Are Data REITs For You?

The Intelligent REIT Investor's Brad Thomas discusses his outlook for real estate and the new class of data REITs.

SPEAKER:  Hi, I'm talking with Brad Thomas today about REITs.  Thank you for joining me, Brad. 

BRAD THOMAS:  Oh, glad to be here, thanks so much. 

SPEAKER:  You're welcome.  You know, we talked a couple of months ago and you were saying to me that there were a couple of things that investors really need to think about when they're investing in REITs, and one was what is the dividend yield, obviously, and second is the safety of that dividend.  So can you expand a little bit on that? 

BRAD THOMAS:  Sure.  Well, you know, REITs today are very attractive for investors because investors are looking for dividends and dividend safety.  You must remember that REITs are unlike any other public company in that they pay out dividends, forced dividends, and what I mean by that is by law, which is a law created in 1960 in the Eisenhower administration, so this is a law that was created over five decades ago, just point that out, that REITs are required to pay out 90% of their taxable income in the form of dividends, so that's created a very sustainable model for investors today.  That's what's attracted investors to this real estate secured industry because of the sustainability of the dividend model.  So we're seeing a lot of high dividends today, again because companies are forced to pay out at least 90%.  In most cases they pay out almost 100% of their taxable income in the form of dividends. 

SPEAKER:  But now, what happens if an investor owns a REIT and there's a cut in the dividend?  I mean, do you panic immediately? 

BRAD THOMAS:  Well, I mean we did see that. 

SPEAKER:  Yes, we did. 

BRAD THOMAS:  Great recession, but remember it was not only REITs -

SPEAKER:  Yes. 

BRAD THOMAS:  - everybody panicked.  I think quite a few companies panicked, but what's interesting is one of my mantras is huge failure makes for huge success.  I think that's really important, not only in the REIT business but any company today, but especially in the REIT sector which is the sector that I cover.  We're seeing a tremendous recovery in the real estate market today. 

SPEAKER:  Yes. 

BRAD THOMAS:  I like to refer to every business has a cycle. 

SPEAKER:  Yes. 

BRAD THOMAS:  Real estate is typically a seven to eight to nine-year cycle, so I like to say we're in the bottom of the third inning.  There's still a tremendous amount of growth ahead.  We're seeing, at least the economy is starting to recover.  Interest rates haven't started to rise yet.  We're talking about a rise in interest rates, and remember when interest rates rise that means the economy is performing well. 

SPEAKER:  Correct. 

BRAD THOMAS:  So again, I think real estate is definitely an asset class that I recommend for any investment portfolio today. 

SPEAKER:  And you also, when I spoke with you in May you were talking about data REITs.  Can you tell us a little bit about what the heck is a data REIT and what does that mean for investors? 

BRAD THOMAS:  Sure.  Well, I was actually over in Digital Realties headquarters today here in San Francisco, just right down the street, and Digital, ticker symbol DLR, they're one of the largest, actually they are the largest data sector REIT in the country.  This is a fairly new sector.  I mean, you know, we didn't have Facebook and Amazon ten years ago. 

SPEAKER:  Right. 

BRAD THOMAS:  So, you know, the fundamental value proposition for a data REIT is all of this data in my phone and your phone and these pictures of kids and grandchildren, where's that data stored today? 

SPEAKER:  Yes. 

BRAD THOMAS:  Where's all the business data stored today?  So there's a tremendous growth in this sector, supply and demand is very important today, so tremendous growth opportunities.  Digital's got around $10 billion market cap.  There are some smaller data sector REITs out there like Serex and Equinex (SP?) which is actually talking about converting to say REIT structure. 

SPEAKER:  Yes, they haven't done that yet, have they? 

BRAD THOMAS:  Right.  No, they've announced, and it's very large, it will be about at least a $10 billion company, so you're seeing when you aggregate all of the data storage product, not only public but also private and a lot of it is private equity driven, there's certainly a lot of real estate out there today so it's a very sustainable model.  Digital by the way, you talk about dividends we addressed earlier.  Dividend (SP?) has never cut a dividend.  They've been a public company for nine years -

SPEAKER:  That's great. 

BRAD THOMAS:  - and not only have they not cut the dividend, they've increased it every year in a row, so that tells you something about the data sector. 

SPEAKER:  Sure, good sector.  Thank you very much. 

BRAD THOMAS:  Sure, you're welcome. 

SPEAKER:  And thanks for being with us on the MoneyShow.com video network.

Well Whaddya Know... Mast Therapeutics (MSTX) Is A Buy After All

A little over a month ago, owning Mast Therapeutics, Inc. (NYSE: MSTX) was nothing but pure misery. Shares plunged from $0.63 to $0.43 in one day, when details of a dilutive public offering were unveiled. As is so often the case though, the market may have overshot with the selling effort that KO's MSTX. Though putting more shares 'out there' mathematically meant existing shareholders would have to share more of the company's upside with newcomers, what's slowly coming to light is that the inflow of new cash is still more advantageous to those prior shareholders; the company would progress little without it.

MSTXis a micro cap biotech name, primarily known for its work on a drug simply known as MST-188. The lead candidate in the Mast Therapeutics pipeline is a treatment for ischemic tissue injury, or predominantly, a drug aimed at the complications that often stem from sickle cell disease. The company's also got two other drugs in the hopper, both aimed at cancer. Neither is in Phase 3 testing though, and therefore not in a position to be a driving force for the stock.

Though it's rarely highlighted, sickle cell disease isn't a minor market, in the United States, or anywhere else. More than $1.0 billion is spent on treating it every year in the U.S. alone, and that's despite the fact that there's no true, dedicated drug that treats it exceedingly well. Mast Therapeutics Inc. is hoping to change that, and so far, MST-188 looks like it just might. Though details of early results are too complicated to explain here, suffice it to say that the drug is in Phase 2 testing for a reason. More than 2/3 of trial drugs that reach Phase 3 end up winning the FDA's approval.

Be that as it may, it's not like MSTX is going to get the new drug approved anytime soon. It's going to need some near-term catalysts to get it going again, especially after last month's hit. Thing is, it has them. Piper Jaffray labeled the stock as 'overweight', and Vista Partners has established a price target of $2.55. ! That's a 430% premium on the current share price.

While it may not get there overnight, the current chart of Mast Therapeutics, says it's pointed in that direction. In fact, the chart of MSTX may be the most compelling part of all about the stock right now.

