Hedge fund managers like to find management teams with “skin in the game.”#-ad_banner-# It’s important to know that CEOs and CFOs own a sizable chunk of company stock, and are therefore as keen to build a rising share price as outsiders. Of course, a lot of these executives get their hands on company stock through the generosity of stock options grant doled out by the broad of directors. You want to focus on executives that are boosting their holdings by opening up their own wallets. That’s truly a way to put some skin in the game. Here are five companies… Read More

Hedge fund managers like to find management teams with “skin in the game.”#-ad_banner-# It’s important to know that CEOs and CFOs own a sizable chunk of company stock, and are therefore as keen to build a rising share price as outsiders. Of course, a lot of these executives get their hands on company stock through the generosity of stock options grant doled out by the broad of directors. You want to focus on executives that are boosting their holdings by opening up their own wallets. That’s truly a way to put some skin in the game. Here are five companies where solid clusters of buying have recently emerged. (All data provided by InsiderInsights.com.) 1. Internap (Nasdaq: INAP )​ This provider of data center hosting services has been caught up the recent tech sell-off, and its shares are now roughly 30% below levels seen last summer.  The downward move has brought out insider support: Director Kevin Dotts bought 10,000 shares last month at $7.73, and more recently, director Debora Wilson has bought the same amount (at $6.79 a share). Though shares have slumped, business trends are solid. First-quarter sales rose 11% sequentially and 18% from the first quarter of 2013, thanks in part to an… Read More

When Merck (NYSE: MRK) announced plans this week to sell its consumer products business to Germany’s Bayer (Nasdaq: BAYRY) for $14 billion, industry watchers may have merely shrugged. #-ad_banner-#After all, Novartis (NYSE: NVS) and GlaxoSmithKline (NYSE: GSK) only recently agreed to a $20 billion asset swap. And Valeant Pharma (NYSE: VRX) is dangling $45 billion in front of Allergan’s (NYSE: AGN) shareholders in a deal that has yet to be consummated. Why are these firms now throwing around such big money? Two reasons. First, the global economy is growing at a sufficiently slow pace that companies must seek deals to… Read More

When Merck (NYSE: MRK) announced plans this week to sell its consumer products business to Germany’s Bayer (Nasdaq: BAYRY) for $14 billion, industry watchers may have merely shrugged. #-ad_banner-#After all, Novartis (NYSE: NVS) and GlaxoSmithKline (NYSE: GSK) only recently agreed to a $20 billion asset swap. And Valeant Pharma (NYSE: VRX) is dangling $45 billion in front of Allergan’s (NYSE: AGN) shareholders in a deal that has yet to be consummated. Why are these firms now throwing around such big money? Two reasons. First, the global economy is growing at a sufficiently slow pace that companies must seek deals to shake up their portfolios to boost profits. Second, most major economies are now healthy enough to avoid the risk of a fresh economic slowdown or crisis. Companies don’t like to do deals when the economic environment is uncertain. Those two reasons add up to a Goldilocks scenario for deal makers, operating in an economy that is neither too hot nor too cold. As long as we remain in this middling growth phase, look for many more deals in coming quarters. Here’s a look at the industries and types of companies that will be on the buying and selling ends of… Read More

We’re stuck in a binary stock market. In recent years, investors have been willing to embrace richly valued high-growth stocks during “risk-on” buying phases. #-ad_banner-#But right now, we’re in a “risk-off” phase of the market. Risky biotechs, dot-coms and recent IPOs have all slumped badly, while value stocks are faring well. The shift away from risk brings a silver lining: Stocks that were only recently in the investing stratosphere have fallen so hard that they now carry a lot less risk then they once did. The key in such market shifts is to find companies that are truly on the… Read More

We’re stuck in a binary stock market. In recent years, investors have been willing to embrace richly valued high-growth stocks during “risk-on” buying phases. #-ad_banner-#But right now, we’re in a “risk-off” phase of the market. Risky biotechs, dot-coms and recent IPOs have all slumped badly, while value stocks are faring well. The shift away from risk brings a silver lining: Stocks that were only recently in the investing stratosphere have fallen so hard that they now carry a lot less risk then they once did. The key in such market shifts is to find companies that are truly on the forefront of a major industry trend, what we here at StreetAuthority call “game-changers.” As an example, there is a clear migration away from traditional radio and toward music streaming services. This trend is poised to continue as automakers roll out car stereos with integrated streaming radio apps. And no company is as well-positioned as Pandora (NYSE: P). As I recently noted, “Pandora has a real shot at becoming the de facto car radio for millions of listeners, and the recent share price pullback provides a fresh chance to latch on to this high-growth business model.” In a similar vein, I’ve been… Read More

When it comes to investing, “the best house in a bad neighborhood” is not the right approach. You want to focus on “good neighborhoods” (meaning good industries) and then proceed to find the best (or at least best-priced) homes in that neighborhood. U.S. oil refiners are great example.  A confluence of factors, which I discussed last summer, was leading to rising and industry profits. In effect, the whole neighborhood held (and still holds) appeal. Some of the industry’s bigger players have really surged in price since my look at the group last August. The appeal of the… Read More

