malls. Some of them are strip malls, some of them are victims of a big box in a strip going out and killing all the things that were left there. But for a big list of companies, this is bleak.
Jones:So, a bit overdone, you would say some of these headlines are?
Kline:Well, yeah. It's easy to look at, say, Sears andJ.C. Penneyand say, "Oh, my god, Amazon is going to kill everyone." But you have to bring upBest BuyandWalmartandTarget. Obviously Target is sometimes a mall store, Best Buy is sometimes a mall store. They're also sometimes stand-alone. But those are companies that said, "OK, this is what people want from Amazon. Can we give them that? And can we give them something that they can only get from a store?" I can right now jump on my phone, see if Best Buy has the laptop, HDMI cable, I don't know, blender, toaster, whatever it is I might want, see if they have it, buy it, and go pick it up at the Best Buy down the street. Amazon can't do that yet. Now, Amazon might be able to deliver a selection of items in some markets within two hours. But they're not going to equal anytime soon a full Best Buy, a full Target, a full Walmart. There's absolutely things you can build upon if you're a brick and mortar store. If you're a mall-based toy store -- that's not really a thing anymore, but let's pretend you are -- you can hold aPokémontournament orMagic the GatheringorWarhammerpainting. Yeah, you can buy all those products for the same price or cheaper online, but you can't create the sense of community; you can't do the things that give people the immediate gratification that a store can. So, yes, we have a retail apocalypse of poorly run stores going out of business because they didn't change with the times. Or, in the case of Sears, they said they were changing, but they didn't actually do anything. So, really, this is about retail management. It's not about consumer behavior.
Jones:Yeah. That's really where, as you were mentioning, the bricks and clicks strategy, really building out these omnichannel presences. Even more, it's about figuring out the right ratio of what's going to be sold online vs., are you going to have a retail store.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.Daniel B. Klinehas no position in any of the stocks mentioned.Shannon Joneshas no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has adisclosure policy. |
Here’s What Hedge Funds Think About NCR Corporation (NCR)
Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 12.1% in 2019 (through May 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 18.7% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' stock picks generate superior risk-adjusted returns. That's why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like NCR Corporation (NYSE:NCR).
NCR Corporation (NYSE:NCR)investors should be aware of an increase in support from the world's most elite money managers of late. Our calculations also showed that NCR 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 review the recent hedge fund action surrounding NCR Corporation (NYSE:NCR).
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the fourth quarter of 2018. By comparison, 21 hedge funds held shares or bullish call options in NCR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in NCR Corporation (NYSE:NCR) was held byNitorum Capital, which reported holding $43 million worth of stock at the end of March. It was followed by Balyasny Asset Management with a $31.7 million position. Other investors bullish on the company included Engaged Capital, Nishkama Capital, and D E Shaw.
As industrywide interest jumped, specific money managers were breaking ground themselves.Prana Capital Management, managed by Peter Seuss, initiated the biggest position in NCR Corporation (NYSE:NCR). Prana Capital Management had $10.6 million invested in the company at the end of the quarter. Jim Simons'sRenaissance Technologiesalso made a $10.5 million investment in the stock during the quarter. The following funds were also among the new NCR investors: Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital, Brandon Haley'sHolocene Advisors, and Paul Tudor Jones'sTudor Investment Corp.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as NCR Corporation (NYSE:NCR) but similarly valued. We will take a look at Cabot Microelectronics Corporation (NASDAQ:CCMP), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), Taubman Centers, Inc. (NYSE:TCO), and Qualys Inc (NASDAQ:QLYS). This group of stocks' market caps are similar to NCR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCMP,17,273525,-3 CSOD,29,644787,-2 TCO,14,205038,-6 QLYS,14,144956,-3 Average,18.5,317077,-3.5 [/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 $317 million. That figure was $251 million in NCR's case. Cornerstone OnDemand, Inc. (NASDAQ:CSOD) is the most popular stock in this table. On the other hand Taubman Centers, Inc. (NYSE:TCO) is the least popular one with only 14 bullish hedge fund positions. NCR Corporation (NYSE:NCR) 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 NCR as the stock returned 14.1% 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 TCF Financial Corporation (TCF)
Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2019. What do these smart investors think about TCF Financial Corporation (NYSE:TCF)?
TCF Financial Corporation (NYSE:TCF)was in 22 hedge funds' portfolios at the end of the first quarter of 2019. TCF shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. There were 23 hedge funds in our database with TCF holdings at the end of the previous quarter. Our calculations also showed that TCF isn't among the30 most popular stocks among hedge funds.
According to most market participants, hedge funds are viewed as slow, old investment tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts look at the moguls of this club, approximately 750 funds. These money managers direct the majority of the smart money's total capital, and by keeping an eye on their inimitable picks, Insider Monkey has spotted numerous investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced 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 analyze the key hedge fund action regarding TCF Financial Corporation (NYSE:TCF).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TCF over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Citadel Investment Groupheld the most valuable stake in TCF Financial Corporation (NYSE:TCF), which was worth $53.7 million at the end of the first quarter. On the second spot was Arrowstreet Capital which amassed $37.7 million worth of shares. Moreover, Pzena Investment Management, AQR Capital Management, and Water Island Capital were also bullish on TCF Financial Corporation (NYSE:TCF), allocating a large percentage of their portfolios to this stock.
Because TCF Financial Corporation (NYSE:TCF) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their full holdings heading into Q3. It's worth mentioning that Dmitry Balyasny'sBalyasny Asset Managementdumped the biggest position of all the hedgies followed by Insider Monkey, comprising an estimated $29.9 million in stock, and Ravi Chopra's Azora Capital was right behind this move, as the fund sold off about $22.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to TCF Financial Corporation (NYSE:TCF). We will take a look at Semtech Corporation (NASDAQ:SMTC), Glacier Bancorp, Inc. (NASDAQ:GBCI), Extended Stay America Inc (NASDAQ:STAY), and United States Steel Corporation (NYSE:X). All of these stocks' market caps are closest to TCF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMTC,19,139258,0 GBCI,12,57597,2 STAY,32,522804,0 X,24,214659,0 Average,21.75,233580,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $245 million in TCF's case. Extended Stay America Inc (NASDAQ:STAY) is the most popular stock in this table. On the other hand Glacier Bancorp, Inc. (NASDAQ:GBCI) is the least popular one with only 12 bullish hedge fund positions. TCF Financial Corporation (NYSE:TCF) 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 TCF wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TCF were disappointed as the stock returned -5.3% 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 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 Benefitfocus Inc (BNFT)
Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Benefitfocus Inc (NASDAQ:BNFT)has seen an increase in hedge fund interest of late. Our calculations also showed that BNFT isn't among the30 most popular stocks among hedge funds.
