Thursday, October 31, 2013

The horror of mutual fund taxes

Another successful Halloween: No soap on your windows, no mailboxes blown up, no one hacked to death in the shower. You're happy, until you reach into the mailbox. And then: The horror.

It's a notice from your mutual fund company telling you about your estimated capital gains distribution. That's right: Along with all those big investment gains this year comes a bigger tax bill. But you have plenty of ways to reduce your fund taxes, most of which do not involve silver bullets, garlic or splattered brains.
Mutual funds buy and sell securities all year, and when they have more gains than losses, they pass those on to you, around this time of year. Gains are good. Unfortunately, you owe taxes on those gains.
Suppose, for example, the entirely fictional Miskatonic River Fund gave you a long-term capital gains distribution of $666. You'd owe 15% tax on your gain, or $99.90. (If you're in the highest tax bracket — 39.6% — you'll owe 20% on your capital gains. You'll also owe an additional 3.8% Medicare tax, which kicks in at $250,000 in modified adjusted gross income for joint filers, and $200,000 single filers.)

Don't buy a mutual fund near the dividend date," says Don Zidik, director of individual trust and estate practice at Braver PC, in Needham, Mass. "You'll end up being taxed for income and gains earned over the full year." Basically, you'll be buying a tax bill when you buy fund shares.

Incidentally, when the fund pays out the distribution, its share price drops by that amount. So you're not getting anything extra when you get the distribution. It's already factored into the share price.

Even more horrifying than long-term gains distributions are short-term gains distributions, which are taxed at your regular income tax rate. And, while most dividend distributions qualify for taxation at long-term capital gains rates, some — such as most from real estate funds — don't.

Most fund companies provide an estimate of their capital gains and income distributions.! Fidelity, for example, estimated that Contrafund, based on its Sept. 30 record, would distribute 18 cents per share in short-term capital gains, $5.765 per share in long-term capital gains, and nothing in income.

Over time, taxable distributions reduce your returns. Consider Contrafund, which has a sterling 10-year record. It's up 10.29% a year the past decade, meaning the fund has turned a $10,000 investment into $26,629. Assuming maximum federal taxes, however, the fund is up 9.8% a year, turning $10,000 into $25,470 — a $1,159 difference.

What can you do to reduce your taxes? One solution is to switch to index funds. Funds that simply track an index, rather than trade stocks actively, typically have lower capital gains distributions. For example, the Vanguard 500 Index fund, which follows the Standard and Poor's 500-stock index, typically pays nothing in capital gains distributions. The fund earned an average 7.45% a year before taxes the past 10 years, and 7.09% after distributions. (The fund does pay out dividend distributions.)

You might also consider tax-managed funds, which try to offset capital gains with capital losses, minimizing distributions. Vanguard Tax-Managed Capital Appreciation fund (ticker: VTCLX) has gained an average 7.89% after distributions the past decade, according to Morningstar, the mutual fund trackers.

An obvious solution would be to put more money into tax-deferred retirement plans, such as individual retirement accounts or 401(k) plans. You wouldn't pay taxes on distributions until you start to withdraw funds at retirement. And if you invest in a Roth IRA, you wouldn't pay taxes on gains and distributions at all, assuming you followed the rules for withdrawal at retirement.

But putting stock-fund shares into an IRA to avoid taxable distributions might be creating a bigger tax bill down the road. When you invest in a traditional IRA or a 401(k) plan, you dodge taxes on distributions or gains in the year they're paid out. But when you withd! raw from ! one of these plans, your entire withdrawal is taxable income. And typically, that's at a higher rate than you'd pay on long-term capital gains — which is the rate you'd pay if you were in a taxable account.

Finally, if your distribution is large enough, you might consider harvesting losses, a polite term for selling fund shares that have performed hideously. You can use long-term losses to offset an unlimited amount of long-term gains. If you have more losses than gains, you can deduct up to $3,000 of those losses from your income. And if you still have losses left over, you can carry those over into the next tax year.

Sending your losing fund to Hades is always a good idea, especially at tax time. But your primary purpose for selling any fund should be performance — not taxes. As horrifying as taxes are, they're a secondary consideration to how your fund fits in your portfolio.

