It’s very unlikely anyone will forget the housing bubble, and subsequent financial crisis, anytime soon. And for good reason. There’s plenty of blame to go around.  #-ad_banner-#This includes the credit rating agencies. All three of the major rating agencies in the U.S. are thought to have played a key role in helping create the housing bubble. Their key crime? Inflating ratings on mortgage-backed securities. Over half a decade later, some investors are still shunning the credit rating agencies. But not Warren Buffett. He and Berkshire Hathaway (NYSE: BRK-B) are Moody’s Corp.’s (NYSE: MCO) largest shareholder, owning 12% of… Read More

It’s very unlikely anyone will forget the housing bubble, and subsequent financial crisis, anytime soon. And for good reason. There’s plenty of blame to go around.  #-ad_banner-#This includes the credit rating agencies. All three of the major rating agencies in the U.S. are thought to have played a key role in helping create the housing bubble. Their key crime? Inflating ratings on mortgage-backed securities. Over half a decade later, some investors are still shunning the credit rating agencies. But not Warren Buffett. He and Berkshire Hathaway (NYSE: BRK-B) are Moody’s Corp.’s (NYSE: MCO) largest shareholder, owning 12% of the company.   Moody’s took one of the hardest hits following the bursting of the credit bubble. In less than two years, the company’s market cap shrank nearly 75%. One reason that Moody’s fell so hard was that three-quarters of the mortgage-backed securities it rated AAA in 2006 were rated junk by mid-2010.  Still, Buffett held on through all Moody’s struggles. Buffett has been an owner of Moody’s since 2000. He sold some shares in 2009, but only to raise money for his buyout of railway company Burlington Northern Santa Fe. Shares of the company are back up… Read More

When a company is referred to as a “poor man’s American Express (NYSE: AXP),” it may seem like a backhanded compliment. #-ad_banner-#But it’s a fair analogy for Discover Financial Services (NYSE: DFS). The credit card issuer and financial services firm caters to a middle-income demographic, a clear peg down from AmEx’s focus on upper-income consumers and small businesses.  But Discover’s management takes a backseat to no one when it comes to delivering robust and shareholder-friendly moves. Based on recent actions, Discover is emerging as one of the top Total Yield plays of 2014. Discover has seemingly always been on the… Read More

When a company is referred to as a “poor man’s American Express (NYSE: AXP),” it may seem like a backhanded compliment. #-ad_banner-#But it’s a fair analogy for Discover Financial Services (NYSE: DFS). The credit card issuer and financial services firm caters to a middle-income demographic, a clear peg down from AmEx’s focus on upper-income consumers and small businesses.  But Discover’s management takes a backseat to no one when it comes to delivering robust and shareholder-friendly moves. Based on recent actions, Discover is emerging as one of the top Total Yield plays of 2014. Discover has seemingly always been on the margins of the financial services industry, never holding dominant market share in any of the niches in which it operates. Sears Holdings (Nasdaq: SHLD) launched the company in 1985 and eventually unloaded it to Morgan Stanley (NYSE: MS), which eventually disposed of it through the IPO market (in 2007).  Yet through it all, Discover’s management has built a very respectable franchise. CEO David Nelms has been in charge for a decade and gets high marks from analysts. “The company has made great strides during his tenure, and Discover’s relatively high capital levels and excellent underwriting kept the company in good… Read More

If you live in Southern California and look out on the horizon, you may notice a lot of cargo ships along the coastline these days.  #-ad_banner-#According to the Port of Los Angeles, the volume of goods being shipped in (measured by container volumes) rose 41% in March. The volume of goods being shipped out rose an also impressive 22% from a year ago. On a combined import/export basis, that marks the sharpest year-over-year monthly gain since 2007.  This surge in port traffic helps explain a view of the economy that is starting to spread. Economic activity stalled over… Read More

If you live in Southern California and look out on the horizon, you may notice a lot of cargo ships along the coastline these days.  #-ad_banner-#According to the Port of Los Angeles, the volume of goods being shipped in (measured by container volumes) rose 41% in March. The volume of goods being shipped out rose an also impressive 22% from a year ago. On a combined import/export basis, that marks the sharpest year-over-year monthly gain since 2007.  This surge in port traffic helps explain a view of the economy that is starting to spread. Economic activity stalled over the winter, thanks in large part to the “polar vortex,” but came roaring back to life as the quarter came to an end. We also know that trade and economic activity are strengthening by looking at the Dow Jones Transportation Index (DJT) which just hit a new all-time high, and when paired with peaks in the Dow Jones Industrial Average, is seen as a bullish sign, according to the Dow Theory. We will hear more about the pace of economic growth on April 30, when first-quarter GDP growth rates are announced. The headline number will look… Read More

A couple of months ago, the fund planners at Invesco PowerShares closed the book on one of the most unusual chapters in investing history, announcing a move to shut down the PowerShares Lux Nanotech Portfolio exchange-traded fund (ETF). A lack of interest was the main culprit in its demise. #-ad_banner-#For many investors, the move signaled the end of the decade-long hype around nanotechnology stocks. Back in 2006, with nanotech mania in full bloom, Businessweek predicted that this emerging technology would represent a $2.6 trillion industry by 2014. That prediction overestimated the industry’s potential by at least… Read More