Today there are tons of signals stock traders use to assess stocks. A duo of the most innovative signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite money managers can trounce the broader indices by a superb margin (see the details here).
We're going to analyze the recent hedge fund action regarding Benefitfocus Inc (NASDAQ:BNFT).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in BNFT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Millennium Managementheld the most valuable stake in Benefitfocus Inc (NASDAQ:BNFT), which was worth $64.8 million at the end of the first quarter. On the second spot was Point72 Asset Management which amassed $25.2 million worth of shares. Moreover, Polar Capital, D E Shaw, and Two Sigma Advisors were also bullish on Benefitfocus Inc (NASDAQ:BNFT), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers were breaking ground themselves.Laurion Capital Management, managed by Benjamin A. Smith, assembled the most valuable position in Benefitfocus Inc (NASDAQ:BNFT). Laurion Capital Management had $12.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $11.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons'sRenaissance Technologies, Josh Goldberg'sG2 Investment Partners Management, and Jonathan Auerbach'sHound Partners.
Let's go over hedge fund activity in other stocks similar to Benefitfocus Inc (NASDAQ:BNFT). We will take a look at Global Net Lease, Inc. (NYSE:GNL), OSI Systems, Inc. (NASDAQ:OSIS), HNI Corp (NYSE:HNI), and Heartland Express, Inc. (NASDAQ:HTLD). This group of stocks' market values resemble BNFT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNL,11,77172,4 OSIS,10,25967,5 HNI,18,34722,0 HTLD,14,27625,7 Average,13.25,41372,4 [/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 $41 million. That figure was $214 million in BNFT's case. HNI Corp (NYSE:HNI) is the most popular stock in this table. On the other hand OSI Systems, Inc. (NASDAQ:OSIS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Benefitfocus Inc (NASDAQ:BNFT) 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 BNFT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BNFT were disappointed as the stock returned -41.6% 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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Hedge Funds Have Never Been This Bullish On Vector Group Ltd (VGR)
The market has been volatile in the last 6 months as the Federal Reserve continued its rate hikes and then abruptly reversed its stance and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q4 and the beginning of Q1. In this article, we analyze what the smart money thinks of Vector Group Ltd (NYSE:VGR) and find out how it is affected by hedge funds' moves.
IsVector Group Ltd (NYSE:VGR)an exceptional investment right now? The best stock pickers are taking an optimistic view. The number of long hedge fund positions improved by 2 lately. Our calculations also showed that VGR isn't among the30 most popular stocks among hedge funds.VGRwas in 22 hedge funds' portfolios at the end of the first quarter of 2019. There were 20 hedge funds in our database with VGR 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.
[caption id="attachment_745225" align="aligncenter" width="473"]
Noam Gottesman, GLG Partners[/caption]
Let's take a look at the recent hedge fund action encompassing Vector Group Ltd (NYSE:VGR).
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2018. By comparison, 15 hedge funds held shares or bullish call options in VGR a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds,Renaissance Technologiesheld the most valuable stake in Vector Group Ltd (NYSE:VGR), which was worth $100.9 million at the end of the first quarter. On the second spot was GLG Partners which amassed $17.2 million worth of shares. Moreover, Citadel Investment Group, Millennium Management, and Two Sigma Advisors were also bullish on Vector Group Ltd (NYSE:VGR), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds have been driving this bullishness.HBK Investments, managed by David Costen Haley, established the most valuable position in Vector Group Ltd (NYSE:VGR). HBK Investments had $0.9 million invested in the company at the end of the quarter. Minhua Zhang'sWeld Capital Managementalso initiated a $0.5 million position during the quarter. The following funds were also among the new VGR investors: Alec Litowitz and Ross Laser'sMagnetar Capitaland Andrew Weiss'sWeiss Asset Management.
Let's go over hedge fund activity in other stocks similar to Vector Group Ltd (NYSE:VGR). These stocks are trivago N.V. (NASDAQ:TRVG), Rush Enterprises, Inc. (NASDAQ:RUSHB), BP Midstream Partners LP (NYSE:BPMP), and Talend S.A. (NASDAQ:TLND). This group of stocks' market caps match VGR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRVG,11,120462,-2 RUSHB,3,37215,0 BPMP,6,45284,3 TLND,32,444990,5 Average,13,161988,1.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $172 million in VGR's case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 3 bullish hedge fund positions. Vector Group Ltd (NYSE:VGR) 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 VGR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VGR were disappointed as the stock returned -15.2% 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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Hedge Funds Have Never Been This Bullish On Sonos, Inc. (SONO)
You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
IsSonos, Inc. (NASDAQ:SONO)a good investment right now? Prominent investors are getting more optimistic. The number of long hedge fund positions increased by 10 lately. Our calculations also showed that sono isn't among the30 most popular stocks among hedge funds.SONOwas in 22 hedge funds' portfolios at the end of the first quarter of 2019. There were 12 hedge funds in our database with SONO holdings at the end of the previous quarter.
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.
[caption id="attachment_746893" align="aligncenter" width="473"]
Paul Marshall of Marshall Wace[/caption]
Let's take a gander at the key hedge fund action regarding Sonos, Inc. (NASDAQ:SONO).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 83% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in SONO a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Citadel Investment Groupheld the most valuable stake in Sonos, Inc. (NASDAQ:SONO), which was worth $14.2 million at the end of the first quarter. On the second spot was Portolan Capital Management which amassed $8.6 million worth of shares. Moreover, HBK Investments, Hawk Ridge Management, and Marshall Wace LLP were also bullish on Sonos, Inc. (NASDAQ:SONO), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were breaking ground themselves.Portolan Capital Management, managed by George McCabe, created the most outsized position in Sonos, Inc. (NASDAQ:SONO). Portolan Capital Management had $8.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $5.4 million investment in the stock during the quarter. The following funds were also among the new SONO investors: Jack Ripsteen'sPotrero Capital Research, John Overdeck and David Siegel'sTwo Sigma Advisors, and Douglas T. Granat'sTrigran Investments.