Wednesday, October 30, 2013

GM Third-Quarter Earnings Beat Wall Street Forecasts

Renaissance Center Light Bands (The General Motors logo and a blue light band are displayed atop the Renaissance Center in DetroCarlos Osorio/AP DETROIT -- General Motors' third-quarter net income fell 53 percent compared with a year ago, as one-time expenses masked a strong performance in North America and a narrowed loss in Europe. The company earned $698 million in the quarter, or 45 cents a share. That compares with $1.48 billion, or 89 cents a share, a year ago. But without $900 million in one-time items, GM earned $1.7 billion, or 96 cents a share. That beat Wall Street expectations. Analysts polled by FactSet expected 94 cents a share. Revenue rose 4 percent to $39 billion, just short of Wall Street's estimate of $39.2 billion. Investors viewed the results favorably. GM (GM) shares rose 87 cents, or 2.4 percent, to $36.93 in morning trading. GM's performance in North America was especially strong, with pretax earnings up 28 percent to $2.2 billion on solid pickup truck sales and better pricing. GM rolled out updated versions of its Chevrolet Silverado and GMC Sierra pickups in the spring. The company's profit margin in North America -- the percentage of revenue it gets to keep after expenses -- was the highest in two years at 9.3 percent. GM has a goal of 10 percent pretax margins in the region. "The new trucks are doing great in the marketplace," Chief Financial Officer Dan Ammann said. "We're commanding good pricing. We're controlling costs." GM's average sales price rose 1 percent in the U.S. during the quarter to $34,566, according to Kelley Blue Book. Sales of the Silverado, its top-selling vehicle, were up 14 percent over last year's third quarter. Prices for the pickup rose by 2 percent to an average of $36,487. In Europe, GM cut its loss by more than half to $214 million. Revenue there rose year-over-year for the first time in two years. Ammann said the company cut $400 million in costs during the quarter, and updated versions of its Opel Mokka small crossover SUV, Adam subcompact and Insignia midsize car sold well. GM's International Operations, including Asia, saw pretax earnings fall 61 percent to $299 million due to struggles in India and other areas outside of China. South American profit rose 79 percent to $159 million. The company's financial unit saw a 20 percent rise in pretax earnings to $239 million. "We continue to have challenges in some markets," Ammann said. Some are due to industrywide issues such as competitors lowering prices, but some are execution problems on GM's part, he said. South American profit rose 79 percent to $284 million. The company's financial unit saw a 20 percent rise in pretax earnings to $239 million. One-time items included $800 million to buy preferred stock from a health care trust for union retirees and a $48 million impairment charge in South Korea. Several major U.S. corporations dodge domestic taxes by moving profits internationally to tax havens. For example, a company can utilize the "double Irish" formula to minimize their U.S. taxes. If the profits from the sale of a good stayed in the U.S., they would be taxed at the federal 35 percent rate. However, some companies sell the intellectual property rights to an Irish subsidiary to minimize tax obligations. The profits from that U.S. sale are paid overseas to the Irish subsidiary. As long as the Irish subsidiary is controlled by managers elsewhere - for instance, a Caribbean tax haven - the profits can move around the world without a dime of taxation. At this point, the profits are moved to a nation with no tax, skirting around the U.S. 35 percent rate.  

Top 5 Companies To Buy For 2014

By Business Insider

Corporations can avoid paying taxes on US profits with the "Double Irish" arrangement. This is the "Double" part of the Double Irish, and also entails a trip through the Netherlands. When the same company's product is sold overseasthat profit is routed to a second Irish subsidiary, Since Ireland has treaties with the Netherlands to make inter-European transfers tax free, the profits are then routed through the Netherlands, and then back to the first Irish subsidiary, and then to the no-tax Caribbean Island. As a result, the U.S. company never has to repatriate the money and they never has to pay taxes on the products.

Tuesday, October 29, 2013

Regular folks can afford to wait on Twitter’s IPO

As Twitter promotes its IPO in cities across the nation before its first day of trading, USA TODAY markets reporter Matt Krantz schools the average investor on whether to jump in now or wait a few months.

1. How does the casual investor go about getting in on a hot IPO, aka initial public offering, like Twitter?

You need to have an existing relationship with a broker. Wealthy clients and customers of the large investment banks have the best chance to get shares of highly coveted IPO shares.

But if you're not rich and famous, or have a long-standing account with a full-service brokerage involved in the IPO, you will need to contact your discount broker to see whether it will offer Twitter shares to its customers.

Recently, about 20% of shares sold in an IPO will be held back for regular folks. This limited number of shares are usually doled out by well-known discount brokers, including Charles Schwab, TD Ameritrade and Fidelity. Just be careful. Remember that most of the shares of popular IPOs are claimed by the big investment banks who give them to their top clients and customers.

My rule of thumb is that if you are a regular person, if there are shares available for regular folks, then that means that the smart ones and rich ones don't want in on them and you should probably avoid them, too.

Remember, too, you don't have to buy shares in the Twitter IPO to be a Twitter investor. You can wait for the shares to start trading once the early investors sell. If demand is weak for the shares, you might even be able to buy shares below their IPO price.

2. Do you think Twitter's IPO will be a success?

Measuring the success of an IPO depends on what side of the table you're sitting on. The higher the price set on the IPO shares, the more money the seller, the company and early investors make. But the higher the price, the less that's left on the table for new investors.

If demand is strong for Twitter shares, and Twitter raises the more than $1 bil! lion it's seeking, it will be a success for the company. But for investors, success will be measured based on how the shares perform after they start trading. If the company sells the shares at a steep premium, and investors pay up only for the shares to fall, that's not most investors' idea of success.

