Winston Churchill once said “You can always count on Americans to do the right thing — after they’ve tried everything else.” Updated for today’s era of governmental gridlock, you could modify that phrase to say that “Americans will do the right thing — when they have no other choice.” #-ad_banner-#Considering that the nation’s Highway Trust Fund (which has relied upon revenues from a tax of $0.184 a gallon since 1993) is expected to run out of funds within the next few months, inaction is not an option. “The moment is dire — the trust fund is quickly running toward insolvency,”… Read More

Winston Churchill once said “You can always count on Americans to do the right thing — after they’ve tried everything else.” Updated for today’s era of governmental gridlock, you could modify that phrase to say that “Americans will do the right thing — when they have no other choice.” #-ad_banner-#Considering that the nation’s Highway Trust Fund (which has relied upon revenues from a tax of $0.184 a gallon since 1993) is expected to run out of funds within the next few months, inaction is not an option. “The moment is dire — the trust fund is quickly running toward insolvency,” Transportation Secretary Anthony Foxx told Bloomberg News. Thankfully, Congress has begun to search for a fix, not only for our nation’s highways, but many other core parts of our infrastructure, which barely get a passing grade, according to the American Society of Civil Engineers.  The Senate has just issued a new bipartisan blueprint for infrastructure spending, which will boost aid to states while also providing greater spending transparency. The challenge is to find the right revenue-raising formula. The Obama administration is siding with some leading Republicans in pursuit… Read More

In search of new investment ideas, it pays to run through several checklists every month.  #-ad_banner-#What stocks are hitting 52-week lows? Which ones sport low price-to-earnings (P/E) ratios? Which ones are being added to the portfolios of leading hedge funds and mutual funds? The reason for this digging is to see if any companies start to pop up in multiple areas. In my recent scans, the same name kept popping up everywhere… Bed, Bath & Beyond (Nasdaq: BBBY).  It’s a well-respected retailer that’s currently out of favor due to a temporary slowdown in profit growth — and it’s suddenly become… Read More

In search of new investment ideas, it pays to run through several checklists every month.  #-ad_banner-#What stocks are hitting 52-week lows? Which ones sport low price-to-earnings (P/E) ratios? Which ones are being added to the portfolios of leading hedge funds and mutual funds? The reason for this digging is to see if any companies start to pop up in multiple areas. In my recent scans, the same name kept popping up everywhere… Bed, Bath & Beyond (Nasdaq: BBBY).  It’s a well-respected retailer that’s currently out of favor due to a temporary slowdown in profit growth — and it’s suddenly become a favorite of value-oriented gurus. In just the past few weeks, we’ve learned that: •  Investment firm Brown, Brothers Harriman (which will have its 200-year anniversary in four years) just took a 5% stake in the retailer. •  In the first quarter of 2014, Robert Olstein, who runs the Olstein Funds, doubled his stake in Bed, Bath & Beyond by acquiring 78,000 more shares at an average price of $67 a share.  •  Also in the first quarter, Westport Asset Management bought a starter position of 90,000 shares at an average price of $67. Those funds are not happy to… Read More

As the crow flies, it’s 4,400 miles from Punta Arenas, Chile, to Barranquilla, Colombia.  #-ad_banner-#The two cities flank the southern and northern ends of western South America, and from end to end, you’ll find the most dynamic economies in the Western Hemisphere. And the remarkable economic strength seen in those countries, in contrast to the more challenged economies in the eastern part of South America, explains why you can’t simply paint the notion of emerging markets with a broad brush.  Make no mistake, a rising tide has lifted many boats in South America.  Brazil has witnessed a remarkable economic renaissance,… Read More

