When satellite radio provider Sirius XM (Nasdaq: SIRI) delivered first-quarter results in late April, it was business as usual. An 11% gain in revenue led to a sharper 28% surge in earnings before interest, taxes, depreciation and amortization (EBITDA), as the company reaps the benefit of incremental new revenues across its largely fixed cost base. That operating leverage has been in place for quite a while, as EBITDA margins expanded from 23% in 2009 to 34% at the end of 2013. Equally impressive, Sirius has become a free cash flow machine and appears on track to generate nearly $1 billion… Read More

When satellite radio provider Sirius XM (Nasdaq: SIRI) delivered first-quarter results in late April, it was business as usual. An 11% gain in revenue led to a sharper 28% surge in earnings before interest, taxes, depreciation and amortization (EBITDA), as the company reaps the benefit of incremental new revenues across its largely fixed cost base. That operating leverage has been in place for quite a while, as EBITDA margins expanded from 23% in 2009 to 34% at the end of 2013. Equally impressive, Sirius has become a free cash flow machine and appears on track to generate nearly $1 billion in free cash flow for the second straight year. Such robust free cash flow has enabled Sirius to restructure its debt (at lower interest rates) while also buying back a large chunk of stock from investor John Malone. (In fact, the total share buyback plan is an impressive $2 billion.)  Also, the fact that Sirius now has 26 million paying subscribers is a feat that few would have expected the company to accomplish a half decade ago. Sirius’ service is resold by 70% of the major automakers and 25% of all cars (new and used) on the road today have the… Read More

Although most of the financial media is focused on large, public companies with billions of dollars in annual sales, it’s actually the little guy that deserves more ink.  Small to medium-size businesses (SMB), often privately held with less than a thousand employees, play a huge role in terms of job creation and capital spending. According to the U.S. Small Business Administration, SMBs provide 45% of all non-farm economic activity, 40% of all private sector payrolls and employ nearly half of all non-government employees.  So you should consider it to be a big deal when the National Federation of Independent Business… Read More

Although most of the financial media is focused on large, public companies with billions of dollars in annual sales, it’s actually the little guy that deserves more ink.  Small to medium-size businesses (SMB), often privately held with less than a thousand employees, play a huge role in terms of job creation and capital spending. According to the U.S. Small Business Administration, SMBs provide 45% of all non-farm economic activity, 40% of all private sector payrolls and employ nearly half of all non-government employees.  So you should consider it to be a big deal when the National Federation of Independent Business (NFIB), which represents these firms, speaks of a noticeable boost in the outlook for such businesses. The NFIB polls its membership base once a month, and in the most recent reading, found that its NFIB Optimism survey rose last month to 96.6, the highest reading in nearly seven years. Yes, SMB confidence is back to pre-crisis levels.  To be sure, the NFIB survey didn’t note any major change in business activity. Instead, the key boost to the gauge came from an expectation of steadily improving sales and business conditions in the future, which is typically a… Read More

Over the most recent Christmas holidays, employees at Twitter (NYSE: TWTR) were in an especially happy mood as their company stock zoomed past the $70 mark. #-ad_banner-#All they needed was a bit of patience — to wait until the calendar read May 6, 2014 — to sell their shares. But the stock market had other ideas. A rising tide of outside investors was well aware that a huge amount of employee-owned stock would come to the market in early May, and a share sell-off began. By the time May 6 rolled around, shares had lost half of their value. That… Read More

Over the most recent Christmas holidays, employees at Twitter (NYSE: TWTR) were in an especially happy mood as their company stock zoomed past the $70 mark. #-ad_banner-#All they needed was a bit of patience — to wait until the calendar read May 6, 2014 — to sell their shares. But the stock market had other ideas. A rising tide of outside investors was well aware that a huge amount of employee-owned stock would come to the market in early May, and a share sell-off began. By the time May 6 rolled around, shares had lost half of their value. That day in particular was very cruel for Twitter employees, as shares plunged 18% that morning alone. The very next day, shares of cybersecurity firm FireEye (Nasdaq: FEYE) plunged from $37 to $29 as the company’s employees were freed up to sell shares on that day. (The share price was also weighed down that day by a so-so quarterly report, though FEYE has made up for all the lost ground since then.) Ever since Twitter and FireEye employees went through that gut-wrenching experience, employees at many other newly public firms are anxiously awaiting their chance to sell company shares, on a… Read More

For the past few decades, we’ve been hearing about the rising levels of obesity in America that are leading to more cases of diabetes. A look at the recent numbers is pretty startling.  According to American Diabetes Association (ADA), 1 out of every 10 Americans is diabetic, and 1 in 4 Americans is classified as pre-diabetic (myself included). For seniors, the figures are more daunting: 25% of America’s elderly residents have diabetes, which is quite concerning when you note that millions of baby boomers are entering that demographic. What kind of toll has this taken? More than… Read More

