Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem… Read More

Many of the traders I talk to are wondering what Bill Ackman could be thinking. Ackman is a hedge fund manager, the founder and CEO of Pershing Square Capital Management, which has about $11 billion under management. Ackman is considered a contrarian investor who tends to buy when companies are down, and an activist investor who sometimes takes a role in managing companies he invests in. He has achieved incredible success by some measures and has a reported wealth of about $1.4 billion. Ackman recently shared a chart showing his performance with investors… There is an obvious problem with recent performance. As Ackman explained, “The substantial decline in performance from August 2015 through March 31, 2016 is largely due to Valeant’s decline…” Valeant is now the investment traders are talking about. Ackman took a large stake in Valeant Pharmaceuticals International (NYSE: VRX) as the company was growing rapidly through acquisitions. The strategy largely relied on buying other companies and then raising prices, a tactic that we know was widespread in the drug sector. But regulators began to question the strategy after it was discovered VRX was using in-house pharmacists to potentially overbill insurance companies. Traders reacted to the… Read More

As equity markets grind higher and investors complain about the absence of value, they continue to flock toward cheap and efficient exchange-traded funds (ETFs). Money directed to equity ETFs grew 13% in 2016, pushing the assets under management to $2.4 trillion in the U.S. alone. While the ETF growth stampede continues, seemingly ignoring valuations in some cases, an ocean of value is being ignored among the ETF’s grandparents: the venerable closed-end fund (CEF). #-ad_banner-#I’ve always had a soft spot for the good old CEF. They tend to fly under the radar. So, before we go shopping, here’s a little historical… Read More

As equity markets grind higher and investors complain about the absence of value, they continue to flock toward cheap and efficient exchange-traded funds (ETFs). Money directed to equity ETFs grew 13% in 2016, pushing the assets under management to $2.4 trillion in the U.S. alone. While the ETF growth stampede continues, seemingly ignoring valuations in some cases, an ocean of value is being ignored among the ETF’s grandparents: the venerable closed-end fund (CEF). #-ad_banner-#I’ve always had a soft spot for the good old CEF. They tend to fly under the radar. So, before we go shopping, here’s a little historical background. CEFs trace their origin to investment trusts organized in Great Britain during the 1860s. The objective was to raise money for investment in the British Empire’s colonial possessions as well as to provide capital to the rapidly expanding railroads in the United States. Financed using bank leverage or the sale of debentures, their primary objective was income rather than capital appreciation. CEFs gained popularity in the United States during the Roaring Twenties. Prior to the Crash of 1929, CEF assets topped $4.5 billion, a significant chunk of the stock market’s total capitalization. But with the market excesses of that… Read More

It’s hard to believe, but the first quarter of 2017 is nearly in the books. And so far the market has continued its torrid pace. In fact, ever since the November election, the investing landscape has gone through a dramatic change of expectations with respect to economic growth, market valuations and inflation. And those expectations seem to be coming to fruition… #-ad_banner-#On March 10, the U.S. Bureau of Labor Statistics released employment data. Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate remained about the same at 4.7%. The consumer price index, which measures inflation, came… Read More

It’s hard to believe, but the first quarter of 2017 is nearly in the books. And so far the market has continued its torrid pace. In fact, ever since the November election, the investing landscape has gone through a dramatic change of expectations with respect to economic growth, market valuations and inflation. And those expectations seem to be coming to fruition… #-ad_banner-#On March 10, the U.S. Bureau of Labor Statistics released employment data. Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate remained about the same at 4.7%. The consumer price index, which measures inflation, came in at 2.74% last month, compared with 1.02% in February 2016. And residential housing starts jumped 6.2% in February over the same time last year. All these economic factors gave the Federal Reserve the green light to tighten the money supply by bumping interest rates up 25 basis points on March 15. Right now everything seems to be firing on all cylinders. Consumer confidence is at the highest level it’s been in 17 years. Unemployment is low, inflation is on target, housing is continuing to recover and the stock market is reaching new highs. As I’ve said many times before,… Read More

There are two young co-workers, Mark and Lizzy, who are both serious about setting aside money for the future. After doing some research, Lizzy finds a reputable blue-chip dividend mutual fund and decides to open with a modest $1,000 investment. After that, she contributes $100 from every bi-weekly paycheck. She doesn’t see much accumulation at first. But over time, her account value starts to build. After 25 years at an average compounded annual return of 8.0% after expenses, Lizzy would be sitting on a nice sum of $204,722. #-ad_banner-#Meanwhile, across the office, Mark finds a similar equity income fund and… Read More