When it comes to investing, “the best house in a bad neighborhood” is not the right approach. You want to focus on “good neighborhoods” (meaning good industries) and then proceed to find the best (or at least best-priced) homes in that neighborhood. U.S. oil refiners are great example.  A confluence of factors, which I discussed last summer, was leading to rising and industry profits. In effect, the whole neighborhood held (and still holds) appeal. Some of the industry’s bigger players have really surged in price since my look at the group last August. The appeal of the biggest refiners becomes evident when you start to focus on their solid cash flow, which is fueling rising dividends and share buyback plans.   #-ad_banner-#These companies’ current dividend yields may seem skimpy, but the stage is set for fast dividend growth in coming years as well, as cash flow surges. Also, share buybacks have been especially impressive in recent years at three of these four major refiners.  But most smaller refiners are not yet witnessing such share price strength. Back in November, I noted that both Alon USA Partners (Nasdaq: ALDW) and CVR Refining (Nasdaq: CVRR) had been forced to… Read More

When it comes to picking winners and losers, it’s unwise to back the little guy when the big guy is so much more powerful.  That was a key concern I had about Pandora Media (NYSE: P), in its attempts to steal the music spotlight from Apple (Nasdaq: AAPL) and its iTunes juggernaut. That analysis proved to be very wrong. Pandora went on to deliver a pair of solid quarters, highlighted by robust growth, and this surging stock became a short seller’s nightmare. #-ad_banner-#Yet in just the past week, this stock has plunged sharply, all the way down to $23. … Read More

When it comes to picking winners and losers, it’s unwise to back the little guy when the big guy is so much more powerful.  That was a key concern I had about Pandora Media (NYSE: P), in its attempts to steal the music spotlight from Apple (Nasdaq: AAPL) and its iTunes juggernaut. That analysis proved to be very wrong. Pandora went on to deliver a pair of solid quarters, highlighted by robust growth, and this surging stock became a short seller’s nightmare. #-ad_banner-#Yet in just the past week, this stock has plunged sharply, all the way down to $23.  The formerly bearish view, in hindsight, would seemingly be justified. But I’m not betting against this stock twice. Pandora’s recent string of quarterly growth metrics are a harbinger of even better days to come. The share price may say this company is now in trouble. Yet media industry trends paint a very different picture. And I’m pivoting away from the bearish camp and joining the bulls.  Rapid Growth At first glance, Pandora’s first-quarter results provided no hint of the share price carnage to come. GAAP revenue surged 69% from a year ago to $194 million. Three-fourths… Read More

The past 18 months have been a great time for investors to pursue IPOs. Many companies have seen strong demand for their newly issued shares, and in many instances, their valuations are now two or three times higher than what bankers envisioned. But investors haven’t responded quite so warmly to all IPOs. And when a new issue stumbles out of the gate, fleeing investors can send shares much lower.  That’s surely been the case for concert promoter SFX Entertainment (Nasdaq: SFXE), which priced shares at $13 back in October (and I profiled briefly last July). Read More

The past 18 months have been a great time for investors to pursue IPOs. Many companies have seen strong demand for their newly issued shares, and in many instances, their valuations are now two or three times higher than what bankers envisioned. But investors haven’t responded quite so warmly to all IPOs. And when a new issue stumbles out of the gate, fleeing investors can send shares much lower.  That’s surely been the case for concert promoter SFX Entertainment (Nasdaq: SFXE), which priced shares at $13 back in October (and I profiled briefly last July). They fell 56% to a low of $5.70 in late March, and are currently trading around $6.50.  #-ad_banner-#It was a regrettable IPO experience, to be sure — but there are no do-overs. What’s the remedy for this broken IPO? Proof that the company, recently loaded up with a series of acquisitions, will ultimately become the cash-producing machine that management promised investors. SFXE produces roughly 30 major outdoor music festivals and another 700 to 800 smaller events every year. A focus on electronic dance music (EDM) has been a sweet spot, as it is one of the fastest growing… Read More

Like clockwork, the investing adage “sell in May and go away” has re-emerged. Most investing clichés don’t hold water, but this one does. Strategists at S&P Capital IQ found an unusual set of calendar-based returns: “On a seasonal basis, the six-month stretch from May to October is historically a weak period for the S&P500 Index, dating back to 1990. On average, the broader market has risen just 1.3%, compared to a 7.0% gain from November to April.” #-ad_banner-#Why would such a trading pattern persist? Two reasons are usually cited.  First, active investors, professional traders and hedge fund managers start to take… Read More

