Dividend Stocks To Buy For 2014, Best Dividend Stocks For 2014: May 2015

Sunday, May 31, 2015

Yahoo! Inc. Winks as It Buys Blink App

Yahoo! Inc. (YHOO) has made the first big move in recent years: It has bought out Blink app, for an undisclosed amount.

What's Blink?

Blink is one of the many, all new and exciting messaging apps (which differs from trendsetters like WhatsApp and similar messaging apps) following the SnapChat philosophy: It self-destructs within a user-controlled timespan!

SnapChat has been a newsmaker in recent months, not as much for its hit "disappearing snaps"-based feature, as for the unsuccessful acquisition bid by social media giant Facebook Inc. (FB) for a whopping $3 billion. Where Snapchat allows users to upload photos or snaps which disappear to self-destruct within a few seconds after they viewed/displayed, Blink works on much the same principle for messages, images, videos and more!

Yahoo Inc.'s First Big Acquisition Post-Alibaba IPO Announcement

Much of Yahoo Inc.'s fortunes in the past few quarters are being driven not by internal growth factors but by much of the external "performers" in which it holds critical stake. Alibaba, the Chinese ecommerce giant which is privately held by founders such as Jack Ma and executives along with SoftBank, is the star of Yahoo Inc.'s growth, in which it currently holds a 22.6% stake.

But Stake in Alibaba Is 22.6%, Not 24%

Incidentally, industry analysts had assumed Yahoo Inc.'s stake in Alibaba was much higher at 24% but as per filings before the U.S. Securities and Exchange Commission as part of its Initial Public Offering, Alibaba revealed the actual stake held by the once popular search engine giant!

Ever since Alibaba's IPO offer has surfaced, analysts have been researching and crunching numbers to note the gains which Yahoo Inc. will hope to see, ever since the downward trend beginning 2006.

Troubled in mid-2006

Yahoo! Inc. (YHOO) despite being the trend setter and technology services innovator for the Internet at the turn of the millennium, ran into troubled financial waters as the company's founding members lost their way in taking it forward, unlike competitor and open source platform giant Google Inc (GOOGL). As Google soon diminished Yahoo's relevance as it unleashed services which Yahoo could not match, it was further sidelined as Microsoft Corporation (MSFT)'s Bing made inroads into Yahoo's traditional U.S. business community user base along with Yelp Inc. (YELP).

By 2006, Yahoo had well hit the worst phase, eventually making changes at the top-most level to bring in dramatic change. As Marissa Mayer, with dog-years of experience driving Google's Search Engine products, moved to take over as Yahoo's chief executive officer, there has been a focused strategy towards making Yahoo the service for the mobile platform!

There have been revenue-sharing forays with Bing and Yelp, but Alibaba continues to be the highest revenue garnerer currently.

And Alibaba's IPO offer will bring in more funds.

Past the IPO, Yahoo will have to sell nearly 40% of the stake it owns, which is expected to bring in substantial funds which will drive growth by way of acquisitions.

The first big move to acquire the Blink App is therefore understandable.

"First with the big deal" says Robert Cox during discussions with Ed Lazear and Hoover for the Reuters program Breaking views, is the "likely motivation behind Yahoo's acquisition of mobile messaging app "Blink". The reason you pay up for these things is because they have a user base."

Increase in number of users and higher engagement is what Yahoo currently desires and Blink could well be the "wink" which will accelerate Yahoo back into the echelons of technology profit making companies with higher user engagement, advertising revenues and substantial quality improvement in the content it provides as it now cuts deals with Spotify to Clear Channel and CNBC.

About the author:Pushpa NareshI have done my MBA (Finance) and an avid market tracker.

Currently 0.00/512345

Rating: 0.0/5 (0 votes)

Subscribe via Email RSS Feeds

Subscribe RSS Comments Please leave your comment:
More GuruFocus Links

Latest Guru Picks	Value Strategies
Warren Buffett Portfolio	Ben Graham Net-Net
Real Time Picks	Buffett-Munger Screener
Aggregated Portfolio	Undervalued Predictable
ETFs, Options	Low P/S Companies
Insider Trends	10-Year Financials
52-Week Lows	Interactive Charts
Model Portfolios	DCF Calculator
RSS Feed	Monthly Newsletters
The All-In-One Screener	Portfolio Tracking Tool

Thursday, May 28, 2015

IPO market is casualty of stock market pullback

Weibo, better known as China's answer to Twitter, was the big winner among five initial public offerings that made their debuts Thursday. Yet, it wasn't exactly a high-flying performance to make investors chirp.