And that's why studies have shown that it is often best to let a new stock trade for three to six months and then buy the stock. Everyone is guessing and so it is dangerous to buy when it first goes public. It can be an overhype deal.

3. The reason that I ask is that some skeptics are saying many people are unsure how Twitter fits in their daily lives. How is Twitter dealing with these criticisms?

I really don't think that will have anything to do with the Twitter IPO. With Facebook, you heard endless stories about the "Facebook fatigue." But that criticism doesn't matter since the company is printing money and the stock is even doubling this year. Investors often confused a company and its stock. They're two very different things. Over the long term, if a company is doing well then the stock and the performance of the company tend to parallel with each other. But in the short term, a stock and the company's fortunes can head in different directions.

People don't know what the future will be. The fact that some people don't use Twitter might be a positive for investing in the stock, because people who don't might start using it and since people who quit it, might go back to it. People shouldn't focus on the criticism; instead they should focus on the price that they are paying for the shares.

4. Would you advise average people to jump in now or wait a few months after Twitter goes public to get in on it?

It's tricky because investors don't know what the exact price is going to be as to what the stock will sell at. The key is to focus on the price of the stock. Right now, we have an estimated price range of $17 to $20 a share. But that's just an estimate and it could ! rise or f! all based on how much demand there is for the stock.

If the IPO price increases the price, then it becomes even more speculative and risky. If the IPO price goes lower, which is highly unlikely, then maybe it is something that investors should look at. If you don't have any experience with financial matters, then it is best to leave it alone. If you do have experience, watch the price until there is an opportunity to jump in.

Saturday, October 26, 2013

In The Beverage Industry, Don't Overlook Dr. Pepper Snapple Group

In a Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) world it's easy to forget about the number three contender Dr. Pepper Snapple Group (NYSE:DPS). For instance, Coca-Cola and PepsiCo hold about 40% and 30% of the respective American soft drink market share against Dr. Pepper Snapple's 16% allocation. In turn, one could rationally make the argument that Dr. Pepper Snapple doesn't quite have the muscle to take advantage of opportunities in the same way as its much bigger rivals. For that matter, some might indicate that the sugary beverage market is at the beginning of a long decline.

However, I would express caution on both fronts. With regard to Dr. Pepper Snapple lacking the same growth prospects of Coca-Cola and PepsiCo, it should be made clear that the valuation of a business is separate from the operations of that enterprise. More specifically, it might very well be true that both Coca-Cola and PepsiCo will grow faster than Dr. Pepper Snapple moving forward.

In fact, this is precisely what we see as analysts are expecting Coca-Cola to grow at 7.7% and PepsiCo to grow at 8.4% moving forward against Dr. Pepper Snapple's expected long-term growth rate of 6.6%. Yet this alone does not make Coca-Cola or PepsiCo a better investment. What is not readily apparent is that Dr. Pepper Snapple trades at a current price-to-earnings ratio around 15 while Coca-Cola and PepsiCo trade closer to 19. If at some time in the future Coke and PepsiCo's multiple falls slightly or else Dr. Pepper Snapple's ratio expands slightly, the investment playing field is leveled, if not titled, towards Dr. Pepper Snapple's favor. Furthermore, Dr. Pepper Snapple's higher initial dividend yield immediately influences the investing decision.

With regard to the decline in sugary beverage demand, proponents again have a sensible case – especially on the health front. Yet once again, I would express exercising carefulness within one's assumptions. It is true that sugary beverages provide a solid health concern – but that doesn't mean everyone will simultaneously stop drinking them cold turkey. In fact, it would be reasonable to assume that a great portion of soda drinkers will still be downing their sugary delights decades from now.

Further, around the globe – in perhaps less calorie conscious circumstances – there are millions of people entering the middle class. Lastly, it is true that Dr. Pepper Snapple offers the well-known brands like 7-UP, Dr. Pepper, A&W and Sunkist. However, Dr. Pepper Snapple also offers a fantastic array of additional options like Mott's, Snapple, Déjà Blue, Nantucket Nectars and Country Time. In short, health concerns are important – but Dr. Pepper Snapple already offers many of the solutions. In addition, about 75% of the company's volume is generated from brands that are either number one or number two in their category, with 6 of the top 10 non-cola soft drinks under its corporate umbrella.

With this information in mind, let's take a look at the operating history of Dr. Pepper Snapple through the powerful fundamental analyzer software tool of F.A.S.T. Graphs™.

Dr. Pepper Snapple Group was spun off as a stand-alone company in 2008, just before the most recent recession. Despite this inopportune timing, the company has remained strong and profitable. From 2008 until today Dr. Pepper Snapple has grown earnings (orange line) at a compound annual rate of 6% a year. In addition, Dr. Pepper Snapple initiated a dividend (pink line) recently and has been able to grow this payout meaningfully over the last couple of years. Note that the following graphic leaves price off the graph to demonstrate the business behind the stock only. I will add the monthly closing prices to a subsequent graph.