Let's now take a look at hedge fund activity in other stocks similar to Sonos, Inc. (NASDAQ:SONO). These stocks are Hyster-Yale Materials Handling Inc (NYSE:HY), GameStop Corp. (NYSE:GME), First Bancorp (NASDAQ:FBNC), and AtriCure Inc. (NASDAQ:ATRC). This group of stocks' market valuations resemble SONO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HY,11,35854,2 GME,27,88161,0 FBNC,16,97868,0 ATRC,25,123086,3 Average,19.75,86242,1.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $75 million in SONO's case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Hyster-Yale Materials Handling Inc (NYSE:HY) is the least popular one with only 11 bullish hedge fund positions. Sonos, Inc. (NASDAQ:SONO) 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 SONO, though not to the same extent, as the stock returned 0.5% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Hedge Funds Have Never Been This Bullish On Veracyte Inc (VCYT)
We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Veracyte Inc (NASDAQ:VCYT).
Veracyte Inc (NASDAQ:VCYT)shareholders have witnessed an increase in hedge fund interest in recent months. Our calculations also showed that vcyt isn't among the30 most popular stocks among hedge funds.
At the moment there are a large number of tools stock traders employ to size up stocks. Two of the most innovative tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a very impressive margin (see the details here).
Let's take a peek at the fresh hedge fund action regarding Veracyte Inc (NASDAQ:VCYT).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the fourth quarter of 2018. On the other hand, there were a total of 12 hedge funds with a bullish position in VCYT a year ago. 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).
Among these funds,Cannell Capitalheld the most valuable stake in Veracyte Inc (NASDAQ:VCYT), which was worth $31.7 million at the end of the first quarter. On the second spot was Millennium Management which amassed $20.5 million worth of shares. Moreover, Renaissance Technologies, Laurion Capital Management, and D E Shaw were also bullish on Veracyte Inc (NASDAQ:VCYT), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were leading the bulls' herd.Laurion Capital Management, managed by Benjamin A. Smith, initiated the biggest position in Veracyte Inc (NASDAQ:VCYT). Laurion Capital Management had $8.9 million invested in the company at the end of the quarter. Steve Cohen'sPoint72 Asset Managementalso initiated a $7 million position during the quarter. The other funds with brand new VCYT positions are Cliff Asness'sAQR Capital Management, Joseph Edelman'sPerceptive Advisors, and Andrew Feldstein and Stephen Siderow'sBlue Mountain Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Veracyte Inc (NASDAQ:VCYT) but similarly valued. We will take a look at Luminex Corporation (NASDAQ:LMNX), Cango Inc. (NYSE:CANG), Kraton Corporation (NYSE:KRA), and Oil States International, Inc. (NYSE:OIS). This group of stocks' market values match VCYT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LMNX,21,159503,2 CANG,2,681,0 KRA,19,97961,2 OIS,14,34336,4 Average,14,73120,2 [/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 $73 million. That figure was $130 million in VCYT's case. Luminex Corporation (NASDAQ:LMNX) is the most popular stock in this table. On the other hand Cango Inc. (NYSE:CANG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Veracyte Inc (NASDAQ:VCYT) 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 VCYT, though not to the same extent, as the stock returned 0% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Hedge Funds Have Never Been This Bullish On Ebix Inc (EBIX)
We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Ebix Inc (NASDAQ:EBIX).
Ebix Inc (NASDAQ:EBIX)investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that EBIX isn't among the30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are a multitude of methods stock market investors have at their disposal to assess publicly traded companies. A couple of the most underrated methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outclass their index-focused peers by a significant amount (see the details here).
[caption id="attachment_746893" align="aligncenter" width="473"]
Paul Marshall of Marshall Wace[/caption]
Let's take a look at the new hedge fund action surrounding Ebix Inc (NASDAQ:EBIX).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards EBIX over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,P2 Capital Partnersheld the most valuable stake in Ebix Inc (NASDAQ:EBIX), which was worth $71.3 million at the end of the first quarter. On the second spot was Marshall Wace LLP which amassed $23.4 million worth of shares. Moreover, Cadian Capital, Barington Capital Group, and Citadel Investment Group were also bullish on Ebix Inc (NASDAQ:EBIX), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names have jumped into Ebix Inc (NASDAQ:EBIX) headfirst.Concourse Capital Management, managed by Joseph Mathias, established the biggest position in Ebix Inc (NASDAQ:EBIX). Concourse Capital Management had $1.1 million invested in the company at the end of the quarter. James Dondero'sHighland Capital Managementalso initiated a $0.8 million position during the quarter. The other funds with brand new EBIX positions are Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital, Minhua Zhang'sWeld Capital Management, and Adam Usdan'sTrellus Management Company.
Let's check out hedge fund activity in other stocks similar to Ebix Inc (NASDAQ:EBIX). These stocks are Freshpet Inc (NASDAQ:FRPT), Eventbrite, Inc. (NYSE:EB), Wageworks Inc (NYSE:WAGE), and Usa Compression Partners LP (NYSE:USAC). This group of stocks' market caps match EBIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRPT,25,117770,4 EB,16,356225,8 WAGE,21,160164,8 USAC,5,9108,0 Average,16.75,160817,5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $154 million in EBIX's case. Freshpet Inc (NASDAQ:FRPT) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 5 bullish hedge fund positions. Ebix Inc (NASDAQ:EBIX) 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 EBIX, though not to the same extent, as the stock returned 1.6% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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New York Mets fire pitching coach and bullpen coach
The New York Mets believe they have found a solution for their struggles in 2019. The team made some big changes Thursday, firing pitching coach Dave Eiland, according to James Wagner of the New York Times. The team also parted ways with bullpen coach Chuck Hernandez, according to Anthony DiComo of MLB.com. The team made the move a day after the Mets dropped to fourth place in the National League East. Mickey Callaway will remain the team’s manager for now. New York entered the season with a promising pitching staff, but the team’s rotation has failed to live up to expectations. The Mets rank 13th with a 4.27 ERA from their starters. Steven Matz , Noah Syndergaard and Zack Wheeler have all posted higher ERAs compared to last season. The bullpen has been even worse. The team’s 5.46 ERA from its relievers ranks 28th. The team is expected to name Phil Regan as Eiland’s replacement. Ricky Bones will return to the club as the bullpen coach, according to Mike Puma of the New York Post. Bones was the team’s bullpen coach last season, but was not asked to return in the offseason. The 82-year-old Regan has been a member of the Mets organization for at least a decade. General manger Brodie Van Wagenen is expected to address those changes prior to Thursday’s game against the Chicago Cubs . ——— 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 |
Hedge Funds Have Never Been This Bullish On Wesco Aircraft Holdings Inc (WAIR)
World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
IsWesco Aircraft Holdings Inc (NYSE:WAIR)a buy right now? Hedge funds are taking a bullish view. The number of bullish hedge fund bets went up by 5 in recent months. Our calculations also showed that wair isn't among the30 most popular stocks among hedge funds.WAIRwas in 22 hedge funds' portfolios at the end of the first quarter of 2019. There were 17 hedge funds in our database with WAIR positions at the end of the previous quarter.
