PDA

View Full Version : Up 32% This Year, This Health Stock Is Set To Really Take Off



John Thomas
07-25-2013,
Investors in a certain global leader in medical equipment have been seen mildly erratic behavior (to put it nicely) from the stock over the better part of a decade.

Shares rose from $40 in 2004 to highs of $75 in 2007 before sinking to $30 in 2009 and rebounding to $50 in 2011. Since then, the stock has steadily risen to its current level near $75.



But while the stock was spinning its wheels over that nine-year period, the company was growing at a good clip. Annual revenue climbed a cumulative 29% between 2009 and 2012, to $8.7 billion. Net earnings jumped 17% in that time, to $1.3 billion.

Last month, Stryker (NYSE: SYK) delivered rather uneven third-quarter numbers: Revenue rose 4.8% from a year ago, to $2.2 billion, but earnings fell more than 70%.

The revenue boost came from a revival in Stryker's largest division, specifically in orthopedic implants used in hip and knee joint replacements. This division grew 9% in the third quarter, one of its strongest performances in some time. Most of the dip in earnings can be attributed to litigation related to a recall of Stryker's ABG II and Rejuvenate hip implants (ranging from $700 million to $1.1 billion) last year. Excluding that lump sum, earnings rose 1%.

Except for a few rough patches, Stryker's been riding a wave of momentum good enough for a 32% year to date gain -- and it hasn't yet begun to crest. It's all coming together for this $25 billion provider of surgical tools and neurotechnology, despite ongoing criticism about a series of expensive acquisitions (the other component of Stryker's third-quarter dip in earnings).

Stryker's most recent purchase: a $1.65 billion deal for MAKO Surgical (Nasdaq: MAKO), a pioneer in robot-assisted orthopedic surgery with its RIO systems and Restoris implants. Considered a long-term bet on the robotics industry, the acquisition gives Stryker new product lines that it can market through its broad distribution network. The deal may position Stryker to compete with Intuitive Surgical (Nasdaq: ISRG), famed for its da Vinci surgical robot.

Before its purchase of MAKO, Stryker acquired Boston Scientific's (NYSE: BSX) neurovascular unit for $1.5 billion, which provided inroads into a thriving market in devices to treat strokes. It also gobbled up orthobiologic and biosurgery products maker Orthovita for $316 million, and China-based Trauson Holdings, a competitor of Stryker's spine segment, for $685 million to build its business overseas.

So Stryker has been busy in recent years shoring up various industry positions, adding to its product lines and building a presence overseas.

The strategy appears to be paying off: Analysts expect earnings growth of 8.5% next year and for the next five years as well.

Risks to Consider: Stryker can ill afford any more product recalls, which could damage its reputation beyond repair and scare away customers and investors. The company also faces stiff competition from Smith & Nephew (NYSE: SNN) and Johnson & Johnson (NYSE: JNJ) in an industry challenged by falling prices.

Actions to Take --> Everything about this stock screams "long term." An aging population will help drive the need for knee and hip replacements in the not-too-distant future. Stryker's string of acquisitions is set to begin paying off; the question is, how soon? At about $75 a share, STk is expected to rise single digits in 2014.

Related Articles

Up 32% This Year, This Health Stock Is Set To Really Take Off
Get Value And Growth With This Little-Known Stock

John Thomas
07-25-2013,
America is facing its own little demographic headache in the coming years thanks to the declining birthrate, drop-off in immigration and massive wave of retiring boomers?



Source:

John Thomas
07-25-2013,
Random Thoughts


With the indices relatively unchanged, I hate to read too much into things.

The Quack ended off its best levels but did end in the black. This was enough to keep it at multi-year highs.

The Ps tried to rally but ended down .13%. This action has them .13% away from all-time highs.

What the Ps lost, the Rusty gained. And, this is enough to keep it at all-time highs.

Again, I don't want to read too much into a flat day. As you would imagine, most stocks were mixed.

There were a few standouts though:

Biotech, which recently looked pretty sick just recently, closed at all-time highs. Drugs overall and Health Services, in spite of all the news, also closed at all-time highs. See my recent column about not confusing the issue with facts.

Selected Regional Banks accelerated to all-time highs.

The Transports also closed at all-time highs.

Not all was rosy though. Metals & Mining continue to roll over. And, Real Estate still looks anemic.

With a flat day, not much changes. I'm still not seeing a lot of new meaningful longs just yet. This is perfectly normal for a methodology that requires a pullback. I am seeing a few shorts but not enough to cause alarm. Focus mostly on managing your existing positions. Take partial profits as offered and trail your stops higher. Continue to avoid getting too bearish as long as the market remains at or near new highs. If you really really like a short side setup, then take it-we actually have one that we are going after today. Again though, just don't get too aggressive as long as the market is at new highs. In an ideal world, the market continues higher and we avoid a new position altogether. Then, we look to add on the long side. And, if it does trigger and the market goes straight up, we'll get stopped. This won't be the first losing trade and it certainly won't be the last. Nothing ventured, nothing gained. Learning how to shrug your shoulders and shout next! -focusing on the next potential trade--takes a while. This may be hard to believe if you are just starting out but it can be done Grasshopper.

John Thomas
07-25-2013,
Dunkin' Brands (Nasdaq: DNKN) has far outpaced the performance of the S&P 500 Index year to date, gaining nearly 48% compared with the broader index's 26% gain.

Even more exciting is that if the shares can crack round-number resistance at $50, they are likely to challenge $60 in fairly short order. Since there is a well-defined stop-loss level at the major uptrend line, which intersects the chart just under $46, the reward-to-risk ratio is roughly 2.5 to 1, which is highly attractive.

Dunkin' Donuts, which has been around since 1950, is an American favorite. Through aggressive expansion, it is capturing an even larger domestic and international following. (My colleague David Goodboy is also a longtime fan of the company, as he wrote recently.)

In its third quarter, the company, which also owns the Baskin-Robbins brand, added 222 new stores worldwide, 81 of which were U.S.-based Dunkin' Donuts locations. There are now 7,500 Dunkin' Donuts restaurants in the U.S.

CEO Nigel Travis announced his goals of opening at least 15,000 Dunkin' Donuts restaurants in the U.S., including 3,000 east of the Mississippi and 5,000 in Western states. That's double the size of the current chain. At present, Dunkin' Donuts is heavily situated in the eastern United States, so there is a lot of virgin territory that can be easily conquered.

In the third quarter, the first Dunkin' Donuts locations in Colorado opened. The company also signed development agreements in Southern California, bringing the total number of planned outlets there to 70. During this same period, the company's U.S.-based same-store sales increased 4.2%, revenue increased 8.5% from a year ago, and earnings increased at a double-digit clip (10.8%).

Since the stores are almost entirely operated by franchisees, continued expansion should mean an influx of franchise fees and royalty income, along with minimal operating expenses. That's a formula for strong future profit growth.

The chart is strong, to say the least. Since its July 2011 IPO near $19, the stock has been on a highly bullish run and shows no sign of slowing down.

John Thomas
07-25-2013,
?I think we?re in the middle of the game, maybe the fourth or fifth inning. I really think this thing has another five years to go. It?s going to take that long before people become confident enough and they start becoming confident enough and blowing themselves up again,? said John Paulson of Wells Capital Management.


go to the Mad Hedge Fund Trader's website

John Thomas
07-25-2013,
I was amazed to see the Dow Average open up only 60 points this morning, and oil to fall a mere $1.50, given the enormous long term implications of a real nuclear deal with Iran. Over the decades, I have noticed that Wall Street isn?t very good at analyzing international political matters and the implications for their own markets. This appears to be one of those cases.

The news over the weekend about a freeze on Iran?s nuclear enrichment program in exchange for international inspections and the unfreezing of $4 billion of their assets is unbelievably positive for all asset classes, except energy. It came much sooner than expected. It proves that the administration?s preference for economic sanctions over military action has been wildly successful.

The US is now in a tremendously powerful negotiating position. If Iran dumps their nuclear program to our satisfaction it can get the carrot. It will rejoin the world economy, unfreeze the rest of its assets, and recover $100 billion a year in trade. Its oil exports (USO) can recover from 750,000 barrels a day back to the pre crisis level of 3 million barrels. If it doesn?t then it gets the stick again in six months, resuming their economic freefall.

The geopolitical implications for the U.S. are enormous. Iran is the last major rogue state hostile to the U.S. in the Middle East, and it is teetering. The final domino of the Arab spring falls squarely at the gates of Tehran. A friendly, or at least a non-hostile Iran, means we really don?t care what happens in Syria.

Remember that the first real revolution in the region was Iran?s Green Revolution in 2009. That revolt was successfully suppressed with an iron fist by fanatical and pitiless Revolutionary Guards. The true death toll will never be known, but is thought to be in the thousands. The antigovernment sentiments that provided the spark never went away and they continue to percolate just under the surface.

At the end of the day, the majority of the Persian population wants to join the tide of globalization. They want to buy iPods and blue jeans, communicate freely through their Facebook pages and Twitter accounts, and have the jobs to pay for it all. Since 1979, when the Shah was deposed, a succession of extremist, ultraconservative governments ruled by a religious minority, have abjectly failed to cater to these desires.

If Iran doesn?t do a deal on nukes soon, it?s economy with sink deeper into the morass in which they currently find themselves. The Iranian ?street? will figure out that if they spill enough of their own blood that regime change is possible and the revolution there will reignite. The Obama administration is now pulling out all the stops to accelerate the process.

The oil embargo former Secretary of State, Hillary Clinton, organized is steadily tightening the noose, with heating oil and gasoline becoming hard to obtain. Yes, Russia and China are doing what they can to slow the process, but conducting international trade through the back door is expensive, and prices are rocketing. The unemployment rate is 40%. The Iranian Rial has collapsed by 50%. Iranian banks were kicked out of the SWIFT international settlements system, a deathblow to their trade.

Let?s see how docile these people remain when the air conditioning quits running this summer because of power shortages. Iran is a rotten piece of fruit ready to fall of its own accord and go splat. The US is doing everything she can to shake the tree. No military action of any kind is required on America?s part. No shot has been fired. That?s a big deal when the shots cost $10,000 apiece.

The geopolitical payoff of such an event for the U.S. would be almost incalculable. A successful revolution will almost certainly produce a secular, pro-Western regime whose first priority will be to rejoin the international community and use its oil wealth to rebuild an economy now in tatters.

Oil will lose its risk premium, now believed by the oil industry to be $30 a barrel. A looming supply could cause prices to drop to as low as $30 a barrel. This would amount to a gigantic $1.66 trillion tax cut for not just the U.S., but the entire global economy as well (87 million barrels a day X 365 days a year X $100 dollars a barrel X 50%). Almost all funding of terrorist organizations will immediately dry up. I might point out here that this has always been the oil industry?s worst nightmare. Hezbollah is a short.

At that point, the US will be without enemies, save for North Korea, and even the Hermit Kingdom could change with a new leader in place. A long Pax Americana will settle over the planet.
The implications for the financial markets will be enormous. The U.S. will reap a peace dividend as large, or larger, than the one we enjoyed after the fall of the Soviet Union in 1992. As you may recall, that black swan caused the Dow Average to soar from 2,000 to 10,000 in less than eight years, also partly fueled by the technology boom.

A collapse in oil imports will cause the U.S. dollar (UUP) to rocket. An immediate halving of our defense spending to $400 billion or less and burgeoning new tax revenues would cause the budget deficit to collapse. With the U.S. government gone as a major new borrower, interest rates across the yield curve will fall further.

A peace dividend will also cause U.S. GDP growth to reaccelerate from 2% to 4%. Risk assets of every description will soar to multiples of their current levels, including stocks, junk bonds, commodities, precious metals, and food. The Dow will soar to 30,000 and the S&P 500 (SPY) to 3,500, the Euro collapses to parity, gold rockets to $2,300 an ounce, silver flies to $100 an ounce, copper leaps to $6 a pound, and corn recovers $8 a bushel. The 60-year bull market in bonds ends.

Some 1 million of the armed forces will get dumped on the job market as our manpower requirements shrink to peacetime levels. But a strong economy should be able to soak these well-trained and motivated people right up. We will enter a new Golden Age, not just at home, but for civilization as a whole.

Wait, you ask, what if Iran develops an atomic bomb and holds the U.S. at bay? Don?t worry. There is no Iranian nuclear device. There is no real Iranian nuclear program. The entire concept is an invention of Israeli and American intelligence agencies as a means to put pressure on the regime. According to them, Iran has been within a month or producing a tactical nuclear weapon for the last 30 years.

The head of the miniscule effort they have was assassinated by Israeli intelligence two years ago (a magnetic bomb, placed on a moving car, by a team on a motorcycle, nice!).

If Iran had anything substantial in the works, the Israeli planes would have taken off a long time ago. There is no plan to close the Straits of Hormuz, either. The training exercises in small rubber boats we have seen are done for CNN?s benefit, and comprise no credible threat.

I am a firm believer in the wisdom of markets, and that the marketplace becomes aware of major history changing events well before we mere individual mortals do. The Dow began a 25-year bull market the day after American forces defeated the Japanese in the Battle of Midway in May of 1942, even though the true outcome of that confrontation was kept top secret for years.

If the advent of a new, docile Iran were going to lead to a global multi-decade economic boom and the end of history, how would the stock markets behave now? They would rise virtually every day, led by the technology sector (XLK), industrials (XLI), and the banks (XLF) (C), offering no substantial pullbacks for latecomers to get in.

That is exactly what they have been doing since August. The markets are telling us that a treaty of real substance is a done deal.

John Thomas
07-25-2013,
This is my 14th consecutive closing Trade Alert, and the 20th including my remaining profitable open positions. I have only six more to go until a break my previous record of 25. It doesn?t get any better than this.

The yen is now in free fall, and the Japanese stock market is going ballistic, as I expected. Both the ProShares Ultra Short Yen double short ETF (YCS) and the Wisdom Tree Japan Hedged Equity ETF (DXJ) have pierced new five-month highs, and loftier levels beckon.

The immediate trigger was a meeting at the Bank of Japan, where the governors voted to maintain their ultra low, 0.1% discount rate. They also reiterated their commitment to growing the money supply by a blistering $600-$700 billion a year, or nearly triple the US monetary easing rate on a per capita GDP basis.

On the same day, we received month old Fed minutes showing a definite lean towards tapering our own quantitative easing. When this eventually does happen, the interest rate differential for dollar/ yen will rise dramatically. Needless to say, this is all terrible news for Japan?s beleaguered currency, as interest rate differentials are the primary drivers of foreign exchange markets.

Given all this, I am going to take profits on my existing short position in the yen through the Currency Shares Japanese Yen Trust (FXY) December, 2013 $101-$104 in-the-money bear put spread. At this mornings shockingly high prices for the spread, we can harvest 83% of the potential profit with one full month still to run to the December 20 expiration.

The outlook for the yen is no so bleak that I want to have plenty of cash to reload on the short side during the slightest recovery. I will move to closer strikes and more distant maturities to maximize your profits. It is now looking like we will soon challenge the 2013 low for the (FXY) of $94.80 and the $72 high for the (YCS).

We have a lot of new readers on board now, as my white-hot performance has become a talking point in the hedge fund community. So for the newbies to familiarize themselves with the basic structural flaws in the yen, please click here http://www.madhedgefundtrader.com/rumblings-in-tokyo-2/, here http://www.madhedgefundtrader.com/ne...r-craters-yen/, and finally here http://www.madhedgefundtrader.com/ne...ushes-the-yen/.

John Thomas
07-25-2013,
The Chart of the Day is Autozone (AZO). I found the stock by sorting the New High List for frequency in the last month then panned through the chart using the Flipchart feature. I picked the stock for its recent momentum. The stock has a Trend Spotter buy, a Weighted Alpha of 25.00+ and gained 21.50% in the last year. In the last quarter while the S&P 500 Index was up 8.31% the stock was up 10.11%, that's 24.8% better than the market.

It is a specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. Each of the company's auto parts store carries an extensive product line for cars, vans and light trucks, including new and re-manufactured automotive hard parts, maintenance items, and accessories. Many of the company's domestic auto parts stores also has a commercial sales program, which provides commercial credit and prompt delivery of parts and other products to local repair garages, dealers and service stations.

John Thomas
07-25-2013,
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

John Thomas
07-25-2013,
What can a 90 year-old woman from Nebraska teach us about finding profit opportunities in today's downtrodden mining sector?

Let me tell you a story.

In 1983, Mrs. Rose Blumkin -- nonagenarian proprietor of Nebraska Furniture Mart -- was approached by a local investment fund manager who was interested in putting money into her family's business. After talking with "Mrs. B" and observing her Herculean managerial style about the store, the buyer handed her a check for $55 million. No audit of the books, check of inventory, or verification of property titles. He saw all the qualities he liked in Mrs. B -- and was willing to pay a lot based on a few key observations and a handshake.

That man was Warren Buffett. I've learned a lot by studying his examples, like the one above, and applying them to natural resources investing.

This "be like Warren" message is an important one for my Junior Resource Advisor readers. That's because investing in mining -- and particularly its highest-potential-return sub-sector, exploration and development -- is radically different from conventional investing.

Unlike banks or manufacturers, mineral exploration and development companies have no revenue or cash flow. I've sat in meetings with Wall Street bankers and been asked about the price-to-earnings (P/E) ratios for these firms -- and had to point out that the number is technically infinity, the inevitable result when you divide any P by an E that is zero.

So why should we care about these serial spillers of red ink? Because, when done correctly, exploration can yield profit multiples nearly unmatched across the investment universe. In the mineral business it's possible to spend millions of dollars identifying an in-ground asset through sampling, drilling and compilation of results, and come up with a single, massive product that commands a one-time sale price in the billions.

Many observers believe that the exploration market is dead today. With commodity prices slumping and the valuations of major miners down, who cares about finding new ore deposits?

But my analysis shows something completely different. The market for exploration properties is as active as it's ever been -- if not more frenetic.

