Tracking the moves of insiders can often lead you to small, unknown companies that have a great deal of promise.  On the daily list of buys, you only rarely come across major insider buying involving large companies. But in the past few weeks and months, there’s been impressive clusters of buying among companies in the S&P 500. Three of them caught my eye. 1. Symantec (Nasdaq: SYMC ) President and CEO James Bennett just plunked down more than $2 million to buy 100,000 shares. This wasn’t just the conversion of stock options that you often find on insider… Read More

Tracking the moves of insiders can often lead you to small, unknown companies that have a great deal of promise.  On the daily list of buys, you only rarely come across major insider buying involving large companies. But in the past few weeks and months, there’s been impressive clusters of buying among companies in the S&P 500. Three of them caught my eye. 1. Symantec (Nasdaq: SYMC ) President and CEO James Bennett just plunked down more than $2 million to buy 100,000 shares. This wasn’t just the conversion of stock options that you often find on insider buying lists, but an actual purchase with real money. The move came after Bennett needed to rein in profit expectations amid a companywide restructuring. Make no mistake, software security vendor Symantec was in need of a shake-up. The company had seen robust growth in the past decade, as sales shot up from $2.6 billion in fiscal 2005 to $6.2 billion by 2009. However, sales in the current fiscal year are expected to be only 10% higher, equating to a compound growth rate of less than 2%. In the current quarter (which ends in December), sales are expected to fall 9% from a… Read More

It started snowing early in Siberia.#-ad_banner-#​ According to Rutgers University’s Global Snow Lab, there is already more than 10 inches of snow on the ground in the massive tundra north of Moscow. That’s the first time 10 inches had already fallen by the end of October since 2002. Roughly 900,000 square miles are covered in snow right now, much higher than the 50-year average of 573,000 square miles. Why should you care? Because the Siberian snowpack provides an uncanny correlation with our winter weather. Scientists call it the negative phase of arctic oscillation. As… Read More

It started snowing early in Siberia.#-ad_banner-#​ According to Rutgers University’s Global Snow Lab, there is already more than 10 inches of snow on the ground in the massive tundra north of Moscow. That’s the first time 10 inches had already fallen by the end of October since 2002. Roughly 900,000 square miles are covered in snow right now, much higher than the 50-year average of 573,000 square miles. Why should you care? Because the Siberian snowpack provides an uncanny correlation with our winter weather. Scientists call it the negative phase of arctic oscillation. As the National Snow and Ice Data Center notes, “A strongly negative phase of the arctic oscillation brings warm weather to high latitudes, and cold, stormy weather to the more temperate regions where people live.”  These climatologists add that in 2009, the arctic oscillation phase was the most negative on record. What was the impact? The U.S. and Europe had brutally cold winters in 2009 and 2010. According to the National Oceanic and Atmospheric Administration, nine of the 10 coldest Januarys in New York City since 1950 have coincided with negative arctic oscillations. Read More

With each passing quarter, Wall Street analysts tweak their forecasts and price targets, trying their best to predict what a company’s sales and profits will look like three or six months from now. That myopia has led them to miss out one of the greatest long-term success stories in the U.S. economy. It isn’t found in the engineering labs in Silicon Valley or the canyons of Wall Street. Instead, it’s in places like Iowa, Nebraska, Texas and Pennsylvania. That’s where our nation’s most dynamic export opportunities have emerged on vast tracts of arable land. Consider this stat: The U.S. exported… Read More

With each passing quarter, Wall Street analysts tweak their forecasts and price targets, trying their best to predict what a company’s sales and profits will look like three or six months from now. That myopia has led them to miss out one of the greatest long-term success stories in the U.S. economy. It isn’t found in the engineering labs in Silicon Valley or the canyons of Wall Street. Instead, it’s in places like Iowa, Nebraska, Texas and Pennsylvania. That’s where our nation’s most dynamic export opportunities have emerged on vast tracts of arable land. Consider this stat: The U.S. exported $29 billion in corn, wheat, soybeans, apples, pistachios and many other farm products in 1985. A decade later, that figure had doubled, and by 2010, surpassed $115 billion. The U.S. also imports many farm items as well. But in 2012, the farm belt ran a $38 billion trade surplus. How many industries can say that? And there’s no reason to expect this trend to reverse course. Simply put, heavy investments in technology have enabled our farmers to become the most productive in the world. Here’s a look at three companies that should prosper in the years… Read More

Warren Buffett loves to invest in stable businesses with few competitors.  One of his recent favorites is DaVita HealthCare (NYSE: DVA), which operates a network of dialysis treatment centers in the United States catering to patients that have diabetes-induced kidney failure. Buffett’s Berkshire Hathaway (NYSE: BRK-B) has been a steady buyer for several years and now owns nearly 30 million shares, equating to a $1.8 billion stake. But DaVita has a big problem on its hands. Dialysis is expensive, and the two biggest payees for this procedure, Medicare and Medicaid, have been pushing DaVita and its rival Fresenius… Read More