For the past few decades, we’ve been hearing about the rising levels of obesity in America that are leading to more cases of diabetes. A look at the recent numbers is pretty startling.  According to American Diabetes Association (ADA), 1 out of every 10 Americans is diabetic, and 1 in 4 Americans is classified as pre-diabetic (myself included). For seniors, the figures are more daunting: 25% of America’s elderly residents have diabetes, which is quite concerning when you note that millions of baby boomers are entering that demographic. What kind of toll has this taken? More than 200,000 Americans die annually either directly or indirectly from diabetes. Worldwide, the figure is far larger.  Society also has a huge financial stake in diabetes. According to the ADA, treating people with diabetes consumes one-fifth of all of our nation’s health care expenditures. Getting our arms around that would have a profound impact on our economy in the form of reduced health care premiums.  Thankfully, there is considerable progress being made and view is emerging of a future where most pre-diabetics can stop the disease in its tracks. Keeping diabetes in check, before it advances to the point where it… Read More

It’s awfully quiet out there. Perhaps too quiet.  #-ad_banner-#The S&P hasn’t made a 1% move — in either direction — since April 16.  How unusual is it for the market to go 43 trading sessions (and counting) without a one-day move of 1% or more? Going back to 1980, the market has only had three longer streaks, according to MKM Partners’ Jonathan Krinsky. If we reach 48 straight days without a 1% move, this current streak will move into third place.  What happens when such streaks end? The market has invariably dropped at least 3% within a month of the… Read More

It’s awfully quiet out there. Perhaps too quiet.  #-ad_banner-#The S&P hasn’t made a 1% move — in either direction — since April 16.  How unusual is it for the market to go 43 trading sessions (and counting) without a one-day move of 1% or more? Going back to 1980, the market has only had three longer streaks, according to MKM Partners’ Jonathan Krinsky. If we reach 48 straight days without a 1% move, this current streak will move into third place.  What happens when such streaks end? The market has invariably dropped at least 3% within a month of the streak’s end, according to MKM.  As you’d expect in such a quiet market, investors are exhibiting little fear. In a weekly survey of investor sentiment, the American Association of Individual Investors (AAII) noted that roughly 45% of responders were bullish. That’s the highest reading yet for 2014.  And the VIX, also known as the fear gauge, has fallen back to very low levels. “The perception of U.S. equity market risk is as low as it has been since 2004-06 when Fed predictability peaked,” notes UBS’s Maury Harris.  Indeed, the Federal Reserve’s announcement earlier this year that it will steadily reduce… Read More

As the monsoon season drew to a close in India last September, the local economy looked waterlogged.  The nation’s currency, the rupee, had just slid to an all-time low against the dollar, as quarterly growth fell to just 4.4%, the slowest growth rate since the global economic crisis of 2009. In response, Indian stocks accelerated their declines as it became increasingly apparent that any economic turnaround would be slowing in coming. Yet as is often the case with many markets, sectors, or even individual stocks, the point of maximum pessimism is often the best time to invest.  That was surely… Read More

As the monsoon season drew to a close in India last September, the local economy looked waterlogged.  The nation’s currency, the rupee, had just slid to an all-time low against the dollar, as quarterly growth fell to just 4.4%, the slowest growth rate since the global economic crisis of 2009. In response, Indian stocks accelerated their declines as it became increasingly apparent that any economic turnaround would be slowing in coming. Yet as is often the case with many markets, sectors, or even individual stocks, the point of maximum pessimism is often the best time to invest.  That was surely the case with India stocks, which have staged a remarkable comeback. In just the past 10 months, India’s SENSEX index has rallied an impressive 35%, and many India-focused exchange-traded funds have done a lot better than that. (These ETFs have benefited from a rebound in the rupee, which has magnified gains.) #-ad_banner-#The catalyst behind this remarkable rebound is quite simple: Narendra Modi.  India’s new prime minister began his campaign last fall on a platform of economic rejuvenation, and Indian stocks have already begun to reflect an anticipation of much better days ahead. India’s Economic Times has… Read More

When CommVault Systems (Nasdaq: CVLT) was founded roughly 25 years ago, corporations were only beginning to grasp just how hard it would become to manage far-flung internal networks. CommVault initially had modest hopes of delivering a few key software tools, on a platform known as Simpana, that could help IT managers archive, search and restore key corporate databases.  #-ad_banner-#We now know that such networks have become remarkably large and complex as the era of cloud computing takes root. And such complexity has paid off for CommVault in… Read More

When CommVault Systems (Nasdaq: CVLT) was founded roughly 25 years ago, corporations were only beginning to grasp just how hard it would become to manage far-flung internal networks. CommVault initially had modest hopes of delivering a few key software tools, on a platform known as Simpana, that could help IT managers archive, search and restore key corporate databases.  #-ad_banner-#We now know that such networks have become remarkably large and complex as the era of cloud computing takes root. And such complexity has paid off for CommVault in the form of rising demand.  Annual sales surpassed $100 million in fiscal 2006, which was the year the company went public, and moved above $300 million by fiscal 2011. With CommVault’s Simpana now in its 10th generation, sales are expected to cross the $600 million threshold in the current fiscal year. In response to that kind of growth, shares zoomed from under $20 in 2010 to an all-time high of $90 in late 2013. The task of network management would seem to be an easy fit for the major IT firms such as Dell, Hewlett-Packard (NYSE: HPQ) or NetApp (Nasdaq:… Read More