Look at the chart below. I've plotted acquisitions of exploration properties during the second quarter of this year. These are deals where one company pays another to purchase the rights to a mineral project.

John Thomas
07-25-2013,
As we head into the final weeks of 2013, European central bankers are on pins and needles. They're hoping the fourth-quarter economic data reveal signs that the Continent is truly on the mend.

An early November report from the European Commission sees signs of that upturn coming. The report's main takeaway: "The signs of hope that we saw last spring have started to turn into tangible positive outcomes. After six consecutive quarters of stagnation or contraction, the EU economy has posted positive growth in the second quarter of 2013. The recovery is expected to continue, and to gather some speed next year."

Indeed, while the European economic region likely contracted a bit in 2013, these economists predict GDP will likely grow 1.5% in 2014, and perhaps 2% in 2015. And where will that strength come from? "Domestic demand is expected to take over as the main engine of growth," they predict.

If they're right, then it's useful to make sure you have European exposure in your portfolio. Heading into Labor Day, my colleague David Goodboy profiled the Vanguard FTSE Europe ETF (NYSE: VGK).

A quick look at a five-year chart of this ETF against the S&P 500 Index shows the extent to which European blue chips have lagged. The outperformance for U.S. stocks really began to pull away in late 20109, when it became apparent that the U.S. economy was on the mend while Europe was not. Now, with Europe perhaps on the mend as well, global investors are likely to allocate more funds to European stocks and funds.

John Thomas
07-25-2013,
Dividend investors crave predictability. Once they lock onto payment streams, they don't want to hear about any interruptions. And if a company dares to withhold a quarterly dividend payout, then many investors simply head to the exits.

I discussed this phenomenon recently with regard to Carl Icahn and his big stake in CVR Refining (NYSE: CVRR).

As I noted earlier this month, CVR had a big hiccup with its third-quarter dividend, but it appears positioned to pay out $3 or $4 per unit in dividends next year. Shares trading around $22 don't begin to reflect that potential income.

Amazingly, a virtually identical scenario has just played out with another oil refiner. And the setup is every bit as compelling.

A series of technical problems at a key refinery led to a sharp drop in output for Alon USA Partners (NYSE: ALDW), the master limited partnership (MLP) of Alon Energy (NYSE: ALJ). In fact, the quarterly production was so weak that Alon USA Partners didn't simply make less money -- it lost money. And though investors were bracing for a smaller than usual dividend, they got nothing. Shares of ALDW, which traded up toward the $30 mark in the spring, are now below $14.

John Thomas
07-25-2013,
The cost of energy production isn't just about money. There are also environment effects.

Last year, according to one environmental group, hydraulic fracturing (commonly known as fracking) alone generated an estimated 280 billion gallons of toxic wastewater, enough to flood Washington, D.C., to a depth of 22 feet. It's no wonder that there's a strong push to institute cleaner practices.

Green initiatives have come to dominate the corporate landscape and are attracting investment flows in record numbers. The performance in alternative energy this year is evidence of this growing trend -- the iShares S&P Global Clean Energy Fund (Nasdaq: ICLN) is up more than 50% year to date. While most of the attention has been focused on renewable energy and clean coal, environmentally friendly sectors like pollution and treatment controls have gone relatively unnoticed.

Calgon Carbon Corp. (NYSE: CCC) is a small-cap stock involved in the purification and treatment of water, air and food, as well as the poisonous emissions from coal-fired power plants. The company has been making tremendous strides in cost reduction, improving operating margins to around 20% from 13.6% just a year ago. (Calgon's leaner operation is one reason the research staff at StreetAuthority's Top 10 Stocks advisory recently named CCC a Top 10 small-cap stock.)

Calgon reported earnings on Nov. 5 and the results were right on line with expectations at $0.22 per share. Gross margins continued to grow, to 33.3% in the most recent quarter from 27.3% a year ago. The demand for activated carbon cloth, used in water, food, and other specialty markets, contributed to a 28.2% gain in consumer sales. The company's cash position climbed 65% from last year to about $30 million, while long-term debt increased only 8.7%, to $48.3 million.

Calgon's stock looks like a value in comparison to CECO Environmental Corp. (Nasdaq: CECE), its closest competitor, trading at around 25 times earnings while CECO trades at over 38. It also looks better from a debt standpoint, with a debt-to-equity ratio of just 0.54 compared to CECO's 1.09. While Calgon's stock is up 44% year to date, CECO's is up 58% and could be due for a pullback.

Looking to the future, Calgon sees opportunity in the mercury removal business. The current annual demand for mercury removal stands at 130 million to 180 million pounds and could grow to as much as 765 million pounds by 2016 as the EPA begins enforcing mercury removal regulations on industrial boilers and cement manufacturers.

John Thomas
07-25-2013,
The number of Starbucks coffee shops that flooded the market during the mid-2000s was almost comical. In 2008, there were more than 230 Starbucks stores in New York City, with over 180 just in Manhattan.

There were literally Starbuckses right across the street from each other. As a coffee lover and Starbucks fanboy, I didn't mind.

But rapid expansion and market saturation turned out to be an unsustainable business model, which led to a large number of underperforming stores. As a result, Starbucks brought back former CEO Howard Schultz in 2008, and the company closed a number of U.S. stores and ceased expansion efforts.

Yet half a decade later, Starbucks (Nasdaq: SBUX) is back in full-blown growth mode.

Despite concerns that Starbucks might again be hitting a saturation point, the coffee company is still very much a growth story. Starbucks has a number of growth levers it can pull this time around beyond just rapid store expansion. These include the company's innovation on the food side and its single-serving products, Verismo and Teavana.

With the likes of McDonald's (NYSE: MCD), Tim Horton's and Dunkin' Donuts all fighting for a piece of the market, the competition in the coffee market has increased over the past half-decade -- but Starbucks continues to set itself apart.

For a couple years there, it looked as though Starbucks and its chief rival, Dunkin' Brands (Nasdaq: DNKN), were going to trade in lockstep forever. However, after upgrading its fourth-quarter guidance and announcing its partnership with Danone, Starbucks begin pulling away and appears to be leaving Dunkin' in the dust.

John Thomas
07-25-2013,
Markets were headed higher at the beginning of Thanksgiving week. The National Association of Realtors announced that for the fifth month in row pending sales of existing homes fell in the U.S. During the month of October pending sales fell 0.6% following a 4.6% decline in September. This was below the expected 1% gain economists were calling for. This can partially be attributed to rising mortgage rights, prices increasing on existing homes as well as a smaller supply of available homes. Patrick Newport, an economist with IHS Global Insight, said, ?When mortgage rates went up, people got spoiled and rushed into the market to seal deals. The numbers that we?re seeing for pending home sales are payback for the stronger numbers earlier this year.? Overall for the 2013, sales of existing homes are expected to top out around 5.1 million, and remain around the same in 2014. During 2012 there were nearly 4.7 million existing homes sold.

There was a revise of economists short-term growth forecast for the U.S. in the final quarter of this year. Analysts are now predicting growth of 1.8% in the fourth-quarter; the previous prediction came in at a 2.3%. Expectations for growth in the first-quarter of 2014 are a gain 2.5%, also down from the original estimate of 2.7%. Growth for this entire year is expected to be 1.7%. Despite the decrease in projections for growth, hiring expectations have been revised higher. Analysts are projecting average monthly job growth over the next two quarters to come in around 187,000 then increasing to 202,000 by the end of 2014. They also expect the jobless rate to decrease to 7% by the end of next year.

Shares of Wal-Mart (WMT) were trading slightly higher on Monday after the company announced their new CEO of their international division. Doug McMillon will replace Current Chief Executive Mike Duke on January 31, when Mr. Duke retires. McMillon will step up to the plate once the holiday season is over and the competition between retail stores increases. He has held several big roles within the company, including president and CEO of the company?s retail warehouse chain Sam?s Club and head of Wal-Mart International. Walter Loeb, president of retail consultancy of Loeb Associates, said, ?McMillon was responsible for the growth area for Wal-Mart-international sales ? and that?s why he got the nod.?

That?s all for the day.
All the best,
Jack Aubrey, Oakshire Financial

Related Articles

John Thomas
07-25-2013,
A recent piece of correspondence by a regular reader has prompted us to make a brief macro-review before we take on the week.
Please remember where we?ve been.

This is a bull market that has weathered ?

the much ballyhooed ?fiscal cliff?,
the ?sequester?,
the European debt debacle,
the highly anticipated Chinese hard landing,
QE 1,2 and 3 in all its iterations,
a year and a half rise without a correction,
the latest government shutdown,
Bernanke screaming,
Janet Yellen,
Obama Liking it and Keeping it,


and a host of other crises large and small, real and imagined, that have been hammered into our ears by the media for almost five full years.

And yet?

The market keeps rising.

So when the good folks who read our rantings (and we?re forever grateful for each and every one of you!) say that we only have a few hundred Dow points before the top, that the coming January debt ceiling showdown will mark a decisive market turning point, and that the fear of midnight is soon to befall us, we remind you once a

John Thomas
07-25-2013,
This is one of the more hilarious charts documenting the impossibility with which price targets and market forecasts are made each year by Wall Street?s analyst community.

Here?s a Morgan Stanley chart via @ukarlewitz of Fat Pitch Financial:

John Thomas
07-25-2013,
Random Thoughts


I'd like to give thanks to all the folks at Traders Expo, especially Tim Bourquin and Elaina Lowe.

Well, things looked a little iffy way back last Wednesday before I left for Vegas. The Quack had pulled back into its prior trading range. And, the Rusty appeared to be on its way to the bottom of its trading range.

As I said, with things mixed and the overall market not too far from new highs, a few big up days would be just what the Doctor ordered. And, that's exactly what we got on Thursday and Friday.

This action puts the Ps back to all-time highs. The Rusty is also at all-time highs. And, the Quack closed at multi-year highs.

The sector action looks great. Biotech, which had been rolling over, has now come back with a vengeance.

There are a few areas stinking up the joint such as Metals & Mining (especially Gold & Silver), Real Estate, and the Semis (which have been mostly sideways). Overall though, most areas are looking pretty good. Chemicals, Manufacturing, Defense, Brokerages, Regional Banks, Drugs, Insurance, Health Services to name a few are all at new highs.

The above is why we take things one day at a time and resist the urge to get too bearish when a market is not too far from new highs. Sure, fire off a short if you really really like the setup but for the most part, you want to wait to make sure the market isn't just taking a breather.

Okay Big Dave, things are looking good. So, do we buy, buy, buy? Well, not just yet. Enjoy the ride on existing longs. Make sure you take partial profits as offered and trail those stops higher. Since the methodology requires a pullback, hold off on new long side positions for now until the market follows through and pulls back. I'd avoid the short side for now. No need to fight it.

Click here to watch today's Market in a Minute.

Best of luck with your trading today!

Dave
omgmachines.com/ericx
__________

Expert swing trader Dave Landry comments on the charts for the major markets, indexes and sectors for the upcoming trading day in his daily one-minute video.

Make sure your sound is turned up. A new browser window will open and the video will begin playing within a few seconds.

Click here to watch today's Market in a Minute.


You can contact Dave Landry by email at dave@davelandry.com or visit his website DaveLandry.com.

John Thomas
07-25-2013,
The cost of energy production isn't just about money. There are also environment effects.

Last year, according to one environmental group, hydraulic fracturing (commonly known as fracking) alone generated an estimated 280 billion gallons of toxic wastewater, enough to flood Washington, D.C., to a depth of 22 feet. It's no wonder that there's a strong push to institute cleaner practices.

Green initiatives have come to dominate the corporate landscape and are attracting investment flows in record numbers. The performance in alternative energy this year is evidence of this growing trend -- the iShares S&P Global Clean Energy Fund (Nasdaq: ICLN) is up more than 50% year to date. While most of the attention has been focused on renewable energy and clean coal, environmentally friendly sectors like pollution and treatment controls have gone relatively unnoticed.

Calgon Carbon Corp. (NYSE: CCC) is a small-cap stock involved in the purification and treatment of water, air and food, as well as the poisonous emissions from coal-fired power plants. The company has been making tremendous strides in cost reduction, improving operating margins to around 20% from 13.6% just a year ago. (Calgon's leaner operation is one reason the research staff at StreetAuthority's Top 10 Stocks advisory recently named CCC a Top 10 small-cap stock.)

Calgon reported earnings on Nov. 5 and the results were right on line with expectations at $0.22 per share. Gross margins continued to grow, to 33.3% in the most recent quarter from 27.3% a year ago. The demand for activated carbon cloth, used in water, food, and other specialty markets, contributed to a 28.2% gain in consumer sales. The company's cash position climbed 65% from last year to about $30 million, while long-term debt increased only 8.7%, to $48.3 million.

Calgon's stock looks like a value in comparison to CECO Environmental Corp. (Nasdaq: CECE), its closest competitor, trading at around 25 times earnings while CECO trades at over 38. It also looks better from a debt standpoint, with a debt-to-equity ratio of just 0.54 compared to CECO's 1.09. While Calgon's stock is up 44% year to date, CECO's is up 58% and could be due for a pullback.

Looking to the future, Calgon sees opportunity in the mercury removal business. The current annual demand for mercury removal stands at 130 million to 180 million pounds and could grow to as much as 765 million pounds by 2016 as the EPA begins enforcing mercury removal regulations on industrial boilers and cement manufacturers.

The company has been positioning itself to take advantage of the new market by landing long-term contracts in February and September of this year for deals worth an estimated $50 million.

Even better for investors, the company -- which just wrapped up a successful $50 million share buyback program -- may initiate a far more aggressive $150 million to $200 million plan at the suggestion of Starboard Value, which owns about a 10% stake.



Risks to Consider: Like most "green" companies, Calgon is depending upon continued trends in corporate sustainability and tax credits for businesses purchasing their environmental controls. While the company expects the demand for mercury removal to increase by 2016, supply exceeds demand and could continue to do so for the short term.

Actions to Take --> The stock was upgraded to "buy" by BB&T Capital Markets on Nov. 11, suggesting that Wall Street may have finally caught on to Calgon's performance. The stock is currently trading at just over $20, which based on future earnings potential, placing it at about a 25% discount.

- Daniel Cross

John Thomas
07-25-2013,
The cost of energy production isn't just about money. There are also environment effects.

Last year, according to one environmental group, hydraulic fracturing (commonly known as fracking) alone generated an estimated 280 billion gallons of toxic wastewater, enough to flood Washington, D.C., to a depth of 22 feet. It's no wonder that there's a strong push to institute cleaner practices.

Green initiatives have come to dominate the corporate landscape and are attracting investment flows in record numbers. The performance in alternative energy this year is evidence of this growing trend -- the iShares S&P Global Clean Energy Fund (Nasdaq: ICLN) is up more than 50% year to date. While most of the attention has been focused on renewable energy and clean coal, environmentally friendly sectors like pollution and treatment controls have gone relatively unnoticed.

Calgon Carbon Corp. (NYSE: CCC) is a small-cap stock involved in the purification and treatment of water, air and food, as well as the poisonous emissions from coal-fired power plants. The company has been making tremendous strides in cost reduction, improving operating margins to around 20% from 13.6% just a year ago. (Calgon's leaner operation is one reason the research staff at StreetAuthority's Top 10 Stocks advisory recently named CCC a Top 10 small-cap stock.)

Calgon reported earnings on Nov. 5 and the results were right on line with expectations at $0.22 per share. Gross margins continued to grow, to 33.3% in the most recent quarter from 27.3% a year ago. The demand for activated carbon cloth, used in water, food, and other specialty markets, contributed to a 28.2% gain in consumer sales. The company's cash position climbed 65% from last year to about $30 million, while long-term debt increased only 8.7%, to $48.3 million.

Calgon's stock looks like a value in comparison to CECO Environmental Corp. (Nasdaq: CECE), its closest competitor, trading at around 25 times earnings while CECO trades at over 38. It also looks better from a debt standpoint, with a debt-to-equity ratio of just 0.54 compared to CECO's 1.09. While Calgon's stock is up 44% year to date, CECO's is up 58% and could be due for a pullback.

Looking to the future, Calgon sees opportunity in the mercury removal business. The current annual demand for mercury removal stands at 130 million to 180 million pounds and could grow to as much as 765 million pounds by 2016 as the EPA begins enforcing mercury removal regulations on industrial boilers and cement manufacturers.

The company has been positioning itself to take advantage of the new market by landing long-term contracts in February and September of this year for deals worth an estimated $50 million.

Even better for investors, the company -- which just wrapped up a successful $50 million share buyback program -- may initiate a far more aggressive $150 million to $200 million plan at the suggestion of Starboard Value, which owns about a 10% stake.



Risks to Consider: Like most "green" companies, Calgon is depending upon continued trends in corporate sustainability and

John Thomas
07-25-2013,
The first rule of running a biotech company: Don't run low on cash. Once investors smell a cash squeeze coming, they'll hammer shares mercilessly.

That was the painful lesson learned by the executives at Dynavax Technologies (Nasdaq: DVAX). Though DVAX was pursuing the development of a very promising new vaccine, the company was burning through more than $15 million in cash every quarter and was at risk of not making it to the FDA finish line. Shares, which traded around $5 in October 2012, skidded all the way to $1.

The good news is that the company shored up its balance sheet late last month, and shares have finally begun to rebound. And, with a few breaks, DVAX looks poised to rise from a recent $1.45 to $3, $4 or even $5.

Little Company, Big Target Market
DVAX has spent years developing Heplisav, which is a vaccine for hepatitis B, a disease that currently afflicts 240 million people around the world, according to the World Health Organization.

Though there are existing vaccines on the market, DVAX believes that Heplisav offers the promise of earlier and better protection with fewer doses than current vaccines.

It appeared it was going to be smooth sailing through the FDA approval process until late last year. The FDA seeks two virtues from any new drug: higher efficacy and a comparable or improved safety profile compared to existing drugs.

On the first count, the FDA gave a resounding thumbs-up, as an advisory panel voted 13-to-1 in favor of the drug's increased effectiveness. But the FDA also decided that DVAX had not sufficiently proved that Heplisav was safe.