A couple of months ago, the fund planners at Invesco PowerShares closed the book on one of the most unusual chapters in investing history, announcing a move to shut down the PowerShares Lux Nanotech Portfolio exchange-traded fund (ETF). A lack of interest was the main culprit in its demise. #-ad_banner-#For many investors, the move signaled the end of the decade-long hype around nanotechnology stocks. Back in 2006, with nanotech mania in full bloom, Businessweek predicted that this emerging technology would represent a $2.6 trillion industry by 2014. That prediction overestimated the industry’s potential by at least $2.5 trillion.  A decade ago, the phrase “nano” was applied to many hot new technology developments. By some estimates, more than $20 billion in government and corporate research funds were invested in the burgeoning technology. The premise was simple. Scientists had found ways to develop ultra-tiny particles that could be used in a range of biotech, industrial and cosmetic applications.  We’re talking smaller than “micro”… smaller than “milli.” You have to get far, far smaller than the width of a human hair, to one-millionth of a meter, to get a sense of just how tiny nano-size particles are. So what… Read More

Choosing the right stocks to invest in can be a difficult proposition for even the most sophisticated investor. Today’s market participants are faced with an overwhelming amount of information about every public company.  #-ad_banner-#This means that the key for investment success is the ability to filter this data and focus on the most pertinent information. The big-money players cumulatively spend billions of dollars every year to filter this monstrous data stream.   Fortunately, for the rest of us, it doesn’t need to be that expensive. In fact, one of the keys to successful stock picking is readily available for… Read More

Choosing the right stocks to invest in can be a difficult proposition for even the most sophisticated investor. Today’s market participants are faced with an overwhelming amount of information about every public company.  #-ad_banner-#This means that the key for investment success is the ability to filter this data and focus on the most pertinent information. The big-money players cumulatively spend billions of dollars every year to filter this monstrous data stream.   Fortunately, for the rest of us, it doesn’t need to be that expensive. In fact, one of the keys to successful stock picking is readily available for free on www.nasdaq.com and several other websites. I’m referring to information on insider trading. You see, every insider transaction needs to be reported to the SEC on Forms 3 and 4. This means every investor can easily access this crucial information for making investment decisions.  When I find a stock with an appealing technical and fundamental picture, I look at what the insiders are doing and use that information to help me make my decision. If I am bullish and recent insider buying greatly outweighs insider selling, this is a strong confirmation of my bullish bias.   On the other… Read More

Market regulations are making it easier for the investing public to scrutinize and learn from the moves of some of the world’s greatest investors. #-ad_banner-#Stellar sources of information can be found in forms known as Schedule 13Ds and 13Gs, which are SEC filings that outline when a party has accumulated more than 5% of a stock’s publicly traded shares. Such positions are considered significant investments, often amounting to millions of dollars.   They speak volumes about an investor’s confidence in the direction of a company. We often see these forms filed in stocks with smaller market caps, in which investing… Read More

Market regulations are making it easier for the investing public to scrutinize and learn from the moves of some of the world’s greatest investors. #-ad_banner-#Stellar sources of information can be found in forms known as Schedule 13Ds and 13Gs, which are SEC filings that outline when a party has accumulated more than 5% of a stock’s publicly traded shares. Such positions are considered significant investments, often amounting to millions of dollars.   They speak volumes about an investor’s confidence in the direction of a company. We often see these forms filed in stocks with smaller market caps, in which investing “whales” (think fund managers) can quickly accumulate a sizable stake in a company through a smaller investment. One of the most successful investors in this space is Mario Gabelli, founder and CEO of GAMCO Investors. He started the firm in 1977 at age 34 and has seen it grow to over $47 billion in assets under management. With a net worth around $1.6 billion, Gabelli is no stranger to making successful calls over his long career, many of them in stocks with smaller capitalizations. According to the SEC, GAMCO Investors has been quite busy recently, making a number of portfolio… Read More

Over the past five years, this company has tripled its revenue. The stock has done even better, increasing from about $5 to over $50, providing investors with a rare “10-bagger.” #-ad_banner-#Now, management has pledged to double the $2 billion in annual revenue achieved in 2013 to $4 billion by 2016. As ambitious as this may seem, if any company can pull it off, it’s athletic gear maker Under Armour (NYSE: UA). Right now, Under Armour is primarily an apparel company. However, management has recognized that increasing market share in athletic footwear is key to growth. At present, it… Read More

Over the past five years, this company has tripled its revenue. The stock has done even better, increasing from about $5 to over $50, providing investors with a rare “10-bagger.” #-ad_banner-#Now, management has pledged to double the $2 billion in annual revenue achieved in 2013 to $4 billion by 2016. As ambitious as this may seem, if any company can pull it off, it’s athletic gear maker Under Armour (NYSE: UA). Right now, Under Armour is primarily an apparel company. However, management has recognized that increasing market share in athletic footwear is key to growth. At present, it controls only 2.4% of the U.S. running shoe market — but this sliver of market share accounted for 13% of the company’s revenue last year. In comparison, footwear giant Nike (NYSE: NKE) controlled 59% of the U.S. shoe market but derived 57% of its revenue last year from footwear sales. Closing the market share gap presents Under Armour with a challenge and opportunity. One key is innovation in lightweight shoe technology. According to a study by researcher NDP Group, sales of lightweight running shoes increased 22% from late 2012 to late 2013.  Under Armour’s entry in the lightweight niche is… Read More