The IPO market, which is coming off its best year since 2000, is showing unmistakable signs of returning to earth — the latest casualty of last week's stock market plunge, which prompted investors to dial back risk-taking.

That slowdown may take some of the excitement out of the coming IPO for Chinese e-commerce giant Alibaba, which could submit its official filing to U.S. regulators as early as next week. . It's being widely touted as the biggest IPO since Facebook raised more than $16 billion in May 2012.

The five IPOs that started trading Thursday posted an average return of just 8.7%, below the average 17% first-day pop so far this year and for 2013, according to IPO investment advisory firm Renaissance Capital.

Chinese microblogging site Weibo jumped 19.1%. Three of the deals were priced below their projected range, while two priced at the low end of the range. Chinese real estate site Leju rallied 18.6%, but travel industry player Sabre, sporting goods retail chain Sportsman's Warehouse and drugmaker Vital Therapies all finished flat or with low single-digit percentage gains.

The fact that Weibo had to price its IPO at $17, which was the bottom end of the $17 to $19 range, and slash the number of shares it was offering by more than 3 million, signals that the IPO market is coming back to earth, says Kathleen Smith, a principal at Renaissance Capital. She called it a "necessary correction."

The days of eye-opening day one pops, such as the 206.7% gain that Dicerna Pharmaceuticals posted on Jan. 30, and Castlight Health's 148.8% jump on March 14, seem to be fading.

The IPO market has lost some of its luster since a major correction in high-price biotech and Internet stocks last week. As the stock market goes, so goes the IPO market, says John Fi! tzgibbon, founder of IPOScoop.com. Last week, the Nasdaq suffered its worst weekly swoon in nearly two years and was down 9% from its recent high before rebounding.

"You need a healthy stock market to have a good IPO market," says Fitzgibbon. "The market (turbulence) is what put this (IPO rally) to bed this week. Without the wind at your sails, you can't go anywhere."

The more bearish tone is best illustrated by the recent performance of the Renaissance IPO Exchange Traded Fund. At its 2014 high on March 5, it was up 8.4% for the year. But it has since given up all

In the past week, the IPO market has gone from a seller's market favoring the bankers to a buyer's market that favors individual investors, says Josef Schuster, founder of IPOX Schuster.

The IPO window, he adds, hasn't closed completely, but if bankers want to get deals done, they'll have to price the shares more conservatively going forward. Alibaba's IPO might not be as gargantuan as many analysts believe due to the recent market jitters, he adds.

"It is definitely going to hurt Alibaba on its initial valuation," said Schuster.

Wednesday, May 27, 2015

Kellogg's To Trace Its Palm Oil Suppliers, While General Mills Looks Internationally For More Opportunities

Related GIS Market Wrap For February 18: Dow Finishes Lower, Nasdaq Still Hot Radio Shack vs. General Mills: Which Would You Rather - Super Bowl Edition Related K Morgan Stanley Remains Positive on Kellogg Company Despite Disappointing Guidance UPDATE: JP Morgan Upgrades Kellogg, But Lowers PT Following Recent Earnings Report

Some recent dispatches from the breakfast cereal front.

The Battle Creek, Michigan-based Kellogg Company (NYSE: K) says it is working to ensure the palm oil used in its products is responsibly produced, and doesn't come from plantations that harm local environments. According to The Associated Press, the cultivation of palm oil has destroyed tens of thousands of acres of vulnerable rainforest in countries like Indonesia and Malaysia.

"As a socially responsible company, traceable, transparent sourcing of palm oil is important to us," Diane Holdorf, Kellogg Company Chief Sustainability Officer, said in a press statement, "and we are collaborating with our suppliers to make sure the palm oil we use is not associated with deforestation, climate change or the violation of human rights."

Palm oil production is a multi-billion-dollar business globally, and AP says it is also minor ingredient in some Kellogg products, such as toaster pastries, waffles and cookies.

Related: Disney's Hong Kong Resort Stays In The Black

Reuters, meanwhile, reports General Mills (NYSE: GIS) – suffering from weak sales at home – is again turning its eye overseas to some rapidly-expanding, emerging markets.

In 2012, the company purchased Brazilian food maker Yoki Alimentos for $1 billion.

And now, Reuters says General Mills is "actively investigating" opportunities to expand in India and Indonesia, as well as across North Africa and the Middle East.

