So far this year, there have been 28 initial public offerings (IPOs). Of these, seven are already up at least 20%. In fact, one IPO — Chinese Internet company Qihoo 360 (NYSE: QIHU) — surged 100%. The problem is that you probably weren’t able to get in on any of them. The reason is that IPOs are hot commodities on Wall Street and go to top clients such as wealthy investors and institutions. However, there is actually a clever way to participate in the upside. How? By investing in the top private equity… Read More

So far this year, there have been 28 initial public offerings (IPOs). Of these, seven are already up at least 20%. In fact, one IPO — Chinese Internet company Qihoo 360 (NYSE: QIHU) — surged 100%. The problem is that you probably weren’t able to get in on any of them. The reason is that IPOs are hot commodities on Wall Street and go to top clients such as wealthy investors and institutions. However, there is actually a clever way to participate in the upside. How? By investing in the top private equity firms that help bring many of these companies public. Essentially, private equity shops look for companies with strong cash flow and substantial barriers to entry. They will use lots of debt to buy the companies — hopefully at low valuations. A few years later, the private equity firms will take these companies public and often reap big returns. Take a look at the largest hospital operator in the United States, HCA (NYSE: HCA), which pulled off a $3.79 billion IPO in early March. The private equity backers behind the deal made a return of more than 250% from when… Read More

#-ad_banner-#So far in 2011, technology is among the worst-performing industries in the market. The stock market, as measured by the S&P 500, ended the first quarter up nearly 6%, while tech returned just over 3%. Additionally, the average price-to-earnings (P/E) ratio for the stock market is around 14, while many leading tech companies trade well below this level — some even trade with single-digit earnings multiples. With weak near-term performance and low valuations, I see a contrarian buying opportunity. By the… Read More

#-ad_banner-#So far in 2011, technology is among the worst-performing industries in the market. The stock market, as measured by the S&P 500, ended the first quarter up nearly 6%, while tech returned just over 3%. Additionally, the average price-to-earnings (P/E) ratio for the stock market is around 14, while many leading tech companies trade well below this level — some even trade with single-digit earnings multiples. With weak near-term performance and low valuations, I see a contrarian buying opportunity. By the P/E metric alone, the tech sector is cheap. However, tech may be even cheaper than you think. This is because many of the leading players in the industry have managed to sock away billions of dollars in excess cash not needed to run daily operations. From a valuation perspective, it has become necessary to back out these net cash positions to focus solely on the underlying operations. Below is a table detailing share price and fundamental data for five of the largest tech companies out there.  As you can see, the stated P/E ratios, which are simply… Read More

For private equity (PE) firms, 2011 is the year of goldilocks — everything’s just right. Interest rates are low, the increasingly stable economy is pumping up corporate cash flows, and if you look hard enough, real bargains can be had. #-ad_banner-#The key for PE firms (also known as leveraged buyout shops) is to find companies that throw off lots of cash flow and also come with very healthy balance sheets. That way, a company can be acquired with its own cash and new loans, putting the buyout firms… Read More

For private equity (PE) firms, 2011 is the year of goldilocks — everything’s just right. Interest rates are low, the increasingly stable economy is pumping up corporate cash flows, and if you look hard enough, real bargains can be had. #-ad_banner-#The key for PE firms (also known as leveraged buyout shops) is to find companies that throw off lots of cash flow and also come with very healthy balance sheets. That way, a company can be acquired with its own cash and new loans, putting the buyout firms on the hook for only a moderate amount of upfront cash. Ideally, they look to take these companies public again a few years later (though with much weaker balance sheets by then). That’s what has happened to the likes of Hertz (NYSE: HTZ), hospital chain HCA (NYSE: HCA) and Burger King. A little sleuthing has revealed a list of companies that may now be in focus for a major deal in 2011. These companies are big enough (with a market value above $750 million) but not too big (with a… Read More