(click to enlarge)

In viewing the operating results of the company one might expect that the performance results mirror closely with the business results. However, that's not necessarily what we see. Since the spin-off Dr. Pepper Snapple has grown earnings by about 6% a year. Yet performance results were much better. A hypothetical $10,000 investment on 4/30/2008 would have turned into $18,200.28 today, or an 11.1% annualized rate of return as compared to just a 5.9% return of the S&P 500 index.

(click to enlarge)

The underlying reasoning behind this is relatively straightforward: in 2008 Dr. Pepper Snapple was slightly undervalued and today it appears reasonably priced. Below I have added the price (black line) to the first graph to demonstrate the relationship between earnings and valuation.

Friday, October 25, 2013

5 Safe Dividend Stocks Yielding North of 7%

RSS Logo Lawrence Meyers Popular Posts: 3 Best ETFs to Own Until You Die5 Safe Dividend Stocks Yielding North of 7%5 Dividend ETFs That Provide Safety for the Long Haul Recent Posts: 5 Safe Dividend Stocks Yielding North of 7% Time to Tune in to AMC Networks Take a Ride With Sizzling Polaris Stock View All Posts

Let us all praise Ben Bernanke for flooding the bond market with gazillions of dollars. In doing so, he creates artificial demand for bonds, which drives prices up and yields down.

That means tons of money has flowed out of the bond market (because yields stink) and into the stock market, sending stocks soaring as all that money finds a home.  On the negative side, bond yields now stink.  If you were a fixed income investor, you've had to look elsewhere for yield.

Fortunately, there are some very secure investments that pay far more in interest than boring bonds ever did.  They may lack the full faith and credit of the U.S. government, but these days that seems like a dicey proposition anyway.

Here are five such investments that deliver solid and safe yields:

Permian Basin Royalty Trust (PBT) is a royalty trust, meaning it pools together royalty rights for various energy-producing properties.  I prefer trusts that are widely diversified.  In this case, Permian holds a 75% net overriding royalty interest in six properties in Crane County, Texas; and a 95% net overriding royalty interest in fields spread across 33 other counties in Texas.  In total, we're talking 400 oil wells, 30 gas wells, and 500 injection wells.  That's plenty diversified.  Yeehaw for its 8.3% yield!

The Sabine Royalty Trust (SBR) is diversified from a geographical perspective, with interests spreading across both producing and undeveloped gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.  It essentially operates as a holding company into which all the royalties get deposited and all the money gets distributed to shareholders via its 9.2% yield.

5 Best Cheap Stocks For 2014

It's no coincidence I have another energy play here, because energy is plentiful and always consumed.  Linn Energy (LINE) is an indie oil and gas player, and spread over the many states across the country.  Proven reserves are 4,796 billion cubic feet of oil and natural gas, and it operates a whopping 15,804 wells.  It also is unique in that it hedges 100% of its production vs. some 71% among other MLPs.  The stock pays a solid 11.2% dividend and may merge with Berry Petroleum (BRY) to solidify its balance sheet.

Business development companies like Hercules Technology Growth Capital (HTGC) invest money into middle-market companies that are experiencing fast growth.  Often, these investments take the form of mezzanine debt paying interest in the teens, and some warrants.  Hercules likes to focus more on senior secured revolvers and term loans to refinance existing debt, and will even take second-liens.  It has more attractive upside with its investments than other BDCs because it focuses on tech, energy tech, healthcare, life sciences and business services — all of which can fetch higher multiples upon exit.  It pays out a sturdy 7.3% dividend.

Finally, we have a long-time holding of my own portfolio, Ashford Hospitality Trust Preferred D Shares (AHT), which is an 8.45% issuance trading right about par.  With hotel preferred stock, you have a great opportunity for safe yields.  Your preferred stock is paid dividends before common shareholders receive theirs.  During the financial crisis, when every other hotel stock was getting destroyed and cutting  both common and preferred dividends, Ashford maintained its preferred payouts.  It is the hotel REIT with the highest insider ownership, and has a solid balance sheet that survived the worst of times.

Lawrence Meyers owns shares of AHT pref. D.

Wednesday, October 23, 2013

The Latest Look Into Elon Musk's Crystal Ball

Elon Musk, the co-founder of PayPal and Tesla Motors (NASDAQ: TSLA  ) , and founder of SpaceX, has a keen ability to make good predictions.

Source: Businessweek.

Though not always accurate, many of his predictions are eerily on target -- especially for Tesla. For the most part, Musk has been able to stay on schedule with his original plan for the electric car manufacturer.

Perhaps Tesla's soaring stock price has emboldened Musk's forecasting spirit, because he's made quite a few bold predictions lately. Though they should be taken with a grain of salt, four of his recent predictions are worth pondering, says Fool contributor Daniel Sparks in the video below.

While Tesla is disrupting this auto industry, this stock is changing everything we know about professional networking, taking investors for a ride while it's at it. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's Chief Technology Officer is putting $117,238 of his own money on the table. And why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!