The FDA did not say that Heplisav was unsafe, only that the clinical trials thus far couldn't conclusively prove that the drug was safe. And the company has been scrambling ever since to deliver better data, essentially conducting a completely new Phase III clinical trial. For much of 2013, DVAX has been designing that new trial, and the company recently said that it will get underway in a few months.

Although that Heplisav trial will not be completed until sometime in 2015, management is likely to deliver interim results throughout 2014, which should serve as catalysts for the stock.

Meanwhile, Heplisav is also in front of the European Medicines Agency (EMA), and the company is expected to respond to the EMA's final information queries later in the fourth quarter and in early 2014. European approval of Heplisav would quickly push this stock toward the $2.50 to $3 mark, and shares would likely move higher from there as U.S. approval starts to come into focus.

So, what would this stock be worth if DVAX receives both European and U.S. approval for Heplisav?

The current hepatitis B vaccine market is around $700 million, led by vaccines offered by GlaxoSmithKline (NYSE: GSK) and Merck (NYSE: MRK), which require three doses. But, according to DVAX, poor compliance is an issue, with only 30% of the people that should get all three required doses doing so. Also, the current vaccines have a slow onset of protection and aren't always effective, especially in people over 40, or those that also have other ailments such as diabetes.

DVAX's Heplisav, which provides more rapid protection, has also been shown to have high levels of efficacy in those who are less responsive to currently licensed hepatitis B vaccines, such as men, people who are obese, and smokers, as well as diabetics. This could lead to greater demand for DVAX's vaccine compared with others.

Moreover, Heplisav may come with a higher price tag than current vaccines. As a result, the $700 million market may expand beyond $1 billion if Heplisav gets approved.

Assuming a $1 billion sales base and 15% operating margins, DVAX would be poised for $150 million in annual profits. The company would likely be worth 10 times that peak profit forecast, or $1.5 billion. The company's current market value is below $400 million, so shares appear to have 200% to 300% upside if both the U.S. and Europe approve Heplisav.

Understand that these are rough estimates, and the ultimate market value will be easier to determine once the company's pricing strategies are better articulated. (More than likely, DVAX would be acquired by a large drug company before actual drug sales took place.)

For now, it's safe to say that the current market value sharply discounts future success, as shares are only starting to recover from the balance sheet issues discussed earlier. Notably, trading volumes now exceed 5 million shares in many sessions, up from around 1 million shares per day earlier this year, reflecting a dramatic increase in investor interest.

Another bullish sign is that since Nov. 6, shares have risen in every trading session (though they still remain well below the $5 levels seen a little more than a year ago). I think longer-term shareholders could see the stock move beyond the $5 mark, a more than 200% gain from current levels.

John Thomas
07-25-2013,
This will be an extremely light week of posting at TRB. Thanksgiving, while sometimes active for the markets, is always a quiet time in terms of client service, meetings and scheduled calls. In the meantime, I?ve got my work cut out for me on the following projects:

1. I?m finishing up my second book right now (I?m a co-author) for a spring release. I think people are going to love it, but it?s still in draft mode at the moment.

2. My team and I are working on the new firm?s official website and related material, which we?ve opted to take our time on rather than throw together just because the firm has been launched. Still have no idea what the finished product will come out like, I?m taking a backseat to Barry on that project for the most part.

3. I?ve picked up a couple of interesting speaking gigs I need to be ready for. One speaking engagement I?m particularly excited about is for the employees at a certain recently-public social media giant during the first week of December. I?m so psyched to meet and greet the troops and hopefully have helpful insights to share.

4. I?ve got a series of fun posts planned for the newest, hottest, most aggressive media firm on the web this winter. They?ve got a kickass audience, tens of millions of young professionals and creative-types hitting their posts every day. I really want to kill it for them.

5. We?re integrating a new performance-reporting and portfolio analytics engine for our advisory clients that we?re really excited about. The rollout is expected to take place next week, it?s taken about six weeks so far to build out and is widely believed to be the best in the industry. I think our clients are going to be really excited as they get access to it.

So that?s it from me for awhile. I?ll be making a couple of TV appearances this week and maybe I?ll put up a post or two, but if I?m not around now you know why. In the meantime, I?d suggest you take this time to read as little as possible about the markets, the economy, etc. It will all be waiting for you when you get back.

Enjoy, my friends, see you soon. ? JB

John Thomas
07-25-2013,
The performance of the Mad Hedge Fund Trader?s Trade Alert Service is still going ballistic, falling just short of a 60% gain for the year last week. Every new subscriber since September has seen 100% of their trades turn profitable. This is your classic ?shooting fish in a barrel? market.

I know guys my age aren?t supposed to be packing in 16-hour workdays. But it?s all worth it when I can level the Wall Street playing field for the individual investor.

Including both open and closed trades, the last 21 consecutive Trade Alerts have been profitable. I am rapidly closing in on old record of 25 successful Trade Alerts, made earlier this year.

The Trade Alert service of the Mad Hedge Fund Trader is now up 58.00% in 2013. The November month to date record is now an enviable 13.54%.

The three-year return is an eye popping 113.05%, compared to a far more modest increase for the Dow Average during the same period of only 32%.

That brings my averaged annualized return up to 38.8%.

This has been the best profit since my groundbreaking trade mentoring service was launched three years ago. These numbers place me at the Mount Everest of all hedge fund managers, where the year to date gains have been far more pedestrian. It seems that their shorts are killing them.

I took profits on my long position in Citigroup (C), which just achieved a major upside breakout, and then rolled the capital into the Financials Select Sector SPDR (XLV). I cashed in on a long position in the Australian dollar (FXA). I also took profits on short positions in the Japanese yen as it approached new lows for the year.

My remaining long positions in Apple (AAPL) and the Industrials Sector Select SPDR (XLI) are contributing daily to my P&L, thank you very much. I am also keeping my short in the Treasury bond market, and will double up on the next ten basis point backup in ten-year rates.
This is how the pros do it, and you can too, if you wish.

Carving out the 2013 trades alone, 74 out of 89 have made money, a success rate of 83%. It is a track record that most big hedge funds would kill for.

My esteemed colleague, Mad Day Trader Jim Parker, has also been coining it. Since April, his own performance numbers have just come back from the auditors, revealing that he is up a staggering 279%.

The coming winter promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014. The Trade Alerts should be coming hot and heavy. Please join me on the gravy train. You will never get a better chance than this to make money for your personal account.

Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. Upgrade to Mad Hedge Fund Trader PRO and you will also receive Jim Parker?s Mad Day Trader service.

To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.

John Thomas
07-25-2013,
Now vs 2007

via Eric Peters at wknd notes:

?Show me something hairy, disgusting, distressed,? he said to Singapore?s top real estate deal-maker. And I laughed, having always wondered how my buddy conducted meetings. He runs one of America?s greatest family offices. And we travelled across Asia for 2wks, searching for investment themes, cheap assets, insights, talent. ?Nothing?s underpriced,? answered the deal-maker. So I asked if it felt like 2007? ?That was fueled by excessive debt, private equity, Lehman ? this mkt?s driven by cash, there?s no leverage, just cash, and behind it, more cash.?

Very well said.

The Fed wanted everyone to be flush with cash and now they are. In 2005, only 19% of all home sales were made with cash. Goldman Sachs says that, as of this summer, that number was 57%. Amazing.

Who needs debt when dollars are everywhere?

Sources:
wknd notes (sub required)
Nearly half of homes are purchased in cash (MarketWatch)


The Reformed Broker

Joshua Brown is a New York City-based financial advisor at Fusion Analytics. Josh helps people invest and manage portfolios. Clients range from individuals to corporations to retirement plans to charitable foundations.

_____________________

Top 50 Trending Stocks

Free Access - take a look at Today's 50 Top Trending Stocks and start trading like the smart money!

Reply With Quote Reply With Quote

John Thomas
07-25-2013,
via Eric Peters at wknd notes:

?Show me something hairy, disgusting, distressed,? he said to Singapore?s top real estate deal-maker. And I laughed, having always wondered how my buddy conducted meetings. He runs one of America?s greatest family offices. And we travelled across Asia for 2wks, searching for investment themes, cheap assets, insights, talent. ?Nothing?s underpriced,? answered the deal-maker. So I asked if it felt like 2007? ?That was fueled by excessive debt, private equity, Lehman ? this mkt?s driven by cash, there?s no leverage, just cash, and behind it, more cash.?

Very well said.

The Fed wanted everyone to be flush with cash and now they are. In 2005, only 19% of all home sales were made with cash. Goldman Sachs says that, as of this summer, that number was 57%. Amazing.

Who needs debt when dollars are everywhere?

Sources:
wknd notes (sub required)
Nearly half of homes are purchased in cash (MarketWatch)


The Reformed Broker

Joshua Brown is a New York City-based financial advisor at Fusion Analytics. Josh helps people invest and manage portfolios. Clients range from individuals to corporations to retirement plans to charitable foundations.

_____________________

Top 50 Trending Stocks

Free Access - take a look at Today's 50 Top Trending Stocks and start trading like the smart money!

Reply With Quote Reply With Quote

John Thomas
07-25-2013,
Here were the most read posts on TRB this week, in case you missed them:

Buy Wood.

The Inevitable Year-End Melt-Up

Feel better, everybody gets killed sometimes.

BAML: Here comes the big bank breakout

Jim Chanos on Taking Risks Early

John Thomas
07-25-2013,
Sunday links: trend starters

Quote of the day

Bob Lefsetz, ?If you want to start a trend, start with consumers, not businesses.? (Big Picture)

Chart of the day



Finance stocks are showing signs of life. (StockCharts Blog)

Markets

Why the stock market rally still needs to be respected. (Dynamic Hedge)

Another bear throws in the towel. (The Reformed Broker)

Q4 is for large caps. (Mark Hulbert)

Stocks have been the ?only game in town? for awhile now. (The Short Side of Long)

At least someone is making money on the short side. (Zero Hedge)

A fearless market prediction. (A Dash of Insight

John Thomas
07-25-2013,
Thanks for checking in with us this weekend. Here are the items our readers clicked most frequently on Abnormal Returns for the week ended Saturday, November 23rd, 2013. The description reads as it does in the relevant linkfest:

Jeremy Grantham?s latest provides fodder for everyone. (Kid Dynamite)
Ten high-conviction picks from the ultimate stock pickers. (Morningstar)
On finding investment ideas. (Aleph Blog)
REITs are on sale. (BCA Research)
Four costly ideas investors have paid attention to. (A Dash of Insight)
If you are going to take career risk, do it early in your career. (The Reformed Broker)
We are in the ?mature phase? of the bull market. (Dynamic Hedge)
The case for timber. (The Reformed Broker)
Ten lessons learned from ten years of investing. (Monevator)
Are these really reasons to be bearish? (Macro Man)


Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.



The post Top clicks this week on Abnormal Returns appeared first on Abnormal Returns.


Abnormal Returns

John Thomas
07-25-2013,
At the end of last month I brought your attention to the shares of a start-up oil and gas company, Bison Petroleum, which trades over-the-counter under the symbol BISN. That was around the time Bison Petroleum management issued an update on its plans to tap into its Wyoming oil prospect reserves?which became the catalyst for some notable buying interest in BISN shares, ultimately driving them to a new all-time top of $1.70. Congrats to all readers who jumped in and profited from the initial trade alert.

As I previously wrote in my original piece on BISN, Wyoming probably isn?t the first area of the country that comes to mind as a major player in domestic oil production. The fact is, however, that state has a long and storied history as a significant oil producer, with the renown ?Muddy Formation? discovery in the Bighorn Basin region of the state having already generated 3.1 billion barrels of oil to date.

Despite the massive amount of oil and natural gas that has already been produced in the region, estimates by the University of Wyoming put remaining recoverable Bighorn Basin oil reserves at over 2 billion barrels. Estimates also include the potential for 3.5 million additional barrels waiting to be tapped. In addition, the state?s natural gas deposits are estimated to be in the neighborhood of 2 trillion cubic feet.

What initially whet investors? appetite for BISN shares was the company?s October 30th update business update, when Bison management announced its plans to develop its two Bighorn Basin prospects, located within 10 miles of two giant oil-producing fields owned by Marathon Oil. Known collectively as the ?Independence Prospect,? Bison?s two leases include a 100% working interest and 80% net revenue interest in a total tract measuring 840 acres. Company estimates put potential recoverable crude for the prospect at north of 5 million barrels.

Included in the company?s update was an exploration plan for these leases complete with 2D seismic acquisition, a Seep Study, and 3D seismic to define optimized drilling locations in the targeted Lower Cretaceous Muddy Formation. The Independence Prospect is located along several of the existing structures marbling the area, which are cut by numerous faults. Bison expects the Muddy accumulations to be between 2,000′ to 6,000′ drilling depths, with well-spacing potential at 10 acres per well.

By focusing on historically proven basins and utilizing conventional drilling technology, Bison management believes it can achieve relatively low-cost production with substantially less capital risk than many of its industry peers. And I?m hopeful as well. Having its assets located so close to established industry infrastructure should dramatically reduce the overhead often required to transport oil and connect to a pipeline network. Bison also plans to evaluate the natural gas holdings on its acreage, which may result in a significant additional revenue stream.
In another development that may bode well for Bison, acquisition activity has been notable, with several established heavy hitters in the industry recently buying out mid-level Wyoming producers. Taken together, Breitburn Energy Partners and Linn Energy have recently made production acquisitions in the region of more than $1 billion. Other potential suitors with current production operations in the area include big-time players Chevron, Conoco-Phillips and Royal Dutch Shell.

Shares of BISN began actively trading over-the-counter at the end of October, with solid volume coming in throughout November. The company?s exploration and development plans, coupled with a bullish article on the company in the Oil Stock Journal, drove some steady buy-side interest?despite an ongoing decline in the open market price of crude.



A round of profit-taking kicked in on Friday, pushing BISN shares all the way back down to an intraday low of $0.81?with the entire oil and gas sector under sell pressure during the week. That?s when buyers stepped into the fray once again, bouncing BISN shares back to the $1.05 level where they currently reside.

One of the biggest battles for development-stage companies is trying to accurately determine how much demand there is for their products. In the case of American oil and gas companies there is no such fear. Oil production in the U.S. is on the rise, with domestic energy security one of the few areas where common ground exists on all side of the political spectrum. In fact, it?s estimated that by 2020, roughly half of all U.S. oil demand will be supplied domestically.

As a result, the spotlight should continue to shine on oil and gas production companies?both big and small?with the potential to help supply this growing demand in the years ahead. It?s always difficult to predict how the market will treat the share price of young start-up concerns like Bison, but good news from the company, accompanied by a bump in worldwide oil prices, might make the recent price pullback in BISN shares an attractive entry point for an aggressive investor.

As always, trade BISN and all stocks with care!

Warren Gates, Senior Analyst, Oakshire Financial

Related Articles

10/30/13 -- Tapping Into the Bighorn Basin Boom with Bison Petroleum (BISN)
05/22/13 -- Revisiting The Alaskan North Shore and Polar Petroleum Corp (POLR)
04/30/13 -- Four Reasons For OCTX
05/13/13 -- Getting Stronger with Tungsten
08/26/13 -- On the Lookout For A Gusher With NAMG
08/19/13 -- Getting in on the Ground Floor with PLCSF

Zemanta


The post Bison Forging Ahead With with Bighorn Plans (BISN) appeared first on Oakshire Financial.




more at Oakshire Financial

Reply With Quote Reply With Quote

John Thomas
07-25-2013,
Hugh Hendry is one of the brightest, most entertaining of the long-standing bears and this week he?s grudgingly flipped bullish.

?I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out,? Hendry said.

?I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years? time.?

?I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.?

?I may be providing a public utility here, as the last bear to capitulate.You are well within your rights to say ?sell?. The S&P 500 is up 30% over the past year: I wish I had thought this last year.?

?Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.?

Is this capitulation emblematic of a market top, as Hendry jests above? Is he doing his followers any favors by turning bullish now, after a 40% growth rate in the market?s sentiment toward stocks (expanded PE multiple) backed by very little in the way of earnings, sales or economic growth? Is there anything to gain by such a late-in-the-game admission?

And what if he?s actually been right all along about how at risk everything is? What if future events play out just as he?d been predicting over the last five years after he gives in? Can he turn back? Can he resurrect the old playbook in time should the crash begin shortly?

This game is really hard, even for the smartest guys who play it, guys like Hugh Hendry who can get almost all of the facts right and yet still reach a precisely incorrect conclusion. And if that can happen to him, think about how difficult the prediction game can be for the rest of us.

Source:
Hugh Hendry Capitulates: ?Can?t Look At Himself In The Mirror? As He Throws In The Towel, Turns Bullish (Zero Hedge)

And here is Mr. Hendry in better times for the structural bears ? his greatest hits from the 2011 almost-apocalyptic Eurodebt Crisis:

John Thomas
07-25-2013,
The weekend is a great time to catch up on some long form items that we passed up on during the week. Thanks for checking in.

Lessons

Two dozen things learned from Bill Miller and Monish Pabrai on investing. (25iq)

Ten lessons learned from ten years of investing. (Monevator)

In a world full of randomness, process matters. (Robert Seawright)

Finance

Cognitive fluency: or why investors prefer stocks with fluent stock symbols. (New Yorker)

How to talk to clients hell-bent on investing in hot IPOs. (Enterprising Investor)

An extended interview with Jack Bogle. (Motley Fool)

Economy

Are we now in a post-scarcity economy? (Pieria)

The case for a universal income. (Tim Harford)

A non-monetary explanation for inflation. (Inside Investing)

Making the case for a basic income. (FT Alphaville)

Startups

On the differences between angel investors and venture capitalists. (Points and Figures)

There is a fatal flaw with MOOCs. (Fast Company)

STEM job growth is happening in some surprising places outside of Silicon Valley. (New Geography)

Technology

Just how close are we to the self-driving car age? (New Yorker)

Now human resources is using algorithms to make better hiring decisions. (The Atlantic)

The ways in which Elon Musk and the late Steve Jobs think alike. (Fortune)

Health

The quest to end the flu. (The Atlantic)

The benefits of napping. (Fast Company)

Juice cleanses are a big waste of money. (Slate)

How to avoid getting sick. (Farnam Street)

You should (and why) brush your teeth at work. (Quartz)

How gut bacteria affect the workings of our brains. (NPR)

Food

John Thomas
07-25-2013,
The Chart of the Day is Repligen (RGEN). I found the stock by sorting the New High List for frequency and this stock was right at the top of the list. Since the Trend Spotter signaled a buy on 10/29 the stock gained 19.17%.