After getting sucker-punched, many stocks continue to drift lower. Not this one. MSTX began to move upward again the very next day, and hasn't stopped. Granted, it's been a slow rise, but a persistent one. This week, the stock's managed to find support at the 20-day moving average line, bolstering the rally effort in motion. There's still a huge chunk of the June gap left to fill, however, and everything about the stock suggests it'll at least be able to do that.

For more stock picks and trading insights like this one, be sure to become a subscriber to our free SmallCap Network daily newsletter. You'll get picks, market calls, sector analysis, and more. Sign up today.

How Did BlackBerry Do Everything Wrong?

Alamy With BlackBerry announcing its exit from the consumer business last week and now entertaining a bid to go private, it's worth looking at how the once-dominant smartphone maker got crushed by Apple, Samsung and other competitors in the mobile marketplace. At first glance, it's obvious that the company was too wedded to its keyboard-based devices even as new designs and technologies cut into its business -- precisely what Clayton Christensen called the Innovator's Dilemma. Looking deeper, one could pin some blame on the Canadian firm's dual-CEO leadership structure, as well as its inordinate focus on corporate customers. Its Hail Mary pass to recapture market share this year with the touch-screen Z10 and hard-keyboard Q10 fell far short. BlackBerry investors over the past five years have seen more than 90 percent of shareholder value evaporate. And the take-private bid, for its part, is far from a done deal. "In apparel you have fashion leaders. In technology, you have innovation leaders," said C. Britt Beemer, a longtime consumer analyst and researcher. Not only did BlackBerry fail to innovate, but also its executives "kept reading their own press clippings" and "did nothing to be able to go out there and defend their turf." BlackBerry's decline made Beemer recall a time when the Zenith brand controlled 60 percent of the market for color-console TV sets, "but it was shrinking 50 percent every year." The mobile company was chasing "huge contracts with companies, then one day those companies that had these large contracts made changes."

Top 10 Gold Companies To Watch In Right Now

He says, ��t has been repeatedly proven that 90 percent of the returns which the portfolio generates is because of right asset allocation and within asset allocation, you need to have right balance between equity, fixed income and gold��

Below is a verbatim transcript of the interview:

Q: Retail investors normally tend to ride the tailwind of a good rally, be it any asset class even gold lately and this has been the undoing of many a retail investors. Now that stock indices have risen and stand 5-6 percent from their all-time highs how can you help make them take sensible investment decisions?

A: Most of the times we have seen retail individual investors are always trailing the returns and I call this ghost of trailing returns. In history, when gold touched Rs 30,000 per 10gm, most of the people started buying gold exchange traded funds (ETFs) at that point of time.

Top 10 Gold Companies To Watch In Right Now: Australian Dollar(AU)

AngloGold Ashanti Limited primarily engages in the exploration and production of gold. It also produces silver, uranium oxide, and sulfuric acid. The company conducts gold-mining operations in South Africa; continental Africa, including Ghana, Guinea, Mali, Namibia, and Tanzania; Australia; and the Americas, which include Argentina, Brazil, and the United States. It also has mining or exploration operations in the Democratic Republic of the Congo, Guinea, and Colombia. As of December 31, 2010, the company had proved and probable gold reserves of 71.2 million ounces. The company has a strategic alliance with Thani Dubai Mining Limited to explore, develop, and operate mines across the Middle East and parts of North Africa. AngloGold Ashanti Limited, formerly known as Vaal Reefs Exploration and Mining Company Limited, was founded in 1944 and is headquartered in Johannesburg, South Africa.

Advisors' Opinion:

• [By Profit Confidential]

  Graham Ehm, Executive Vice President of South African-based AngloGold Ashanti Limited (NYSE: AU), one of the biggest gold producers in the global economy, stated the company is looking to save $500 million over the next 18 months, as capital expenditures will only be going towards their highest-quality assets. (Source: Mining Weekly, August 5, 2013.)

Top 10 Gold Companies To Watch In Right Now: Goldcorp Incorporated(GG)

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.

Best Gold Companies For 2014: Golden Star Resources Ltd(GSS)

Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.

Top 10 Gold Companies To Watch In Right Now: Iamgold Corporation(IAG)

IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.

Top 10 Gold Companies To Watch In Right Now: Claude Resources Inc.(CGR)

Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.

Top 10 Gold Companies To Watch In Right Now: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Top 10 Gold Companies To Watch In Right Now: NEW GOLD INC.(NGD)

New Gold Inc. engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The company primarily explore for gold, silver, and copper deposits. Its operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. The company also has development projects, including the New Afton gold, silver, and copper project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is headquartered in Vancouver, Canada.

Top 10 Gold Companies To Watch In Right Now: Newmont Mining Corporation(Holding Company)

Newmont Mining Corporation, together with its subsidiaries, engages in the acquisition, exploration, and production of gold and copper properties. The company?s assets or operations are located in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2009, it had proven and probable gold reserves of approximately 93.5 million equity ounces and an aggregate land position of approximately 27,500 square miles. The company was founded in 1916 and is headquartered in Greenwood Village, Colorado.

Top 10 Gold Companies To Watch In Right Now: Agnico-Eagle Mines Limited(AEM)

Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.

Top 10 Gold Companies To Watch In Right Now: Thompson Creek Metals Company Inc.(TC)

Thompson Creek Metals Company Inc., through its subsidiaries, engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. The company?s principal properties include the Thompson Creek Mine and mill in Idaho; a metallurgical roasting facility in Langeloth, Pennsylvania; and a joint venture interest in the Endako Mine, mill, and roasting facility in British Columbia. It also holds interests in development projects comprising the Davidson molybdenum property and the Berg copper-molybdenum-silver property located in northern British Columbia; the Howard?s Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut. The company produces molybdenum products, primarily molybdic oxide and ferromolybdenum, as well as soluble technical oxide, pure molybdenum tri-oxide, and high purity molybdenum disulfide. As o f December 31, 2010, its consolidated recoverable proven and probable ore reserves totaled 462.2 million pounds of contained molybdenum in the Thompson Creek Mine and the Endako Mine. The company was formerly known as Blue Pearl Mining Ltd. and changed its name to Thompson Creek Metals Company Inc. in May 2007. Thompson Creek Metals Company Inc. is based in Denver, Colorado.

The Deal: Dell's Quandary Reflects Tech's Secular Shift

NEW YORK (The Deal) -- Just a day after Carl Icahn publicly waved the white flag in his fight over the fate of Dell (DELL), it was announced that HP (HPQ) would be unceremoniously booted from the Dow Jones Industrials Average.