There are two young co-workers, Mark and Lizzy, who are both serious about setting aside money for the future. After doing some research, Lizzy finds a reputable blue-chip dividend mutual fund and decides to open with a modest $1,000 investment. After that, she contributes $100 from every bi-weekly paycheck. She doesn’t see much accumulation at first. But over time, her account value starts to build. After 25 years at an average compounded annual return of 8.0% after expenses, Lizzy would be sitting on a nice sum of $204,722. #-ad_banner-#Meanwhile, across the office, Mark finds a similar equity income fund and invests the same amount. His fund delivers an identical annual return, with one difference. It carries an extra 50 basis points (one-half of one percent) in additional yearly fees and expenses. Because of that extra drag, Mark’s account grows to just $189,644 over the same time frame — a difference of more than $15,000. For the sake of illustration, let’s suppose we start with a $10,000 upfront investment and assume a stronger annual return of 9%. Under that scenario, the two accounts would grow to around $316,000 and $290,000, respectively — a difference of $26,000. And keep in mind, that… Read More

Recently, I had to take an exam for yet another license my industry requires me to have. Aside from feeling like I’d given birth to a compliance officer afterwards, I came away from the experience, newly minted license in hand, with an investment idea. I took the exam, on a computer workstation of course, at one of the many testing centers owned and managed by British education and multi-media publisher Pearson PLC (NYSE: PSO). Although my exam was specific to the financial industry, qualification exams for other professions are also administered at the centers, including nursing and engineering to name… Read More

Recently, I had to take an exam for yet another license my industry requires me to have. Aside from feeling like I’d given birth to a compliance officer afterwards, I came away from the experience, newly minted license in hand, with an investment idea. I took the exam, on a computer workstation of course, at one of the many testing centers owned and managed by British education and multi-media publisher Pearson PLC (NYSE: PSO). Although my exam was specific to the financial industry, qualification exams for other professions are also administered at the centers, including nursing and engineering to name a few.  Honestly, when I first looked at the stock, I was not impressed.     As you probably know, I’m not a chart guy. But if you go by these tea-leaves, the wiggles aren’t encouraging — and neither are the fundamentals. Earnings Per Share (EPS) has declined, on average, 131% on an annual basis over the last two years. Annual revenue has shrunk by 9.5% on average for the same period. But the short-term pain may be paving the way for long term gain. #-ad_banner-# Pearson, like most large publishing and media companies, is grappling with the disruptive technological… Read More

Last month, Reuters uncovered an internal report from the U.S. Department of Homeland Security estimating the cost of a border wall with Mexico at $21.6 billion. The report projected a timeframe of nearly four years for construction. Whatever your view on the wall may be, that is a huge project. It amounts to more than a full year of sales at Fluor Corp (NYSE: FLR), the world’s largest engineering firm by revenue, or 5.6 times annual revenue at leading industrial materials firm Martin Marietta Materials (NYSE: MLM). Can companies afford to pass up the opportunity to… Read More

Last month, Reuters uncovered an internal report from the U.S. Department of Homeland Security estimating the cost of a border wall with Mexico at $21.6 billion. The report projected a timeframe of nearly four years for construction. Whatever your view on the wall may be, that is a huge project. It amounts to more than a full year of sales at Fluor Corp (NYSE: FLR), the world’s largest engineering firm by revenue, or 5.6 times annual revenue at leading industrial materials firm Martin Marietta Materials (NYSE: MLM). Can companies afford to pass up the opportunity to bid on such a project? One company did just that, publicly refusing to participate. It’s one of the largest cement producers in North America and could have made billions on materials sales. But this company may still win out and, even better, shares are attractively-priced for strong 2017 fundamentals. #-ad_banner-# The Surprising Winner In The Border Wall Construction It wasn’t a complete surprise when $12 billion Cemex (NYSE: CX) didn’t show up on the list of initial bidders for the border wall project issued by the Department of Homeland Security.  The Mexican industrial company has a huge footprint in… Read More