It is a life sciences company focused on the development, production and commercialization of high-value consumable products used in the process of manufacturing biological drugs. Their bioprocessing products are sold to major life sciences and biopharmaceutical companies worldwide. They are a leading manufacturer of Protei

John Thomas
07-25-2013,
Dividend investors crave predictability. Once they lock onto payment streams, they don't want to hear about any interruptions. And if a company dares to withhold a quarterly dividend payout, then many investors simply head to the exits.

I discussed this phenomenon recently with regard to Carl Icahn and his big stake in CVR Refining (NYSE: CVRR).

As I noted earlier this month, CVR had a big hiccup with its third-quarter dividend, but it appears positioned to pay out $3 or $4 per unit in dividends next year. Shares trading around $22 don't begin to reflect that potential income.

Amazingly, a virtually identical scenario has just played out with another oil refiner. And the setup is every bit as compelling.

A series of technical problems at a key refinery led to a sharp drop in output for Alon USA Partners (NYSE: ALDW), the master limited partnership (MLP) of Alon Energy (NYSE: ALJ). In fact, the quarterly production was so weak that Alon USA Partners didn't simply make less money -- it lost money. And though investors were bracing for a smaller than usual dividend, they got nothing. Shares of ALDW, which traded up toward the $30 mark in the spring, are now below $14.

John Thomas
07-25-2013,
My dad is in his early 70s. I remember when he was in his 50s and would joke that when he retired, he would be glad to take the spare bunk in my youngest son's room. Luckily, it hasn't come to that.

Like many American seniors, he and my mother, also in her early 70s, are in excellent health and extremely active. They both still work full time. They're not baby boomers. They're part of the smaller pre-boomer generation that was born at the tail end of the Great Depression and during World War II.

They have more in common with their parents than their younger boomer siblings or cousins. On the whole, they seem to be a little tougher, a little more independent and self-sufficient.

Baby boomers, on the other hand, not so much.

From the toy companies of the '50s to the Big Pharma companies of the 1990s hawking erectile dysfunction cures, corporations and their shareholders have consistently profited in a big way by catering to the perceived immediate needs of the biggest bubble of the U.S. population -- all 76 million of them, with another estimated 10,000 baby boomers turning 65 every day over the next 16 years. (My colleague Joseph Hogue wrote about this looming trend this summer in his "Graying of America" series.)

And as the boomers enter their golden years, the needs may change, but the opportunities for investors remain as lucrative as ever.

The Trend is Your Friend
One of the best investment ideas available to capture the upside of the aging Boomer trend is health care real estate investment trust (REIT) Senior Housing Properties Trust (NYSE: SNH). I've followed and recommended this stock for more than a decade.

John Thomas
07-25-2013,
Nose-Blowing Premiums with Kimberly Clark (KMB)

We note that this week, several big-name market hotshots openly mused about the possibility of a nose dive in the markets that could potentially lead to an end of the current global financial system.'

And while that prospect may not be news to readers of these letters ? indeed, Bourbon and Bayonets has been drumming upon that inevitability for some time now ? the fact that all these gurus chose to speak up within a week of each other has got a great many breaking out the home blood-pressure testing kits.

John Thomas
07-25-2013,
Stocks were relatively flat on Friday after U.S. job openings reached a five-year high in September. The Labor Department announced that job postings were up 69,000 to a seasonally adjusted 3.9 million. This surpassed economist?s expectations of 3.85 million openings. Job openings have not seen this level since March 2008. Keeping in line with the positive jobs data, hiring was also up in September. Hiring increased 26,000 to 4.6 million, a level not seen since August 2008. The increase in both numbers suggests that employers are posting more jobs and actively filling the positions. The total filled positions, however, still sits below the 5 million mark, which is the average number in a healthy job market. Brian Jones, senior U.S. economist at Societe Generale, said, ?Things are genuinely getting better. I don?t think we?re at the point where people will quit without having something in hand, but hopefully we?re moving in that direction.?

Shares of Ross Stores (ROST) were dropping after the company announced that they are expecting some stiff competition throughout the holiday season. Competition is growing amongst retailers as more stores are staying open on Thanksgiving and the shopping time between Thanksgiving and Christmas is shorter than normal. Ross said they are expecting fiscal fourth-quarter profits to come in around 97 cents and $1.01 per share. This is below analyst?s expectations of $1.08 per share. They are expecting earnings between $3.83 and $3.87 per share, while analysts were predicting $3.94 per share.

The price for shares of Caterpillar (CAT) were also falling after news was released that federal investigators are beginning a probe accusations that the company has been dumping train parts into the ocean. This dump allegations are allegedly part of a scam in an effort to charge customers for parts they didn?t need. Investigators are beginning to delve in and see if Progress Rail was dumping brake parts along with other items near the Port of Long Beach, in an effort to hide evidence that they were charging owners of rail equipment for replacing parts that were still in good shape. Caterpillar acquired Progress Rail in 2006.

That?s all for the day. Have a great weekend, loyal readers.
All the best,
Jack Aubrey

Related Articles

John Thomas
07-25-2013,
John Authers at the Financial Times writes about a survey carried out Harvard, Columbia and NYU academics looking at the investment behavior of the ultra wealthy retail investor. They look at the period from 2000-2009, monitoring the buys, sells and holds of 115 wealthy investors with an average net worth of $90 million.

Of all the conclusions they had come to, the most interesting one is that despite all of their high-cost advisors and celebrity fund managers (there were 450 investment managers working with the families in the study) and access to the best of everything available, they still managed to lose MORE money than the market during the recent crisis.

People are people, in the end, and no one is safe from the swiftness with which overconfidence turns to panic.

Here?s Authers:

The fascinating question, however, is how they behaved under the extreme stress of the 2008 financial crisis. And they did not show up well. This was one time when rebalancing would have been a great strategy, because it would have forced them to buy stocks near their bottom in the dark months after the Lehman bankruptcy.

But on average, the stock in wealthy investors? portfolios tended to fall by more than the market during the crisis, meaning they had suspended their regular rebalancings and had instead sold even more stock. Some may have been forced to do this by calls from private equity funds for more money, which their investors were obliged to provide during the worst of the crisis.

The median wealthy investor had just as much in cash in mid-2009 as in mid-2007. There was no great move to take evasive action in the months before the disaster unfolded.

No one who?s worked on The Street for a few cycles is really surprised by this, even if it does continue to fascinate.

John Thomas
07-25-2013,
Arbitrage is a financial concept that's been around since the dawn of the time.

Simply put, engaging in arbitrage means buying an asset in one location where it's cheap, then immediately turning around and selling it in a place where it commands a higher price.

With globalization and international trade continuing to play a larger role in today's economy, arbitrage opportunities are getting harder to find... and even when you do spot them, chances are they won't last long.

Yet despite the rarity of these occurrences, this is exactly the kind of opportunity we're seeing in today's natural gas market...

Dave Forest - StreetAuthority's resident commodities expert and Chief Investment Strategist for Junior Resource Advisor -- is so excited about this opportunity that he recently dedicated an entire issue of his premium newsletter to covering it. Said Dave in his November issue of Junior Resource Advisor:

The current situation in natural gas markets is unique. As I write these words, U.S. and Canadian natural gas sells for a paltry $3.50 per thousand cubic feet (Mcf). And yet just across the Pacific in markets such as Japan and Korea, gas is going for nearly $16 -- as measured by the JKM Marker price for liquefied natural gas shipments to these countries.

That kind of geographic price discrepancy is unprecedented in the modern natural resources business.

Given how good people are at moving commodities to take advantage of price discrepancies, it's striking that natural gas markets could be laboring under such a massive regional disconnect. No other good today is in such a predicament. Almost all others have a price that is more or less global.

To be fair, there is a reason for the price discrepancy. Shipping natural gas is a tricky process. It needs to be liquefied and condensed before it can be transported. Then, once it arrives at the destination, it needs to be regasified so it can return to its original state.

As it stands, the United States currently lacks the infrastructure to export large volumes at an economical price. Consequently, most of the gas we produce ends up getting consumed here at home rather than packed up and shipped abroad.

But the arbitrage opportunity in the natural gas market is starting to garner considerable attention from American energy companies. For example, Cheniere Energy (NYSE: LNG) has been working on a natural gas export terminal in Louisiana for the past few years. Freeport LNG -- one of ConocoPhillip's (NYSE: COP) major partners -- is also working on an export terminal after it received a federal permit allowing the company to sell natural gas overseas in May.

All the efforts to move U.S. gas abroad hints at a major investment opportunity in this sector. As Dave went on to say in his issue:

In the U.S. exploration and production sector today, producers are being valued on expectations of a $4 natural gas price.
If gas were to rise to even $6 (still low by global standards), it would cause of flurry of upward revisions to valuations. (Not to mention a rush of investor excitement that could take valuations to more manic levels -- making significant profits for early-in investors.)

Now imagine if U.S. natural gas were to revert to average global prices. Maybe not the $15 we saw in 2006, but, say, $10 (which is probably around the global average for the developed world).

Such a move would represent one of the biggest price increases seen in the commodities space recently. Copper would have a hard time gaining 150% from current levels. I doubt even gold has the juice for such a move. But with natural gas, triple-digit price increases are entirely possible.

Now if you're interested in investing here, there are several ways you can play this trend. For one, you could start by buying companies with considerable investment in shale assets. These are stocks like Chesapeake Energy (NYSE: CHK) and Range Resources (NYSE: RRC) -- both of which control prime acreage in some of the country's top-producing shale fields.

But as we mentioned before, rising production costs are starting to weigh on the economic viability of companies with heavy shale exposure. Since most of these companies are already trading at lofty valuations, an uptick in natural gas prices might not be enough to offset the increase in costs.

John Thomas
07-25-2013,
When I was in elementary school, we called a student who got good grades, stayed out of trouble and embraced his or her position as teacher's pet "Goody Two-shoes."

With that in mind, I'd like to introduce you to a company I like to consider the Goody Two-shoes of insurance companies. It takes few risks, performs admirably and is well liked by some of the most upstanding clients around.

Founded in 1945 by two Illinois schoolteachers, Horace Mann Educators (NYSE: HMN) is an $8.5 billion national multi-line insurance company. Just about every penny comes from public K-12 teachers, administrators and their families in the U.S., a market expected to grow 14% by 2020. The auto, property and casualty segment represents 52% of Horace Mann's business, with commission-generating annuities and life insurance accounting for 39% and 9%, respectively.

About 6 million teachers, administrators and support personnel worked in K-12 in the U.S. in 2012. Another 413,000 college students are planning to become teachers, and 1.2 million are retired. That's a big, loyal, responsible, insurance-buying market that blesses Horace Mann with higher-than-average retention rates, a low rate of paid claims and steady growth of its annuity and life insurance products.

The company gets an A-plus on its third-quarter 2013 figures. Its $8.5 billion in total assets as of Sept. 30, a 4.9% year-over-year increase, is supported mainly by a 17.2% increase in annuity income and an 18.4% increase in life insurance income.

Those numbers look great, but what about competition? Horace Mann certainly has its share of general competition with the likes of Allstate (NYSE: ALL), Travelers (NYSE: TRV) and other insurers. However, Horace Mann's roots are firmly planted among teaching communities, and its competitors haven't made a concerted effort to enter its territory.

Because many former educators still active as PTA members or school board members have become independent agents for Horace Mann, they're on the grounds in more than half of the country's public schools. It's a tight-knit community of professionals who take each other's words as gospel, so Horace Mann agents are likely preaching to the choir on many occasions.

The key to keeping Horace Mann's competition at bay is the constant maintenance of close relationships with school districts and teachers organizations. No other insurance company has even tried to impede on this niche, a factor that serves Horace Mann well in the face of potential price wars from larger companies.

The fact that premiums grew 4% in third quarter 2013 on a year-over-year basis to $152.5 million is proof the strategy is working. Retention rates remain solid at 85% in auto and 89% in property. Those numbers, along with strong growth in annuities and life insurance as well as lower-than-expected paid catastrophe claims, prompted the company to increase its full-year earnings guidance from $1.95 to $2.05 a share.

John Thomas
07-25-2013,
$388.5 billion is a staggering figure. It's more than the entire economy of Thailand, Denmark, Colombia or the United Arab Emirates.
And it's how much operating cash flow was generated by America's top 12 companies in 2012.


Source: Thomson Reuters

Of course, the old adage "It takes money to make money" applies. Many of these companies need to spend billions of dollars in research, infrastructure and other areas to generate that cash flow, and their actual take-home pay is a lot less. Exxon Mobil (NYSE: XOM), for example, spent more than $34 billion on capital expenditures last year, sapping a considerable chunk of its $56 billion in operating cash flow.
As a bit of silver lining, these companies spend much of that on goods and services offered by other companies, creating a virtuous circle of corporate spending. Here are the top 12 capex spenders of 2013.

John Thomas
07-25-2013,
$388.5 billion is a staggering figure. It's more than the entire economy of Thailand, Denmark, Colombia or the United Arab Emirates.
And it's how much operating cash flow was generated by America's top 12 companies in 2012.


Source: Thomson Reuters

Of course, the old adage "It takes money to make money" applies. Many of these companies need to spend billions of dollars in research, infrastructure and other areas to generate that cash flow, and their actual take-home pay is a lot less. Exxon Mobil (NYSE: XOM), for example, spent more than $34 billion on capital expenditures last year, sapping a considerable chunk of its $56 billion in operating cash flow.
As a bit of silver lining, these companies spend much of that on goods and services offered by other companies, creating a virtuous circle of corporate spending. Here are the top 12 capex spenders of 2013.


Source: Thomson Reuters

The number of oil and gas firms in this group explains why an energy services provider like Schlumberger (NYSE: SLB) sports a $120 billion market value, but is not truly a household name.

The True Measure
Unfortunately, even as many Wall Street analysts wisely avoid a simple focus on net profits, their decision to value stocks in the context of operating cash flow is also mistaken. It's irrelevant that Exxon Mobil generated $56 billion in 2012 free cash flow. After capital expenditures are deducted, free cash flow falls by more than half to $22 billion. It's still an impressive figure, but knocks the oil giant from the leaderboard.

Rather than focus on operating cash flow, check out a company's free cash flow, which is the only bankable source of stock buybacks, dividends, acquisitions and debt pay downs. Indeed some of the top-performing stocks in today's market share some of all of those characteristics. Here's a look at the top 12 companies in America in terms of free cash flow.

John Thomas
07-25-2013,
When I was in elementary school, we called a student who got good grades, stayed out of trouble and embraced his or her position as teacher's pet "Goody Two-shoes."

With that in mind, I'd like to introduce you to a company I like to consider the Goody Two-shoes of insurance companies. It takes few risks, performs admirably and is well liked by some of the most upstanding clients around.

Founded in 1945 by two Illinois schoolteachers, Horace Mann Educators (NYSE: HMN) is an $8.5 billion national multi-line insurance company. Just about every penny comes from public K-12 teachers, administrators and their families in the U.S., a market expected to grow 14% by 2020. The auto, property and casualty segment represents 52% of Horace Mann's business, with commission-generating annuities and life insurance accounting for 39% and 9%, respectively.

About 6 million teachers, administrators and support personnel worked in K-12 in the U.S. in 2012. Another 413,000 college students are planning to become teachers, and 1.2 million are retired. That's a big, loyal, responsible, insurance-buying market that blesses Horace Mann with higher-than-average retention rates, a low rate of paid claims and steady growth of its annuity and life insurance products.

The company gets an A-plus on its third-quarter 2013 figures. Its $8.5 billion in total assets as of Sept. 30, a 4.9% year-over-year increase, is supported mainly by a 17.2% increase in annuity income and an 18.4% increase in life insurance income.

Those numbers look great, but what about competition? Horace Mann certainly has its share of general competition with the likes of Allstate (NYSE: ALL), Travelers (NYSE: TRV) and other insurers. However, Horace Mann's roots are firmly planted among teaching communities, and its competitors haven't made a concerted effort to enter its territory.

Because many former educators still active as PTA members or school board members have become independent agents for Horace Mann, they're on the grounds in more than half of the country's public schools. It's a tight-knit community of professionals who take each other's words as gospel, so Horace Mann agents are likely preaching to the choir on many occasions.

The key to keeping Horace Mann's competition at bay is the constant maintenance of close relationships with school districts and teachers organizations. No other insurance company has even tried to impede on this niche, a factor that serves Horace Mann well in the face of potential price wars from larger companies.

The fact that premiums grew 4% in third quarter 2013 on a year-over-year basis to $152.5 million is proof the strategy is working. Retention rates remain solid at 85% in auto and 89% in property. Those numbers, along with strong growth in annuities and life insurance as well as lower-than-expected paid catastrophe claims, prompted the company to increase its full-year earnings guidance from $1.95 to $2.05 a share.

The stock is up 43% this year to date and 59% over the past 12 months. On top of steady growth and healthy earnings, HMN delivers a 2.7% dividend. That's supported by a 28% payout ratio, so management has room to boost the dividend. Currently trading above its 50- and 200-day moving averages, HMN has momentum heading into 2014.

John Thomas
07-25-2013,
When I was in elementary school, we called a student who got good grades, stayed out of trouble and embraced his or her position as teacher's pet "Goody Two-shoes."