And, just like that, it became clear to investors, executives and everyone else that tech 1.0 is over.

That was followed by the hard fought win on Thursday, Sept. 12, of Dell founder Michael Dell and backer Silver Lake to take the PC maker private at $13.75 per share in a deal worth almost $25 billion.

For years, the vise-like grip Microsoft (MSFT) held on the technology industry muddled lines between products, since so many PCs were wholly dependent on the Seattle-based company. Now, no different than Dell or HP., Microsoft is going through changes of its own, as the advent of iOS and Android created a secular shift away from everything Steve Ballmer tried to protect, one reason he is on the way out as CEO. But that was tech 1.0. "All the marketing in the world can't get you out of having a bad product in this industry," a tech industry executive said. "Brands matter a lot less than people think, and products matter a lot more than people think." And the brand atop each Dell PC is the very name of its founder. Neither Apple (AAPL), Microsoft nor HP are as entwined with their current leadership as Dell is today. Michael Dell will have overseen his company's rise, from a $1,000 balance sheet in his dorm room at the University of Texas, to its 1988 initial public offering and a zenith of a $100 billion market cap a dozen years later, to, ultimately, an leveraged buyout for around $25 billion. Dell's final act as CEO will be to determine the ultimate fate of the company: whether it's services juxtaposed against consumer products, or, a combination of both. Of course, his stated intention is to revitalize his company that has been coasting downward for more than a decade. But there's another side to the Dell success, decline and potential rebirth story and that is of LBO backer Silver Lake.

Silver Lake already has a reputation as being the resurrector of Silicon Valley. When it loaned $20 million this year to Foursquare Labs Inc., which does business as Foursquare, Silver Lake invested in a company some considered a zombie in the location-based ad game, only to see its fortunes shift practically instantaneously. A decade ago, Silver Lake pulled off an improbable win, taking scandal-stricken telecom MCI Inc. from bankruptcy and transitioning it into a winning exit to Verizon Communications Inc. (VZ) in short order.

The Dell deal, however, is Silver Lake's biggest ever, and will stand out among its many successes, if success it turns out to be.

"Like it or not, this is the one that's going to stick with them for 10, 20 years... or forever," said a senior private equity executive.

Much like the company Silver Lake is taking private, the LBO shop owes its very existence in large part to the financial power of Dell's founder. Michael Dell seeded Silver Lake as the PE firm grew into one of Silicon Valley's investing titans. So the firm's 2013 mega-fund to support its mega-deal looks like nothing so much as chips being called in big time. Or, put another way, a fee-generating opportunity to the LBO shop and a far more peaceful coast into retirement for Dell's founder than staying out in the public domain. In private equity's brave new world, in which club deals are gauche and mega-transactions' poor performance can undo years of operational improvements and IRR, Silver Lake will reap most of the glory (or blame) for Dell's success (or failure) -- like it or not. Not only is Dell facing a secular decline in the PC business, but its brand is also losing traction with consumers. And that's not something Dell can price its way out of, one technology executive said: If the company still aims to succeed with consumers, it will inevitably increase investment in the product, thereby cutting into margins for a product in secular decline, and so forth and so on into an ever-steepening downward spiral. However, Dell's enterprise capabilities -- particularly in cloud services as more businesses shift away from in-house server management -- could still generate more revenue. That's somewhere that Dell could capitalize on its corporate brand name, not unlike what IBM (IBM) did so successfully, one tech banker said. That, in fact, was one of the arguments that both Icahn and Michael Dell and Silver Lake made when they were fighting over the company's fate. And 3D printing could also be a natural next frontier, where major patents are due to expire soon, opening up a potentially lucrative enterprise and services business for Dell, the banker said.

But the size of the deal itself means the odds could be stacked against Silver Lake's Glenn Hutchins & Co.: Energy Future Holdings Corp., RJR Nabisco Holdings Corp. or Clear Channel Communications Inc. all come to mind as LBOs that staggered under the their debt load. Then again, none of these deals permanently tarnished the images of Henry Kravis, Scott Sperling, Robert Weaver or Stephen Pagliuca.

History's biggest LBOs have generated more losers than winners and for a tech-centric PE firm to succeed in what is considered its wheelhouse, extracting a successful IRR from a boom-market deal and doing so independently, will be a story worth repeating during Silver Lake's roadshow -- if the investment firm ever chases an IPO of its own.

Despite throwing in the towel on his attempted leveraged recapitalization, Carl Icahn kept trying to jockey for a better share price. But even the proxy advisors don't appear to have felt he, or anyone, ever deserved much more than originally bid.

For those still in Icahn's camp, insisting the shareholders were robbed on the deal, consider this: The company lost nearly 80% of its value over a 13-year period. Dell is only going private now because its decline has finally made it a viable target for private equity. The company is, even according to its own special committee, trapped largely within an industry facing secular decline. As a private company, Dell's shuttering and selling businesses and shuttling jobs overseas won't be met with the same scrutiny -- or criticism -- it would likely have received as a public entity. So whether the background story is that Michael Dell privately arm-twisted his old buddies at Silver Lake into going in on a big enough to fail deal, or the private entity firm saw potential where few others did, there's a lot for the new private equity owner to do in a relatively short time period. But with Dell's PC top line continuing to shrink -- market researcher IDC reported in April that Dell's PC revenue suffered a first- quarter double-digit decline -- and with a board that has been pre-occupied for the better part of a year with the takeover, the company now needs to be nimble in changing course, possibly through M&A.

But striking big deals with so much debt could make strategy shifts cumbersome.

Right now, it appears that Silver Lake's teaming with Michael Dell will represent the biggest true LBO of this bull market. Yet, were it not for Michael Dell's sizeable slug of stock, Silver Lake could not get this deal done without another equity partner -- and that says a lot about the state of mega-LBOs. Silver Lake's $25 billion deal might have gone by much more quietly in the LBO boom days of 2006 and 2007, but in a slumped M&A market -- one that private equity's inaction has contributed to substantially -- it's all eyes on Dell.

There are other big strategics that may look to follow Dell's example: HP is among tech 1.0 names that have been suggested by M&A sources as likely to make divestitures. HP, as it struggles to put an embarrassing accounting flop behind it, will be compared -- for better, or for worse -- to Dell, and the LBO will factor prominently in the comparison. HP's decline in the PC industry has been more painful even than Dell's as of late and the company's stock rebound all but mandates that its board start figuring out a way to reward shareholders who hung in throughout its Autonomy scandal.