Warren Buffett loves to invest in stable businesses with few competitors.  One of his recent favorites is DaVita HealthCare (NYSE: DVA), which operates a network of dialysis treatment centers in the United States catering to patients that have diabetes-induced kidney failure. Buffett’s Berkshire Hathaway (NYSE: BRK-B) has been a steady buyer for several years and now owns nearly 30 million shares, equating to a $1.8 billion stake. But DaVita has a big problem on its hands. Dialysis is expensive, and the two biggest payees for this procedure, Medicare and Medicaid, have been pushing DaVita and its rival Fresenius Medical Care (NYSE: FMS) to swallow painful reimbursement cuts. It’s not just the administration of dialysis that is costly. Many patients end up with side effects related to iron deficiency and red blood cell production, which costs billions more to remedy. And these costly treatments don’t even yield the desired medical outcomes.#-ad_banner-# Thankfully, one of the biggest providers of the drugs and chemicals used in dialysis has a solution to the problem. Little-known Rockwell Medical (Nasdaq: RMTI) has been testing an iron supplement that goes right into bone marrow. Patients on dialysis stop producing erythropoietin, a key ingredient in the… Read More

Outside of the revitalized energy patch, no corner of the U.S. economy is hotter than Silicon Valley.​ Google (Nasdaq: GOOG), the region’s bellwhether, has tacked on a 50% gain over the past 12 months, adding more than $100 billion its market value. #-ad_banner-# And moving far down the tech food chain, the hottest young tech companies are also creating great wealth for their employees and shareholders: Recent IPOs RocketFuel (Nasdaq: FUEL) and FireEye (Nasdaq: FEYE) have more than doubled since their IPOs last month. These companies are boosting sales at a really fast pace, but they’ve… Read More

Outside of the revitalized energy patch, no corner of the U.S. economy is hotter than Silicon Valley.​ Google (Nasdaq: GOOG), the region’s bellwhether, has tacked on a 50% gain over the past 12 months, adding more than $100 billion its market value. #-ad_banner-# And moving far down the tech food chain, the hottest young tech companies are also creating great wealth for their employees and shareholders: Recent IPOs RocketFuel (Nasdaq: FUEL) and FireEye (Nasdaq: FEYE) have more than doubled since their IPOs last month. These companies are boosting sales at a really fast pace, but they’ve also quickly become richly valued. For instance, FireEye is valued at $4.7 billion but is expected to have just $230 million in sales in 2014. On the other end of the tech investing spectrum are some deep value plays. But in cases like IBM (NYSE: IBM), growth will be so limited that they are really more like value traps. Simply put, in the world of tech, you can have growth or value, but not both.  But a few companies stand out for a reasonable measure of both growth and value. Each company is in the midst of… Read More

Throughout the summer, investors were treated to a steady drumbeat of sobering news. Retail sales were flattening out. China and other emerging markets appeared set to consume less of our exports. The steady implementation of the budget sequester was leading to a drop in government spending on technology and services. And many companies showed a lot more interest in buybacks and dividends than capital spending, which is a sure a sign of CEO pessimism.#-ad_banner-# So how do you explain the surprisingly robust profit picture being delivered in the current earnings season?  With roughly 40% of… Read More

Throughout the summer, investors were treated to a steady drumbeat of sobering news. Retail sales were flattening out. China and other emerging markets appeared set to consume less of our exports. The steady implementation of the budget sequester was leading to a drop in government spending on technology and services. And many companies showed a lot more interest in buybacks and dividends than capital spending, which is a sure a sign of CEO pessimism.#-ad_banner-# So how do you explain the surprisingly robust profit picture being delivered in the current earnings season?  With roughly 40% of the S&P 500 weighing in thus far (and another 25% to go next week), 68% of all reporting companies have delivered a positive earnings surprise, according to Standard & Poor’s. That compares with just 18% of companies reporting negative surprises. Frankly, I wouldn’t have been shocked if those numbers were reversed. The odds against yet another stellar earnings season seemed quite long. Year-over-year comparisons tell the story. Among companies in the S&P 500 that have reported third-quarter results thus far, profits are up 8.4% from a year ago, more than triple the expectations of 2.5% for these… Read More

Individual investors and private equity firms often target companies with great yields. But they are talking about two different numbers.  While the first crowd focuses on divided yields, the big-game hunters focus on free cash flow yield. In fact, if you draw a connection between the two, you can find the path to stocks that are capable of robust dividend growth — and just may get acquired at a nice premium.#-ad_banner-# To understand why free cash flow yields are so important, you just need to look at the frenzied pursuit of Dell Inc. (Nasdaq: DELL) by Southeastern Asset… Read More