The Minneapolis Star Tribune says General Mills is also looking to branch out further into the yogurt business.

Several years ago, the company bought a 51-percent interest in France's Yoplait for more than $1 billion. And COO Christopher O'Leary, according to the newspaper, announced company plans to open a yogurt production plant in China.

General Mills CEO Ken Powell, speaking at a business conference in Florida on Tuesday, acknowledged "it's been a tough winter for U.S. consumers and for U.S. food industry sales," but said he remains optimistic about his company's long-term growth.

"There's plenty of growth to be had," he added, "and it's our job to get it."

Posted-In: brazil breakfast cereal cereals China Christoper O'Leary Diane Holdorf food and beverage India Indonesia Ken Powelll Malaysia Middle East North Africa Yoki AlimentosNews Emerging Markets Eurozone Retail Sales M&A Economics Markets Media Best of Benzinga

Most Popular The Craziest iPhone 6 Rumors And Everything Else About Apple's Next Smartphone Procter & Gamble Shares Under Selling Pressure #PreMarket Primer: Tuesday, February 18: Big Merger Deals In The Works Berkshire Hathaway Files SEC 13F Options Outlook For The Week Of February 17: Time To Link Up With LinkedIn? Earnings Expectations For The Week Of February 17: Coca-Cola, Hewlett-Packard, Wal-Mart & More Related Articles (GIS + K) Kellogg's To Trace Its Palm Oil Suppliers, While General Mills Looks Internationally For More Opportunities Market Wrap For February 18: Dow Finishes Lower, Nasdaq Still Hot Morgan Stanley Remains Positive on Kellogg Company Despite Disappointing Guidance UPDATE: JP Morgan Upgrades Kellogg, But Lowers PT Following Recent Earnings Report Benzinga's Top Upgrades #PreMarket Primer: Friday, February 7: Jobs Friday Around the Web, We're Loving... Create an Account With Options House and Get 150 Free Trades! Pope Francis Rips 'Trickle-Down' Economics Wynn, MGM, Other Casino Giants Vying For U.S. Turf

Monday, May 25, 2015

Icahn Eyes eBay

One of our favorite stocks has caught the attention of activist investor Carl Icahn, explains Geoffrey Seiler, editor of BullMarket.com.

eBay (EBAY) disclosed that Carl Icahn had accumulated a 0.82% stake in eBay and proposed a non-binding shareholder proposal to split-off PayPal as a separate unit.

The board rejected the split-off proposal, saying it has examined that idea in detail in the past, and believes keeping PayPal together with eBay's Marketplace unit is in the best interests of shareholders.

It believes PayPal is better able to leverage the company's technology capabilities, commerce platforms, and relationships with retailers, brands, and large merchants worldwide, as part of eBay.

As to its results, the company earned $850 million, or 65 cents per share, up 13% from $751 million, or 57 cents per share, a year earlier. Adjusted earnings rose 15% to $1.07 billion, or 81 cents a share.

The result was in line with the analyst consensus. Revenue jumped 13% to $4.53 billion, just below the $4.54 billion consensus.

eBay generated $1.43 billion in free cash flow during the quarter. It ended the quarter with cash, equivalents, and investments of $12.8 billion, and $4.12 billion in debt. Net cash was approximately $6.62 per share. During the quarter, the company repurchased $254 million of its stock. The company's board also authorized another $5 billion for share repurchases.

Looking first at the operating results, eBay delivered an OK quarter, given challenges, such as the shortened holiday season for the Marketplace unit. PayPal once again delivered solid growth.

In both cases, we think the growth in active users, up 14% year over year at Marketplace and 16% for PayPal, points to continued momentum for the businesses.

Icahn is not the first investor to suggest PayPal should be spun-off. One of the arguments is that PayPal would likely command a higher multiple on its own; it would also open PayPal up to be a takeover target.

Our view of Icahn's investment is that it is, mostly, a positive for shareholders, but a distraction for management. Icahn doesn't always get everything he wants, but he's been pretty successful at bidding up the price of companies he has a stake in.

His investment in eBay, at the least, should help raise the floor price a bit and it certainly will lead to a vigorous debate over the merit of his proposal. Meanwhile, eBay remains one of our favorite stocks for the long-term and we continue to rate it a Buy. Our target is $64.

Subscribe to BullMarket.com here…

Sunday, May 24, 2015

Terminal Tuesday â€“ 2013 Comes to an End

INDU WEEKLY Will it be a happy new year?