So the Dell deal not only represents private equity's gaining a very big foothold in the technology sector but also a secular shift for another maturing U.S. industry. Then there's what's in it for Michael Dell, besides every founder's nightmare: losing control of his baby. The PC maker's founder may have been eager to embrace public markets and expansion capital in the late 1980s, when he was barely a college dropout with a big idea, but Michael Dell quickly tired of cumbersome compliance requirements. He clearly prefers to control his own company -- Dell's only time out of the CEO role was a brief period from 2004 to 2007, during which its market share in critical lines of business continued to plummet. That fall from grace compelled Michael Dell to return to the top leadership role at the company that bears his name. With an LBO, he greatly reduces the size of the windows into his PC maker, and can ride out the years of its twilight without quarterly earnings calls, sometimes painful analysts' queries and, best of all, without Carl Icahn getting in his ear. Written by Jonathan Marino.

McDonald’s Testing New Way to Pay (MCD)

Fast food bellwether McDonald’s (MCD) announced on Tuesday that it had rolled out a new payment method that it is testing in select cities across the Southwest.Lisa McComb, spokesperson for McDonald’s, commented in an email to Bloomberg that the company has released an application that allows for customers to pay at the register directly from their smartphone. McComb went on to mention that the payment app is currently being tested in restaurant locations across Salt Lake City, Utah and Austin, Texas. McDonald’s also released global monthly sales data on the day; sales in the U.S. improved by 0.2% for the month while Europe saw a 3.3% jump.

McDonald’s shares traded higher on Tuesday, gaining 0.46% on the day. The stock is up nearly 10% YTD.

World Wrestling Entertainment Cuts Outlook for FY2013 (WWE)

World Wrestling Entertainment, Inc. (WWE) announced on Monday that it has updated its FY2013 outlook.

The company now expects to see OIBDA between $40 million and $50 million. This new estimate is a result of recent developments that caused a 5% decline in second half revenue estimates.

George Barrios, CFO of WWE commented: “Our revised 2013 Outlook reflects a relatively moderate change in our second half revenue expectations and our continued investment in the WWE brand and our content.”

“Given the rising value of content in the market place, we believe these investments will maximize WWE's future earnings as we renegotiate our four largest television distribution agreements and potentially launch a WWE Network,” Barrios added.

World Wrestling Entertainment shares were down 13 cents, or 1.28%, during pre-market trading Monday. The stock is up 29% YTD.

50/50 Chance AMR Wins Merger Case, JPMorgan Says, Upgrades US Airways, Delta

The Department of Justice shocked the airline industry when it sued to block the merger of AMR Corp. (AAMRQ) and U.S. Airways (LCC), causing both stocks to plummet. JPMorgan’s Jamie Baker and Mark Streeter believe the odds are even that the two airlines prevail in court. They write:

AP

The industry dialogue has crescendoed, with airlines, pundits, bloggers, former CEOs, etc, all extolling the folly of DOJ's suit and  certainty of an airline win (we frequently hear 75% probability). But when it comes to  antitrust experts, we have yet to find any that believe the airlines face anything but a  steep, uphill battle, with most citing probabilities below 40%. We agree with the former, but we simply cannot ignore the latter, so let's call it 50/50.

Baker and Streeter also propose an option if the airlines lose the case:

LCC begins the process of extracting itself from the Star Alliance in favor of OneWorld. Senior management changes occur at stand-alone AMR, satisfying labor's desire for executive changes and assuaging investor concerns over excessive growth. AMR and LCC then pursue a high degree of domestic codesharing, with [Alaska Air (ALK)] potentially dropped as an AMR partner over time. Zero cost synergies, though LCC pilots don't get marked to market so costs remain intact. And oh, DOJ doesn’t have jurisdiction. Call it a near-beer, synthetic merger scenario. It’s not great – not by a long shot – but it beats the two airlines sulking and retreating into separate corners, in our view.

Either way, U.S. Airways is worth taking a look at, as the analysts upgraded it to Overweight from Neutral. Baker and Streeter explain why:

Delta is trading at roughly 10x 2014E earnings, LCC at 5x. Delta trades at a 16% premium on EV/EBITDAR. Granted, Delta is deploying capital to shareholders, joined the S&P 500, and appears to hold particular appeal for first-time airline investors. We get all that. But LCC makes money, consensus looks low, and the market's tendency to portray it as a handicapped network wannabe is highly misguided, in our view. We are raising our price target from $18 to $26 and rating from Neutral to Overweight.

Delta got an upgrade to Overweight as well.

Shares of AMR have dropped 2.1% to $3.73, while U.S. Airways has gained 3.2% to $18.64. Delta has gained 0.2% to $23.20 and Alaska Air has gained 0.9% to $62.17.  Southwest Airlines (LUV) has advanced 0.6% to $14.19.

Is JPMorgan Chase Ready To Explode?

With shares of JPMorgan Chase (NYSE:JPM) trading around $48, is JPM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

JPMorgan Chase is a financial holding company that provides various financial services worldwide. The company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity. Financial services companies, such as JPMorgan Chase, are essential for well-functioning economies around the world. As companies continue to operate and economies expand, leaders like JPMorgan Chase will provide valuable products and services that help financial transactions and services run as smoothly as possible. As one of the better big banks, JPMorgan Chase will lead the financial sector for years to come.

T = Technicals on the Stock Chart are Strong

JPMorgan Chase stock is one of the few big banks that are trading near pre-Financial Crisis price levels. The stock is at a critical juncture at these prices, a solid break above may see the stock continue on a strong bullish run. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, JPMorgan Chase is trading above most of its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of JPMorgan Chase options may help determine if investors are bullish, neutral, or bearish.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
JPMorgan Chase Options	21.61%	6%	5%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
May Options	Flat	Average
June Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on JPMorgan Chase’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for JPMorgan Chase look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	33.61%	54.89%	37.25%	-4.72%
Revenue Growth (Y-O-Y)	-3.57%	10.16%	5.82%	-17.17%
Earnings Reaction	-0.60%	1.01%	-1.14%	5.96%

JPMorgan Chase has seen increasing earnings and revenue figures over most of the last four quarters. From these figures, the markets have had mixed feelings about JPMorgan Chase’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has JPMorgan Chase stock done relative to its peers, Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and sector?