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 Wesco Aircraft Holdings Inc (NYSE:WAIR).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WAIR over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically,Makaira Partnerswas the largest shareholder of Wesco Aircraft Holdings Inc (NYSE:WAIR), with a stake worth $95.1 million reported as of the end of March. Trailing Makaira Partners was Royce & Associates, which amassed a stake valued at $22.6 million. Cove Street Capital, Wallace R. Weitz & Co., and Rutabaga Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers were breaking ground themselves.Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Wesco Aircraft Holdings Inc (NYSE:WAIR). Marshall Wace LLP had $4.5 million invested in the company at the end of the quarter. Jim Simons'sRenaissance Technologiesalso made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Minhua Zhang'sWeld Capital Management, Michael Platt and William Reeves'sBlueCrest Capital Mgmt., and John Overdeck and David Siegel'sTwo Sigma Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Wesco Aircraft Holdings Inc (NYSE:WAIR) but similarly valued. We will take a look at Gran Tierra Energy Inc. (NYSE:GTE), ACCO Brands Corporation (NYSE:ACCO), Extreme Networks, Inc (NASDAQ:EXTR), and Continental Building Products Inc (NYSE:CBPX). All of these stocks' market caps match WAIR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GTE,16,269130,0 ACCO,18,49974,-3 EXTR,20,97339,0 CBPX,20,87312,4 Average,18.5,125939,0.25 [/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 $126 million. That figure was $195 million in WAIR's case. Extreme Networks, Inc (NASDAQ:EXTR) is the most popular stock in this table. On the other hand Gran Tierra Energy Inc. (NYSE:GTE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Wesco Aircraft Holdings Inc (NYSE:WAIR) 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 WAIR as the stock returned 14.4% 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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Hedge Funds Have Never Been This Bullish On Waitr Holdings Inc. (WTRH)
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 Waitr Holdings Inc. (NASDAQ:WTRH) makes for a good investment right now.
Waitr Holdings Inc. (NASDAQ:WTRH)investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that wtrh 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 take a look at the latest hedge fund action surrounding Waitr Holdings Inc. (NASDAQ:WTRH).
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WTRH 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.
Among these funds,Pelham Capitalheld the most valuable stake in Waitr Holdings Inc. (NASDAQ:WTRH), which was worth $47.9 million at the end of the first quarter. On the second spot was Leucadia National which amassed $47.9 million worth of shares. Moreover, Park West Asset Management, Corvex Capital, and ThornTree Capital Partners were also bullish on Waitr Holdings Inc. (NASDAQ:WTRH), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds were leading the bulls' herd.Honeycomb Asset Management, managed by David Fiszel, established the most outsized position in Waitr Holdings Inc. (NASDAQ:WTRH). Honeycomb Asset Management had $14.7 million invested in the company at the end of the quarter. Richard Driehaus'sDriehaus Capitalalso made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Kahan and Jeremy Kahan'sNorth Peak Capital, Israel Englander'sMillennium Management, and Mark N. Diker'sDiker Management.
Let's now review hedge fund activity in other stocks similar to Waitr Holdings Inc. (NASDAQ:WTRH). We will take a look at General American Investors Company, Inc. (NYSE:GAM), MBIA Inc. (NYSE:MBI), Kelly Services, Inc. (NASDAQ:KELYA), and Tutor Perini Corp (NYSE:TPC). This group of stocks' market caps resemble WTRH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GAM,5,26578,-1 MBI,19,162216,1 KELYA,13,19109,3 TPC,12,17648,5 Average,12.25,56388,2 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $234 million in WTRH's case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand General American Investors Company, Inc. (NYSE:GAM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Waitr Holdings Inc. (NASDAQ:WTRH) 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 WTRH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WTRH were disappointed as the stock returned -45.2% 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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PwC Unveils New Tool for Auditing Crypto Transactions
Consulting firm PwC is offering a new cryptocurrency auditing feature as a part of its Halo data auditing suite.
The new tool allow users to take a closer look at the cryptocurrency transactions they make, providing “independent, substantive evidence of the ‘private key and public address pairing'” to establish ownership of cryptocurrency and gather information about blockchain transactions and balances, according to the company.
PwC is now using the product in auditing those clients that transact in bitcoin, bitcoin cash, bitcoin gold, bitcoin diamond, litecoin, ethereum, OAX and XRP. The tool is additionally being offered to firms that don’t have a direct relationship with PwC, “helping them to implement the processes and controls they will require in order to obtain assurance reports from their auditors,” PwC’s press release states.
Related:Crypto Hedge Funds’ Average AUM Grew Three Times in Q1
“It is important as companies continue to digitize we, as auditors, keep up with technology changes in the market, continue to develop audit tools that meet the needs of emerging technologies and serve the changing and developing demands of our stakeholders,” James Chalmers, PwC’s global assurance leader, said a statement.
As previously reported, PwC has been working as an auditor withTezos Foundationand the Hong Kong stablecoin projectLoorping Foundation.
In addition to auditing blockchain companies, PwC did some crypto investigation itself andreportedin March about finding out that two Iranians under the U.S. sanctions have been using the Russia-originated crypto exchange WEX, the successor of the now defunct BTC-e, allegedly to launder money.
Some of the firm’s employees have shifted into roles in the blockchain industry itself as well. Roman Schnider, co-creator of PwC Switzerland’s blockchain initiative,leftthe “Big Four” firm to become Tezos’ CFO in June. Earlier this year, PwC’s blockchain principal Grainne McNamaraleftto join auditing firm EY, which also does work in the space.
Related:Coinbase Says It Never Shared ‘Personally Identifiable’ Customer Data
Image Credit:Konektus Photo / Shutterstock.com
• Crypto Exchange WEX Linked to Iranian Ransomware Operators, Says PwC
• PwC Blockchain Principal Grainne McNamara Moves to Rival EY |
Here's How P/E Ratios Can Help Us Understand LexinFintech Holdings Ltd. (NASDAQ:LX)
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The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to LexinFintech Holdings Ltd.'s (NASDAQ:LX), to help you decide if the stock is worth further research. Looking at earnings over the last twelve months,LexinFintech Holdings has a P/E ratio of 5.71. That is equivalent to an earnings yield of about 18%.