Tuesday, October 22, 2013

Best China Companies To Own For 2014

The U.S. Energy Department's weekly inventory release showed that crude stockpiles fell sharply for the second time in as many weeks amid climbing refinery runs. The report further revealed that within the ��efined products��category, gasoline stocks fell, while distillate supplies were up from the week-ago level.

The bullish data from the U.S. government, together with the ongoing unrest in Egypt that could destabilize the resource-rich Middle East and further tighten the global supply picture, has kept the commodity above $100 a barrel since last week. However, indications of a slowdown from China ��the world�� second largest economy ��may play spoilsport and pull back oil prices.

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

Best China Companies To Own For 2014: U S Concrete Inc.(USCR)

U.S. Concrete, Inc. engages in the production and sale of ready-mixed concrete, precast concrete products, and concrete-related products for use in commercial, residential, and public works construction projects in the United States. It operates in two segments, Ready-Mixed Concrete and Concrete-Related Products, and Precast Concrete Products. The Ready-Mixed Concrete and Concrete-Related Products segment involves in the formulation, preparation, and delivery of ready-mixed concrete to customers? job sites; and the provision of various services that include the formulation of mixtures for specific design uses, on-site and lab-based product quality control, and customized delivery programs. This segment also engages in the mining and sale of aggregates, such as crushed stone aggregates, sand, and gravel; and the resale of building materials, including rebars, concrete blocks, wire mesh, color additives, curing compounds, grouts, wooden forms, concrete masonry, and tools. Th e Precast Concrete Products segment produces a range of precast concrete products for use in various architectural applications, including free-standing walls used for landscaping; soundproofing and security walls; panels used to clad a building facade; and storm water drainages. This segment also offers various finished products consisting of utility vaults, manholes, catch basins, highway barriers, curb inlets, pre-stressed bridge girders, concrete piles, and custom-designed architectural products. The company serves general contractors, concrete sub-contractors, design engineers, architects, governmental agencies, property owners and developers, and home builders principally in Texas, California, New Jersey, and New York. As of March 7, 2011, it had 102 fixed and 11 portable ready-mixed concrete plants, 7 precast concrete plants, and 7 aggregates facilities. U.S. Concrete, Inc. was founded in 1948 and is based in Houston, Texas.

Best China Companies To Own For 2014: New Oriental Education & Technology Group Inc.(EDU)

New Oriental Education & Technology Group Inc. provides private educational services primarily in the People?s Republic of China. It offers a range of educational programs, services, and products consisting primarily of English and other foreign language training; test preparation courses for admissions and assessment tests; primary and secondary school education; development and distribution of educational content; software and other technology; and online education. The company?s language training courses primarily consist of various types of English language training courses, and other foreign languages, including German, Japanese, French, Korean, and Spanish. It offers test preparation courses for language and entrance exams used by educational institutions in the United States, the People?s Republic of China, and commonwealth countries. The company also operates primary and secondary schools in Yangzhou. In addition, New Oriental Education & Technology Group Inc. deve lops and edits content for educational materials for language training and test preparation, such as books, software, CD-ROMs, magazines, and other periodicals. It distributes these materials through various distribution channels consisting of own classrooms and bookstores, as well as third-party distributors. Further, the company offers various online education programs on its Web site, Additionally, it provides consulting services to help students through the application and admission process for overseas educational institutions, as well as post-secondary educational programs to help students seek career opportunities; and operates two pre-schools. The company offers educational services under the ?New Oriental? brand name. As of May 31, 2010, it offered education programs, services, and products through a network of 48 schools, 319 learning centers, and 25 bookstores. The company was founded in 1993 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Belinda Cao]

    New Oriental Education & Technology Group Inc. (EDU), China�� largest private educational company, fell 11 percent last week to a one-month low of $16.07. Oppenheimer & Co. analyst Ella Ji said April 2 that students may avoid large gatherings because of the flu, impacting New Oriental.

  • [By Seth Jayson]

    New Oriental Education & Technology Group (NYSE: EDU  ) reported earnings on April 24. Here are the numbers you need to know.

    The 10-second takeaway
    For the quarter ended Feb. 28 (Q3), New Oriental Education & Technology Group met expectations on revenues and beat expectations on earnings per share.

Top 5 Warren Buffett Stocks To Watch Right Now: International Ltd.(CTRP) International, Ltd., together with its subsidiaries, provides travel services for hotel accommodations, airline tickets, and packaged tours in the People?s Republic of China. It also sells independent leisure travelers bundled package-tour products, which include transportation and accommodation, as well as guided tours covering various domestic and international destinations. In addition, the company offers Internet-related advertising, aviation casualty insurance, and air-ticket delivery services. Further, it sells Property Management System, a hotel information software; travel guidebooks, which provide information for independent travelers; and VIP membership cards that allow cardholders to receive discounts from various restaurants, clubs, and bars. The company was founded in 1999 and is headquartered in Shanghai, the People?s Republic of China.