As the crow flies, it’s 4,400 miles from Punta Arenas, Chile, to Barranquilla, Colombia.  #-ad_banner-#The two cities flank the southern and northern ends of western South America, and from end to end, you’ll find the most dynamic economies in the Western Hemisphere. And the remarkable economic strength seen in those countries, in contrast to the more challenged economies in the eastern part of South America, explains why you can’t simply paint the notion of emerging markets with a broad brush.  Make no mistake, a rising tide has lifted many boats in South America.  Brazil has witnessed a remarkable economic renaissance, and is now the world’s seventh-largest economy. To the south, Argentina remains blessed with an impressive set of natural resources, and a well-educated middle class. But these countries are also beset by deep-rooted structural challenges, and are increasingly being run with a dubious government hand. Investors need to brace for inflation scares, GDP slumps, social unrest and currency swings, and the higher risk doesn’t necessarily yield greater returns.  Yet if you pivot west, you’ll find a completely different economic environment. Chile, Peru and Colombia, which are often referred to as the Andean nations, possess all the key virtues that emerging-market… Read More

If you are hoping to be a savvy stock picker when you’re in your 70s, I’ve got good news for you. Seventy-one-year-old legendary fund manager Leon Cooperman, who I profiled last year, remains on top of his game. As I noted then, Cooperman was wrapping up a successful year of investment returns in 2012, and I decided to see how his February 2013 investments turned out. Excluding his investments in yield plays Linn Energy (Nasdaq: LINE), Kinder Morgan (NYSE: KMI) and Atlas Pipeline Partners (NYSE: APL), which are in the portfolio for income and not capital appreciation, the rest of… Read More

If you are hoping to be a savvy stock picker when you’re in your 70s, I’ve got good news for you. Seventy-one-year-old legendary fund manager Leon Cooperman, who I profiled last year, remains on top of his game. As I noted then, Cooperman was wrapping up a successful year of investment returns in 2012, and I decided to see how his February 2013 investments turned out. Excluding his investments in yield plays Linn Energy (Nasdaq: LINE), Kinder Morgan (NYSE: KMI) and Atlas Pipeline Partners (NYSE: APL), which are in the portfolio for income and not capital appreciation, the rest of his top holdings are handily beating the market. Cooperman’s Hot Hand Yet recent adjustments in his portfolio suggest Cooperman now views the market in a different context. According to recent filings, Cooperman appears to be eschewing growth stocks and chasing yield — very high yield. Three of his picks sport dividend yields in excess of 10%. Here’s a closer look.  1. Atlas Resource Partners (NYSE: ARP )​ When I looked at Cooperman’s portfolio 15 months ago, he owned roughly 3 million shares of Atlas Pipeline Partners, the master limited partnership (MLP) that controls the oil and gas pipelines of Atlas… Read More

For every Amazon.com (Nasdaq: AMZN) or Priceline (Nasdaq: PCLN), you’ll find many more examples of Web-based business that failed to live up to their promise.  Companies like WebVan, Pets.com and eToys.com were once worth hundreds of millions of dollars… but failed to survive the eventual dot-com shakeout. Others survived — but are mere shadows of their former selves.  Case in point: online employment firm Monster Worldwide (NYSE: MWW), which has seen its shares slide more than 90% since their peak in the summer of 2000. Monster’s… Read More

For every Amazon.com (Nasdaq: AMZN) or Priceline (Nasdaq: PCLN), you’ll find many more examples of Web-based business that failed to live up to their promise.  Companies like WebVan, Pets.com and eToys.com were once worth hundreds of millions of dollars… but failed to survive the eventual dot-com shakeout. Others survived — but are mere shadows of their former selves.  Case in point: online employment firm Monster Worldwide (NYSE: MWW), which has seen its shares slide more than 90% since their peak in the summer of 2000. Monster’s market value has fallen to just over $500 million, and in a sign of a clearly missed opportunity, rival LinkedIn (NYSE: LNKD) is worth a hefty $18 billion. That valuation gap may appear warranted. Monster now has just $800 million in annual sales, which have declined every year since 2008. LinkedIn now has more than $1.5 billion in sales and has boosted its top line by more than 50% every year.  But think about those numbers again for a moment. LinkedIn’s 2013 sales base was nearly twice as large, yet its market value is more than 35 times larger. Monster’s… Read More