Like clockwork, the investing adage “sell in May and go away” has re-emerged. Most investing clichés don’t hold water, but this one does. Strategists at S&P Capital IQ found an unusual set of calendar-based returns: “On a seasonal basis, the six-month stretch from May to October is historically a weak period for the S&P500 Index, dating back to 1990. On average, the broader market has risen just 1.3%, compared to a 7.0% gain from November to April.” #-ad_banner-#Why would such a trading pattern persist? Two reasons are usually cited.  First, active investors, professional traders and hedge fund managers start to take three-day weekends, and they devote less time looking for stocks to buy and more time looking for existing positions to cull.  Second, the European sales offices of U.S. firms start to detect a hesitance when it comes to purchasing decisions. Few European customers want to ink deals just as they are starting to prepare for their extended summer holidays. Though the market has been in a solid uptrend for the past five years, pockets of weakness have emerged in the spring and summer months. To inject a further note of caution, investors should proceed especially cautiously with tech… Read More

Investors who were gutsy enough to buy real estate investment trusts (REITs) at the height of the economic crisis in 2008 have been well rewarded. Not only did these REITs see their shares soar from those lows, but they’ve been treated to a surging tide of dividends.#-ad_banner-#​ Case in point: Simon Property Group (NYSE: SPG), the nation’s largest REIT. Its stock has rebounded more than 150% in the past five years, and if you bought Simon back when it traded at $45 in the summer of 2009 and held on,… Read More

Investors who were gutsy enough to buy real estate investment trusts (REITs) at the height of the economic crisis in 2008 have been well rewarded. Not only did these REITs see their shares soar from those lows, but they’ve been treated to a surging tide of dividends.#-ad_banner-#​ Case in point: Simon Property Group (NYSE: SPG), the nation’s largest REIT. Its stock has rebounded more than 150% in the past five years, and if you bought Simon back when it traded at $45 in the summer of 2009 and held on, then today’s $5 annual dividend would work out to be a juicy 9% dividend yield. But this kind of window has most likely closed. Not only has the share price surge pushed the dividend yield down below 3%, but the dividends themselves are no longer growing at an impressive rate. Simon’s Dividend Growth Is Cooling For Simon Property Group, the era of double-digit growth in yields may have come to an end, which is a concern since its dividend yields aren’t all that compelling anyway. Outside the U.S., it’s unclear if REIT dividends will grow any faster,… Read More

In terms of revenues, Amazon.com (Nasdaq: AMZN) is the classic growth stock. #-ad_banner-#Its sales have grown at least 20% for 20 straight years, and analysts think the winning streak will continue, with consensus projected sales growth of 20.7% this year (to an eye-popping $89 billion). Yet in 2015, this remarkable streak may come to an end, as sales growth slips to just 19%. (Elusive profit growth for Amazon is a topic for another day, though my colleague Serge Berger did take a look at Amazon this morning.) Amazon’s streak of 20% sales growth got me thinking. How hard is it… Read More

In terms of revenues, Amazon.com (Nasdaq: AMZN) is the classic growth stock. #-ad_banner-#Its sales have grown at least 20% for 20 straight years, and analysts think the winning streak will continue, with consensus projected sales growth of 20.7% this year (to an eye-popping $89 billion). Yet in 2015, this remarkable streak may come to an end, as sales growth slips to just 19%. (Elusive profit growth for Amazon is a topic for another day, though my colleague Serge Berger did take a look at Amazon this morning.) Amazon’s streak of 20% sales growth got me thinking. How hard is it to maintain a robust growth pace? Very hard, as it turns out. Of the 1,500 companies in the S&P 400, 500 and 600, only 16 of them are expected to boost sales at least 20% in 2014, 2015 and 2016.  Of these 16, special mention goes to Facebook (Nasdaq: FB) and Priceline.com (Nasdaq: PCLN). These companies are on pace for than $10 billion in sales by next year and are fighting the “Laws of Bigness.” (However, a massive wave of insider selling at Priceline last month led me to wonder if that company’s robust growth streak can really be maintained.)  The… Read More

When it comes to successful investing, the key is not how you perceive an issue, but how you think the crowd will perceive it. Your analysis may be more accurate, but you can’t buck the tide. That was a key concern I raised six months ago in my negative view of LED company Cree (Nasdaq: CREE). At the time, I thought analysts and fund managers were off the mark when it came to this company’s gross margin profile: “Analysts have been continually forecasting margin gains as Cree more fully utilizes its manufacturing capacity, but so far, that’s just not happening.” And analysts’… Read More

When it comes to successful investing, the key is not how you perceive an issue, but how you think the crowd will perceive it. Your analysis may be more accurate, but you can’t buck the tide. That was a key concern I raised six months ago in my negative view of LED company Cree (Nasdaq: CREE). At the time, I thought analysts and fund managers were off the mark when it came to this company’s gross margin profile: “Analysts have been continually forecasting margin gains as Cree more fully utilizes its manufacturing capacity, but so far, that’s just not happening.” And analysts’ eventual move to lower their gross margin forecast stood as a key negative catalyst for this stock. That fear has come home to roost. Cree recently reported fiscal third-quarter results highlighting a further decline in gross margins, and shares are now paying the price. #-ad_banner-#To be clear, the concern isn’t the gross margins themselves, but instead the market’s perception and anticipation of higher gross margins. Those perceptions have evaporated, and it’s time to look at this stock from a different perspective. Now that’s it is clear to investors that this company’s move into the mass market… Read More