With that in mind, I'd like to introduce you to a company I like to consider the Goody Two-shoes of insurance companies. It takes few risks, performs admirably and is well liked by some of the most upstanding clients around.

Founded in 1945 by two Illinois schoolteachers, Horace Mann Educators (NYSE: HMN) is an $8.5 billion national multi-line insurance company. Just about every penny comes from public K-12 teachers, administrators and their families in the U.S., a market expected to grow 14% by 2020. The auto, property and casualty segment represents 52% of Horace Mann's business, with commission-generating annuities and life insurance accounting for 39% and 9%, respectively.

About 6 million teachers, administrators and support personnel worked in K-12 in the U.S. in 2012. Another 413,000 college students are planning to become teachers, and 1.2 million are retired. That's a big, loyal, responsible, insurance-buying market that blesses Horace Mann with higher-than-average retention rates, a low rate of paid claims and steady growth of its annuity and life insurance products.

The company gets an A-plus on its third-quarter 2013 figures. Its $8.5 billion in total assets as of Sept. 30, a 4.9% year-over-year increase, is supported mainly by a 17.2% increase in annuity income and an 18.4% increase in life insurance income.

Those numbers look great, but what about competition? Horace Mann certainly has its share of general competition with the likes of Allstate (NYSE: ALL), Travelers (NYSE: TRV) and other insurers. However, Horace Mann's roots are firmly planted among teaching communities, and its competitors haven't made a concerted effort to enter its territory.

Because many former educators still active as PTA members or school board members have become independent agents for Horace Mann, they're on the grounds in more than half of the country's public schools. It's a tight-knit community of professionals who take each other's words as gospel, so Horace Mann agents are likely preaching to the choir on many occasions.

The key to keeping Horace Mann's competition at bay is the constant maintenance of close relationships with school districts and teachers organizations. No other insurance company has even tried to impede on this niche, a factor that serves Horace Mann well in the face of potential price wars from larger companies.

The fact that premiums grew 4% in third quarter 2013 on a year-over-year basis to $152.5 million is proof the strategy is working. Retention rates remain solid at 85% in auto and 89% in property. Those numbers, along with strong growth in annuities and life insurance as well as lower-than-expected paid catastrophe claims, prompted the company to increase its full-year earnings guidance from $1.95 to $2.05 a share.

The stock is up 43% this year to date and 59% over the past 12 months. On top of steady growth and healthy earnings, HMN delivers a 2.7% dividend. That's supported by a 28% payout ratio, so management has room to boost the dividend. Currently trading above its 50- and 200-day moving averages, HMN has momentum heading into 2014.



Risks to Consider: Horace Mann's narrow focus can also be a negative in the event budget cuts and reduced funding for public school districts lead to layoffs. The company doesn't currently have plans to broaden its scope, but it plans to fine-tune its products within education next year.

Action to Take --> HMN met resistance after hitting its high for the year on Oct. 21 of $31.03, pulling back some 10% over the next 10 days. I'd buy the stock once it resumes momentum at that Oct. 21 level.

- Karen Canella

Related Articles

Get Value And Growth With This Niche Insurer
Forget Amazon -- Buy This Stock Instead
Profit From ID Theft -- Legally -- With This Stock





StreetAuthority.com

StreetAuthority spends over a million dollars on research each year and employs a team of experts across the U.S. and Canada. Before joining, these experts worked as senior analysts for Wall Street firms, financial advisors, investment relations presidents, and business reporters for major newspapers. As a result, they're able to uncover rare, profitable and compelling investing opportunities that you aren't likely to find anywhere else. Their research is presented in simple, easy-to-understand language without the typical Wall Street double talk.

__________________

Highly recommend, unconventional trading service:

Trading Coach Sam Johnson demonstrates the #1 Passive Income Strategy for Traders

Reply With Quote Reply With Quote

John Thomas
07-25-2013,
Graphic via Fidelity Investments, great reference:

John Thomas
07-25-2013,
For many market strategists, the Federal Reserve's multi-trillion-dollar stimulus program has had one huge drawback.

The Fed's massive quantitative easing (QE) programs have rendered what's known as the yield curve utterly useless -- and that's left everyone in the dark as to just how healthy or weak the U.S. economy remains.

The good news: The Fed's looming retrenchment from stimulus will let the yield curve take its natural shape again, helping investors to better navigate a confounding market environment. (Surging stocks and weak economic data do no typically go hand in hand.) You'll be hearing a lot about the yield curve in 2014, so to better understand its looming implications, let's brush up on the concept now.

What Kind Of Slope?
Bond investors typically demand a higher interest rate for longer-term securities. After all, in an uncertain world, longer time horizons bring a greater chance that something can go wrong. (And if we're talking about bonds, then we're talking about the corrosive effects of inflation or an expectation of much higher bond issuance by Uncle Sam and others.)

So a yield curve is simply the slope of interest rates on short- to mid- to long-term bonds. A healthy yield curve implies an economy poised for growth, and typically looks like this:

John Thomas
07-25-2013,
Stuff I?m Reading this Morning?

A high level sector look at what top hedge funds bought and sold leading into Q4. (FactSet)

Pros polled by Bloomberg are big-time worried about a bubble. (Bloomberg)

Samsung gets nailed in patent suit, forced to pay $290 million to Apple, which has absolutely no idea what to do with more cash at the moment. (NYP)

All kidding aside, Marissa hasn?t done much to improve Yahoo?s core business, the stock price is 75% ?Asian assets? and 25% her. (CNNMoney)
Dan Loeb buys stake in Japan?s Softbank as a way to play Alibaba?s IPO. Details here: (Reuters)

Using Holiday Sales Forecasts as an Investment Tool is Pointless (YourWealthEffect)

Paulson?s gold hedge fund is now down 63% year-to-date yet is still capable of generating hilarious headlines. (Bloomberg)

The fact that Wall Street guys are still passing around Pessimism Porn charts says we?re not quite in a bubble yet. (BusinessInsider)

Finra is cracking down on ?high risk? or ?rogue brokers? (WSJ)

Ken Fisher: If the broker-dealers get control of the RIA world via regulatory oversight, kiss your ass goodbye. (ThinkAdvisor)

How Wall Street?s changed since the crisis, great chart. (CNBC)

$48M in cocaine washes ashore in Japan (NYP)

John Thomas
07-25-2013,
One of the coolest things about the stock market is that money can be made regardless of the direction of a stock. I've often heard investors lament that they missed a sharp upward move.

Often, these same investors will commit the investing sin of chasing stocks that have made extreme short-term moves to the upside in the hope of momentum carrying shares even higher. While upward momentum can and does take stocks higher, more often than not, prices will quickly retrace the upward spike.

This leaves the stock chasers jumping from one hot stock to the next, wondering why many of their investments are losers.
One solution to this dilemma is to learn how to short. Shorting allows investors to profit from downward moves in price. For those of you unfamiliar with shorting stocks, my recent article on shorting biotech stocks describes the method. The same tactic can be applied to any stock, regardless of sector.

Stocks that have spiked higher often drop in price. This is particularly true if the increase is due to questionable news, hype or other dubious reasons. Just like the stock chasers, short sellers scan the market for stocks that have soared higher in a short time.
Next, these rocketing stocks are researched to determine whether the move was warranted and will be sustained. Sometimes the move is in reaction to a real event, but the shares simply become overextended. Other times, the upward move will be due to hype or any number of questionable reasons. These are the ideal short candidates.

Keep in mind that stocks can simply keep climbing higher, no matter how dubious the reasons. This is why stop-loss orders are critical when shorting.

I think InterCloud Systems (Nasdaq: ICLD) looks like an ideal short candidate of the overextended variety. Its share price recently spiked from a low of $2.20 to a high of $16.69 in just the past week. That's a gain of more than 650%.

InterCloud is a global provider of cloud, managed and professional consulting services for technology companies. It helps support the operation of enterprise, fiber optic, Ethernet and wireless networks. The stock moved from the OTC market to the Nasdaq on Oct. 31 after raising $5 million in a public stock offering.

A massively successful third quarter is what fueled the upward spike. The company reported that revenue increased by 448%, to $16.2 million; gross profits hit $5.5 million, crushing the $1.2 million from a year ago; and net income was $0.26 a share, compared with a loss of $2.16 a share a year ago. While these are compelling numbers, I think the share price increase is unsustainable, primarily due to the daily chart pattern.

John Thomas
07-25-2013,
Watch Those Monetary Aggregates!

Call me a nerd, but instead of spending my Sundays watching football, I pour over data analyzing the monetary aggregates. That?s a tough thing to say for someone whose dad was a lineman on the University of Southern California?s legendary 1947 junior varsity football team.

This is so I can gain insights into the future performance of assets classes. What I am seeing these days is not just unusual, it?s bizarre. Call it a double reverse, a Hail Mary, and a Statue of Liberty all combined into one.

You can clearly see the impact of QE2 at the end of 2010 on the chart below, which caused the monetary base to explode and triggered a six month love fest for all risk assets. Hard asset prices, like energy, commodities, the grains, and precious metals did especially well, leading to fears of resurging inflation. This prompted the European Central Bank to commit a massive policy blunder by raising interest rates twice. The US dollar (UUP) was weak for much of this time.

When quantitative easing ended in June of that year, not only did the base stop growing, it started shrinking. Hard assets rolled over like the Bismarck, and gold peaked in August. No surprise that when you take away the fuel, the fire goes out. And guess what else happened? The dollar began an uptrend that continues unabated.

So what happens next? Given the continuing strength of the economic data, I think that the prospects of a taper have been greatly diminished. Not only has it been taken off the back burner, the flame has been extinguished and the pot put back into the cupboard.

Needless to say, if this trend continues it will have an inflationary impact on the global economy as a whole, and ?RISK ON? assets specifically. It?s simply a question of supply and demand. Print a lot more dollars and you create a supply shortage of other assets, forcing bidders to pay up.

John Thomas
07-25-2013,
!

Call me a nerd, but instead of spending my Sundays watching football, I pour over data analyzing the monetary aggregates. That?s a tough thing to say for someone whose dad was a lineman on the University of Southern California?s legendary 1947 junior varsity football team.

This is so I can gain insights into the future performance of assets classes. What I am seeing these days is not just unusual, it?s bizarre. Call it a double reverse, a Hail Mary, and a Statue of Liberty all combined into one.

You can clearly see the impact of QE2 at the end of 2010 on the chart below, which caused the monetary base to explode and triggered a six month love fest for all risk assets. Hard asset prices, like energy, commodities, the grains, and precious metals did especially well, leading to fears of resurging inflation. This prompted the European Central Bank to commit a massive policy blunder by raising interest rates twice. The US dollar (UUP) was weak for much of this time.

When quantitative easing ended in June of that year, not only did the base stop growing, it started shrinking. Hard assets rolled over like the Bismarck, and gold peaked in August. No surprise that when you take away the fuel, the fire goes out. And guess what else happened? The dollar began an uptrend that continues unabated.

So what happens next? Given the continuing strength of the economic data, I think that the prospects of a taper have been greatly diminished. Not only has it been taken off the back burner, the flame has been extinguished and the pot put back into the cupboard.

Needless to say, if this trend continues it will have an inflationary impact on the global economy as a whole, and ?RISK ON? assets specifically. It?s simply a question of supply and demand. Print a lot more dollars and you create a supply shortage of other assets, forcing bidders to pay up.

John Thomas
07-25-2013,
We are about to get some wild, seasonal gyrations to the jobs numbers, and I think you will be well advised to know about them in advance.
A large part of our economy is moving online more rapidly than most people and governments realize. According to ComScore, a marketing data research firm, online sales leapt by 15% to $35.3 billion during the last November-December holiday period, an all-time high.

I speak from a position of authority here as I happen to run one of the most successful financial sites on the Internet, which I kicked off four years ago with a $500 investment.

Much of this migration is being captured by FedEx and UPS, the nexus at which Internet commerce meets the real world. After all, virtual products require a real world delivery. This explains why the couriers are seeing a booming business in an otherwise flat economy. FedEx (FDX) hired 10,000 temporary workers to deal with the last Christmas surge in 2012, a gain of 18% over the same period the previous year. UPS added a stunning 55,000, a 10% increase.

Watch for the other shoe to drop. That will become apparent when that the newly hired become the newly fired, leading to a sudden and rapid deterioration of the jobs data. This could be the information the stock market and other risk assets need to put in a top for the year. The scary part is that this may happen sooner than you think.

John Thomas
07-25-2013,
The Chart of the Day is AmerisourceBergen (ABC) is the Chart of the Day. I found the stock by sorting the New High List for frequency then used the flipchart feature to find the chart I liked. Since the Trend Spotter signaled a buy on 9/9 the stock has gained 18.90%.

It is a pharmaceutical services companies serving the United States, Canada and selected global markets. Servicing both pharmaceutical manufacturers and health care providers in the pharmaceutical supply channel, the Company provides drug distribution and related services designed to reduce costs and improve patient outcomes. It's service solutions range from pharmacy automation and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education.

John Thomas
07-25-2013,
$388.5 billion is a staggering figure. It's more than the entire economy of Thailand, Denmark, Colombia or the United Arab Emirates.
And it's how much operating cash flow was generated by America's top 12 companies in 2012.


Source: Thomson Reuters

Of course, the old adage "It takes money to make money" applies. Many of these companies need to spend billions of dollars in research, infrastructure and other areas to generate that cash flow, and their actual take-home pay is a lot less. Exxon Mobil (NYSE: XOM), for example, spent more than $34 billion on capital expenditures last year, sapping a considerable chunk of its $56 billion in operating cash flow.

As a bit of silver lining, these companies spend much of that on goods and services offered by other companies, creating a virtuous circle of corporate spending. Here are the top 12 capex spenders of 2013.

John Thomas
07-25-2013,
One of the boldest energy predictions of the past 10 years is about to become reality.

According to the International Energy Agency, the U.S. will eclipse Russia and Saudi Arabia and become the world's top oil producer by 2015. And looking forward, that trend is going to accelerate, with the agency saying that booming production has the U.S. on track for energy independence in 20 years.

But while that bullish trend will give energy companies a big boost, it's also going to have a huge effect on local and regional economies. High-production states such as North Dakota, South Dakota and Nebraska already enjoy the lowest levels of unemployment in the country. And as energy companies continue to add tens of thousands of new employees, those strong local and regional economies will fuel record demand for temporary housing, permanent housing and commercial real estate.

That's why I'm bullish on a little-known group of real estate investment trusts (REITs) that are exclusively focused on strong regional economies in position to profit from the North American shale boom.

Not only do these REITs have the ability to produce big gains, but they also carry some of the industry's biggest yields that are more than double the yield of the 10-year Treasury.

And that is creating a big opportunity for investors.

Here are two high-yield regional REITs ready to profit from the North American shale boom.

Investors Real Estate Trust (NYSE: IRET)
Investor Real Estate Trust is a mixed bag of commercial and residential assets, owning and operating multi-family residential properties and medical, retail and industrial properties. The REIT is a direct play on some of the strongest regional economies, with operations in a dozen states across the upper Midwest and the Rockies.

John Thomas
07-25-2013,
The main character in Kurt Vonnegut, Jr.'s 1965 book, God Bless You, Mr. Rosewater, is an eccentric philanthropist. He thinks it's unfair that babies don't all start with an equal playing field.

"I think it's a heartless government that will let one baby be born owning a big piece of the country, the way I was born, and let another baby be born without owning anything." To rectify this perceived injustice, he sends one share of stock to each newborn child in the country.
Wouldn't that be a nice start.

Don't get me wrong. I know a single share of stock doesn't amount to much. Even a share of $1,000-plus Google (Nasdaq: GOOG) stock wouldn't go too far if you had to live off of it.

But there is a well-known way that you can stretch your investment -- even if it starts as a single share -- to where it can more than provide for any needs you might have.

Unfortunately, it's my experience that not too many investors take advantage.

The Secret to Lasting Income
So how can you make your investment -- no matter how small initially -- turn into something that you can actually afford to live on? Simple: Reinvest its dividends.

I know. It's not groundbreaking. But are you actually doing it?

Unless you absolutely need the cash now, reinvesting is invaluable.

Dividends are one of the most powerful wealth-building tools in an investor's arsenal because of the phenomenon of compounding. By reinvesting your dividend checks (instead of cashing them), you can buy more shares, which lead to even larger dividend checks. These larger checks can then be used to buy even more shares and so on. In time, even a small stake in such stocks can grow into a tidy sum.

(Reinvesting your dividends is a cinch. In fact, many dividend payers do it automatically -- and if they don't, just give your broker a call and he'll take care of it for you in a matter of seconds.)

Take a look at my chart to see what happens to a $20,000 investment earning a 7% annual yield that's reinvested.

John Thomas
07-25-2013,
Quote of the day

Aswath Damodaran, ?The more comfortable you are in valuing a company, the less point there is to doing that valuation.? (Musings on Markets)

Chart of the day



The rough year for TIPS. (WSJ also CBP)

Markets

Energy stocks have disengaged from the price of crude oil. (Charts etc.)

We may have already seen the bottom in gasoline prices. (Time)

Is there a Friday the 13th effect in the stock market? (Priceonomics Blog)

Strategy

On finding investment ideas. (Aleph Blog)

On the appeal of autopilot investment programs. (Unexpected Returns)

Portfolio rebalancing is not a one-size-fits-all deal. (Capital Spectator)

Companies

Why Black Friday sales have leaked into the middle of November. (Daniel Gross)

To say that Brookfield Asset Management?s ($BAM) financials are complicated would be an understatement. (SIRF)

The battle over Odyssey Marine Exploration ($OMEX). (Business Insider)

John Thomas
07-25-2013,
Years ago, as I was strolling on a beachside boardwalk, I looked around and realized I was the only person in my area not wearing Crocs (Nasdaq: CROX), the somewhat ugly plastic shoes that had become all the rage. Clearly, these folks were not alone: Sales of Crocs soared from $14 million in 2004 to $355 million in 2006.

