In a rising stock market, all eyes are on the income statement.  #-ad_banner-#But in a flat or falling market, the balance sheet moves into the spotlight. Investors want to know that their stocks that possess certifiable take-it-to-the-bank value. The recent drubbing among tech and biotech stocks brought this issue right to the fore. Many of these stocks traded for 10 or even 20 times tangible book value and had no floor in place when investors began to head for the exits. As Warren Buffett’s gurus, Benjamin Graham and David Dodd, explained eight decades ago, you can sleep well… Read More

In a rising stock market, all eyes are on the income statement.  #-ad_banner-#But in a flat or falling market, the balance sheet moves into the spotlight. Investors want to know that their stocks that possess certifiable take-it-to-the-bank value. The recent drubbing among tech and biotech stocks brought this issue right to the fore. Many of these stocks traded for 10 or even 20 times tangible book value and had no floor in place when investors began to head for the exits. As Warren Buffett’s gurus, Benjamin Graham and David Dodd, explained eight decades ago, you can sleep well at night only if you own stocks that are valued at a lower price than the net assets on the balance sheet — what’s known as “below book.” Back in Graham and Dodd’s era, you could find many stocks sporting such value. These days, less than 10% of all U.S. stocks with a market value of at least $200 million trade below book. And the pool of stocks that trade at a very deep discount to book value is even smaller. A quick review of such stocks suggests that a few industries are especially cheap in relation to their hard… Read More

Technology changes fast and often. The tech bubble of the early 2000s is one of the greatest examples of this. And with billionaire David Einhorn of Greenlight Capital noting that we might be in the second tech bubble in less than 15 years, it might be a great time to reassess what tech stocks you own.  #-ad_banner-#Despite the sky-high valuations of some stocks, including Amazon.com (Nasdaq: AMZN) and Facebook (NYSE: FB), there are a few stocks in the sector that are trading at enticing valuations. One of those stocks is a… Read More

Technology changes fast and often. The tech bubble of the early 2000s is one of the greatest examples of this. And with billionaire David Einhorn of Greenlight Capital noting that we might be in the second tech bubble in less than 15 years, it might be a great time to reassess what tech stocks you own.  #-ad_banner-#Despite the sky-high valuations of some stocks, including Amazon.com (Nasdaq: AMZN) and Facebook (NYSE: FB), there are a few stocks in the sector that are trading at enticing valuations. One of those stocks is a company that Einhorn owns. Despite being short a basket of tech stocks, Einhorn is still bullish on the tech sector. Apple (Nasdaq: AAPL), Micron Technology (Nasdaq: MU) (which my colleague Erik Epp profiled last week) and Marvell Technology (Nasdaq: MRVL) are three of his hedge fund’s largest positions.  But one of the cheapest tech stocks Einhorn has owned is Seagate Technology (Nasdaq: STX).  Einhorn owned Seagate for nearly two years, with a stake of 5.4 million shares at the end of last year. That’s because the stock is still a very cheap dividend play. It trades at a forward price-to-earnings… Read More

I’m in the process of increasing my life insurance. I’m taking advantage of my firm’s group life benefit to shore up my total face value to a number that will make my wife even happier should I head to the happy hunting ground sooner than expected.  #-ad_banner-#As I’ve been navigating the underwriting odyssey, I’ve realized that I haven’t looked at some of the bigger life insurance stocks in a while. So I set out to correct that — and I was intrigued by what I found.  Many investors have fallen out of love with large insurance company stocks over the… Read More

I’m in the process of increasing my life insurance. I’m taking advantage of my firm’s group life benefit to shore up my total face value to a number that will make my wife even happier should I head to the happy hunting ground sooner than expected.  #-ad_banner-#As I’ve been navigating the underwriting odyssey, I’ve realized that I haven’t looked at some of the bigger life insurance stocks in a while. So I set out to correct that — and I was intrigued by what I found.  Many investors have fallen out of love with large insurance company stocks over the past five years (if they were ever in love to begin with). The two main reasons are the two motivations that drive almost all behavior in financial markets: fear and greed.  From 2008 to 2011, fear drove the bus mainly due to the fallout from the global financial crises in U.S and European markets. Investors worried that the investment portfolios of the big insurers contained huge quantities of securities that were in danger of deep devaluation or even default due to the turmoil and depressive economic environment. The natural reaction was to sell and then avoid. This chart of MetLife… Read More