In a rising stock market, all eyes are on the income statement.  #-ad_banner-#But in a flat or falling market, the balance sheet moves into the spotlight. Investors want to know that their stocks that possess certifiable take-it-to-the-bank value. The recent drubbing among tech and biotech stocks brought this issue right to the fore. Many of these stocks traded for 10 or even 20 times tangible book value and had no floor in place when investors began to head for the exits. As Warren Buffett’s gurus, Benjamin Graham and David Dodd, explained eight decades ago, you can sleep well… Read More

In a rising stock market, all eyes are on the income statement.  #-ad_banner-#But in a flat or falling market, the balance sheet moves into the spotlight. Investors want to know that their stocks that possess certifiable take-it-to-the-bank value. The recent drubbing among tech and biotech stocks brought this issue right to the fore. Many of these stocks traded for 10 or even 20 times tangible book value and had no floor in place when investors began to head for the exits. As Warren Buffett’s gurus, Benjamin Graham and David Dodd, explained eight decades ago, you can sleep well at night only if you own stocks that are valued at a lower price than the net assets on the balance sheet — what’s known as “below book.” Back in Graham and Dodd’s era, you could find many stocks sporting such value. These days, less than 10% of all U.S. stocks with a market value of at least $200 million trade below book. And the pool of stocks that trade at a very deep discount to book value is even smaller. A quick review of such stocks suggests that a few industries are especially cheap in relation to their hard… Read More

We’ve learned a clear lesson over the past 12 months: There is no sense in hopping into momentum stocks after they’ve doubled or tripled in value in a short time.  #-ad_banner-#That was the sobering lesson around 3-D printing stocks, popular IPOs and, more recently, fuel cell stocks. When I looked at fuel cell stocks a month ago, I asked whether they were in a bubble, and concluded that “this is a great group to put on your watch list, as any major pullback would provide excellent entry points.” Well, your ship has come in: Fuel cell stocks are dropping like a… Read More

We’ve learned a clear lesson over the past 12 months: There is no sense in hopping into momentum stocks after they’ve doubled or tripled in value in a short time.  #-ad_banner-#That was the sobering lesson around 3-D printing stocks, popular IPOs and, more recently, fuel cell stocks. When I looked at fuel cell stocks a month ago, I asked whether they were in a bubble, and concluded that “this is a great group to put on your watch list, as any major pullback would provide excellent entry points.” Well, your ship has come in: Fuel cell stocks are dropping like a stone. They had already been pulling back when I looked at them last month — and now they’ve now all lost roughly half their value since mid-March. In retrospect, the group sell-off was inevitable. These stocks were pushed ever higher under the “greater fool theory,” which states that a price can be justified by a rational buyer under the belief that someone else is willing to pay an even higher price. Of course, the moment that people believe that this circular logic has come to an end, everyone heads for the exits at once. These… Read More

There are so many issues to ponder about the proposed link-up between AT&T (NYSE: T) and DirecTV (NYSE: DTV) that it’s hard to know where to begin. But let’s start with short sellers.  #-ad_banner-#For nearly a year now, a growing number of investors have become convinced that steady-as-she-goes AT&T was drifting into oblivion. By the middle of April, the short position in this stock had reached 197 million.  Though the short position shrank by 12 million two weeks later, AT&T was still the most heavily shorted stock on the New York Stock Exchange — by a very wide margin. (AMD… Read More

There are so many issues to ponder about the proposed link-up between AT&T (NYSE: T) and DirecTV (NYSE: DTV) that it’s hard to know where to begin. But let’s start with short sellers.  #-ad_banner-#For nearly a year now, a growing number of investors have become convinced that steady-as-she-goes AT&T was drifting into oblivion. By the middle of April, the short position in this stock had reached 197 million.  Though the short position shrank by 12 million two weeks later, AT&T was still the most heavily shorted stock on the New York Stock Exchange — by a very wide margin. (AMD (NYSE: AMD) is next at 115 million shares.) One of the key concerns for shorts: AT&T’s inability to sustain its dividend. I looked into AT&T’s myriad challenges two months ago, noting that “simply maintaining the dividend will eventually push the payout ratio above 100%.” In announcing the deal, AT&T’s management was quick to suggest that DirecTV’s impressive cash flow will help AT&T support its dividend (currently yielding 5%).  DirecTV generates around $8 billion a year in EBITDA (earnings before interest, taxes, depreciation and amortization), and a little less than $7 billion after interest expenses are covered. DirecTV also spends more… Read More