Hard to imagine it being happier for the markets than 2013, with the indexes closing at record highs and investor optimism nearing 80% bullish – as good as it's been since October of 1929 – just day's before the crash. Earnings were also looking great in 1929 and the gap between the top 1% and the bottom 99% had never been greater – until now.

That's another record we've shattered in this trickle-less rally, wealth disparity is at an all-time high. The top 10% are partying like it's 1999, and why shouldn't they? The top 10% control 83% of the country's financial wealth, 50% more than they did in 1929 and the next 10% have 12%, leaving 5% for the bottom 80% to share.

There's no use complaining about it, these are the conditions we're living in (well, that's what we like to say to the bottom 80% – to keep them from revolting!). If the prevailing social condition is slavery and the average white plantation owner has 200 slaves, then we should buy stock in the plantations, right?

That's what we do when we play the markets, there was a brief fad of "social-conscience investment funds" but, of course, they underperformed and no one wanted them and they died a quick death. There are, in fact, just 29M people in the World who have more than $1M and only another 344M people who have more than $100,000 in assets. Between them, these 373M people, just 5% of the World's population, control 82.4% of the World's assets.

That's US and, believe me, you do NOT want to be one of THEM. You may think you can live fighting with the bottom 90% for your share of the remaining 17.6% but, essentially, it's like permanently moving to Survivor Island – and you've seen that experience break down even the strongest of people. Even the poorest Americans are typically in the top half of the global wealth dung-heap and the poorest Europeans as well – the rest of the world suffers beneath us all.

Ken Langone is one…
continue reading

Would you like to read up-to-date articles on the day they are posted? Subscribe by clicking here.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Futures Pre-Market Outlook Markets

Originally posted here...

Most Popular Five Star Stock Watch: Facebook, Round Two A Look at Some 'Legit' OTC Stocks 5 Technology Stocks With The Highest EPS Estimates The Herd Continues to Flock Out of Icahn Enterprises Berkshire Hathaway To Trade Stock for Phillips 66 Specialty Products Business Which Is The Better Bet - FedEx vs. UPS? Related Articles () A Look at Some 'Legit' OTC Stocks January Second Trading: Always Interesting Wilshire Bancorp Announces Changes to Board of Directors Market Wrap For December 31: Markets End The Year On A Positive Note Starbucks vs. Dunkin' Donuts: Which Is The Better Bet? WPCS Announces its Seeking Buyer for 60% Stake in China JV Around the Web, We're Loving... Lightspeed Trading Presents: Thunder and Tubleweeds: Trading Techniques for the New Market Enviroment Pope Francis Rips 'Trickle-Down' Economics Come See How the Pro's Trade in this Exclusive Webinar Wynn, MGM, Other Casino Giants Vying For U.S. Turf What Should You Know About AMZN? View the discussion thread.

Wednesday, May 20, 2015

Chestnuts make roaring comeback

Chestnuts still roast on open fires, but some farmers are now using the traditional holiday favorite in many other ways — making treats like hummus, soup and gluten-free beer.

With a combination of nature, entrepreneurial farming and some help from Michigan State University, Michigan has become a national leader in growing chestnuts and is harvesting more than 100,000 pounds a year.

It's a comeback of sorts for the nuts after the trees that grow them were nearly wiped out by a fungus that destroyed billions of chestnut trees across the country by the 1950s.

"If I had a million pounds of chestnuts, I could sell them tomorrow," said Roger Blackwell, president of the Chestnut Growers Inc., a cooperative of 29 growers across the state.

Roasting the nuts at Christmastime still is popular, Blackwell said, but additional uses have fueled the industry's growth. Unlike other nuts, chestnuts are full of water — rather than oil — which means they can be dried out and ground up like grain to make flour. Their natural sweetness makes them ideal for pastries.

Researchers say the American Chestnut tree was once king of the forest in the eastern U.S., producing a decay-resistant hardwood perfect for building things like railroad ties, barns and other structures left out in the elements. In the 1940s, Mel Torme and Bob Wells lionized chestnuts in "The Christmas Song," later made famous by Nat King Cole.

But a fungus, first noticed in the early 1900s, took out billions of the trees. By the 1950s, it was rare to see a mature tree that hadn't been destroyed. Most chestnuts sold in stores were imported from Italy and China.

By the 1990s, Michigan farmers sensed a potential cash crop if the nuts could be grown successfully. Dennis Fulbright — a professor of plants, soils and microbial sciences at MSU — was researching chestnut trees and isolated a natural advantage that Michigan could exploit.