	JPMorgan Chase	Bank of America	Wells Fargo	Citigroup	Sector
Year-to-Date Return	9.58%	4.48%	10.33%	15.99%	10.58%

JPMorgan Chase has been an average performer, year-to-date.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

JPMorgan Chase provides essential financial products and services to consumers and companies in developed and developing countries around the world. The stock has had a decent run over the last couple of years and is now trading at critical price levels. A solid break above these critical price levels may be very positive for its future stock price. Earnings and revenue figures have been increasing over most of the last four quarters but investors have expected a little more from the company. Relative to its peers and sector, JPMorgan Chase has been an average year-to-date performer. Look for JPMorgan Chase to OUTPERFORM

Is General Motors the Great American Bailout Success Story?

With shares of General Motors Company (NYSE:GM) trading at around $32.85, is GM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

General Motors is a feel-good story. Americans love comebacks, and General Motors definitely fits the bill. Another feel-good aspect of this story is that based on employee reviews at Glassdoor.com, General Motors is a company that truly tries to do the right thing for its customers. And according to employees, it never cuts corners. In all, employees see the company they work for as the good guys. And an impressive 77 percent of employees approve of CEO Daniel F. Akerson.

It's widely believed that corporate America is evil. However, in this case, the good guys are winning. Below is a quick look at April sales improvements:

Chevrolet: Increased 11 percent

Cadillac: Increased 34 percent

Buick: Increased 11 percent

GMC: Increased 7 percent

General Motors is also consistently launching new vehicles, which is an indication of confidence in future prospects. The company is performing well in emerging markets, such as Brazil, China, and India. Overall, Q1 global vehicle sales increased 3.6 percent. And General Motors increased its market share by 0.02 percent in Q1 to 11.4 percent.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

General Motors isn't just focused on growth; it's also focused on cost reduction in Europe, which should help the bottom line. General Motors has strong exposure to Europe. For example, 17.6 percent of its 2012 revenue came from Europe.

It should also be noted that General Motors is on Goldman Sachs's Hedge Fund VIP List. The companies on this list have outperformed the market year-to-date as well as last year. It's a follow-the-smart-money approach for investors. However, this doesn't guarantee future results. Furthermore, analysts love the stock: 16 Buy, 3 Hold, 1 Sell.

Now let's get to some numbers. Below is a chart comparing basic fundamentals for General Motors, Ford Motor Co. (NYSE:F), and Toyota Motor Company (NYSE:TM).

	GM	F	TM
Trailing P/E	11.25	10.05	16.15
Forward P/E	7.54	8.93	12.08
Profit Margin	4.00%	4.27%	4.36%
ROE	15.20%	33.97%	9.09%
Operating Cash Flow	8.92B	7.18B	31.15B
Dividend Yield	N/A	2.70%	1.10%
Short Position	7.50%	2.00%	N/A

Let's take a look at some more important numbers prior to forming an opinion on this stock.

T = Technicals Are Strong

General Motors has been trading right along with the industry over the past year, which is a good thing – a very good thing! However, General Motors doesn’t offer any yield whereas Ford yields 2.70 percent and Toyota yields 1.10 percent.

	1 Month	Year-To-Date	1 Year	3 Year
GM	12.27%	13.91%	52.74%	N/A
F	14.27%	16.09%	49.06%	36.01%
TM	11.10%	33.72%	62.85%	70.01%

At $32.84, General Motors is trading above its averages.

50-Day SMA	30.48
200-Day SMA	28.15

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for General Motors is stronger than the industry average of 0.80.

	Debt-To-Equity	Cash	Long-Term Debt
GM	0.48	24.31B	18.42B
F	5.99	24.18B	107.60B
TM	1.11	30.73B	179.57B

E = Earnings Have Been Inconsistent

Annual earnings have been inconsistent, but they have been on the right side of the line. Annual revenue has consistently improved, but the rate of growth has slowed.

Fiscal Year	2008	2009	2010	2011	2012
Revenue ($) in millions	0	0	135,592	150,276	152,256
Diluted EPS ($)	NA	NA	2.89	4.58	2.92

When we look at the last quarter on a year-over-year basis, we see declines in revenue and earnings.

Quarter	Mar. 31, 2012	Jun. 30, 2012	Sep. 30, 2012	Dec. 31, 2012	Mar. 31, 2013
Revenue ($) in millions	37,759	37,600	37,600	39,300	36,884
Diluted EPS ($)	0.60	0.90	0.89	0.54	0.58

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Support the Industry (for now)        

Due to the Chinese/Japanese conflict over islands in the East China Sea, General Motors and Ford have gained market share in China. Chinese consumers are shying away from Toyota and Honda.

In a more overall sense, do you believe Europe is bottoming? Do you believe the American consumer is strengthening? Do you believe China is slowing? The answers to these three questions will give you your answer as to whether or not the auto industry will perform well over the next three to five years.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

General Motors has potential to run higher, but since it looks more likely that Bernanke will unwind later this year, auto manufactures could become high risk. It would be wise to see how the broader market acts over the next few trading days prior to considering any positions in General Motors.

Financial Advice That Will Save You $50,000

Picture this couple looking for financial advice: At 70 he's a successful businessman about to retire, with a much younger wife who's still working. He's managed their portfolio, and they have accumulated $5 million, including the retirement accounts.

Live bait for anybody in the business of handling money. A stockbroker would see in these clients an annual revenue opportunity of at least $50,000.

Just such a couple came to the wealth management firm where Sheryl Garrett was working a little over a decade ago. They didn't need a lot of hand-holding, and their balance sheet was simple. The usual fee, based on a percentage of assets, would have been a bad deal.

Garrett quit the firm, opened a new financial-planning practice charging by the hour and took the couple on as a client, billing them $2,500 the first year for some narrowly targeted assignments, such as rearranging their portfolio to lower their tax bill. (She moved a junk bond fund from a taxable account into a retirement account, for example.) Says Garrett, "They didn't feel like paying somebody 1% a year to babysit their portfolio."

You might entertain feelings of the sort after you have accumulated significant assets. Do you really need to spend $50,000 getting what are likely to be merely average investment returns?

At 51 Garrett now presides over a nationwide confederation of 325 like-minded financial planners who work under the banner of Garrett Planning Network. Their clients are frugal when it comes to portfolio construction, either doing their own stock and bond picking or being content to own cheap index funds. But they are willing to pay to get other kinds of financial advice.

Should I pay off my mortgage? How rapidly should I draw down my IRA? What's the best way to help a relative cover a tuition bill? When should I exercise my employee stock options? At most planners in the Garrett network the answers cost between $180 and $240 an hour.

The initial engagement might consume 5 to 15 hours of billable time, but the tab will be a fraction of what the customer would fork over under a traditional fee schedule.