View our latest analysis for LexinFintech Holdings
Theformula for price to earningsis:
Price to Earnings Ratio = Price per Share (in the reporting currency) ÷ Earnings per Share (EPS)
Or for LexinFintech Holdings:
P/E of 5.71 = CN¥79.37(Note: this is the share price in the reporting currency, namely, CNY )÷ CN¥13.89 (Based on the year to March 2019.)
A higher P/E ratio means that buyers have to paya higher pricefor each $1 the company has earned over the last year. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. When earnings grow, the 'E' increases, over time. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.
In the last year, LexinFintech Holdings grew EPS like Taylor Swift grew her fan base back in 2010; the 490% gain was both fast and well deserved.
We can get an indication of market expectations by looking at the P/E ratio. If you look at the image below, you can see LexinFintech Holdings has a lower P/E than the average (9.1) in the consumer finance industry classification.
This suggests that market participants think LexinFintech Holdings will underperform other companies in its industry. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. So it won't reflect the advantage of cash, or disadvantage of debt. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
Such spending might be good or bad, overall, but the key point here is that you need to look at debt to understand the P/E ratio in context.
LexinFintech Holdings's net debt is 20% of its market cap. It would probably deserve a higher P/E ratio if it was net cash, since it would have more options for growth.
LexinFintech Holdings's P/E is 5.7 which is below average (17.9) in the US market. The EPS growth last year was strong, and debt levels are quite reasonable. The low P/E ratio suggests current market expectations are muted, implying these levels of growth will not continue.
When the market is wrong about a stock, it gives savvy investors an opportunity. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. So thisfreereport on the analyst consensus forecastscould help you make amaster moveon this stock.
Of courseyou might be able to find a better stock than LexinFintech Holdings. So you may wish to see thisfreecollection of other companies that have grown earnings strongly.
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. |
Hedge Funds Have Never Been This Bullish On NanoString Technologies Inc (NSTG)
As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about NanoString Technologies Inc (NASDAQ:NSTG).
IsNanoString Technologies Inc (NASDAQ:NSTG)undervalued? Hedge funds are getting more optimistic. The number of bullish hedge fund bets improved by 7 lately. Our calculations also showed that nstg isn't among the30 most popular stocks among hedge funds.NSTGwas in 22 hedge funds' portfolios at the end of March. There were 15 hedge funds in our database with NSTG positions at the end of the previous quarter.
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 analyze the key hedge fund action regarding NanoString Technologies Inc (NASDAQ:NSTG).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 47% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in NSTG a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Brian Ashford-Russell and Tim Woolley'sPolar Capitalhas the largest position in NanoString Technologies Inc (NASDAQ:NSTG), worth close to $17.9 million, corresponding to 0.2% of its total 13F portfolio. The second most bullish fund manager isD E Shaw, managed by D. E. Shaw, which holds a $16.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism contain Efrem Kamen'sPura Vida Investments, Israel Englander'sMillennium Managementand Eric Bannasch'sCadian Capital.
Consequently, specific money managers have jumped into NanoString Technologies Inc (NASDAQ:NSTG) headfirst.Farallon Capital, managed by Thomas Steyer, established the largest position in NanoString Technologies Inc (NASDAQ:NSTG). Farallon Capital had $9.6 million invested in the company at the end of the quarter. Steve Cohen'sPoint72 Asset Managementalso made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman'sGLG Partners, Jim Simons'sRenaissance Technologies, and Andrew Sandler'sSandler Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as NanoString Technologies Inc (NASDAQ:NSTG) but similarly valued. We will take a look at DMC Global Inc. (NASDAQ:BOOM), Party City Holdco Inc (NYSE:PRTY), Everi Holdings Inc (NYSE:EVRI), and INTL Fcstone Inc (NASDAQ:INTL). This group of stocks' market valuations match NSTG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BOOM,14,86851,2 PRTY,19,69139,1 EVRI,26,244606,0 INTL,15,78246,2 Average,18.5,119711,1.25 [/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 $120 million. That figure was $144 million in NSTG's case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand DMC Global Inc. (NASDAQ:BOOM) is the least popular one with only 14 bullish hedge fund positions. NanoString Technologies Inc (NASDAQ:NSTG) 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 NSTG as the stock returned 15% 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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Hedge Funds Have Never Been This Bullish On Hanger, Inc. (HNGR)
Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Hanger, Inc. (NYSE:HNGR)was in 22 hedge funds' portfolios at the end of the first quarter of 2019. HNGR investors should be aware of an increase in hedge fund sentiment of late. There were 18 hedge funds in our database with HNGR holdings at the end of the previous quarter. Our calculations also showed that hngr 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 recent hedge fund action surrounding Hanger, Inc. (NYSE:HNGR).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HNGR 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,Courage Capitalwas the largest shareholder of Hanger, Inc. (NYSE:HNGR), with a stake worth $22.7 million reported as of the end of March. Trailing Courage Capital was SCW Capital Management, which amassed a stake valued at $21.6 million. Cannell Capital, Prosight Capital, and Tudor Investment Corp were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers have been driving this bullishness.Ancora Advisors, managed by Frederick DiSanto, established the most outsized position in Hanger, Inc. (NYSE:HNGR). Ancora Advisors had $8.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitalalso made a $2.4 million investment in the stock during the quarter. The following funds were also among the new HNGR investors: Jim Simons'sRenaissance Technologies, D. E. Shaw'sD E Shaw, and Joel Greenblatt'sGotham Asset Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Hanger, Inc. (NYSE:HNGR) but similarly valued. We will take a look at Precision Drilling Corp (NYSE:PDS), Modine Manufacturing Company (NYSE:MOD), Banc of California, Inc. (NYSE:BANC), and Weatherford International plc (NYSE:WFT). This group of stocks' market valuations match HNGR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PDS,16,36738,2 MOD,17,69889,0 BANC,15,92220,-2 WFT,15,38444,-7 Average,15.75,59323,-1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $155 million in HNGR's case. Modine Manufacturing Company (NYSE:MOD) is the most popular stock in this table. On the other hand Banc of California, Inc. (NYSE:BANC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Hanger, Inc. (NYSE:HNGR) 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 HNGR, though not to the same extent, as the stock returned -0.3% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Acorda Therapeutics Inc (ACOR)
"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 Acorda Therapeutics Inc (NASDAQ:ACOR) and see how it was affected.