There’s a major change brewing in the maritime shipping industry right now, and it should change the way you pick stocks in this once-hot sector. The new era of shipping demand is splitting one broad transportation industry into two distinct groups, with one of them poised to be a winner… Read More

Think back to the last time you were on the road for business. You decided to drive because you were covering some of the outlying areas in the territory and it was much more cost effective. You skipped lunch so you could get to Slapback, Miss. to see your customer… Read More

The current social unrest spreading throughout the Middle East has its roots in many causes. In some places, despotic leadership is no longer being tolerated. In other instances, such as Bahrain, religious groups that constitute a majority of the population have been shut out of important roles in the economy. Yet in all of the countries involved, one clear theme has emerged: The citizens are tired of corrupt, sclerotic and nepotistic leaders, and simply want improved access and a shot at a better lifestyle. What’s in the interests of these citizens is also in the… Read More

The current social unrest spreading throughout the Middle East has its roots in many causes. In some places, despotic leadership is no longer being tolerated. In other instances, such as Bahrain, religious groups that constitute a majority of the population have been shut out of important roles in the economy. Yet in all of the countries involved, one clear theme has emerged: The citizens are tired of corrupt, sclerotic and nepotistic leaders, and simply want improved access and a shot at a better lifestyle. What’s in the interests of these citizens is also in the interest of investors. Corruption-free, merit-based economies are always the best place to do business. That’s why the Heritage Foundation annually issues a Freedom Index of 10 components that measure a series of “economic freedoms” such as business freedom, trade freedom, fiscal freedom, property rights and corruption. It’s no coincidence that Iran, Syria, Algeria, Yemen, Tunisia and Morocco all occupy the bottom half of the Freedom Index rankings. Unless you are a member of the elite in these countries and have the ability to bribe and cajole your way into key business relationships, you… Read More

China’s GDP growth is projected by the Chinese Academy of Social Sciences to be 9.9% this year, making it by far the fastest-growing economy in the world. Although Chinese “A” shares, shares of mainland China-cased companies, are generally… Read More

#-ad_banner-# I think it’s the most boring business I’ve ever researched. That’s what you want if you’re looking for a stock to hold no matter what. It pays dividends like clockwork. They’ve increased for 39 years straight — that goes back to when Nixon was in office. Read More

[Editor’s Note: On Wednesday, Andy Obermueller, editor of Game-Changing Stocks, gave his take on the resignation of David Sokol, one of the frontrunners to replace Warren Buffett at the helm of Berkshire Hathaway. Now, it looks like Ajit Jain, Buffett’s insurance man extrordinaire, may be “the man.” Funny enough, StreetAuthority’s… Read More

David Sokol, considered by many to be the leading candidate to replace Warren Buffett as the chairman of Berkshire Hathaway (NYSE: BRK-A, BRK-B), has resigned. His stated reason was to build up a business to leave to his family. The real reason, it seems, is that Sokol took a major position in Lubrizol before Berkshire bought it at a substantial premium in a $9 billion deal. The bottom line is that these transactions always become known, and Sokol, who’s arguably one of the most capable executives in the world, got out in front of the bullet… Read More

David Sokol, considered by many to be the leading candidate to replace Warren Buffett as the chairman of Berkshire Hathaway (NYSE: BRK-A, BRK-B), has resigned. His stated reason was to build up a business to leave to his family. The real reason, it seems, is that Sokol took a major position in Lubrizol before Berkshire bought it at a substantial premium in a $9 billion deal. The bottom line is that these transactions always become known, and Sokol, who’s arguably one of the most capable executives in the world, got out in front of the bullet and left before he had to. Warren Buffett and Berkshire Hathaway are more than one man’s name and that of a large company — they are a platinum-coated brand that implies the absolute highest ethical and business standards. Berkshire, despite its gargantuan, multi-billion dollar market cap, is still a handshake company. Buffett has the cash to make the world turn with a phone call, sure, but his cache is more than that. The world trusts him. He’s known for being a straight-shooter. Sokol’s actions, which Buffett thinks are legal to the letter of the law, would still… Read More