Even though sales would rise another 139% in 2007 (to $847 million), investors who bought in while growth remained above 100% learned a terrible lesson. All fashion fads end -- sometimes very badly.

John Thomas
07-25-2013,
From David Kostin?s GS Portfolio Strategy Research note this morning:

Target: S&P 500 will rise 6% and reach 1900 at year-end 2014
Our forecast return reflects 8% growth in EPS to $116 coupled with an
essentially flat forward P/E multiple near 15x. Looking further ahead,
extended growth in sales, earnings, and the economy will lift the P/E to 16x
and S&P 500 will reach 2100 by year-end 2015 and 2200 by year-end 2016.

Path: Drawdown risk rising after 40% rally with no correction
S&P 500 has soared 26% YTD. The median expected drawdown equals 6%
in the next three months and 11% during the next 12 months. Drawdowns
of these magnitudes from the current level would equate to 1700 and 1600.
We estimate a 67% probability of a 10% drawdown at some point in 2014.

Fundamentals: Improving US economy and rising earnings
US GDP growth will accelerate to 3% in 2014. Fed taper will start in March.
Buybacks and dividends will grow by 25% to $960 billion and account for
45% of cash usage by S&P 500 firms in 2014, the highest share since 2007.

Four strategies for a stock market trading at fair value
(1) Russell 1000 Growth will outperform Russell 1000 Value as earnings
growth decelerates; (2) Firms with low recent capex but high ROIC that will
grow investment spending in 2014 are positioned for sustainable growth;
(3) Firms with high buyback yields will benefit as cash returns to investors;
(4) Firms with high degree of operating leverage will benefit most from
acceleration in sales growth.

John Thomas
07-25-2013,
Pairs trading, once mainly a strategy for institutions, became possible for individuals with the advent of the Internet, thus giving all traders access to a wealth of real-time information and online brokerages.

It is a market-neutral strategy that takes advantage of a certain imbalance in the stocks, funds, bonds, commodities or currencies in focus. In other words, it does not depend on the broader market making a directional move.

Pairs trading involves a long position and a short position in a pair of highly correlated assets, and the strategy is thought to lower risk because it creates a natural hedge.

Traditionally, investors would look for two stocks in the same sector, preferably in the same subsector, that showed good positive correlation. Therefore, if the two stocks were to diverge, a pairs trader would buy the stock of the underperforming company and sell short the stock of the outperforming company. The trade would be profitable if the spread between the two stocks narrowed (that is, the stocks' prices again moved closer together). Looked at this way, pairs trades are simply market bets on a mean-reversion move.

Another pairs trading strategy is to bet on the continued outperformance of one stock versus another. Today's pairs trading idea is to go long Exxon Mobil (NYSE: XOM) and short Chevron (NYSE: CVX).

Both companies operate in the same sector (energy), as well as in the same subsector (integrated oil companies). Not surprisingly, their stocks have historically moved in tandem. Looking at the weekly chart of XOM (blue) and CVX (red), we can see the positive historical correlation between the two.

John Thomas
07-25-2013,
Stuff I?m Reading this Morning?

Everyone?s talking about this massive Goldman forex trading loss from the no-taper Fed meeting. (ValueWalk) and (Reuters) and (WSJ)

How to play a potential bank rally as rates go higher. (ETFTrends)

Goldman?s 10 themes for 2014. (PragCap)

SAC?s employee number one under the microscope this week at the never-ending insider trading trial. (DealBook)

David Merkel peels back the curtains a bit, here?s how he generates investment ideas. (AlephBlog)

Another day, another bullshit artist with a stock-picking software system. (BrokeandBroker)

Why not tie the taper to deficit reduction? (DrEdsBlog)

The world?s most powerful computer is being wasted on Bitcoin. (Gizmodo)

Whoa ? 70% of SnapChat users are female. Wait, actually that makes sense? (Digits)

REMINDER: Backstage Wall Street is now on Kindle!


The Reformed Broker

John Thomas
07-25-2013,
The below is an amazing and true story written by Bryan Taylor, Ph.D. and Chief Economist for*Global Financial Data. I?ve asked one of the site?s proprietors, Ralph Dillon, to allow me to guest-post it here on TRB.

The tale you are about to read weaves together a fascinating and obscure financial scandal with the death of JFK, I hope you enjoy it!
- JB

***

Fifty years ago, John F. Kennedy was assassinated on Friday, November 22, 1963 in Dallas, Texas. The assassination not only shocked the nation, but shook the stock market as well. However, very few people have heard about The Great Salad Oil Swindle which nearly crippled the New York Stock Exchange that weekend. Officials at the NYSE took advantage of the closure of the exchange to keep the crisis caused by the swindle from spreading further. Here is what happened at the NYSE while the nation focused on the President?s funeral.

Salad Oil, Cornered and Quartered
The Great Salad Oil Swindle was carried out by Anthony ?Tino? De Angelis, who traded vegetable oil (soybean oil) futures which was an important ingredient in salad oil. De Angelis had previously been involved in a swindle involving the National School Lunch Act and the Adolph Gobel Co. When it was discovered that he had overcharged the government and delivered over 2 million pounds of uninspected meat, he ended up bankrupt. Con-men don?t stop being cons, they just try to learn from their mistakes and make more money the next time around.

Tino de Angelis had learned that government programs were a way to make easy money, so he started the Allied Crude Vegetable Oil Refining Co. in 1955 to take advantage of the U.S. Government?s Food for Peace program. The goal of the program was to sell surplus goods to Europe at low prices. Initially, De Angelis sold massive quantities of shortening and other vegetable oil products to Europe, and when this worked, he expanded into cotton and soybeans.

By 1962, De Angelis was a large enough player in commodity markets that he thought he could corner the soybean oil market, allowing him to make even more money. Always the schemer, De Angelis?s plan was to use his large inventories of commodities as collateral to get loans from Wall Street bank and finance companies. Buying soybean oil futures would drive up the price of his vegetable oil holdings, which would increase both the value of his inventories and allow him to profit from his futures contracts. De Angelis could use these profits not only to line his own pockets, but to pay his staff, make contributions to the community, and in one case, pay the hospital bill of a government official.

American Express had recently created a new division that specialized in field warehousing, which made loans to businesses using inventories as collateral. American Express wrote De Angelis warehouse receipts for millions of pounds of vegetable oil, which he took to a broker and discounted the receipts for cash. This proved to be an easy way to get money, so De Angelis began falsifying warehouse receipts for vegetable oil he didn?t have.

American Express sent out inspectors to make sure that De Angelis had the vegetable oil that acted as collateral, but what they didn?t know is that many of the tanks were filled mostly with water with a minimum of oil floating on the top to fool the inspectors, or that some of the tanks were connected with pipes to other tanks so the oil could be transferred between tanks when the inspectors went from one tank to the other.

If American Express had done their homework, they would have realized that De Angelis?s reported vegetable oil ?holdings? were greater than the inventories of the entire United States as reported by the Department of Agriculture. Unsatisfied with the American Express loans, De Angelis was able to get additional loans from Bunge Ltd., Staley, Proctor and Gamble, and The Bank of America. By the time the swindle collapsed, De Angelis had gotten loans from a total of 51 companies.

No Salad Today
As a result of attempted bribery, delivery mistakes, and other factors, the inspectors were eventually tipped off about De Angelis?s fraud. Allied Crude was supposed to have $150 million in vegetable oil as collateral, but only had $6 million. When the inspectors found water in the tanks, and not oil, the gig was up.

The futures market crashed. Soybean oil closed at $9.875 on Friday, November 15, at $9 on Monday and $7.75 on Tuesday, November 19, wiping out the entire value of the De Angelis loans. As you might guess, De Angelis?s company had been losing money all along, and the loans were used to cover these mounting losses. De Angelis?s goal was to sell out at the top and cover all of his losses, but of course, his plan didn?t work out that way. The crash of the soybean oil market in November 1963 is shown below.

John Thomas
07-25-2013,
Here at StreetAuthority, we're constantly on the lookout for stocks worthy of our Top 10 Stocks advisory -- and a stock doesn't attain that status by accident.

One energy company in particular is a perennial Top 10 Stocks favorite. I profiled this company two years ago, calling it "the safest oil stock to buy." The results since then haven't been bad at all.

Including dividends, investors who held shares of ConocoPhillips (NYSE: COP) enjoyed a compound annual growth rate of 31.8%, handily outperforming the S&P 500 Index's rate of 27.3%.

One might think that COP's chart indicates its run is done. Quite the contrary.

John Thomas
07-25-2013,
"There's no shame in holding cash."

It's a refrain you hear from many fund managers these days after witnessing the market grind ever higher. And no hedge fund manager has uttered that phrase more than Baupost Capital's Seth Klarman. The legendary value investor has actually started returning money to clients, finding few real bargains in this market.

But when Klarman does spot an investment opportunity, he goes big. Lately, he's been building sizable stakes in a pair of young companies that few would consider to be deep value plays. They are contrarian plays from a contrarian investor.

Idenix: A Blockbuster Or A Blowup?
An estimated 150 million people are infected with hepatitis C, making it one of the most widespread diseases in the world for which current treatments are considered to be inadequate. Though there are current treatments such as Interferon, a recent Wall Street Journal article noted that "a growing number of people infected with hepatitis C are putting off therapy, choosing instead to roll the dice and wait for a new generation of drugs to become available."

First out of the gate is Gilead Sciences (Nasdaq: GILD) and its sofosbuvir drug, which got a 15-0 thumbs-up last month from an FDA advisory panel. AbbVie (Nasdaq: ABBV) is expected to seek FDA approval for its own hepatitis C drug in 2014.

But Klarman thinks Idenix Pharmaceuticals (Nasdaq: IDIX), with its hepatitis C drug candidate IDX20963, could be the blockbuster in this market. He started buying shares of Idenix in 2011, and thanks to ongoing buying efforts (including a purchase of 3 million shares in this year's third quarter), now owns nearly 30 million shares, worth roughly $135 million at current prices. That makes him the company's largest stockholder.

John Thomas
07-25-2013,
For a landlord, there's absolutely no better tenant than this one.

Every year, the 12,000 employees at the U.S. government's General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he's also the nation's largest renter.

The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash flow, which translates into a rock-solid 7% dividend yield for investors. That's a lot of reward for little risk.

I'm talking about Government Properties Income Trust (NYSE: GOV), a real estate investment trust (REIT) that leases more than 10 million square feet spread across 82 buildings, mostly to the public sector. (Roughly 68% of revenues are derived from the U.S. government, another 20% from state governments, 7% from the private sector, and 5% from the United Nations).

A sample of tenants includes:

-- The Centers for Disease Control (CDC) in Atlanta
-- Many of the Federal Bureau of Investigation's (FBI) satellite offices
-- A U.S. Army Logistics Center
-- The state of Oregon's capital complex

Apparently, business is good. While the national office building vacancy rate hovers at around 14.8%, according to Reis.com, this landlord has a vacancy rate around 7%. Equally important, this REIT's vacancy rate tends to be stable in any economic climate compared to commercial office buildings, which saw a spike in the vacancy rate up to the 18% to 20% range when the U.S. economy slowed in 1987, 1991, 2002 and 2009.

And GOV's key tenant is staying put. In the most recent quarter, the average lease renewal was for a term of 20 years.

With government spending under pressure, it's fair to wonder if GOV might start to see government tenants consolidate into fewer office spaces. "We really are not seeing impact specifically on our properties from sequester," noted CEO David Blackmon on a recent conference call, adding that "the buildings we have in the D.C. market tend to be relatively strategic to the government tenants. So fortunately for us, it hasn't had a real effect on occupancy at our portfolio."

Wondering how can GOV afford to pay out such robust dividends? The answer lies in the company's judicious use of debt leverage. Thanks to locked-in cash flows, GOV can borrow at low interest rates, and a debt-to-EBITDA ratio of 3.5 means that a little equity goes a long way. Over the past three years, GOV has generated net profit margins in excess of 20%. In contrast, Boston Properties (NYSE: BXP), the country's largest office REIT, has net profit margins in the 10% to 15% range.

Minimal organic growth
To be sure, the government's need for office space is likely to remain stable, but isn't expected to grow in coming years.

John Thomas
07-25-2013,
"Water, water everywhere, nor any drop to drink."

This line from Samuel Taylor Coleridge's poem "The Rime of the Ancient Mariner" is apropos not only for those lost at sea but for the Earth in general.

The Earth is indeed the "water planet," with more than 70% of its surface covered with the liquid. However, more than 97% of this water is unusable salt water, meaning freshwater accounts for less than 3% of the world's supply. Of that total, more than 70% is frozen, resulting in a very limited supply of usable freshwater. Only 0.007% of all of Earth's water is available for human use.

John Thomas
07-25-2013,
BAML: Here comes the big bank breakout

I?ve been talking about the idea that banks would / should lead the market into the next leg of the rally for a few weeks now. It appears that this breakout for the big bank stocks ? which had been trapped at resistance since July ? has already gotten underway. While most traders reference the XLF financial sector SPDR ETF when talking about bank stocks, the KBW Index is really the grandaddy, the old school traders? standard.

Here?s BAML?s ace technical strategist Stephen Suttmeier with an important call on that index:

The KBW banks Index (BKX) is consolidating within the rising channel from late 2012 and is set up for a breakout that would set up a rally to channel resistance at 74-75. A break above 67 for the BKX would would complete the bullish consolidation?
Also, a steepening of the yield curve (10-year Treasury yields minus 2-year Treasury yields) tends to coincide with stronger relative price performance for the BKX vs. the S&P 500.

Here?s Stephen?s chart of the yield curve vs the BKX : S&P 500 ratio:

John Thomas
07-25-2013,
Stocks remained relatively unchanged on Wednesday as U.S. retail sales were up in October. The Commerce Department announced that sales were up 0.4% in October surpassing economists expectations of a 0.1% increase. The increase in retail sales was the largest gain in nearly four months. One element dragging on the index was gasoline sales. They were at the lowest levels in over two years. This was partially attributed to the cheaper price of gasoline resulting in a lower price tag at the pump. Fuel sales were down 0.6% in October. When subtracting gas, sales were up 0.5%. Gennadiy Goldberg, a strategist with TD Securities, said, ?The stronger retail sales figure were driven by solid performance of furniture (1.0%) and electronics (1.4%) sales during the month. Clothing sales and eating and drinking also rose 1.4% and 1.0%, respectively.We believe stronger performance of these categories may have been a factor of consumers using the savings from lower gasoline prices to finance additional purchases or of retailers clearing inventories. If the former is true, with gasoline prices likely to remain contained in the near-term, we may see stronger consumption trends persist over the next few months.? There was also a revise of September?s sales data from the original decline of 0.1% to a flat 0.0%.

General Motors (GM) announced they will re-innovate their small pickup truck, the Chevrolet Colorado. GM revealed the model at the Los Angeles Auto Show on Wednesday morning. The new model has very little in common with the older version; the 2015 Colorado weighs in roughly 900 pounds less than the original model and is 16 inches shorter. It comes with bike racks and other modern accessories that GM hopes will attract ?lifestyle buyers,? as the company calls them. They are aiming to create their success of the company?s well known Forester SUV. Sales of the smaller SUV are up nearly 61% in the past two years. Alan Batey, senior vice president of Global Chevrolet, said, ?If there was a brand, a domestic brand, that could fill that space and really provide those types of things, we thought Chevy was a good place to do it.? GM are also looking to attract those individuals who need a smaller truck, one that is not as big as the Silverado or the GMC Sierra. Batey continued to say, ?We didn?t want to just create a really pretty truck that?s accessorized but can?t do anything.?

J.C. Penney (JCP) announced that their net income loss for the third-quarter was more than they were expecting. The company reported a net loss of $489 million, or $1.94 per share. This is a substantial loss compared to this time last year when net income dropped $123 million or $0.56 per share. The company did say that sales for the coming quarter are still encouraging. J.C. Penney is expecting to have more than $2 billion in liquidity at the end of this year. Shares of the stock were still trading higher as expectations remained high for positive comparable-store sales in the fourth-quarter.

That?s all for the day.
All the best,
Jack Aubrey, Oakshire Financial

John Thomas
07-25-2013,
Stocks remained relatively unchanged on Wednesday as U.S. retail sales were up in October. The Commerce Department announced that sales were up 0.4% in October surpassing economists expectations of a 0.1% increase. The increase in retail sales was the largest gain in nearly four months. One element dragging on the index was gasoline sales. They were at the lowest levels in over two years. This was partially attributed to the cheaper price of gasoline resulting in a lower price tag at the pump. Fuel sales were down 0.6% in October. When subtracting gas, sales were up 0.5%. Gennadiy Goldberg, a strategist with TD Securities, said, ?The stronger retail sales figure were driven by solid performance of furniture (1.0%) and electronics (1.4%) sales during the month. Clothing sales and eating and drinking also rose 1.4% and 1.0%, respectively.We believe stronger performance of these categories may have been a factor of consumers using the savings from lower gasoline prices to finance additional purchases or of retailers clearing inventories. If the former is true, with gasoline prices likely to remain contained in the near-term, we may see stronger consumption trends persist over the next few months.? There was also a revise of September?s sales data from the original decline of 0.1% to a flat 0.0%.

General Motors (GM) announced they will re-innovate their small pickup truck, the Chevrolet Colorado. GM revealed the model at the Los Angeles Auto Show on Wednesday morning. The new model has very little in common with the older version; the 2015 Colorado weighs in roughly 900 pounds less than the original model and is 16 inches shorter. It comes with bike racks and other modern accessories that GM hopes will attract ?lifestyle buyers,? as the company calls them. They are aiming to create their success of the company?s well known Forester SUV. Sales of the smaller SUV are up nearly 61% in the past two years. Alan Batey, senior vice president of Global Chevrolet, said, ?If there was a brand, a domestic brand, that could fill that space and really provide those types of things, we thought Chevy was a good place to do it.? GM are also looking to attract those individuals who need a smaller truck, one that is not as big as the Silverado or the GMC Sierra. Batey continued to say, ?We didn?t want to just create a really pretty truck that?s accessorized but can?t do anything.?