I’m going to show you a simple strategy that has never lost money in the market. A recent study by mega-investment firm Oppenheimer proved just as much. Don’t worry, it’s not some “too good to be true” story. But there are some caveats. #-ad_banner-#First, I could tell 100 people about this strategy… and I’d guess 99 of them would flat ignore it. That’s despite the evidence I’ll show you backing it up. “That strategy is for suckers.” “Its time has passed.” “You have to be an idiot to think that would work today.” I know some people will say this… Read More

I’m going to show you a simple strategy that has never lost money in the market. A recent study by mega-investment firm Oppenheimer proved just as much. Don’t worry, it’s not some “too good to be true” story. But there are some caveats. #-ad_banner-#First, I could tell 100 people about this strategy… and I’d guess 99 of them would flat ignore it. That’s despite the evidence I’ll show you backing it up. “That strategy is for suckers.” “Its time has passed.” “You have to be an idiot to think that would work today.” I know some people will say this — because they already have. We asked some of our regular readers to give us their thoughts on this strategy. Those were the type of responses I heard from some people. I was shocked. Second, you can’t use this strategy for every stock. Use it on the wrong ideas, and you can still lose money. But across the market as a whole, it hasn’t failed once in the past 60 years. The truth is, you don’t have to trade every day… or every week… or even every year to beat the market. In fact, your success actually increases with the… Read More

If you own stock in Facebook (Nasdaq: FB), you’ve had to reach for the Tums, as shares have tumbled roughly 15% since early March. Yet that pullback is just a minor inconvenience when you consider that a host of other dot-com and social media stocks have plunged by 25%, 50% or more.  #-ad_banner-#No doubt about it, the mania for richly valued tech stocks has come to an end, and the odds of a rapid climb back to their 52-week highs are quite small.  By the time I looked at these stocks two… Read More

If you own stock in Facebook (Nasdaq: FB), you’ve had to reach for the Tums, as shares have tumbled roughly 15% since early March. Yet that pullback is just a minor inconvenience when you consider that a host of other dot-com and social media stocks have plunged by 25%, 50% or more.  #-ad_banner-#No doubt about it, the mania for richly valued tech stocks has come to an end, and the odds of a rapid climb back to their 52-week highs are quite small.  By the time I looked at these stocks two months ago, they had shown signs of a top. (Indeed, a number of these stocks had hit their all-time highs on March 5.) By the time I looked at this group a month later, they were in freefall.  While almost all of these stocks had fallen more than 20% from their peaks by early April, the carnage has continued for some, while others have seen their share prices stabilize.  Has this group hit bottom — and is it primed for a comeback? Not everybody’s convinced. A recent Wall Street Journal article suggests that some of these stocks… Read More

John Maynard Keynes famously said that “The market can remain irrational longer than you can stay solvent.”  Short sellers are also aware of that painful axiom, and many of them lost money in 2013 betting against some of the market’s most popular stocks. And perhaps no single stock defied the logic and reason of short sellers as much as 3D Systems (NYSE: DDD). Back in September, I took note of emerging concerns about the health of this company’s financial statements and suggested that aggressive accounting would be this stock’s undoing. Still, shares of this and other 3-D printers rose ever higher,… Read More

John Maynard Keynes famously said that “The market can remain irrational longer than you can stay solvent.”  Short sellers are also aware of that painful axiom, and many of them lost money in 2013 betting against some of the market’s most popular stocks. And perhaps no single stock defied the logic and reason of short sellers as much as 3D Systems (NYSE: DDD). Back in September, I took note of emerging concerns about the health of this company’s financial statements and suggested that aggressive accounting would be this stock’s undoing. Still, shares of this and other 3-D printers rose ever higher, and 3D Systems was valued at roughly 125 times trailing earnings. That’s what happens when a stock surges 4,000% in five years. #-ad_banner-#​Of course, when momentum investors lose interest, stocks such as 3D Systems can’t fall back on any sort of intrinsic value, and a nearly 50% plunge thus far in 2014 has been equally sobering. The question now is: Should you buy it? The short answer: More boulders may lie ahead, and you should wait for an even better entry price. Organic Vs. Inorganic Growth 3D Systems has been dogged by its… Read More