My grandmother, a schoolteacher, was widowed at a relatively early age. She inherited a relatively small nest egg my grandfather, a rabbi, had built that included a couple of municipal bonds and 90 shares of stock in a small local bank started by a handful of his congregants.  #-ad_banner-#At the time of her death 40 years later, the bank had grown into one of the largest regional players in the business. Those 90 shares had grown through mergers, splits and stock dividends to over 12,000 shares, with a value of close to $300,000. Not a fortune… Read More

My grandmother, a schoolteacher, was widowed at a relatively early age. She inherited a relatively small nest egg my grandfather, a rabbi, had built that included a couple of municipal bonds and 90 shares of stock in a small local bank started by a handful of his congregants.  #-ad_banner-#At the time of her death 40 years later, the bank had grown into one of the largest regional players in the business. Those 90 shares had grown through mergers, splits and stock dividends to over 12,000 shares, with a value of close to $300,000. Not a fortune — but not too shabby.  Was she some kind of investing genius? She was a smart cookie, but no. She held the stock for what seemed like forever. She banked there forever. She knew the business inside and out. She liked the 5% rain or shine dividend.  The bank she owned evolved into Regions Financial (NYSE: RF). Investors had two glaring opportunities to take handsome profits before 93% of the stock’s value was wiped during the financial crisis. The stock has recovered significantly since its panic lows — but it is still far from its high and will… Read More

The casual dining industry has taken it on the chin over the past half-decade as consumers have been trading down to cheaper alternatives. #-ad_banner-#But companies that cater to high-income consumers have been resilient against a weak economy. Ralph Lauren (NYSE: RL), Tiffany & Co. (NYSE: TIF) and Coach (NYSE: COH) have all impressively outperformed the S&P 500 over the past five years. These high-end retailers are all sought after by malls and shopping centers. That’s because these stores generate traffic.   But what these shopping centers also need is an anchor restaurant. And for that, their… Read More

The casual dining industry has taken it on the chin over the past half-decade as consumers have been trading down to cheaper alternatives. #-ad_banner-#But companies that cater to high-income consumers have been resilient against a weak economy. Ralph Lauren (NYSE: RL), Tiffany & Co. (NYSE: TIF) and Coach (NYSE: COH) have all impressively outperformed the S&P 500 over the past five years. These high-end retailers are all sought after by malls and shopping centers. That’s because these stores generate traffic.   But what these shopping centers also need is an anchor restaurant. And for that, their first choice is often the Cheesecake Factory (Nasdaq: CAKE).   That’s because it’s a destination restaurant — a place consumers go to for special occasions — so it doesn’t depend on mall traffic. Rather, it brings traffic to the malls. But mall traffic was down nearly 15% this holiday season, causing many investors to stay away from mall-related investments.   However, malls are still calling on the Cheesecake Factory. It remains the leader when it comes to restaurant metrics, including generating foot traffic. It ranks #1 in cash flow per unit, average unit volume and sales… Read More

With each earnings season comes an avalanche of corporate news, and not coincidentally, an abundance of high-probability trade setups. For my part, I like to wait for a company to report its results, let emotions settle somewhat, and then see how the news affected the charts.  #-ad_banner-#On Tuesday, semiconductor giant Intel (Nasdaq: INTC) reported first-quarter earnings per share (EPS) of $0.38, which beat the consensus estimate by a penny. On the top line, revenue of $12.8 billion was a touch below analysts’ estimates, but the company’s gross margin came in a better than expected at 59.7% versus 59%. Read More

With each earnings season comes an avalanche of corporate news, and not coincidentally, an abundance of high-probability trade setups. For my part, I like to wait for a company to report its results, let emotions settle somewhat, and then see how the news affected the charts.  #-ad_banner-#On Tuesday, semiconductor giant Intel (Nasdaq: INTC) reported first-quarter earnings per share (EPS) of $0.38, which beat the consensus estimate by a penny. On the top line, revenue of $12.8 billion was a touch below analysts’ estimates, but the company’s gross margin came in a better than expected at 59.7% versus 59%. In terms of the outlook for the second quarter and full fiscal year, nothing changed dramatically relative to Intel’s previous guidance or analysts’ expectations. After analysts had a chance to digest the news, the responses were mixed. Morgan Stanley reiterated an “underweight” rating on shares with a $24 price target. Goldman Sachs reiterated its “sell” rating, while Jefferies Group raised its price target from $32 to $35, giving it a “buy” rating. B. Riley & Co downgraded the stock to “neutral” from “buy,” but raised its price target by $0.50 to $29.  If there is one investment theme over the… Read More