Four decades ago, a move by OPEC to curtail exports led to a surge in oil prices that pushed the global economy into recession. And history repeated itself six years ago when the demand side of the equation led to a similar “super spike” in oil prices. West Texas Intermediate crude (WTIC) oil briefly moved above $140 a barrel in July 2008, which some economists believe was a key catalyst behind the sharp economic slowdown later that year. #-ad_banner-#As we head toward the midpoint of 2014, both the supply and demand part of the picture are starting to… Read More

Four decades ago, a move by OPEC to curtail exports led to a surge in oil prices that pushed the global economy into recession. And history repeated itself six years ago when the demand side of the equation led to a similar “super spike” in oil prices. West Texas Intermediate crude (WTIC) oil briefly moved above $140 a barrel in July 2008, which some economists believe was a key catalyst behind the sharp economic slowdown later that year. #-ad_banner-#As we head toward the midpoint of 2014, both the supply and demand part of the picture are starting to look worrisome. And though crude oil has made a fast move toward (and past) the $100-a-barrel mark, it won’t take much to push prices past $120 a barrel — and investors should be thinking about the ramifications of such a move.  Libya And Iraq Heat Up The downfalls of Libya’s Muammar Gaddafi and Iraq’s Saddam Hussein were great news for democracy advocates, but we’re now seeing that these countries have very troubled futures. Both countries now have very weak central governments, and their ability to meet their oil export quotas is becoming a key concern. In Libya, for example, daily… Read More

They call it “Merger Monday” for a reason. #-ad_banner-#Bankers like to spend the weekend putting the finishing touches on the paperwork, launching blockbuster deals in time for the start of the trading week. As this week began, we were greeted to Medtronic’s (NYSE: MDT) planned $43 billion purchase of Covidien (NYSE: COV). Big Pharma and medical device firms are surely seeking big prey these days, in part due to tax efficiencies created by trans-national mergers. (Covidien’s Irish base is a plus for Medtronic.) To be sure, the deal-making in the tech sector is heating up as well: the volume of… Read More

They call it “Merger Monday” for a reason. #-ad_banner-#Bankers like to spend the weekend putting the finishing touches on the paperwork, launching blockbuster deals in time for the start of the trading week. As this week began, we were greeted to Medtronic’s (NYSE: MDT) planned $43 billion purchase of Covidien (NYSE: COV). Big Pharma and medical device firms are surely seeking big prey these days, in part due to tax efficiencies created by trans-national mergers. (Covidien’s Irish base is a plus for Medtronic.) To be sure, the deal-making in the tech sector is heating up as well: the volume of deal-making is bigger than in pharma/medtech, but the size of the deals are smaller. Just last week, we heard about chip maker On Semiconductor’s (Nasdaq: ONNN) buyout of Aptina Imaging and chip maker Analog Devices’ (Nasdaq: ADI) planned buyout of Hittite Microwave (Nasdaq: HITT). And at the start of this week, memory chip maker Sandisk (Nasdaq: SNDK) announced plans to acquire flash storage provider Fusion-io (NYSE: FIO).  A buyout offer for Fusion-io had been expected for quite a while. Two weeks ago, I predicted that Seagate (Nasdq: STX) was a likely buyer. Indeed, there is a chance that a bidding war for… Read More

For the companies that own lease massive dry-freight cargo ships, it’s been another tough year.  Copper export woes in Indonesia, canceled orders in China for U.S. soybeans, and a few other events have taken away any optimism that the freight industry may have had at the start of the year. The Baltic Dry Index, which tracks the daily lease rates of a wide range of freighters, was rallying six months ago, but is again back in the doldrums. #-ad_banner-#So you would have expected to hear of a dour mood when the industry’s leading players gathered this… Read More

For the companies that own lease massive dry-freight cargo ships, it’s been another tough year.  Copper export woes in Indonesia, canceled orders in China for U.S. soybeans, and a few other events have taken away any optimism that the freight industry may have had at the start of the year. The Baltic Dry Index, which tracks the daily lease rates of a wide range of freighters, was rallying six months ago, but is again back in the doldrums. #-ad_banner-#So you would have expected to hear of a dour mood when the industry’s leading players gathered this month at Posidonia, the biennial meeting in Greece to discuss industry conditions. Deutsche Bank analyst Taylor Mulhern, who attended the event, heard an entirely different tone.  His view of the event: “Optimism from management teams for fundamental improvement in the shipping sector continues to build after several years of prolonged fragility.” For an industry that has been slumping since 2008, such optimism would seem to be misplaced.  At the height of the economic boom before the global downturn, freight operators placed orders for many new ships, and those ships hit the market right as global demand for them was tanking. By… Read More