One claim that scientists make is that part of what distinguishes humans from animals is that humans have the ability to recognize patterns.  The reason I call it a claim is that my 8-year-old yellow lab knows when things are out of order — mainly at feeding time (especially if the cat’s food dish has been moved) and when it’s time to come in to go to bed. If things are askew, she’ll let you know (as only labs can). In my research for an article on value-priced utility stocks, I recognized an undeniable historical pattern: #-ad_banner-#In every… Read More

One claim that scientists make is that part of what distinguishes humans from animals is that humans have the ability to recognize patterns.  The reason I call it a claim is that my 8-year-old yellow lab knows when things are out of order — mainly at feeding time (especially if the cat’s food dish has been moved) and when it’s time to come in to go to bed. If things are askew, she’ll let you know (as only labs can). In my research for an article on value-priced utility stocks, I recognized an undeniable historical pattern: #-ad_banner-#In every instance, a sideways pattern, or underperformance of that particular group of stocks, in the Dow Jones Utility Average Total Return index occurred during a relatively strong, broader equity market period was followed by a flat broader market or even a correction. Now, in times of uncertainty in the economy and the markets, nervous investors will gravitate toward utility company stocks for their large and reliable dividends. So far this year, that scenario seems to be playing out. Utility stocks are outperforming the S&P 500 Index handily: DJUTR is up 15% compared with a meager 1.8% gain for the broader average. Read More

When it comes to the stock market, we’re all sheep quietly marching to get slaughtered… At least that’s what the alarmists are saying when it comes to Michael Lewis’ new book, “Flash Boys: A Wall Street Revolt.” His analysis has roiled commentators the world over by shedding light on the unsung world of high-frequency trading (HFT). You’re probably familiar with Michael Lewis, even if you aren’t readily aware of it. Lewis, a former bond trader with Salomon Brothers in the 1980s, used his experiences to write the best-selling book Liar’s Poker and has since written multiple best-sellers such as Moneyball,… Read More

When it comes to the stock market, we’re all sheep quietly marching to get slaughtered… At least that’s what the alarmists are saying when it comes to Michael Lewis’ new book, “Flash Boys: A Wall Street Revolt.” His analysis has roiled commentators the world over by shedding light on the unsung world of high-frequency trading (HFT). You’re probably familiar with Michael Lewis, even if you aren’t readily aware of it. Lewis, a former bond trader with Salomon Brothers in the 1980s, used his experiences to write the best-selling book Liar’s Poker and has since written multiple best-sellers such as Moneyball, The Blind Side and The Big Short. In Flash Boys, Lewis paints a picture of Wall Street’s dark underbelly, where complex computer algorithms make lightning-fast investment decisions normal humans are simply incapable of. #-ad_banner-#In the simplest of explanations, this sensitive information allows traders to work about two to three nanoseconds ahead of the rest of the market (to give you an idea of how fast that is, it takes roughly 100 nanoseconds to blink your eye). Most experts have no idea what’s in these algorithms, but they do know that Wall Street traders can profit from them by executing buy… Read More

Today’s kids are different than when you and I grew up. They’re computer-savvy, smartphone-savvy… in fact, at first glance, they almost resemble mini-adults. #-ad_banner-#It’s no surprise, then, that sales for toy makers have been sluggish over the past few years. Add in the fact that stagnant wages have parents watching their wallets when it comes to spending on toys for their kids, and it might seem wise for investors to stay away from this space. Big mistake. The toy industry is still a $22 billion business in the U.S. And with the licensing deals that come from movie and game… Read More

Today’s kids are different than when you and I grew up. They’re computer-savvy, smartphone-savvy… in fact, at first glance, they almost resemble mini-adults. #-ad_banner-#It’s no surprise, then, that sales for toy makers have been sluggish over the past few years. Add in the fact that stagnant wages have parents watching their wallets when it comes to spending on toys for their kids, and it might seem wise for investors to stay away from this space. Big mistake. The toy industry is still a $22 billion business in the U.S. And with the licensing deals that come from movie and game franchises, it can be a lucrative venture for the companies that can “get it right.” Toy maker Hasbro (Nasdaq: HAS) has been a perfect example of this. It makes toys and games featuring the popular Transformers, My Little Pony and G.I. Joe franchises, as well as Disney’s (NYSE: DIS) various Marvel and Star Wars properties. You can see how this has worked out for the company — and its investors: The company I want to talk about today — Mattel (Nasdaq: MAT) — sells toys in 150 countries and controls 17% of the U.S. toy market. But it… 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