J.C. Penney (JCP) announced that their net income loss for the third-quarter was more than they were expecting. The company reported a net loss of $489 million, or $1.94 per share. This is a substantial loss compared to this time last year when net income dropped $123 million or $0.56 per share. The company did say that sales for the coming quarter are still encouraging. J.C. Penney is expecting to have more than $2 billion in liquidity at the end of this year. Shares of the stock were still trading higher as expectations remained high for positive comparable-store sales in the fourth-quarter.

John Thomas
07-25-2013,
In early 1997, the world was in awe of the record growth of Southeast Asia's "tiger economies" as markets opened and foreign investors rushed to fund new ventures.

However, by January 1998, stock markets across the region had lost as much as 70% of their value, and the crisis had spread to the rest of the emerging world. Even behemoth Russia wasn't immune, defaulting on its debt that same year.

Such massive and rapid growth relied on a constant influx of dollars to fund deficits and pay higher amounts of foreign debt. At the first sign of economic cracks, foreign investors withdrew their accounts, leading to a plunge in currencies and leaving the region's governments unable to pay debt denominated in now more expensive dollars.

Now it seems another emerging market has not learned much from that episode -- and may be doomed to repeat it soon.

A Financial Crisis With A Latin Flair
Latin America escaped the most recent crisis in 2008, with the region managing 4.5% growth in 2010. The iShares Latin America 40 (NYSE: ILF) jumped 120% in the two years after the March 2009 lows, outperforming the S&P 500 Index by 40%. Housing prices have increased dramatically for more than a decade, and credit for homeownership flows like water.

From my vantage point in Colombia, I talk to investors regularly -- and few want to acknowledge that trouble could be on the horizon. The Colombian national soccer team made the World Cup selection for the first time in six years, regional economies are strong, and Brazil is hosting two major events in the next three years.

And that brings us to the tipping point.

Athens Calling
In 2004, the world marveled as the Olympics returned to its Greek homeland in Athens. Greece spent $16 billion on those Summer Games, 10 times the original budget, in hopes that tourist dollars would pay the bills when they came due. Four years later, Greece was bankrupt; nearly a decade later, the country has just entered its sixth straight year of recession with a 28% unemployment rate.

Now Brazil has won the right to host the 2014 World Cup and the 2016 Summer Olympics. The country is spending more than $14 billion on World Cup projects, $3.3 billion of which will be spent on stadiums that are unlikely to have much real economic use after the games. The largest stadium being built, the Estadio Nacional, will hold 70,000 spectators. In comparison, the entire 57 games of the recent regional championship brought in only 50,000 people.

Brazil bid a $14.4 billion budget for the 2016 Olympics, equal to about 4% of the country's total tax revenue of $338 billion. If the 2007 Pan American Games, held in Rio de Janeiro, are any indication, the budget for the World Cup and the Olympics could be dwarfed by cost overruns. The Pan Am games were originally budgeted to cost $177 million with final estimates topping $1 billion for the event, over budget by sixfold.

Even if the cost overrun for the 2016 Games is not as bad as the Pan Am games, it will almost definitely run over budget. Every Olympiad since 1960 has gone over budget, by an average of 179% in real terms. That overrun would put the Brazil Olympics at $25.8 billion. Add this to World Cup spending of at least $20 billion, and Brazil's fiscal position looks precarious at best over the next few years.

Brazil desperately needs infrastructure spending, and some of the event budgets will be put to good economic use. The problem is that the lasting benefit accounts for only a small portion of the total spending.

An Unsustainable Path
Inflation in Brazil has begun to take hold, with consumer prices jumping 5.8% last month from a year ago. This is well above the central bank's 4.5% target and likely means that the 9.5% benchmark interest rate will continue upward. With the surge in public spending on the Cup and the Games, inflation is unlikely to moderate, but higher rates could choke off other business spending. Lower economic growth will hit tax revenues and the public burden could become unsustainable.

John Thomas
07-25-2013,
In early 1997, the world was in awe of the record growth of Southeast Asia's "tiger economies" as markets opened and foreign investors rushed to fund new ventures.

However, by January 1998, stock markets across the region had lost as much as 70% of their value, and the crisis had spread to the rest of the emerging world. Even behemoth Russia wasn't immune, defaulting on its debt that same year.

Such massive and rapid growth relied on a constant influx of dollars to fund deficits and pay higher amounts of foreign debt. At the first sign of economic cracks, foreign investors withdrew their accounts, leading to a plunge in currencies and leaving the region's governments unable to pay debt denominated in now more expensive dollars.

Now it seems another emerging market has not learned much from that episode -- and may be doomed to repeat it soon.

A Financial Crisis With A Latin Flair
Latin America escaped the most recent crisis in 2008, with the region managing 4.5% growth in 2010. The iShares Latin America 40 (NYSE: ILF) jumped 120% in the two years after the March 2009 lows, outperforming the S&P 500 Index by 40%. Housing prices have increased dramatically for more than a decade, and credit for homeownership flows like water.

From my vantage point in Colombia, I talk to investors regularly -- and few want to acknowledge that trouble could be on the horizon. The Colombian national soccer team made the World Cup selection for the first time in six years, regional economies are strong, and Brazil is hosting two major events in the next three years.

And that brings us to the tipping point.

Athens Calling
In 2004, the world marveled as the Olympics returned to its Greek homeland in Athens. Greece spent $16 billion on those Summer Games, 10 times the original budget, in hopes that tourist dollars would pay the bills when they came due. Four years later, Greece was bankrupt; nearly a decade later, the country has just entered its sixth straight year of recession with a 28% unemployment rate.

Now Brazil has won the right to host the 2014 World Cup and the 2016 Summer Olympics. The country is spending more than $14 billion on World Cup projects, $3.3 billion of which will be spent on stadiums that are unlikely to have much real economic use after the games. The largest stadium being built, the Estadio Nacional, will hold 70,000 spectators. In comparison, the entire 57 games of the recent regional championship brought in only 50,000 people.

Brazil bid a $14.4 billion budget for the 2016 Olympics, equal to about 4% of the country's total tax revenue of $338 billion. If the 2007 Pan American Games, held in Rio de Janeiro, are any indication, the budget for the World Cup and the Olympics could be dwarfed by cost overruns. The Pan Am games were originally budgeted to cost $177 million with final estimates topping $1 billion for the event, over budget by sixfold.

Even if the cost overrun for the 2016 Games is not as bad as the Pan Am games, it will almost definitely run over budget. Every Olympiad since 1960 has gone over budget, by an average of 179% in real terms. That overrun would put the Brazil Olympics at $25.8 billion. Add this to World Cup spending of at least $20 billion, and Brazil's fiscal position looks precarious at best over the next few years.

Brazil desperately needs infrastructure spending, and some of the event budgets will be put to good economic use. The problem is that the lasting benefit accounts for only a small portion of the total spending.

An Unsustainable Path
Inflation in Brazil has begun to take hold, with consumer prices jumping 5.8% last month from a year ago. This is well above the central bank's 4.5% target and likely means that the 9.5% benchmark interest rate will continue upward. With the surge in public spending on the Cup and the Games, inflation is unlikely to moderate, but higher rates could choke off other business spending. Lower economic growth will hit tax revenues and the public burden could become unsustainable.

Brazil 2014 Budget

Ministry of Planning and Budget
The government already spends 43% of its annual budget on debt and interest payments with only 6% going to education and health programs.
Now squeeze out upward of $45 billion of spending (13% of the budget) for the World Cup and Summer Olympics and huge cuts will need to come from somewhere or a default is imminent.

The value of the local currency, the real, has already fallen more than 12% this year, and higher inflation plus weak economic growth could cause it to fall further. This could lead to problems paying the country's dollar-denominated debt -- much like what happened during the Asian crisis of 1997. The country has been able to raise funds fairly easily, with a recent $7 billion 2025 offering -- but will it be able to pay the money back?

In recent research by Wells Fargo Securities, Brazil ranked fifth of 28 countries deemed most vulnerable to a crisis. The research focused on credit growth, ability to meet dollar demands on foreign debt and the exchange rate. Brazil ranked second on the list for highest increase in private sector debt to GDP since 2009, signaling that recent growth in loans may be too rapid.

More ominously, protests against corruption and the high price of the World Cup erupted in Brazil this year. Ultimately, I think the burden from the games will result in a change in the government and a default on debt. State-controlled Petrobras (NYSE: PBR) could be hardest hit as the government wipes out shareholders to prop up the debt situation. Shares are already down 70% from the 2009 high but could fall much further.

With presidential elections looming next year, Brazilian politicians will probably follow the typical playbook of boosting social spending to win re-election and worrying about the bills later. This may temporarily stave off a collapse, but the situation becomes more dire and inescapable as we look to 2015 and beyond.

Metals miner Vale (NYSE: VALE) has rebounded from its low this year but could also fall victim to the government's need for funds. The shares may be supported over the next year on infrastructure spending, but the long-term outlook is negative.

Beyond individual Brazilian companies, a bankrupt Brazil would almost certainly throw the rest of Latin America into a regional recession. The country accounts for more than 40% of the regional economy and imports more than $26 billion in goods and services from Latin American countries. In the same Wells Fargo study, six of the top 10 countries most vulnerable to crisis are in Latin America, with Colombia, Argentina, Peru, Chile and Mexico also seen as at risk.

Risks to Consider: Shares of the largest Brazilian companies are not expensive at 14 times trailing earnings and could get a boost from infrastructure spending in the short term. Investors may miss out on some rebound pricing but would do well to avoid a possible major crash in the long term.

Action to Take --> Spending ahead of the presidential election in 2014 may drive the economy for another year, but I would avoid Brazilian companies as long-term investments. Keep an eye on spending for the Cup and the Games to signal when you may want to take profits on other stocks from the region. A collapse of the government might not cause world markets to buckle, but it would definitely affect regional names and probably emerging markets across the globe.

- Joseph Hogue




StreetAuthority.com

StreetAuthority spends over a million dollars on research each year and employs a team of experts across the U.S. and Canada. Before joining, these experts worked as senior analysts for Wall Street firms, financial advisors, investment relations presidents, and business reporters for major newspapers. As a result, they're able to uncover rare, profitable and compelling investing opportunities that you aren't likely to find anywhere else. Their research is presented in simple, easy-to-understand language without the typical Wall Street double talk.

__________________

Highly recommend, unconventional trading service:

Trading Coach Sam Johnson demonstrates the #1 Passive Income Strategy for Traders

Reply With Quote Reply With Quote

John Thomas
07-25-2013,
Random Thoughts


The Ps ended slightly lower. So far, their recent breakout remains intact and they only appear to be pulling back.

When it comes to the indices, it is a bit of a tale of two markets.

The Quack doesn't look quite as good. It sold off a bit on Tuesday. This action puts it back below its recent breakout levels. On a net net basis, it hasn't made any forward progress in nearly a month.

The Rusty got hit the worst. It lost over ?%. It too hasn't made any forward progress (net net) in quite a while.

The action in the Rusty is indicative of what happened internally. Most stocks and sectors got hit fairly hard.

Things are getting a little mixed.

Although they ended lower, areas such as Defense, Transports, Manufacturing, and Retail only appear to be pulling back from their uptrends.

Some areas like Drugs and Health Services (which actually ended slightly higher on Tuesday) have pulled back to prior breakout levels.

The Semis got whacked fairly hard. This action keeps them sideways at best.

A few big up days would be just what the Dr. ordered to get this now mixed market moving.

Longer-term things still look pretty good. When things get a little iffy, I like to plot the 50day moving average as a reference. In general, this will help to keep you on the right side of the market. This is especially true if you use the concept of slope (positive) and "daylight" (lows greater than the moving average).

So what do we do? I still think that it is too early to fight the longer-term trend, especially with the market just off of new highs. Sure, fire off a short if you really like the setup (we are short NCR) but the main focus should still be on the long side. This doesn't mean you should load the boat. I'm still not seeing a tremendous amount of setups. I am seeing a few Trend Knockouts (TKOs, email me if you need the pattern). I like this pattern (especially when the stock closes poorly) when the market becomes questionable because the stock will really have to rally to trigger---i.e. the stock will have to prove itself. If the market stays mixed or rolls over then there is no trigger. No trigger, no trade.

Click here to watch today's Market in a Minute.

John Thomas
07-25-2013,
The Chart of the Day is Hibbett Sports (HIBB). I found the stock by sorting today's New High List for frequency then used the flipchart function to find a stocks with momentum I like. The stock gained 24.97% in the last quarter and since the Trend Spotter signaled a buy on 10/1 the stock gained 10.84%

It is a rapidly-growing operator of full-line sporting goods stores in small to mid-sized markets predominantly in the southeastern United States. Hibbett's stores offer a broad assortment of quality athletic equipment, footwear and apparel at competitive prices with superior customer service.

John Thomas
07-25-2013,
GMO is out with its latest monthly asset class real returns forecast for this month. The system is largely predicated on mean reversion and so you?ll typically see the most loved sectors projected to have the worst returns (US small caps this go-round) for the future period. Barry and I are huge fans of Jeremy Grantham, James Montier and the rest of the thought leadership cabal at GMO, we always take their insights as important food for thought.

What?s notable in this month?s edition is how no asset class is projected to be able to even meet their long-term equity return measurement of 6.5% real (inflation-adjusted). The asset class they?d appear to be most constructive on for the seven year period, emerging market stocks, doesn?t even get you halfway there. But they see high potential returns for timber, which would fly in the face of the idea that paper is already dying in our tablet-based economy. My kids will be headed to school with iPads in a year or two, we?re told, not textbooks. And it?s pretty hard to find a waiter or waitress taking orders on a pad in cutting-edge Brooklyn.

Sometimes a secular downtrend will appear to be a cyclical one at first. Timber may be exactly that ? unless you tell me we?re going to see another massive homebuilding wave this decade.

Anyway, here?s the forecast chart:

John Thomas
07-25-2013,
While prices are rising, investors need to maximize their gains. When prices turn down, investors need to minimize their losses.

The problem many investors face is worrying about a bear market during the bull market. Worries can be stopped by switching to cash, but then investors miss gains, and failing to take advantage of market gains destroys potential wealth.

We do believe that it is OK to worry about the state of the market. However, we don't believe it is OK to act on those worries without a plan. Investment actions should be based on plans that react to the market, and the 10-month moving average (MA) is the simplest way we know to do this.

Before we explain why, this chart of the SPDR S&P 500 ETF (NYSE: SPY) can help highlight the importance of this indicator.

John Thomas
07-25-2013,
Stuff I?m Reading this Morning?

?Actually, economists CAN predict financial crises.? ? so what, they just don?t feel like it? I don?t understand? (Bloomberg)

Meanwhile, scientists brawled with Fama over the legitimacy of economics the other night. Six dead, four wounded. (Economix)

JPMorgan?s $13 billion selfie. (HighNetWorld)

Heidi Moore?s take on the record settlement and what it means. (Guardian)

Why JPMorgan might have gotten a good deal in the end. (DealBook)

For investors, Coal is the new Tobacco. (Bloomberg)

?and Frontier Markets are the new Emerging Markets. (Morningstar)

There?s Type A Personalities and then there?s this guy: (VanityFair)

The modern mariachi band in Mexico comes strapped with bazookas and sht. (Wired)

$1.2 million in gold bars found stashed in Boeing 737′s bathroom (NBCNews)

REMINDER: Backstage Wall Street is now on Kindle!


The Reformed Broker

John Thomas
07-25-2013,
Ringing the Register with the Aussie

This is our 13th consecutive closing profitable position, and 19th consecutive profitable Trade Alert when you include our remaining open positions. I have only seven more winners to go before I break my old record of 25.

Since I strapped on this trade last week, the (FXA) has popped a full 1 ? points to the upside. It?s tough to say where these options are really trading, they are so illiquid and the spreads so wide. If you didn?t do the trade at all, just consider this part of your educational effort.

However, the Currency Shares Australian Dollar Trust December, 2013 $89-$91 bull call spread was marked at their maximum possible value of $2.00 by the market makers at last night?s close. So I am going to take the hint and close the position. At this price we have harvested 75% of the potential profit, and we still have a full month to run before the December 20 expiration.

Yes, I should have been more aggressive, moving the strikes closer to the money, farther out in expiration, and bigger in size. But it?s always easy to say that about your winners.

To close the position just put in a limit order for the entire spread at $1.95 and wait for the market to come to you, even if it is for a few days. It is impressive how much they are crushing volatility in the options markets in the run up to the Thanksgiving holidays, so you should eventually get done.

Then you can plow the money back into other trades, such as buying global stocks and commodities, and shorting bonds and the yen. You can also buy back the Aussie on the next two-point dip.

I still believe that we are in bull mode for the Aussie longer term, and that we should make it above par, or $1.00, next year. The recent reforms announced by China (FXI) last week certainly remove any doubt about the northward direction.

It all provides fresh rocket fuel for the global synchronized recovery in 2014, which I have been predicting since the summer. A parallel pop in Australian stocks (EWA) confirms this view. So if you aren?t in the options and own the (FXA) outright, I?d hang in there.

John Thomas
07-25-2013,
This is our 13th consecutive closing profitable position, and 19th consecutive profitable Trade Alert when you include our remaining open positions. I have only seven more winners to go before I break my old record of 25.

Since I strapped on this trade last week, the (FXA) has popped a full 1 ? points to the upside. It?s tough to say where these options are really trading, they are so illiquid and the spreads so wide. If you didn?t do the trade at all, just consider this part of your educational effort.

However, the Currency Shares Australian Dollar Trust December, 2013 $89-$91 bull call spread was marked at their maximum possible value of $2.00 by the market makers at last night?s close. So I am going to take the hint and close the position. At this price we have harvested 75% of the potential profit, and we still have a full month to run before the December 20 expiration.

Yes, I should have been more aggressive, moving the strikes closer to the money, farther out in expiration, and bigger in size. But it?s always easy to say that about your winners.