Several decades ago, mutual fund managers such as Fidelity’s Peter Lynch and Legg Mason’s Bill Miller garnered a great deal of attention from investors and the financial media. #-ad_banner-#These days, it’s the hotshot hedge fund managers, with their epic battles against companies such as Herbalife (NYSE: HLF) or Green Mountain Coffee Roasters (Nasdaq: GMCR), that get all the buzz. Proxy fights and bold short sale claims can be entertaining to watch and sometimes even create value for investors.  Yet investing shouldn’t be about drama.  Those now-obscure mutual fund managers deserve a lot more attention than they deserve, even if they rarely… Read More

Several decades ago, mutual fund managers such as Fidelity’s Peter Lynch and Legg Mason’s Bill Miller garnered a great deal of attention from investors and the financial media. #-ad_banner-#These days, it’s the hotshot hedge fund managers, with their epic battles against companies such as Herbalife (NYSE: HLF) or Green Mountain Coffee Roasters (Nasdaq: GMCR), that get all the buzz. Proxy fights and bold short sale claims can be entertaining to watch and sometimes even create value for investors.  Yet investing shouldn’t be about drama.  Those now-obscure mutual fund managers deserve a lot more attention than they deserve, even if they rarely enjoy being in the spotlight. Thankfully, the mutual fund analysts at Morningstar single out the best and brightest mutual fund managers every year, helping steer investors toward the savviest stock pickers in the field.  A current favorite: Los Angeles-based First Pacific Advisors (FPA). Morningstar anointed Steve Romick, the fund manager behind the FPA Crescent Fund (Nasdaq: FPACX), as the “2013 Asset Allocation Manager of the Year.” That five-star fund gets a “gold” rating from Morningstar.  As Morningstar notes, “Romick seeks securities trading at a substantial discount to what he believes they’re worth. When opportunities are scarce, he will let cash… Read More

Shares of Cisco Systems (Nasdaq: CSCO) are finally beginning to percolate, thanks to solid quarterly results and a brightening outlook. A 10% upward move since early March is quite impressive when you consider the beating that many tech stocks have been getting in recent months.#-ad_banner-# Though Cisco is only slowly going to emerge from an extended period of anemic sales growth, it has a powerful weapon in today’s troubled tech stock environment… Cash. Lots of it. Cisco ended its fiscal third quarter with nearly $30 billion in net cash — but it’s having a hard time spending that cash. It… Read More

Shares of Cisco Systems (Nasdaq: CSCO) are finally beginning to percolate, thanks to solid quarterly results and a brightening outlook. A 10% upward move since early March is quite impressive when you consider the beating that many tech stocks have been getting in recent months.#-ad_banner-# Though Cisco is only slowly going to emerge from an extended period of anemic sales growth, it has a powerful weapon in today’s troubled tech stock environment… Cash. Lots of it. Cisco ended its fiscal third quarter with nearly $30 billion in net cash — but it’s having a hard time spending that cash. It now spends nearly $1 billion every quarter on its dividend, and the share count has shrunk from 6.6 billion shares back in fiscal 2005 to a recent 5.2 billion. And still, the cash balance remains enormous. Those buybacks and dividends have helped Cisco’s shareholders sleep well at night, even as they’ve had to endure an extended period of shares trading in the low $20s. With the Nasdaq index steadily losing traction, having a rock-solid balance sheet is quite a virtue — and can help shares from getting sucked down into a deeper sell-off. Cisco’s not alone. I’ve come across 15… Read More