Hedge fund interest inAcorda Therapeutics Inc (NASDAQ:ACOR)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 Clean Energy Fuels Corp (NASDAQ:CLNE), i3 Verticals, Inc. (NASDAQ:IIIV), and IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS) 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.
[caption id="attachment_746893" align="aligncenter" width="473"]
Paul Marshall of Marshall Wace[/caption]
We're going to check out the latest hedge fund action surrounding Acorda Therapeutics Inc (NASDAQ:ACOR).
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2018. By comparison, 18 hedge funds held shares or bullish call options in ACOR 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.
The largest stake in Acorda Therapeutics Inc (NASDAQ:ACOR) was held byScopia Capital, which reported holding $59.3 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $53.3 million position. Other investors bullish on the company included Marshall Wace LLP, GLG Partners, and Citadel Investment Group.
Since Acorda Therapeutics Inc (NASDAQ:ACOR) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of fund managers that slashed their positions entirely heading into Q3. At the top of the heap, Christopher James'sPartner Fund Managementdumped the biggest investment of the 700 funds watched by Insider Monkey, comprising close to $27.1 million in stock. Christopher James's fund,Partner Fund Management, also sold off its stock, about $17.3 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 take a look at hedge fund activity in other stocks - not necessarily in the same industry as Acorda Therapeutics Inc (NASDAQ:ACOR) but similarly valued. These stocks are Clean Energy Fuels Corp (NASDAQ:CLNE), i3 Verticals, Inc. (NASDAQ:IIIV), IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS), and Gladstone Commercial Corporation (NASDAQ:GOOD). This group of stocks' market values match ACOR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLNE,11,32009,3 IIIV,8,66259,0 IRS,8,48594,1 GOOD,6,61639,-1 Average,8.25,52125,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $161 million in ACOR's case. Clean Energy Fuels Corp (NASDAQ:CLNE) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Acorda Therapeutics Inc (NASDAQ:ACOR) 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 ACOR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ACOR were disappointed as the stock returned -29.4% 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Hedge Funds Have Never Been This Bullish On Health Insurance Innovations Inc (HIIQ)
How do we determine whether Health Insurance Innovations Inc (NASDAQ:HIIQ) 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.
IsHealth Insurance Innovations Inc (NASDAQ:HIIQ)ready to rally soon? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets moved up by 4 in recent months. Our calculations also showed that hiiq 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 recent hedge fund action surrounding Health Insurance Innovations Inc (NASDAQ:HIIQ).
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HIIQ over the last 15 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey,Hunt Lane Capital, managed by Dennis Puri and Oliver Keller, holds the largest position in Health Insurance Innovations Inc (NASDAQ:HIIQ). Hunt Lane Capital has a $24.1 million position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is J. Carlo Cannell ofCannell Capital, with a $23.8 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Amy Minella'sCardinal Capital, Claus Moller'sP2 Capital Partnersand Israel Englander'sMillennium Management.
As one would reasonably expect, some big names have been driving this bullishness.Hunt Lane Capital, managed by Dennis Puri and Oliver Keller, created the largest position in Health Insurance Innovations Inc (NASDAQ:HIIQ). Hunt Lane Capital had $24.1 million invested in the company at the end of the quarter. Ron Bobman'sCapital Returns Managementalso made a $4.4 million investment in the stock during the quarter. The following funds were also among the new HIIQ investors: Daniel S. Och'sOZ Management, Philip Hempleman'sArdsley Partners, and D. E. Shaw'sD E Shaw.
Let's now review hedge fund activity in other stocks similar to Health Insurance Innovations Inc (NASDAQ:HIIQ). These stocks are AudioCodes Ltd. (NASDAQ:AUDC), Century Bancorp, Inc. (NASDAQ:CNBKA), Ultra Clean Holdings Inc (NASDAQ:UCTT), and ImmunoGen, Inc. (NASDAQ:IMGN). All of these stocks' market caps are similar to HIIQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUDC,14,21544,3 CNBKA,2,11330,-1 UCTT,9,45721,-1 IMGN,16,69185,0 Average,10.25,36945,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $154 million in HIIQ's case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Century Bancorp, Inc. (NASDAQ:CNBKA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Health Insurance Innovations Inc (NASDAQ:HIIQ) 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 HIIQ wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HIIQ were disappointed as the stock returned -12.5% 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 in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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If You Had Bought Macy's (NYSE:M) Stock Five Years Ago, You'd Be Sitting On A 62% Loss, Today
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Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. Zooming in on an example, theMacy's, Inc.(NYSE:M) share price dropped 62% in the last half decade. That's not a lot of fun for true believers. We also note that the stock has performed poorly over the last year, with the share price down 44%. It's up 1.7% in the last seven days.
Check out our latest analysis for Macy's
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Looking back five years, both Macy's's share price and EPS declined; the latter at a rate of 2.2% per year. This reduction in EPS is less than the 18% annual reduction in the share price. This implies that the market is more cautious about the business these days. The less favorable sentiment is reflected in its current P/E ratio of 6.18.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Thisfreeinteractive report on Macy's'searnings, revenue and cash flowis a great place to start, if you want to investigate the stock further.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Macy's's TSR for the last 5 years was -53%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted thetotalshareholder return.
Macy's shareholders are down 40% for the year (even including dividends), but the market itself is up 5.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. If you want to research this stock further, the data on insider buying is an obvious place to start. You canclick here to see who has been buying shares - and the price they paid.
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.
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. |
1 Analyst Thinks Tesla Stock Will Fall 28%
The debate about demand forTesla's (NASDAQ: TSLA) vehicles took another interesting turn this week as Goldman Sachs analyst David Tamberrino slashed his price target for the electric-car company's stock, citing concerns about Tesla's ability to meet delivery estimates in the second half of 2019. This news comes not long after Tesla CEO Elon Muskreassured investorsthat the company does not face a demand problem.
The back-and-forth between Tesla and analysts about the demand for the company's vehicles highlights the uncertainty surrounding the automaker's ability to keep growing sales.
"We believe a downward path for shares will resume as it becomes more clear that sustainable demand for the company's current products are below expectations," said Tamberrino in a note to investors on Thursday morning. The analyst also cut his 12-month price target for the stock, lowering it from $200 to $158.
In the near term, however, Tamberrino believes Tesla's second-quarter deliveries will be "fine." Indeed, the analyst projects Tesla will exceed the low end of its guidance range for second-quarter deliveries of between 90,000 to 100,000 units. It's the second half of the year that has the analyst betting the company may not live up to estimates. Worse-than-expected demand beyond Q2, Tamberrino argues, will lead to "a downward path for shares."