The fungus that kills the trees was itself susceptible to a virus tha! t occurs naturally in Michigan.

"We don't know where the virus came from," Fulbright said. "But it slows down the fungus considerably to the point where the trees' resistance can work."

Scientists helped by finding a hybrid tree that combines European and Japanese varieties. They produce larger nuts and a larger crop.

Fulbright said that eventually farmers hope to grow about 3,000 pounds of nuts per acre. The nuts sell for about $2 per pound wholesale and can fetch three times that much when sold retail, said Joyce Ivory of the Chestnut Growers.

The Henry Ford buys Michigan-grown chestnuts, and roasts and sells them during its Holiday Nights in Greenfield Village.

Jesse Eisenhuth, director of Food Services for the Henry Ford, said it's important to musuem to buy local.

"Chestnuts are a type of food most people equate with the holidays," Eisenhuth said. "Few people, however, have actually tasted them. We see a lot of people at our Holiday Nights program in Greenfield Village, eating chestnuts for the first time."

Fulbright said chestnuts give growers a diversity of products to offer; that helps when something goes wrong with their other crops.

"It's an alternative crop," Fulbright said. "We didn't freeze out the year of the big freeze in Michigan. If your apples or cherries are damaged, you still have your chestnuts."

Fulbright said Michigan's fruit belt on the west side of the state, where apples and cherry thrive, is perfect for chestnuts. But he sees other areas that can grow them, too.

Ivory and her husband, Peter, grow chestnuts on their property in Lapeer County in the Thumb. Fulbright said he initially doubted they could do well there, but: "They've proven me wrong, and I like to be proven wrong."

Fulbright said soil conditions and other factors in metro Detroit could make chestnut-growing possible here, too.

"This a great agricultural story," Fulbright said. "There are not too many start-ups in agriculture in our lifetime."

Tuesday, May 19, 2015

With K-Cup patent expired, others try to cash in

BURLINGTON, Vt.— Green Mountain Coffee Roasters in Waterbury, Vt., built a huge business on the strength of its patented K-Cup single-serve portion pack for Keurig single-cup coffee makers.

When the patent expired in September 2012, some analysts foretold doom.

That has not been the case. Rival companies have captured just about 8% of the single-serve market, and through the third quarter of this year, $2.4 billion of Green Mountain's $3.3 billion in revenue has come from selling the ubiquitous portion packs.

Green Mountain struck deals to make K-Cup packs for some of the biggest names in the business, including Starbucks and Dunkin' Donuts, and has kept that business after the patent expiration.

"The patent expired 13 months ago," said Bill Chappell, an analyst with SunTrust Robinson Humphrey in Atlanta. "We've had more than ample time to see what kind of impact it would have, and it really hasn't had that much."

That doesn't mean there aren't determined challengers out there, perhaps none more feisty than Rogers Family Co. in Lincoln, Calif.

Founder Jon Rogers remembers his first mug of K-Cup coffee, some 20 years ago at a car wash. He didn't like it and decided the single-cup craze would be a flash in the pan.

"I didn't think it had legs," he said. "Obviously time proved me wrong."

Rogers didn't wait for Green Mountain Coffee's patent to expire to launch his own single-serving portion pack, which led to his company being sued in November 2011. Green Mountain Coffee lost that lawsuit in May and appealed to the federal circuit, where the appeal is ongoing.

Rogers said he felt it was important to fight the much-larger Green Mountain Coffee because Rogers' One Cup portion pack is so different from the K-Cup pack. Rogers Family Co. has about $200 million in annual sales.

"Look at ours, and look at theirs," Rogers said. "They don't have a leg to stand on."

The One Cup uses a ring made from plant-based materials and an inner bag made from wo! od pulp, together with a mesh filter made from food-grade polyester. It is 97% biodegradable, says Rogers, who invested $10 million in machines to make the pods. Only the mesh filter is not biodegradable. Rogers is looking for an alternative that will make One Cup 100% biodegradable.

"It's done very well," Rogers says of One Cup. "It's pretty much nationwide, sold in selected Costcos. We manufacture (the) private label for Safeway."

One of the enduring criticisms of the K-Cup pack has been that it ends up in landfills — a problem that Green Mountain Coffee is still trying to solve.

Whole Foods Market, which launched a pod under its private 365 Everyday Value brand in July, did not even consider Green Mountain Coffee as a supplier, said Mark Dickerson, a buyer for the grocery chain.