To close the position just put in a limit order for the entire spread at $1.95 and wait for the market to come to you, even if it is for a few days. It is impressive how much they are crushing volatility in the options markets in the run up to the Thanksgiving holidays, so you should eventually get done.

Then you can plow the money back into other trades, such as buying global stocks and commodities, and shorting bonds and the yen. You can also buy back the Aussie on the next two-point dip.

I still believe that we are in bull mode for the Aussie longer term, and that we should make it above par, or $1.00, next year. The recent reforms announced by China (FXI) last week certainly remove any doubt about the northward direction.

It all provides fresh rocket fuel for the global synchronized recovery in 2014, which I have been predicting since the summer. A parallel pop in Australian stocks (EWA) confirms this view. So if you aren?t in the options and own the (FXA) outright, I?d hang in there.

John Thomas
07-25-2013,
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.


Further Update to: Trade Alert -(IWM)

Buy the Russell 2000 iShares (IWM) December $113-$116 bear put spread at $2.54 or best

Opening Trade
11-19-2013
expiration date: 12-20-2013
Portfolio weighting: 10%
Number of Contracts = 39 contracts.

John Thomas
07-25-2013,
The Old Gray Lady is looking a lot younger these days.

Less than five years after desperately needing a costly $250 million capital infusion from Mexican billionaire Carlos Slim, The New York Times Co. (NYSE: NYT) has staged a remarkable rebound. Shares have nearly doubled in the past two years, handily surpassing the S&P 500 Index. Rival Gannett (NYSE: GCI), publisher of the USA Today, has fared even better.

John Thomas
07-25-2013,
Earlier this month I brought your attention to a young company called Life Stem Genetics, plying its trade in the burgeoning realm of stem cell therapies. Trading over-the counter under the symbol (LIFS), the company had recently received a $500,000 round of financing to help execute its business plan of rolling out an international chain of ?all-purpose? stem cell treatment clinics.

Once a highly controversial avenue of medical research, stem cell therapy is just beginning to reach critical mass, providing new ways to treat previously untreatable diseases and ailments, including diabetes, Parkinson?s disease, eye disorders, spinal cord injuries and cancer. Current estimates say that the existing market for stem-cell therapies is easily in the multi-billion dollar range, and that may be conservative.

The first stage in the therapeutic use of stem cells is ?harvesting? a patient?s own stem cells ? one of the services that Life Stem Genetics provides. In a spa-like setting, patients undergo a four-hour stem cell extraction procedure. The company has also developed and tested a proprietary regenerative procedure to promote spinal, joint, organ health and longevity by using the patient?s own platelet rich blood cells and ASCs, and plans to offer stem cell storage, and other regenerative medical treatment options.

When I first wrote about Life Stem in early November the company had announced its intention to build a base of affiliate clinics in the U.S. and internationally, designed to both extract stem cells and help treat the wide spectrum of diseases that stem cells can benefit. Since that time, Life Stem has been aggressively pursuing its business plan by announcing a series of deals that have served to generate steady buying interest in LIFS shares.

On Tuesday, Life Stem announced that it has secured an additional $500,000 in financing, closing its previously announced private placement. The financing deal involved the issuance of 1,000,000 units of LIFS stock and warrants at a price of $1 per unit. Each unit of the private placement consists of one common share of company stock and one warrant to purchase an additional common share of the company at $1 per Warrant Share for a period of one year. If and when all of the warrants are exercised, the company will realize up to an additional $1.0 million in proceeds.

The financing announcement was preceded by two pending new deals that mark the beginning of Life Stem?s roll-out of its services in established clinics worldwide. On November 13 the company announced the signing of a Letter of Intent (LOI) with a clinic in Dhaka, Bangladesh, to add the company?s stem cell therapies to its existing line-up of wellness procedures.

One week earlier Life Stem announced a more significant deal?the signing of an LOI with an undisclosed health and wellness chain in Canada. According to Life Stem management, the announcement of the organization?s identity is set to take place in approximately 10 days upon signing of the definitive agreement. The LOI between both parties will enable the company to provide stem cell therapy to individuals who would derive benefit from such treatments using LSG?s procedures and practices. Life Stem confirmed that the company operates in excess of 25 health/medical clinics in various locations throughout Canada.

In addition to these deals, the company has been actively expanding its board and management team. At the end of last week Life Stem announced that it had named its Regenerative Specialist, James Vanden Bosch, Chief Medical Stem Cell Specialist. Vanden Bosch has performed thousands of stem cell treatments, has published prolifically on the subject, and is often called upon to provide expert commentary. Earlier in the month, Life Stem had announced the addition of Dr. Shirin Rostamkalaee, an expert on wound healing, bone grafting, and reconstructive surgery, to its newly expanded Executive Advisory Board.

LIFS shares began trading in late October, making their debut in the $1.06 ? $1.07 range on thin trading volume. Volume gradually picked up in subsequent sessions, and has been surging to new heights in recent dealings?along with LIFS share price.

John Thomas
07-25-2013,
Earlier this month I brought your attention to a young company called Life Stem Genetics, plying its trade in the burgeoning realm of stem cell therapies. Trading over-the counter under the symbol (LIFS), the company had recently received a $500,000 round of financing to help execute its business plan of rolling out an international chain of ?all-purpose? stem cell treatment clinics.

Once a highly controversial avenue of medical research, stem cell therapy is just beginning to reach critical mass, providing new ways to treat previously untreatable diseases and ailments, including diabetes, Parkinson?s disease, eye disorders, spinal cord injuries and cancer. Current estimates say that the existing market for stem-cell therapies is easily in the multi-billion dollar range, and that may be conservative.

The first stage in the therapeutic use of stem cells is ?harvesting? a patient?s own stem cells ? one of the services that Life Stem Genetics provides. In a spa-like setting, patients undergo a four-hour stem cell extraction procedure. The company has also developed and tested a proprietary regenerative procedure to promote spinal, joint, organ health and longevity by using the patient?s own platelet rich blood cells and ASCs, and plans to offer stem cell storage, and other regenerative medical treatment options.

When I first wrote about Life Stem in early November the company had announced its intention to build a base of affiliate clinics in the U.S. and internationally, designed to both extract stem cells and help treat the wide spectrum of diseases that stem cells can benefit. Since that time, Life Stem has been aggressively pursuing its business plan by announcing a series of deals that have served to generate steady buying interest in LIFS shares.

John Thomas
07-25-2013,
Diabetes is no longer solely an American epidemic.

The Journal of the American Medical Association just released a study that shows 11.6% of Chinese adults have the debilitating disease, surpassing America's 11.3%. With a population topping 1 billion, China is now home to more than 100 million people suffering from diabetes -- a third of the global diabetes population.

And with emerging markets gaining more access to middle-class amenities such as high-fat food, the trend is accelerating. The International Diabetes Federation projects that more than 550 million people will be diagnosed with diabetes by 2030, up from 371 million diabetes patients in 2012. That's a huge opportunity for the global leader in diabetes medication and treatments.

Not only is this market leader home to five of the top 10 selling diabetes medications in the world, it's also developing a deep pipeline of next-generation diabetes drugs and is protected by a huge competitive moat. That has driven an outsize gain of 58% in the past two years:

John Thomas
07-25-2013,
Quote of the day

Morgan Housel, ?Even though we have more financial data than ever, investing is just as much an art as it was when Ben Graham criticized it almost a century ago.? (Motley Fool)

Chart of the day



A look at the Dow on an inflation-adjusted basis. (Economix)

Markets

Jeremy Grantham?s latest provides fodder for everyone. (Kid Dynamite, Business Insider)

Chinese stocks are sitting just below important resistance. (Market Anthropology)

Investors are bidding up junk stocks. (Bloomberg)

REITs are on sale. (BCA Research)

Ten high-conviction picks from the ultimate stock pickers. (Morningstar)

Strategy

Don?t expect to see accurate bubble calls on the front page of the mainstream media. (Barry Ritholtz also Capital Spectator)

When a declining stock price is a blessing in disguise. (Vitaliy Katsenelson)

Investors are still overweight bonds. (Simon Lack)

Applying the smell test to backtested results. (Morningstar)

The case for holding for the long-term: taxes. (Turnkey Analyst)

Do you need a proprietary trading platform? (SMB Training)

Companies

3M ($MMM) is finding organic growth harder and harder to find. (WSJ)

Competition is ebbing in the airline industry. (smithy Salmon)

Media

The NFL and MLB may take their balls leave free TV. (BusinessWeek)

The evolution of Bloomberg News. (smithy Salmon)

Just how big is ESPN? (The Atlantic)The media is a two-way street. (The Reformed Broker)

Startups

Now DropBox is raising money at a $8 billion valuation. (BusinessWeek, TechCrunch, Yahoo Finance)

Startups are making it possible for individuals to IPO themselves. (NYMag)

ETFs

What is the problem with smart beta? (IndexUniverse)

Five criteria for measuring a mutual fund. (Vanguard)

A look at Franklin Templeton?s ($BEN) first ETF the Franklin Short Duration U.S. Government ETF ($FTSD). (IndexUniverse)

John Thomas
07-25-2013,
When he buys a stock, Warren Buffett places more emphasis on one factor above almost any other.

Since 1986 he has mentioned this single trait more than 20 times in his annual shareholder letters. He calls it "essential for sustained success."

However, you won't find it listed on a company's balance sheet. Its value doesn't rise and fall with the market. And even if a company reports great earnings, the worth of this one advantage still can't be calculated.

But that doesn't keep it from being a company's most valuable possession.

Take the nasty bear market of 2008 and 2009. From its peak to trough, the S&P lost more than 55%. No investment completely avoided the downfall.

Well, almost no investment. Of the 500 stocks in the S&P, only nine made money during that period.

Of those nine stocks, six of them (two-thirds) had this advantage.

But this advantage also helps these stocks beat the market in uptrends, too. After all, Buffett has made billions thanks to companies with this trait.

So what single advantage can capture the attention of Warren Buffett... help a stock beat the market in an uptrend... and help it fall less in a downtrend?

That advantage is a term originally popularized by Buffett himself -- an economic moat.

As Buffett puts it...

"A truly great business must have an enduring "moat" that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business "castle" that is earning high returns.

"Therefore a formidable barrier such as a company's being the low-cost producer or possessing a powerful world-wide brand is essential for sustained success. Business history is filled with "Roman Candles," companies whose moats proved illusory and were soon crossed."
- Warren Buffett, 2007 Berkshire Hathaway Shareholder Letter

John Thomas
07-25-2013,
361 Capital portfolio manager, Blaine Rollins, CFA, previously manager of the Janus Fund, writes a weekly update looking back on major moves, macro-trends and economic data points. The 361 Capital Weekly Research Briefing summarizes the latest market news along with some interesting facts and a touch of humor. 361 Capital is a provider of alternative investment mutual funds, separate accounts, and limited partnerships to institutions, financial intermediaries, and high-net-worth investors.

361 Capital Weekly Research Briefing
November 18, 2013

Timely perspectives from the 361 Capital research & portfolio management team
Written by Blaine Rollins, CFA

John Thomas
07-25-2013,
Every home has at least one. From the White House to a shotgun shack in Appalachia, this product is notable for its widespread use across every demographic.

Virtually all of us spend nearly a third of our lives using this product, which commands a wide range of prices -- from less than $100 for basic versions to well over $10,000 for custom-built ones. In addition, this product is so commonplace you might not give it a second thought after the purchasing decision. U.S. manufacturers produce about 35 million units a year, and the industry's revenues neared $6 billion in 2009.

If you haven't guessed it yet, I am referring to the lowly mattress. I recently had a great experience with a particular brand over the last several years, but right now I would avoid or even short the stock.

When my wife and I were newlyweds, one of the most important purchases for our new household was a mattress. I'm a restless sleeper, and my wife sleeps so silently and still that sometimes I have to check to be sure she's still breathing. My rolling about at night disturbs my wife when we sleep on spring-based mattress, so much so that we often sleep in separate beds when in hotels.

The memory of a TV commercial from the late 1990s -- in which a person is jumping on a bed but not spilling a wine glass sitting on the same bed -- sent me looking for this mattress brand. Considering the hyperbole used in commercials, I wasn't expecting the mattress to live up to the TV ad -- but I was willing to give it a try.

Talk about being pleasantly surprised! Not only was this mattress exceedingly comfortable, I could roll around with abandon and my wife would barely feel the movement on the other side of the bed. It truly is the rare product that performs exactly as advertised. It's been three years since our purchase, and this mattress has held up as the most comfortable and practical mattress either of us have ever used.

Based on this positive experience, I took a close look at the company as a potential investment. The mattress is called Tempurpedic, and the manufacturer is Tempur Sealy International (NYSE: TPX).

The world's largest bedding manufacturer, Tempur Sealy was formed by the merger of Tempur-Pedic International and Sealy Corp. this year . The Lexington, Ky.-based company's brands include Sealy, Tempur-Pedic, Posturepedic and Stearns & Foster. The Tempur-Pedic mattress was the result of 10 years of research, originally for NASA, culminating in the founding of the U.S. Tempur business in 1992. The Sealy part of the company was founded in 1881.

John Thomas
07-25-2013,
The ?Furious Five? 3D stocks have gone absolutely ballistic this fall. Below, the unbelievable performance for each over the last 23 days:

John Thomas
07-25-2013,
You don?t get the good without the bad in this world. There are no free lunches and everything costs something.

Elon Musk is getting an education on that very subject as we speak. The brilliant inventor and entrepreneur was given a full year in the spotlight as his Tesla Model S became the darling launch of Wall Street. His halo shone so brightly it even illuminated the stock price of Solar City, another company he?s leading. Each appearance he made was accompanied by a built-in cheering section on the networks.

Every corporate milestone was greeted with fanfare and accompanied by massive upside for the shares of both stocks.

He could do no wrong and his every utterance became chyron?d on-screen, complete with the ?BREAKING? and ?EXCLUSIVE? headlines.
Billions upon billions in shareholder value had been created as the real-life Tony Stark become a media star.

But then Tesla hit a rough patch. A few of the cars went on fire and the media was quick to seize upon this new, less flattering angle of the story.

And now Elon believes the coverage of him and his Tesla company is ?disproportionate.?

Unfortunately that?s how it works. That disproportionate coverage enabled the man?s company to get a lot done and to grow up really quickly. It generated awareness for the cars and legitimacy for the business model in a way that actual advertising never could. But there?s a price.

Musk has been named the CEO of the year and with good reason ? he?s a visionary with the capability to actually execute and build. He?s probably changing the world.

But the media, like the market, is a two-way street. First they love you, then they hate you, then they fall in love with you all over again when you start to win once more.

John Thomas
07-25-2013,
Are the goldbugs all fleeing for crypto currencies?

Hilarious chart posted by Tyler yesterday, I had to nick it:

John Thomas
07-25-2013,
When I wrote early this year about the coming Internet boom, my purpose was to highlight dot-com 2.0 stocks and companies that would benefit from an increase in domain names and advertising.

I recommended four names: Verisign (Nasdaq: VRSN), Google (Nasdaq: GOOG), Marchex (Nasdaq: MCHX) and ValueClick (Nasdaq: VCLK) as companies ready to ring the cash register. Since that article was published in January, all but ValueClick have easily beaten the market, with 40% to 50% gains in Google and Verisign and a whopping 120% gain by Marchex.

But there is another facet of the Internet boom coming -- and no one is talking about it. When it happens, I think it will be one of those things that people look back on and ask: "In hindsight, it was so obvious. Why did I not invest?"



This next big wave is something that is already affecting the way people use the Internet and bringing about massive changes in the software and hardware space. It plays on the same emotions that made YouTube and Facebook (Nasdaq: FB) household names.

John Thomas
07-25-2013,
Random Thoughts



In Monday's column I was discussing a conversation that I had about Obamacare and the markets with a long lost friend. One thing that I didn't mention was a question he asked: "So, when, exactly, is this market going to crash?" My answer was that many of fortunes throughout history have been lost betting on a crash. Right now (Sunday, November 17th, 2013) things look pretty good with the market and many sectors at or near new highs.

Yes, there are naysayers calling a top. The Fed, Obamacare, and a fifth of a fifth wave inverted triangle extension might suggest that the market is done. However, as long as the market goes higher, does this matter?

It only matters when it matters. Again, as I wrote in The Layman's Guide To Trading Stocks, "unless you're Bill Clinton, what is, is."

The above doesn't mean that things are all rosy. Yesterday stunk. After probing all-time highs, the Ps reversed to form an outside day down. The new high might have attracted some "Johnny-come-latelies" and this fast money might be looking to bail now that they are faced with an immediate loss. So far though, the breakout in the Ps remains intact.

Yesterday's action in the Quack looks a little uglier than the Ps. It's now all the way back to its previous breakout levels.

I'm sure the candle people will be quick to point out that this is the ominous "Fat Baby With A Poopy Diaper" signal. Me? Yesterday sucked but I'm not going to call the end of the world based on one really crappy day-no pun intended.

As you would expect, many sectors which were just breaking out-like the indices themselves-are now right back to their prior breakout levels.

What's interesting is that I'm still not seeing a lot of meaningful setups on the long side. This might be the database telling me to hold off for now and let things shake out. The database continues to generate quite a few shorts. I don't see any reason to fight the overall trend just yet, but I'm keeping an eye on this situation.

So, what do we do? Considering the above, I think sitting on your hands is probably a good idea at this juncture. If things worsen, then stops will take us out of our longs and we'll look to put on more shorts. If the market turns right back up, then we keep our trend following hats on and follow along. That's how we roll. I suppose all of the above is long winded way of saying don't make any big picture predictions. Take things one day at a time.

Click here to watch today's Market in a Minute.

Best of luck with your trading today!

Dave
omgmachines.com/ericx
__________

Expert swing trader Dave Landry comments on the charts for the major markets, indexes and sectors for the upcoming trading day in his daily one-minute video.

Make sure your sound is turned up. A new browser window will open and the video will begin playing within a few seconds.

Click here to watch today's Market in a Minute.