Following this report on Thursday, Tesla shares fell about 3%. But even after this decline, Tamberrino's $158 price target represents about 28% further downside for the stock.
As Tamberrino doubles down on his bearish outlook for Tesla stock, Musk has been as adamant as ever about the company's optimistic demand story.
"I want to be clear: There is not a demand problem," Musk told investors during Tesla's annual shareholder meeting earlier this week. The CEO even backed up this statement with some hard data, noting that second-quarter sales "have far exceeded production." In addition, a slide during the presentation declared that quarter-to-date "orders for Model S, X, and 3 are outpacing production."
While Musk's reassurance is comforting, it's understandable why some concerns about demand for the company's vehicle remain. In order for Tesla to hit the low end of its full-year guidance for 360,000 to 400,000 deliveries in 2019, the automaker will likely need to deliver more than 200,000 vehicles in the second half of the year. Though current order trends and the fact that the Model 3's international expansion hasonly recently ramped updo suggest this is possible, forecasting such significant growth does involve some speculation.
Investors will hopefully get more insight into Tesla's demand trends when the company reports its second-quarter deliveries sometime during the first few days of July. In its updates, Tesla sometimes provides helpful commentary on demand for its vehicles.
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Daniel Sparksowns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has adisclosure policy. |
UPDATE 1-Harris Corp, L3 Technologies win U.S. antitrust approval for merger
(Adds context, quote, background on deal)
WASHINGTON, June 20 (Reuters) - Military communication equipment providers Harris Corp and L3 Technologies Inc have won U.S. antitrust approval for their merger, the Justice Department said on Thursday.
Increased defense spending under U.S. President Donald Trump and the Republican-led Congress is driving contractors to pursue mergers so they have more scale to bid on bigger projects, spanning everything from upgrading computer systems to space exploration.
The all-stock merger will create the sixth-largest U.S. defense contractor, with a market value of $34 billion at the time it was announced in October 2018.
The government required that the companies sell Harris' night vision business to win approval for the proposed transaction.
The companies were the only two which make intensifier tubes, which amplify visible light and are a needed component for night vision devices, the department said.
"The merger, as originally structured, would have given the combined company a monopoly over image intensifier tubes, an essential component in night vision devices," said Assistant Attorney General Makan Delrahim, head of the Justice Department’s Antitrust Division.
"Today’s settlement will ensure that our armed forces continue to benefit from competition for a mission critical component," Delrahim said. (Reporting by Diane Bartz Editing by James Dalgleish and Tom Brown) |
New tokens thrive in crypto market but sales raise questions
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Initial exchange offerings (IEOs) have been the latest darlings in raising funds for cryptocurrency projects, but intensifying regulatory scrutiny and investors' concern about the viability of the companies raising capital are flashing red flags.
The emergence of IEOs - which sidestep banks and venture capital firms as a way to generate capital for new companies - is emblematic of a market which has long been trying to break free from regulation itself.
Their launch as well as Facebook's plan to create its own digital currency, or token, have revived interest in a market that slumped last year amid intense regulatory focus. Already, Facebook is facing scrutiny from the U.S. Congress on the launch of the social networking company's white paper on its digital currency Libra.
IEOs, which take place on exchanges, are a spin-off of initial coin offerings (ICOs), which grew in popularity in 2016 and raised nearly $30 billion since their inception three years ago. ICOs, though, slowed sharply this year amid a regulatory crackdown on fraudulent and illegal offerings led by the U.S. Securities and Exchange Commission.
"I don't expect IEOs to result in better outcomes," said Peter Van Valkenburgh, director of research at advocacy group Coin Center in Washington. "From a regulatory and legal standpoint, there's not going to be much difference here."
"Calling it now an IEO is not going to change your obligation to the potential issuer of that token, if the token fits the test for a security, which I think in many cases it will."
SEC KEEPING AN EYE
Much like the last three years, the SEC has not changed its tune on digital currency offerings, no matter what they're called.
At last month's Consensus conference in New York, Valerie Szczepanik, SEC's senior advisor for digital assets and innovation, said IEOs could be problematic in the United States if U.S. exchanges are acting as broker-dealers, but not registered as such.
Cryptocurrency exchanges need to follow the registration and licensing requirements for broker-dealers, alternative trading systems, or national securities exchanges. And if they're not, they're going to be in hot water, Szczepanik said.
There is already a precedent at the SEC if and when IEOs become regulated.
In September of last year, the SEC charged Michigan-based TokenLot, a self-described "ICO Superstore," for acting as unregistered broker-dealers. TokenLot received orders from more than 6,100 retail investors and handled more than 200 different digital tokens, which the SEC found included securities, the SEC said.
QUESTIONS ABOUT VIABILITY
Aside from an uncertain regulatory status, start-ups doing IEOs face doubts about viability.
Cryptocurrency research firm InWara said only 30% of IEOs launched this year had what it calls a "minimum viable product" at the time of the token sale, with the majority offering nothing more than a website and a white paper.
At the end of the day, IEOs don't change the fact that the token has to work in the long run as a utility token, said Ransu Salovaara, chief executive officer at crypto advisory firm TokenMarket.
Some market observers also believe IEOs are not any safer just because exchanges have vetted the projects. Cryptocurrency exchanges effectively act as middlemen in IEOs, performing functions such as due diligence on a project, "know your customer" (KYC) screening, marketing and selling tokens to customers.
"Built-in KYC for exchanges? That's a nice explanation if it's true," said Arnold Spencer, general counsel at Coinsource, which operates more than 200 bitcoin teller machines in 28 states. "The problem is it's not true - many of the non-U.S. exchanges have almost no KYC behind them."
InWara, in a research report, said not all exchanges screen the projects that launch on their platforms. Often the evaluation of a project is subjective.
"That's the problem here: there is no standardized vetting process," said InWara. "And as long as exchanges have the freedom to decide where to draw the line, bad actors, and fraud crypto projects will always creep into the limelight."
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Jennifer Ablan and Nick Zieminski) |
Is It Time To Consider Buying Lantronix, Inc. (NASDAQ:LTRX)?