Dickerson declined to say who makes Whole Foods' pods but did say the famously green company had to grapple with the fact that its consumers "tend to not like additional packaging."

As much as Whole Foods might chafe at the single-serve pod — which is difficult to recycle because of its small size and the combination of plastic and aluminum used in its packaging — the company decided it couldn't ignore the numbers.

"The sales trend really, really made it compelling to explore the opportunity," Dickerson said. "In doing so we wanted to stay true to our mission and core values and do it in a Fair Trade organic format to differentiate ourselves."

While the inroads that unlicensed portion packs have made so far are modest, Green Mountain Coffee's plans to introduce a brewer in 2014 that can reject unlicensed pods has some analysts wondering just how worried the company is.

CEO Brian Kelley explains that Keurig 2.0, as the new brewer is known, utilizes interactive technology to distinguish licensed from unlicensed pods.

"We will brew perfectly every licensed pod," Kelley said. "We're in the process of offering unlicensed pods the opportunity to come into the system so the! y, too, c! an be perfectly brewed."

Kelley declined to say what the fate of unlicensed pods will be in the new system, but it could range from not brewing them at all to brewing them a few times before they no longer work.

"It's fair to say we're still deciding on exactly how we will handle the unlicensed pod," Kelley said.

Dan D'Ambrosio also reports for the Burlington (Vt.) Free Press

Wednesday, May 13, 2015

Advanced Micro Devices, Inc (AMD): When Warm Just Isn't Hot Enough

Last Thursday after the market closed, Advanced Micro Devices, Inc (NYSE: AMD) reported earnings and now the stock is off by almost 22% over the last four trading days with most of the fall coming when the market opened on Friday after earnings were reported. Part of the problem for the company was bad timing as there were a whole bunch of earnings reports that came out last Thursday and Friday plus major tech names like Microsoft Corporation (NASDAQ: MSFT) and Google (NASDAQ: GOOG) missed Wall Street expectations. Nevertheless, our SmallCap Network Elite Opportunity (SCN EO) portfolio position in Advanced Micro Devices went from a handsome profit to being down about 6%, but we aren't going to worry too much for the following reasons:

The Earnings Report Beat Expectations. Advanced Micro Devices did largely beat Wall Street expectations when it reported earnings. Revenues fell 18% to $1.16 billion while Wall Street had expected $1.1 billion; plus the company reported a net loss of $74 million verses net income of $37 million for the same period last year, while Wall Street was expecting a loss of around $102.9 million. CEO Rory Read also said that Advanced Micro Devices is on track to report net income in the third quarter, something that hasn't happened since mid-2012, with most of an expected 22% sequential improvement in revenue expected to come from console chip sales. Finally, Gross margin will drop to about 36% this quarter from 40%. Stock Downgrades. Some Wall Street analysts decided to downgrade Advanced Micro Devices after the earnings report with John Pitzer of Credit Suisse cutting his rating from "Neutral" to "Underperform." Pitzer noted that while the results and guidance were ahead of Wall Street's estimates, he cautioned that estimates for the company's profits from videogame consoles appear too high He added: "Its unclear to what extent new gaming platforms are incremental relative to AMD's current royalty position." Joseph Moore of Morgan Stanley also called the earnings report "a good quarter," but then he cited margins from game consoles that will be lower than expected when he downgraded the stock to an "Underweight" rating. Neutral Analyst Opinions. Not everyone was downgrading Advanced Micro Devices as Citi analyst Glen Yeung reiterated his "Neutral" rating plus he increased his price target by $2 to $5. Yeung added that while the video game player business will boost sales, its products have very small margins which will limit its effect on the company's bottom line. Meanwhile, Susquehanna Financial Group's Chris Caso also backed his "Neutral" rating and raised his price target by $1.50 to $4. However, Caso did caution that the company's cash balance and debt obligations leave it little flexibility plus he added there is no guarantee that the new video game consoles its chips supply will be successful. Finally, Wedbush Securities' Betsy Van Hees has kept her "Hold" rating and noted: "It was a great report but a lot of the good news is already priced in." Cramer Still Likes the Stock. For what his oppinion may be worth, Jim Cramer, the host of CNBC's Mad Money, recently said: "I'm a buyer as a bullish bet on new gaming consoles." Share Performance. Advanced Micro Devices fell 0.82% to $3.63 in heavy trading yesterday, but the stock is rising in premarket trading plus its still up 59.2% since the start of the year, down 14% over the past year and down 21.9% over the past five years:

For technicians, here is the latest technical chart for AMD:

Again, Advanced Micro Devices put in a pretty good earnings report – meaning the selloff after or perhaps the run up ahead of earnings was a bit overblown.