The country has several hundred thousand stockbrokers, insurance agents and money managers who guide you in investing and spending; 68,500 have the Certified Financial Planner honorific. A small minority bill by the hour. The rest would rather collect either a commission on the stuff they sell or an annual percentage of the money you have.

A stiff fee is unavoidable if you want a pro to pick stocks in a separately managed account. But what if you're persuaded that trying to beat the market is a fool's errand? In that case it makes sense to find a planner who earns his or her keep in some other fashion. You need someone who knows a lot about the tax code, a fair amount about college-tuition aid and something about estates and trusts.

Cambridge Connection is a Franklin, Mich. planning firm that aims to earn back a good chunk of its fees by cutting clients' tax bills. Founder Bert Whitehead, 68, is a tax lawyer turned financial advisor; alongside him are two other tax lawyers and an M.B.A. with an IRS enrolled agent status.

One of Whitehead's tricks is to put taxable brokerage assets into a mechanically chosen list of 50 big companies, from which losers can be plucked for the tax deductions and winners for tax-wise gifts to charities and relatives. Another is to paw through a new client's past tax returns, looking for missed deductions.

Cambridge Connection's bill is likely to be higher than a Garrett planner's but still much lower than that of most advisors. For someone with $5 million it might run $30,000 the first year and $24,000 a year thereafter. That includes tax-return preparation.

Go to forbes.com/sites/baldwin for my 21-part series, "Paying For College."

Top Canadian Stocks To Own Right Now

Canadian stocks fell, following the biggest rally in 11 months, as raw-materials companies declined amid signs China may tolerate slower growth and a U.S. Federal Reserve official urged slower stimulus.

Pretium Resources Inc. lost 4 percent and Alamos Gold Inc. dropped 3.7 percent as falling metals prices weighed on raw-materials producers. Catamaran Corp. added 0.9 percent, pacing gains among health-care companies. Niko Resources Ltd. surged 3.4 percent after entering an agreement for a $60 million loan.

The Standard & Poor��/TSX Composite Index (SPTSX) fell 31.09 points, or 0.3 percent, to 12,462.17 at 4 p.m. in Toronto, erasing an earlier gain of 0.2 percent. The loss pared the index�� weekly gain to 2.7 percent, its biggest five-day advance since November. Trading was 27 percent below the 30-day average.

Top Canadian Stocks To Own Right Now: Royal Bank Of Canada(RY)

Royal Bank of Canada provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide. Its Canadian Banking segment offers personal financial services, business financial services, and cards and payment solutions. The company?s Wealth Management segment provides wealth and asset management, and estate and trust services to affluent and high net worth clients through distributors, as well as directly to institutional and individual clients in Canada, the United States, Europe, Asia, and Latin America. Its Insurance segment provides various life and health insurance, including universal life, accidental death and critical illness protection, disability, long-term care insurance, and group benefits; and property and casualty insurance comprising home, auto, and travel insurance, as well as wealth accumulation solutions; and reinsurance products through retail ins urance branches, call centers, independent insurance advisors and travel agencies, financial institutions, and career sales force. The company?s International Banking segment offers various financial products and services to individuals, business clients, and public institutions in the U.S. and Caribbean. This segment also provides global custody, fund and pension administration, securities lending, shareholder services, analytics, and other related services to institutional investors. Royal Bank of Canada?s Capital Markets segment engages in the trading and distribution of fixed income, foreign exchange, equities, commodities, and derivative products for institutional, public sector, and corporate clients; and involves in investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. The company was founded in 1864 and is headquartered in Toronto, Canada.

Top Canadian Stocks To Own Right Now: DCP Midstream Partners LP (DPM)

DCP Midstream Partners, LP, together with its subsidiaries, engages in gathering, compressing, treating, processing, transporting, storing, and selling natural gas in the United States. It also transports, stores, and sells propane in wholesale markets; and produces, fractionates, transports, stores, and sells natural gas liquids (NGLs) and condensate. The company operates in three segments: Natural Gas Services, Wholesale Propane Logistics, and NGL Logistics. The Natural Gas Services segment operates Northern Louisiana system that gathers, process, and transports natural gas; Southern Oklahoma system; Colorado system; Wyoming system that covers 1,300 miles of natural gas gathering pipelines that cover approximately 4,000 square miles in the Powder River Basin in Wyoming; and Michigan system. It also operates Discovery system, East Texas system, and Southeast Texas system. The Wholesale Propane Logistics segment owns and operates a propane marine import terminal; a leased propane marine terminal; a propane pipeline terminal; and six propane rail terminals, as well as access to several open access pipeline terminals. This segment sells its propane to retail propane distributors. The NGL Logistics segment operates Seabreeze and Wilbreeze NGL transportation pipelines, the Wattenberg NGL transportation pipeline, the Black Lake interstate NGL pipeline, and the NGL storage facility in Marysville, Michigan. DCP Midstream Partners, LP was founded in 2005 and is based in Denver, Colorado.

Hot Insurance Companies To Watch In Right Now: Silver Wheaton Corp(SLW)

Silver Wheaton Corp., together with its subsidiaries, operates as a silver streaming company worldwide. The company has 14 long-term silver purchase agreements and 2 long-term precious metal purchase agreements whereby it acquires silver and gold production from the counterparties located in Mexico, the United States, Canada, Greece, Sweden, Peru, Chile, Argentina, and Portugal. Silver Wheaton Corp. is headquartered in Vancouver, Canada.

Advisors' Opinion:

• [By Christopher Barker]

  Parallel to my selection of major producer Goldcorp among my top 10 gold stocks for 2012, Silver Wheaton might appear a relatively conservative pick as compared to the stable of smaller-cap growth stories that fill out the rest of the list. But don't let Silver Wheaton's hefty market capitalization fool you; this is a stock from which I continue to expect multi-bagger gains as this long-term bull market for silver matures. What's more -- with an enterprise value that equates to just $5.63 per total-resource ounce of silver (or $10.77 per ounce of proven and probable silver reserves) the stock remains dirt cheap! It's not quite as cheap as it was when I treated readers to a truly uncommon opportunity just over 3 years ago, but just watch how this stock responds as the market comes to terms with the likelihood of silver penetrating the all-time high near $50 per ounce and blasting into fresh record territory. Keep in mind, Fools, that Silver Wheaton is targeting about a 70% production surge by 2015, to reach a monumental 43 million ounces of silver per year!