Individual investors and private equity firms often target companies with great yields. But they are talking about two different numbers.  While the first crowd focuses on divided yields, the big-game hunters focus on free cash flow yield. In fact, if you draw a connection between the two, you can find the path to stocks that are capable of robust dividend growth — and just may get acquired at a nice premium.#-ad_banner-# To understand why free cash flow yields are so important, you just need to look at the frenzied pursuit of Dell Inc. (Nasdaq: DELL) by Southeastern Asset Management, Silver Lake Partners, Carl Icahn and Michael Dell. All of these big-money players knew that Dell Inc. was quite undervalued in the context of its prodigious free cash flow. Over the past four fiscal years, Dell has generated a cumulative $14.5 billion in free cash flow. That’s just $2 billion less than all of Dell’s enterprise value. Assuming that Dell is able to maintain that level of free cash flow, then the current proposed buyout will pay for itself in less than five years. After that, it’s pure profit. Many private equity firms can do even better by using their… Read More

Biotechnology is a notorious minefield for investors. For every successful drug that survives the approval process, dozens more simply flame out. Millions of dollars of capital evaporate every time a clinical trial fails to produce positive results. #-ad_banner-# Yet a select group of biotech visionaries manage to strike it big — time and again. They have a knack for spotting biotechnologies that ultimately prove their mettle through the Food and Drug Administration’s rigorous process. And few have shown the gift of biotech insights like Randal J. Kirk. Kirk has built his fortune by focusing on drugs that have blockbuster potential. Read More

Biotechnology is a notorious minefield for investors. For every successful drug that survives the approval process, dozens more simply flame out. Millions of dollars of capital evaporate every time a clinical trial fails to produce positive results. #-ad_banner-# Yet a select group of biotech visionaries manage to strike it big — time and again. They have a knack for spotting biotechnologies that ultimately prove their mettle through the Food and Drug Administration’s rigorous process. And few have shown the gift of biotech insights like Randal J. Kirk. Kirk has built his fortune by focusing on drugs that have blockbuster potential. And he’s shown the patience to stick with them — for years, if needed — until his vision is realized. The payoff: He netted a $1.2 billion profit in 2007 when Shire (Nasdaq: SHPG) acquired New River Pharmaceuticals for $2.6 billion. New River had developed Vyvanse, a key drug in the treatment of attention deficit hyperactivity disorder (ADHD). Four years later, Kirk struck gold again as Forest Labs (NYSE: FRX) paid him $600 million for his majority stake in Clinical Data, which had developed Viibryd, an anti-depressant drug that hit the market in 2011. Since then, Kirk has remained off… Read More

The finance department at Charles Schwab (Nasdaq: SCHW) has a very large problem. The firm has been so successful at attracting clients over the past half-decade that the cash Schwab holds for its clients has swelled nearly 190% from 2008, to a recent $86 billion. But in this era of low interest rates, the firm hasn’t been able to fully capitalize on that success.#-ad_banner-# Schwab’s net interest margin (which is the difference between the rate it pays to clients in their cash accounts and Schwab’s own interest income on those assets held)… Read More

The finance department at Charles Schwab (Nasdaq: SCHW) has a very large problem. The firm has been so successful at attracting clients over the past half-decade that the cash Schwab holds for its clients has swelled nearly 190% from 2008, to a recent $86 billion. But in this era of low interest rates, the firm hasn’t been able to fully capitalize on that success.#-ad_banner-# Schwab’s net interest margin (which is the difference between the rate it pays to clients in their cash accounts and Schwab’s own interest income on those assets held) has been squeezed to almost nothing. Yet good new lies ahead. As interest rates start to rise, so will Schwab’s net interest margins. It happens every cycle, and investors are only just beginning to warm up the profit boom yet to come. Shares of Schwab have already begun to move up in anticipation of this trend, moving back into the mid-$20s, right where they stood back in 2007. But investors shouldn’t think they’ve missed the boat. Schwab’s base of clients has more than doubled since 2007 (leading to assets under management that now exceeds $2 trillion). So as interest rates… Read More

When is the best time to focus on a particular industry? When it’s deeply out of favor. Every industry hits the occasional rough patch, which typically leads investors to focus their attention elsewhere. Yet when the rough patch ends, and the skies start to brighten, you have a chance to dig into the group before the crowd returns. That’s precisely the set up in place for a group of companies known as upstream MLPs. These master limited partnerships focus on mature energy fields. These firms don’t focus on the early stage of energy exploration, and instead buy mature oil and… Read More

When is the best time to focus on a particular industry? When it’s deeply out of favor. Every industry hits the occasional rough patch, which typically leads investors to focus their attention elsewhere. Yet when the rough patch ends, and the skies start to brighten, you have a chance to dig into the group before the crowd returns. That’s precisely the set up in place for a group of companies known as upstream MLPs. These master limited partnerships focus on mature energy fields. These firms don’t focus on the early stage of energy exploration, and instead buy mature oil and gas fields that other firms have chosen to sell.  It’s an industry known for a lot of deals, as the key players boost sales and replace existing assets that eventually start to post declining output. Nearly $2.5 billion in transactions were completed in 2010, rising to $5.8 billion in 2012, according to Credit Suisse. And investors were expecting even higher amounts of deal-making in 2013 — until Linn Energy (Nasdaq: LINE) spoiled the party.#-ad_banner-# One of the industry’s most acquisitive firms, Linn has tended to utilize aggressive accounting measures to justify the economics of its deals to investors. That caught… Read More