Advisors' Opinion:
  • [By Shareholders Unite]

    The Chinese travel agency Ctrip (CTRP) has been one of our best performers in the past 12 months. The shares more than tripled since we first suggested a buy at $13.69 almost exactly a year ago.

  • [By Brian Pacampara]

    What: Shares of Chinese travel website International (NASDAQ: CTRP  ) surged 19% today after its quarterly results and outlook topped Wall Street expectations. �

Best China Companies To Own For 2014: China Security & Surveillance Technology Inc. (CSR)

China Security & Surveillance Technology, Inc., together with its subsidiaries, manufactures, installs, distributes, and services surveillance and safety products, systems, and software in the People?s Republic of China. The company?s products include standalone digital video recorders (DVRs); embedded DVRs; mobile DVRs; real-time hard-compression coding cards; DVR compression boards; digital cameras; intelligent high-speed dome cameras; intelligent control system software platforms; perimeter security alarm systems; monitors; and radio frequency identification terminals and data collectors. It serves various customers, which include governmental entities, such as customs agencies, courts, public security bureaus, and prisons; non-profit organizations, including schools, museums, sports arenas, and libraries; and commercial entities consisting of airports, hotels, real estate, banks, mines, railways, supermarkets, and entertainment venues. The company is headquartered in S henzhen, the People?s Republic of China.

Best China Companies To Own For 2014: Bitauto Holdings Limited (BITA)

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People?s Republic of China. The company offers subscription services to new automobile dealers that enable them to list pricing and promotional information on its Website and partner Websites, and to interact with consumers through its virtual call center, as well as provides advertising service to dealers and automakers on its Website. It also offers listing services to used automobile dealers, which enable them to display used automobile inventory information through its Website and partner Websites; and advertising services to used automobile dealers and automakers with certified pre-owned automobile programs on its Website. In addition, the company provides digital marketing solutions, including Website creation and maintenance, online public relationship, online marketing campaigns, and advertising agent service s. Bitauto Holdings Limited was founded in 2000 and is headquartered in Beijing, the People?s Republic of China.

Advisors' Opinion:
  • [By Evan Niu, CFA]

    What: Shares of Bitauto (NYSE: BITA  ) have plunged today by as much as 18% after the company reported first-quarter earnings.

    So what: Revenue in the first quarter added up to $38.6 million, which translated into non-GAAP profits of $3.7 million. The top and bottom lines were up 34.6% and 29.1% relative to a year ago, but investors were still left wanting more. The results were in line with Bitauto's guidance.

Best China Companies To Own For 2014: Top Image Systems Ltd.(TISA)

Top Image Systems Ltd. provides enterprise solutions for managing and validating content entering organizations from various sources. It develops and markets automated data capture solutions for managing and validating content gathered from customers, trading partners, and employees. The company?s solutions deliver digital content to the applications that drive an enterprise by using technologies, such as wireless communications, servers, form processing, and information recognition systems. It offers eFLOW Unified Content Platform that provides the common architectural infrastructure for its solutions. The company also provides Smart, an automated classification solution, which is the eFLOW plug-in for unstructured content providing single point of entry for information entering the organization; and Freedom, the eFLOW plug-in for semi-structured content that enables customers to identify and capture critical data from semi-structured documents, such as invoices, purchase orders, shipping notes, and checks. In addition, it offers Integra, the eFLOW plug-in for structured content, which provides a solution for data capture, validation, and delivery from structured predefined forms; eFLOW Ability, an integrated module interfacing with SAP systems for automated parking, approval, and posting of invoices and other document within SAP systems; and eFLOW Invoice Reader, an invoice capture and approval solution, which could be deployed and integrated in enterprise accounting environment, such as SAP, Oracle, and other financial systems. Top Image Systems Ltd. sells its products through a network of value-added distributors, systems integrators, original equipment manufacturers, and partners in approximately 40 countries worldwide. It has strategic partnership with SQN Banking Systems (SQN) to incorporate SQN's fraud detection solutions with its eFLOW Banking Platform in the Asia Pacific market. The company was founded in 1991 and is headquartered i n Ramat Gan, Israel.

Monday, October 21, 2013

Rethinking Retirement: Tips for older job searc…

"Retirement job" seems like an oxymoron. And yet a growing number of Americans say that they plan to continue to work during their retirement years.

Unfortunately, finding employers willing to hire them is not easy.

"The elephant in the workplace is still age bias," says Tim Driver, founder and CEO of "Because of the Baby Boomers and the lower birth rates of younger people, job supply and demand will eventually favor mature workers. But that is still some time off."

The demand for older workers has only declined during the recession as many of them have lost their jobs. Last year, the unemployment rate of Americans 65 and older was 6.2%, up from 3.1% in 2007, says AARP Public Policy Institute, based on Bureau of Labor Statistics.