SmallCap Network Elite Opportunity (SCN EO) has an open position in AMD. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.

Tuesday, May 12, 2015

The Retirement Time Bomb No Oneâ€™s Talking About ... Yet

The problem of insufficient retirement savings is an oft-highlighted problem, but the safety of Americans’ meager retirement assets gets far less attention.

So says Ron Surz (left), pension consultant and gadfly on target-date and hedge fund issues who has written numerous technical articles on portfolio management.

In an interview with ThinkAdvisor, Surz warns that masses of retirement portfolios are due to blow up, just like they did in 2008, because of the inappropriate risk levels of target-date funds, which today claim a far higher proportion of retirement assets than they did back then.

“It’s not a matter of if — it’s a matter of when, says Surz of San Clemente, Calif.-based Target-Date Solutions. "We will have another market correction and those folks at or near retirement will be toast,”

While both diversification and fund costs have improved somewhat since the 2008 financial crisis, the key factor that is unchanged since that time is the riskiness of these funds.

“The equity allocation is exactly what it was in 2008,” Surz says, noting that target-date assets have skyrocketed since that time.

The fund category, which combines stocks and bonds but which reallocates in order to become more conservative as the investor approaches retirement, has surged in growth since the Pension Protection Act (PPA) of 2006 made TDFs (the most popular) one of three default investments.

From zero assets prior to the PPA, target-date funds today amount to more than $1 trillion, or about one fourth of all 401(k) assets, and are on track to reach $4 trillion, or half of all 401(k) assets, by 2020.

And yet, as the financial media mark the fifth anniversary of the Lehman Brothers bankruptcy, which sent the stock market into a tailspin, Surz wants Americans to recollect that target-date funds, despite their image as safe investments, performed abysmally at that time.

Investors — some already retired and others close to retirement — in 2010 target-date funds (i.e., funds invested for investors targeting that year as their retirement date), lost 25% of their funds’ value on average in 2008.

The Securities and Exchange Commission and Department of Labor held hearings at which fund company executives assured officials that all was well.

“As soon as they made back 25%, the fund companies were saying no harm no foul. This will never happen again. It’s a pretty naïve view,” Surz says.

That is because fund company incentives are not aligned with retirees’ goals, which is to not risk losing their retirement wealth when they need it.

“The fund companies get paid whether performance is good or bad, and they get paid more for running higher risk products. They get paid for more for running a stock portfolio than a bond portfolio,” Surz says.

And indeed, Surz points out that the three fund companies that collectively manage 85% of target-date fund assets — T. Rowe Price, Vanguard and Fidelity — have average equity allocations of 60%, 55% and 55% respectively, a level of risk Surz says is inappropriate.

(While unchanged on average since 2008, he notes that 2010 funds specifically averaged equity allocations of 45% when they lost 25% in 2008.)

Beyond these averages, Surz finds it curious that some companies have widely different allocations that seem to reflect corporate objectives more than investor objectives.

For example, PIMCO, a bond shop, has just a 20% average equity allocation at the target date, whereas AllianceBernstein, an equity shop, has a 70% equity allocation.

“In their presentations, they’ll tell you that PIMCO’s demographic is people who have saved enough and don’t need to take risk and AllianceBernstein’s is people who haven’t saved enough and need to take more medicine [i.e., equities],” Surz says.

“But look at their prospectuses: You will not see these objectives; they’re just an excuse to package product any way they want to.”

He adds that each has its Ph.D. presenters who will “prove to you that 70% of the target-date portfolio should be in equities [for AllianceBernstein while] Pimco will prove to you that 80% should be in bonds.”

The reality, he says, is they allocate their funds the way they do for two reasons: “They want to get paid most they can and they want to win the horse race” — meaning they understand that equities usually outperform, so (PIMCO notwithstanding) they’re going to load up on stocks so they have good performance numbers most of the time.

Surz, who has developed his own Smart Funds available to RIAs through Hand Benefit & Trust of Houston, says advisors must play the key fiduciary role.

The plan sponsors who are obligated as fiduciaries for workers “are just plain lazy,” Surz remarks. “These guys are running companies, not pension funds.”

Five-year losses for his Smart Funds were just 10% in the five most brutal months of 2008, compared with 37% for T. Rowe Price, 30% for Vanguard and 35% for Fidelity.