  Silver Wheaton has been a bit quiet lately with respect to adding new silver stream agreements to the pipeline, and personally I suspect the hiatus is likely linked to an adjustment of its signature rate structure (paying roughly $4 per ounce delivered into a stream agreement) to account for a much-transformed silver price environment. But I do note with interest the company's recent appointment of mining analyst Haytham Hodaly -- as senior vice president for corporate development -- to aid in the negotiation of new silver streams. I do not expect the pause to last through 2012, and view the prospects for one or two major new stream announcements as likely stock catalysts for 2012. And as Silver Wheaton's newly established dividend policy of distributing 20% of cash from operations collides with a rising silver price, I expect Silver Wheaton to remain a major focal point of global silver investment demand.

Top Canadian Stocks To Own Right Now: E.I. du Pont de Nemours and Company(DD)

E. I. du Pont de Nemours and Company operates as a science and technology company worldwide. It operates in seven segments: Agriculture & Nutrition, Electronics & Communications, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection, and Pharmaceuticals. The Agriculture & Nutrition segment provides hybrid seed corn and soybean seed, herbicides, fungicides, insecticides, value enhanced grains, and soy protein under the Pioneer brand name. The Electronics & Communications segment supplies materials and systems for photovoltaic products, consumer electronics, displays, and advanced printing. The Performance Chemicals segment offers fluorochemicals, fluoropolymers, specialty and industrial chemicals, and white pigments for various markets, such as plastics and coatings, textiles, mining, pulp and paper, water treatment, and healthcare. The Performance Coatings segment supplies high performance liquid and powder coatings for motor vehicle origi nal equipment manufacturers (OEM); the motor vehicle after-market; and general industrial applications, such as such as coatings for heavy equipment, pipes and appliances, and electrical insulation. The Performance Materials segment provides polymers, elastomers, films, parts, and systems and solutions for the automotive OEM and associated after-market industries, as well as electrical, electronics, packaging, construction, oil, photovoltaics, aerospace, chemical processing, and consumer durable goods. The Safety & Protection segment primarily offers nonwovens, aramids, and solid surfaces for the construction, transportation, communications, industrial chemicals, oil and gas, electric utilities, automotive, manufacturing, defense, homeland security, and safety consulting industries. The Pharmaceuticals segment represents its interest in the collaboration relating to Cozaar/Hyzaar antihypertensive drugs. The company was founded in 1802 and is headquartered in Wilmington, Dela ware.

Advisors' Opinion:

• [By Lowell]

  DuPont offers agriculture and food, building and construction, electronics and communications, general industrial and transportation products and services. Cramer holds 500 shares of DD stocks. DD has a dividend yield of 3.57% and returned -3.52% since the beginning of this year. It has a market cap of $42.94B and a P/E ratio of 12.77. Phill Gross and Robert Atchinson had $55 million in DD shares.

Four Healthy Plays from The Chartist

Technically, it's still way too early to worry about an impending bear market; our models remain in a highly bullish mode, says Dan Sullivan, editor of The Chartist; here, he looks at four well-positioned drug stocks.

Our overbought/oversold indicator is back to neutral after being heavily overbought as recently as July 18.

Stocks appeared to be on the verge of trending lower over the near-term, however, looking further out, it remains, in our opinion, a very powerful bull market that has further to run.

All the key averages remain comfortably above their uptrending 50- and 200-day moving averages, which is typical bull market action.

Abbott Labs (ABT) reported better than expected second-quarter earnings as a result of improved profit margins and cost controls.

The nutritional segment of their business continues to be the star performer. Sales of Similac formula and Ensure rose 7.9% to $1.7 billion, representing one-third of Abbott's total revenue.

Abbott, which is in Dan's Aggressive Account and the Traders Portfolio, has been an okay performer. Its spin-off company, AbbVie (ABBV), has been a much better performer since trading on its own.

AbbVie reported second quarter earnings and revenues which beat expectations. The company earned 82 cents per share on revenues of $4.7 billion. Their key drug, Humira, recorded a sales increase of 12.1%, with revenue sold $2.6 billion.

AbbVie is poised for strong growth with a significant pipeline of new drugs with terrific potential. They are looking for 15 FDA approvals between 2013 and 2017.

Besides being a solid performer in Dan's Account and the Traders Portfolio, the stock has a good yield of 3.6%.

Amgen (AMGN), the world's largest biotech company, reported second quarter earnings and sales that surpassed analysts' expectations.

For the quarter, the company earned $1.89 per share. They are projecting full year revenue to be in the $17.8 billion to $18.2 billion range. The stock is in Dan's Portfolio and our Trading Portfolio.

Biogen (BIIB) reported that second quarter profits exceeded analysts' expectations. Biogen reported earnings of $2.29 per share, well above Zacks Consensus estimate of $1.83. Revenues for the quarter jumped 21% to $1.7 billion.

The company again raised its earnings guidance for 2013 and now expects earnings in the range of $8.25 to $8.50 per share. The stock continues to be one of the best performers in the Actual Cash Account, Dan's Account, and the Traders Portfolio.

Subscribe to The Chartist here...

More from MoneyShow.com:

The Next Big Biotech Bull Market?

GlaxoSmithKline: The Fate of Avandia?

A Prudent Trio of Healthcare Picks

The Original Behavioral Economist

“I’ve been doing the behavioral stuff for 35 years. It’s the basis of investing and economics. It’s only recently that it’s been popularized by academia. They’re reconstituting something in a trivial manner.”

Michael Aronstein doesn’t mince words. The president, chief investment officer and portfolio manager of the MainStay Marketfield Fund has a good thing going in the long-short equity space, due in part to his no nonsense style and the predictable unpredictability of human behavior. And it’s paying off. The fund has five stars, $7.4 billion in AUM, has returned 8.5% annually during the past five years (outdoing 95% of its peers) and is ranked third out of 45 long-short equity funds since inception its in 2007.

Aronstein, his partner Michael Shaoul and the team of analysts look for “ideas investors are acting on that we feel are incorrect.”

“We point to things they own that they shouldn’t be, and things they’re missing that they should,” Aronstein explains. “The markets are influenced by global market trends, but the two really are different. The global macro situation causes distortions in the domestic marketplace that will eventually correct themselves.”

It might sound like a value play, but it’s really anything but. To the contrary, Aronstein looks for growth companies with good balance sheets, those that “might be in controversial industries, but are strong themselves .”

When asked for an example of where this might occur, he immediately points to government statistics, an area he’s been studying for a year and a half.