"It's not easy for an older unemployed worker to find a job, nor is it easy for an older retiree to return to the workforce," says Sara Rix, senior strategic policy adviser at the AARP Public Policy Institute. "In this economy the employer is going to say, 'I can get two younger workers for the same price as one older worker.'"

RETIREMENT LIVING: Boomers turn to encore careers after retiring

HEALTH CARE: Concerns about costs in retirement are off the charts

In March, 51% of job seekers 55 and older were unemployed for 27 weeks or longer, compared with 41.7% of those ages 25 to 54, according to the AARP Public Policy Institute's analysis of the federal Current Population Survey.

Many unemployed older Americans who are cash-strapped and need to keep earning money cannot be rehired because they have not kept up their skills. Others want to find a new career that would give them more flexibility and help them stay engaged and make a difference in life.

At least there are a number of programs and websites aimed at helping older job seekers. A program called the Plus 50 Initiative was launched by the American Association of Community Colleges in 2008. "We started doing personal enrichment classes, volunteeri! ng activities and workforce training," says Mary Sue Vickers, director for the Plus 50 Initiative.

But because of the economic collapse, the program decided to focus only on workforce training. "It helps meet the needs of adults 50 and older, and it increases their prospects in high-demand fields," Vickers says.

Dory Brinker, who lives in Brewster, Mass., has decided to go to the Cape Cod Community College to study human services alcohol and drug abuse counseling. She seldom thinks about her age until she is in the classroom and the other students are 50 years younger than she is.

Brinker will turn 70 in October. Over the years the former teacher has also raised three children and owned a nursing school. She always wanted to get a master's degree and Ph.D. "But when the kids were growing up, I got too busy," she says.

Now she works part time at a shelter for families who are recovering from alcohol or drug abuse. And when she finishes the program at the community college, she plans to go on for a college degree. "I love school," she says. "The job means a lot to me and I'm not sitting home bored."

Brinker found out about the shelter through people she knew. But for most older Americans, jobs don't just fall into their laps. "Typically, they have to pound the pavement, or today's equivalent, which is sending out loads and loads of résumés," Rix says.

In part, older workers have a harder time finding work because they are less efficient in networking and using social media. And many employers believe that older workers lack creativity and are generally unwilling to learn new things, says an Urban Institute 2012 report.

Seniors need to better use job-search tools and know what type of employers are most likely to hire older job seekers. The Plus 50 Initiative at community colleges has focused on health care, education and social service because that will increase their job prospects in high-demand fields, Vickers says.

Currently, workers who were 65 and ! older ten! d to work in retail, professions, education and health services, says AARP, based on the 2012 Current Population Survey. Fewer worked for the information sector, which includes telecommunications.

The one industry category where age bias doesn't exist is elder care, Driver says. His firm has launched a separate service where families can find high-quality certified elder care providers.

And to make the job search easier for older Americans, has a certified age-friendly employer program. About 100 major companies have been identified as among the best places for employees above age 50. And AARP has a program for the best employers for workers over 50.

The Plus 50 Incentive can help older Americans improve themselves and make major career changes. For many years, Patricia Zimmer, who lives in St. Louis, was a stay-at-home mom who home-schooled her children. She is now 58, the kids are grown and she is divorced.

Recently Zimmer started the patient care technician program at St. Louis Community College. "It is something that I had wanted to do for 20 years," she says." I'm also doing it out of necessity. But I wanted to do something that would stretch me."

As Baby Boomers approach retirement age they realize that they may be living well into their 80s or 90s. And many of them don't want to spend 30 years sitting on their porch. But they probably don't want to continue doing the same job they've had for 20 or 30 years.

They have a different mindset, and they will be creating a new retirement job world. "We're only a little way into this phenomenon," Driver says. "It is playing itself out before our eyes. And the more it happens, the more culturally accepted it is for someone with gray hair to be in an office cubicle."

Sunday, October 20, 2013

5 Best Canadian Stocks To Buy Right Now

Canada feels like it is getting picked on by Europe. This week, Canada's natural resources minister issued a warning to EU countries regarding their discriminatory treatment of Canadian oil sands. While Europe labeling oil sands as a "greenhouse gas intense oil source" might not hurt Canada's bottom line right now, the country is trying more to squash the bad rap Canadian oil sands have had lately. That very same label is one of the biggest reason people are blocking TransCanada's (NYSE: TRP  ) Keystone XL pipeline.�

Canada does have some reason to fight back because Europe is already importing other heavy crudes that Canada claims is just as greenhouse gas intense as oil sands. In this video, contributor Tyler Crowe looks at the validity of Canada's claim and asks what oil sands can do to get things headed in the right direction.