Surz has spoken to ERISA attorneys who are already planning class-action lawsuits against mutual funds (rather than shallower-pocketed plan sponsors) when the next crisis hits.

---

Check out Beware of Target-Date Funds by Ron DeLegge on ThinkAdvisor.

Sunday, May 10, 2015

This Wall Street Superstar Is Spending Billions On These Dirt-Cheap Stocks

When the employees of Florida-based Fairholme Capital came into work on Jan. 11, 2010, they were greeted with great news. Rating firm Morningstar had just selected Fairholme's Bruce Berkowitz as the "Domestic-Stock Fund Manager of the Decade." That's quite an accolade, considering the heady competition.

Morningstar chose him because "his aptitude for picking stocks sets him apart from his peers, and Fairholme's portfolio is filled with attractively priced firms that generate high free cash flow." In the just-completed decade -- a decade in which the S&P 500 delivered slightly negative returns -- Berkowitz's Fairholme generated a 10-year annualized total return of 13%.

The accolades are still pouring in. GuruFocus.com anointed Berkowitz as its "Investing Guru of the Year 2012."

These days, Berkowitz is still seeking out stocks with solid value and cash flow characteristics. According to recent filings, Berkowitz is loading up on shares of four insurers that are the epitome of deep value.

Berkowitz's Insurance Picks

In the second quarter, Berkowitz couldn't resist the urge to buy yet more shares of American International (NYSE: AIG).

This much beleaguered company survived a near-death experience, and is now on the mend. I profiled AIG about a month ago and completely agree with Berkowitz that it offers tremendous value, trading at just 0.71 times tangible book value. The fact that AIG recently put into place a dividend and buyback program simply underscores this stock's appeal.

Berkowitz is beginning to build a major position in Genworth Financial (NYSE: GNW) as well. Although he has bought this insurer at an average price of $9.38 a share, and it has already risen to $12, look for Berkowitz to keep on buying. After all, tangible book stands at $27 a share. Equally important, book value has been rising roughly $4 per year, implying this figure may move above the $40 mark in the next three to four years.

More broadly, all insurers are entering the sweet spot of their cycles: "The fundamental outlook of the life insurers continues to strengthen, reflecting stronger macro conditions, favorable operating leverage, and robust capital management," noted analysts at Morgan Stanley, adding that "while the stocks have reacted positively to these developments, with the sector having increased about 45% year to date, the valuations remain low relative to other financial services sectors."

Back in May, I noted a series of factors underpinning an eventual move up in insurance stocks, and investors are now paying closer attention to this deep-bargain sector.

New Picks
In the second quarter, Berkowitz initiated positions in two other insurers: Lincoln National (NYSE: LNC) and Hartford Financial (NYSE: HIG).



	CNBC
	Berkowitz was selected by Morningstar as the "Domestic-Stock Fund Manager of the Decade."

The appeal of Hartford Financial stems from its below-book valuation but also a move to refocus the core business on fewer but more profitable niches. The company is slowly exiting the annuities business and recently sold a division that operated retirement plans. The remaining core: property and casualty (P&C) insurance, employee benefits programs and mutual funds.

With those moves largely complete, Hartford Financial "has significant capital flexibility to de-lever its balance sheet, reduce risk in its runoff variable annuity block, and return cash to shareholders," noted Citigroup analysts who rate the stock as a "buy" with a $37 price target. "Over time, we see significant value as results in the core P&C and group benefits businesses improve."

Some of that returning cash to shareholders is coming in the form of a stock buyback. As I've written, buying back shares while they trade well below tangible book value is a no-brainer. Hartford Financial said in June that it was adding $750 million to its buyback program, bringing the total authorization to $1.25 billion. If the move is completed at current prices, it would reduce the share count by more than 100 million shares -- roughly 22% of the total share count.

Risks to Consider: Insurance stocks have already posted solid gains this year and may need a breather before resuming their climb toward book value.

Action to Take --> It always pays to track the moves of Bruce Berkowitz, as his value investing approach never goes out of style. These insurers not only possess solid upside in an improving economy but also offer solid downside protection if the economy stumbles, thanks to their below-book valuations.

P.S. -- Have you heard about the American Retirement Betrayal? In a just released report, top StreetAuthority analyst Nathan Slaughter predicts rough roads ahead for for a key area of of the U.S. economy... and it's all Bernake's fault. This collapse could happen as soon as October, and anyone not prepared for it could have their savings wiped out. To learn how Nathan plans to ride out the storm, click here.