Jim Cramer’s investment picks have captured headlines and the dreams of investors for years. This one-time hyper-successful hedge fund manager-turned television personality attracts a huge audience of investors with his market pontifications. His following is so influential that a stock market phenomenon, known as the “Cramer Bounce” often occurs after he touts a particular stock. That’s right, this single individual is thought to have the power to move markets. The Man Behind The Legend Jim Cramer has reached legendary status on Wall Street with his often uncannily accurate stock calls and hyper-energetic persona. Not only has he amassed millions of… Read More

Jim Cramer’s investment picks have captured headlines and the dreams of investors for years. This one-time hyper-successful hedge fund manager-turned television personality attracts a huge audience of investors with his market pontifications. His following is so influential that a stock market phenomenon, known as the “Cramer Bounce” often occurs after he touts a particular stock. That’s right, this single individual is thought to have the power to move markets. The Man Behind The Legend Jim Cramer has reached legendary status on Wall Street with his often uncannily accurate stock calls and hyper-energetic persona. Not only has he amassed millions of followers who hang on his every word, I;ve even seen trading platforms boasting a built-in Jim Cramer stock picks data feed. But Cramer was not always a public persona. Early in his career as a reporter, he was so poor that he lived in his car for several months. Despite creating popular lead stories for high-profile cases like the Ted Bundy murders, Jim was not satisfied with the low pay of a reporter’s life. #-ad_banner-#Seeing a legal career as a way out of the low-income lifestyle, he attended from Harvard Law School and was admitted to the New York Bar… Read More

Editor’s Note: Today we’d like to feature a guest column from Nathan Slaughter, Chief Stock Market Strategist for Scarcity & Real Wealth, StreetAuthority’s premium newsletter that seeks to profit from the producers and processors of the rarest and most valuable assets on the planet — precious metals, energy and other natural resources. In this column, Nathan addresses what’s become something of a buzzword again this year: Infrastructure. As Nathan points out in the article that follows, President Trump has pledged to rebuild outdated infrastructure on a scale not seen since Dwight Eisenhower proposed the national interstate highway system in the… Read More

Editor’s Note: Today we’d like to feature a guest column from Nathan Slaughter, Chief Stock Market Strategist for Scarcity & Real Wealth, StreetAuthority’s premium newsletter that seeks to profit from the producers and processors of the rarest and most valuable assets on the planet — precious metals, energy and other natural resources. In this column, Nathan addresses what’s become something of a buzzword again this year: Infrastructure. As Nathan points out in the article that follows, President Trump has pledged to rebuild outdated infrastructure on a scale not seen since Dwight Eisenhower proposed the national interstate highway system in the 1950s. If Trump and his allies have their way, it could lead to as much as $1 trillion in infrastructure-related spending over the next 10 years. That’s a lot of cement (and other resources and services), but it’s just icing on the cake when it comes to the appeal these companies hold for investors. So… Which companies are likely to profit the most? Here’s Nathan’s take on some of the opportunities for investors — and it’s actually a prelude to his next issue, which is due out in a couple weeks. If you’re interested in learning more about Scarcity &… Read More

It’s 1720 in England. A hard-working printer is busy at work. But he’s not happy… #-ad_banner-#All around him are ordinary people starting businesses and making great sums of money by selling their stock. What bothered him was that the businesses didn’t seem legitimate on the surface. For instance, one company’s prospectus promised, “to bring up hellfire for heating.” Another business advertised the ability, “to squeeze oil out of radishes.” Unbelievably, these business owners sold out all their stock in a matter of days. So he asked himself how rational people could… Read More

It’s 1720 in England. A hard-working printer is busy at work. But he’s not happy… #-ad_banner-#All around him are ordinary people starting businesses and making great sums of money by selling their stock. What bothered him was that the businesses didn’t seem legitimate on the surface. For instance, one company’s prospectus promised, “to bring up hellfire for heating.” Another business advertised the ability, “to squeeze oil out of radishes.” Unbelievably, these business owners sold out all their stock in a matter of days. So he asked himself how rational people could buy into such stupid business concepts. But then he made a decision. Instead of trying to understand the rationale behind such silliness, he decided to join the club. He printed a prospectus describing a business “for carrying out an undertaking of great advantage, but nobody to know what it is.” When he opened for business the next morning, long lines of people were waiting to buy his stock. The printer took every penny offered for the stock, and immediately boarded a boat for France. He disappeared forever. Now, the efficient market… Read More