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Lantronix, Inc. (NASDAQ:LTRX), which is in the communications business, and is based in United States, led the NASDAQCM gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Lantronix’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Lantronix
According to my relative valuation model, the stock is currently overvalued. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Lantronix’s ratio of 36.15x is above its peer average of 28.76x, which suggests the stock is overvalued compared to the Communications industry. In addition to this, it seems like Lantronix’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 75% over the next couple of years, the future seems bright for Lantronix. 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?LTRX’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe LTRX should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping an eye on LTRX for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for LTRX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Lantronix. You can find everything you need to know about Lantronix inthe latest infographic research report. If you are no longer interested in Lantronix, 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. |
South Africa's president says shaky power utility can't fail
CAPE TOWN, South Africa (AP) South Africa's president declared Thursday the country's struggling state-owned power utility Eskom "cannot be allowed to fail" and said he wants more funding to keep it afloat after its cash runs out in October. President Cyril Ramaphosa in his first State of the Nation address since last month's election acknowledged "enormous and severe challenges" including the economy's sharpest decline in a decade. That first-quarter drop of 3.2% was blamed largely on widespread power outages under Eskom, which supplies about 95% of South Africa's electricity and relies on the government to help service its $30 billion debt. The country's economy, the most developed in sub-Saharan Africa, also has seen declines in key sectors such as mining, manufacturing and agriculture. Ramaphosa said his government would table an urgent bill to allocate Eskom a "significant portion" of the 230 billion rand ($16 billion) it needs over the next decade earlier than planned, calling the utility "too vital to our economy." He urged South Africans to pay their power bills and do their part. The president also declared a "relentless focus on economic growth" in a country with 28% unemployment, noting that growth this year is now projected to be lower than anticipated. More than 50% of young people are unemployed, and Ramaphosa wants at least 2 million jobs created for them within the decade. Public dissatisfaction with the economy and corruption led to the ruling African National Congress party's 57.5% electoral victory, its weakest showing since coming to power in 1994 after the end of the harsh system of racial discrimination known as apartheid. Ramaphosa in his address to parliament called for a focus on creating jobs, improving education, reducing hunger and inequality and halving violent crime over the next decade. He also made an unusual call to construct "the first entirely new city built in the democratic era," saying the dream was sparked by conversations with a handful of "wonderful" people including Chinese President Xi Jinping and his account of building a new city outside Beijing. Story continues "Has the time not arrived for us to be bold and reach beyond ourselves and do what we believe is impossible?" Ramaphosa asked, saying some 75% of South Africans will be living in cities by 2030 as people continue to migrate from rural areas. His comments drew loud murmurs from lawmakers and questions afterward about who will pay. The reference to China in the high-profile speech came a day before the United States' top diplomat to Africa, Tibor Nagy, will make a speech in Johannesburg on U.S.-Africa diplomacy at a time when the U.S. is trying to counter the growing influence on the booming continent of China, Russia, Gulf countries and others. On the sensitive issue of land reform to help address South Africa's long-standing inequalities, Ramaphosa said a much anticipated report by an advisory panel had been received and will be presented to the Cabinet for consideration. In the meantime, he said, government would begin to release state-owned land for home construction and farming. South Africa's top opposition parties said Ramaphosa's speech lacked details and a clear plan. Julius Malema with the Economic Freedom Fighters said the address was too imaginative and avoided the land question, while Mmusi Maimane with the Democratic Alliance said it was vague on how to turn South Africa's economy around. Declaring 10-year goals "means very little to people who desperately need immediate change," Maimane said. Ramaphosa, who first took office in February 2018 after the ANC forced scandal-plagued former President Jacob Zuma to resign, again said corruption had no place in his government and that "we need to ensure that public money stolen is returned" and used to provide basic services to the people. A widely watched commission of inquiry into graft during Zuma's administration wants the former president to appear before it and answer questions next month but on Thursday said that Zuma was not entitled to request the questions in advance. ___ Magome reported from Johannesburg. ___ Follow Africa news at https://twitter.com/AP_Africa |
Appeals Court Allows Trump Abortion Rules to Take Effect
A federal appeals court said Thursday new Trump administration rules imposing additional hurdles for women seeking abortions can take effect while the government appeals decisions that blocked them.
More than 20 states and several civil rights and health organizations challenged the rules in cases filed in Oregon, Washington and California. Judges in all three states blocked the rules from taking effect, with Oregon and Washington judges issuing nationwide injunctions. One judge called the new policy “madness.”
But a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco called the rules a “reasonable” interpretation of a federal law that prohibits taxpayer-funded health clinics from advocating, encouraging or promoting abortion.
The panel said the lower courts appeared to have gotten the rulings wrong, and it granted a stay of those orders requested by the Justice Department. That allows the rules to take effect while the government appeals the lower court rulings.
“We are pleased that the Ninth Circuit has cleared the way for this important executive branch action to take effect while our appeals are pending,” Justice Department spokeswoman Kelly Laco said in an emailed statement. “The Department of Justice’s position is supported by long-standing Supreme Court precedent and we are confident we will ultimately prevail on appeal.”
The new rules ban taxpayer-funded clinics from making abortion referrals and prohibit clinics that receive federal money from sharing office space with abortion providers — a rule critics said would force many to find new locations, undergo expensive remodels or shut down. Many considered the rules an attack on Planned Parenthood.
Planned Parenthood said it would immediately ask the 9th Circuit to reconsider the decision.
“The Trump-Pence administration’s gag rule is unethical, illegal, and harmful to public health,” Dr. Leana Wen, president of the Planned Parenthood Federation of America, said in a written statement. “The news out of the 9th Circuit this morning is devastating for the millions of people who rely on Title X health centers for cancer screenings, HIV tests, affordable birth control and other critical primary and preventive care.”
A federal court in Maryland has also issued an order blocking the rules from taking effect, but that ruling only applies in that state. The Justice Department has appealed it.
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Get up to speed on your morning commute withFortune’sCEO Dailynewsletter. |
Is Matson, Inc. (NYSE:MATX) Overpaying Its CEO?
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Matt Cox became the CEO of Matson, Inc. (NYSE:MATX) in 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Matson
At the time of writing our data says that Matson, Inc. has a market cap of US$1.6b, and is paying total annual CEO compensation of US$4.6m. (This number is for the twelve months until December 2018). That's just a smallish increase of 2.7% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$789k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.
So Matt Cox receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Matson, below.
On average over the last three years, Matson, Inc. has grown earnings per share (EPS) by 28% each year (using a line of best fit). It achieved revenue growth of 7.7% over the last year.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested inthisfreevisualization of analyst forecasts.
With a total shareholder return of 21% over three years, Matson, Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Remuneration for Matt Cox is close enough to the median pay for a CEO of a similar sized company .
We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. So upon reflection one could argue that the CEO pay is quite reasonable. So you may want tocheck if insiders are buying Matson shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out 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. |
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