“If government was subject to Sarbanes-Oxley, the producers of these numbers would be in jail,” he says. “Statistics is the easiest place for government not to spend money, if that’s what they’re looking to do.”

“If you have a story you’re writing about the New York State Legislature that is produced by the New York State Legislature, you wouldn’t need to be too innovative. People tend to be very lazy about taking numbers at face value. They don’t realize that most statistics are an estimate of a guess. When the revisions come out, it very often puts them in the opposite camp of the original conclusions.”

Aronstein says the real value comes in giving a sense of the forces at work in the world.

“Investing is avoiding the major sinkholes that could permanently take you out. We let clients know of the theme of the decade that has matured and is now too dangerous.”

With that in mind, he advises to “short bonds all over the world. The theme that’s matured is emerging-market fixed income. It’s been the most popular product on Wall Street recently.”

He noted the credit expansion “gave him pause in 2010 and 2011,” and we’re at an even higher level of credit exposure than 2003 through 2007, the period just prior to when the markets seized.

So what does he like?

Europe — little surprise given his philosophy.

“We have 25% of the fund in Europe. The north, in particular, is doing better than anybody could have guessed.”

He cryptically concludes that there are “forces that people have come to rely on that will be unseated,” noting energy as an example.

“This unseating will be an unmitigated positive for some and inherently unstable for others. Like the old saying in golf: every swing makes somebody happy.”

---

Check out It’s Not Just Active and Passive, but Behavioral Finance That Best Meets Clients’ Needs on AdvisorOne.

How to play buybacks, open offers?

Buybacks, open offers, delisting very often in the case of many global MNC, what does that constitute and how does an investor take a studied call on whether or not they should tender or exit as the case maybe or actually stay invested? In an interview with CNBC-TV18's Mitali Mukherjee, Yogesh Radke, head-quantitative research, Edelweiss Securities and SP Tulsian, sptulsian.com, answer those questions.

Below is the transcript of the interview. Also watch the accompanying videos.

Q: A buyback by a company. What does it constitute and what is the intent behind doing that?

Tulsian: Buyback by the company is generally made with three objectives; first, to increase the shareholder value, two, to increase the promoter shareholding and third, to make use of the surplus cash lying with the company. This is made by the company with a view to ultimately extinguish the shares, which the company has purchased, resulting into the reduction in the share capital. So, if the paid up capital of the company gets reduced, obviously the earning per share (EPS), book value and the other return on share parameters get improved. Often, this method is largely used by the company more as a gimmick to mop-up the share prices.

Q: A lot of time it's seen and called as a confidence building mechanism. How exactly does that happen for someone who is holding share in that particular company?

Tulsian: Generally, this window remains open for about one year. One needs to carefully watch whether this results into a fruitful or a positive or a constructive exercise or not. There have been many instances where the window has remained opened for one year, the share was ruling below the price at which company intent to buy in spite of not a single share has been bought.

Obviously, you cannot paint all with the same brush. But, if a company is sincere, the promoters are sincere and if it results into the positive move on those lines, definitely that results into the accretion in the value of the shareholders.

Q: Let's take a couple of examples over here and try and understand how you should gauge whether or not you should be participating in that buyback. Reliance Infra is a largecap company which is a case in point, there is Piramal as well. How do you go about gauging the value of the business, the future value of the business and whether this is a good price to be giving back at?

Radke: You have to bifurcate buyback into two types of buybacks; one, the buyback which the company does by buying the shares from the market and second, is a tender offer. Recently, Piramal announced a buyback which was a tender offer, where shareholders can tender their shares and on a proportionate basis they get accepted. So that is something which an investor can play to get the benefit of a buyback.

In the other one, the company buys from the market. So, in this, the shareholder does not know at what time, at what price the company is going to buy because this is something which has been mentioned before that it is one year process, two year process and across the prices the company buys it. So, the benefit for a shareholder who wants to participate in a buyback is only when the company announces a tender offer, buyback via tender offer.

Historically, we have seen few instances where the buyback is via tender offer. Normally, all the buybacks are done via market which does not directly benefit the investor or trader, but company's equity base, performance base parameters get improved. So, whenever there is a buyback via tender offer that is something where traders can make money or trade on those opportunities.

Q: Walk us through a couple of key things to do then. Over the next month or so for buybacks that are currently open for companies, just lineout a few of them and how you would go about approaching the process?

Radke: As I mentioned that if the buyback is via tender offer then we can play for something again. But currently there is no buyback which is a tender offer. All the buybacks are via market. That means you cannot tender your shares and get the price at which the company is buying. The company will buy through the market. So, you cannot take the benefit of a normal buyback. You need a tender offer, which I just explained, Piramal Healthcare where the buyback was at Rs 600, when the share price was trading at Rs 450. At that time, you can buy the shares and tender into the buyback. So, you get a benefit of that. All the buybacks which are going on, running in the market don't provide you an opportunity to make money or trade in the market. These are only for the performance improvement of the companies.

1 2 3

.gD_15nRedN{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:normal;}

Related News

ABB: Outcome of board meeting ABB India April-June net profit fall 22% on weak order flow 

.gD_15nRed{font:15px/20px Arial;color:#FF0000 !important;text-decoration:none;font-weight:bold;}

.GoogleNewsTitle{font:14px/16px Trebuchet MS,Arial,Helvetica,sans-serif;color:#005066;text-decoration:none;} .GoogleNewsTitle:hover{text-decoration:underline} .GoogleNewsURL{font:12px Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none;} .GoogleNewsURL:hover{text-decoration:underline} .GoogleNewsTitleLine{font:20px/22px Trebuchet MS,Arial,Helvetica,sans-serif;color:#F01414;text-decoration:none} .GoogleNewsTitleLine:hover{text-decoration:underline} .GoogleNewsLineURL{font:12px family:Trebuchet MS,Arial,Helvetica,sans-serif;color:#000;text-decoration:none} .GoogleNewsLineURL:hover{text-decoration:underline}

Set email alert for

ABB Siemens AP Paper Mills Everonn Edu Bombay Rayon Cairn India Patni Computer Kanoria Chem Smartlink Net Borosil Glass Piramal Glass

Tags: Buybacks, open offers, delisting, Yogesh Radke, Edelweiss Securities, SP Tulsian, sptulsian.com

Know the finer points in clubbing income with spouse

Hilton Worldwide launches new global careers website

.scroll_hv .panel{width:250px !important; padding:10px 10px 25px !important} #scroll13{width:540px;} .hv_bx{margin-left:-10px;} .tab_data1{padding:0px;}