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5 Best Canadian Stocks To Buy Right Now: Safeway Inc.(SWY)

Safeway Inc., together with its subsidiaries, operates as a food and drug retailer in North America. The company operates stores that provide an array of grocery items, food, and general merchandise, as well as features specialty departments, such as bakery, delicatessen, floral, and pharmacy, as well as coffee shops and fuel centers. It also offers SELECT line of products that include baked goods, sparkling ciders and lemonades, salsas, whole bean coffees, frozen pizzas and entrees, and fresh and dry pastas and sauces, as well as an array of ice creams, hors d'oeuvres, and desserts; O ORGANICS line, which comprises milk, chicken, salads, juices, and entrees; Lucerne line of dairy products; Eating Right line of better-for-you products; Bright Green line of home care products; Total Pet Care line of pet foods and pet care products; and Value Red line of value-priced paper goods. As of December 31, 2009, Safeway operated approximately 1,725 stores in California, Oregon, Wash ington, Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area, and the Mid-Atlantic region, as well as British Columbia, Alberta and Manitoba/Saskatchewan. In addition, the company owns and operates Operating Company, LLC, an online grocery channel, doing business under the names,, and; and Blackhawk Network Holdings, Inc., which provides third-party gift cards, prepaid cards, telecom cards, and sports and entertainment cards to North American retailers for sale to retail customers. Additionally, it engages in gift card businesses in the United Kingdom, France, Mexico, and Australia. Further, the company, through a 49% ownership interest in Casa Ley, S.A. de C.V. operates 156 food and general merchandise stores in Western Mexico. The company was formerly known as Safeway Stores, Incorporated and changed its name to Safeway Inc. in February 1990. Safeway was founded in 1915 and is based in Pleasanton, California. Advisors' Opinion:

  • [By Teresa Rivas]

    Safeway (SWY) was up nearly 4% after an upgrade to Outperform at Credit Suisse, which also upgraded lululemon (LULU), sending shares up 1%, and downgraded Under Armour (UA)��hares were down 1.6%.

  • [By Ben Levisohn]

    Investors sided with UBS. Shares of Fresh Market have dropped 10% to $48.80 today. Competitor Kroger (KR) has gained 1.2% to $36.83, while Whole Foods Market (WFM) has risen 1.5% to $52.53 and Safeway (SWY) has advanced 1.2% to $11.40.

5 Best Canadian Stocks To Buy Right Now: PPL Corporation(PPL)

PPL Corporation, an energy and utility holding company, generates and sells electricity; and delivers natural gas to approximately 5.3 million utility customers primarily in the northeastern and northwestern U.S. The company operates in four segments: Kentucky Regulated, International Regulated, Pennsylvania Regulated, and Supply. The Kentucky Regulated segment engages in the generation, transmission, distribution, and sale of electricity; and the distribution and sale of natural gas to approximately 1.3 million customers in Kentucky, Virginia, and Tennessee. The International Regulated segment owns and operates electricity distribution businesses in the United Kingdom that deliver electricity to 7.7 million customers. The Pennsylvania Regulated segment delivers electricity to approximately 1.4 million customers in eastern and central Pennsylvania. The Supply segment owns and operates power plants to generate electricity using coal, uranium, natural gas, oil, and water res ources; markets and trades electricity and other purchased power to wholesale and retail markets; and acquires and develops domestic generation projects. It controls or owns a portfolio of generation assets of approximately 11,000 megawatts in Montana and Pennsylvania. As of December 31, 2010, the company?s distribution system included 649 substations with a capacity of 25 million kVA, 28,838 circuit miles of overhead lines, and 24,131 cable miles of underground conductors in the United Kingdom. It also operated 377 substations with a capacity of 31 million kVA, 33,122 circuit miles of overhead lines, and 7,368 cable miles of underground conductors in Pennsylvania. The company was founded in 1920 and is headquartered in Allentown, Pennsylvania.

Advisors' Opinion:
  • [By Justin Loiseau]

    FirstEnergy wasn't the only utility to feel the burn from backwards hedges. Exelon (NYSE: EXC  ) took a one-time $235 million hit this quarter as natural gas prices unexpectedly headed higher. Likewise, PP&L's (NYSE: PPL  ) generation unit EPS fell more than 50%, primarily because of trimmed hedged wholesale prices. Meanwhile, Ameren (NYSE: AEE  ) is defying traditional diversity by exiting the generation business and relying entirely on regulated sales for revenue. While this might cause the utility to lag when margins expand, it safeguards earnings and keeps this dividend stock sustainable no matter where commodity prices head.

  • [By Justin Loiseau]

    Across the pond, Britain-based PPL's (NYSE: PPL  ) Western Power Distribution is piloting a project to incentivize "smart" electricity use for 15 businesses. As part of the trial, businesses will receive financial compensation for reducing overall electricity use and for shifting use away from peak hours.�

  • [By Justin Loiseau]

    Corporate musical chairs
    AES (NYSE: AES  ) announced Friday that it has added former PPL (NYSE: PPL  ) CEO and Chairman James Miller to its board of directors. "Jim brings to AES' Board substantial experience in the energy industry, both in the U.S. and internationally, including in regulated utilities and competitive power markets," said AES Chairman Charles Rossotti in a statement.

Top Biotech Companies To Invest In 2014: Yamana Gold Inc.(AUY)

Yamana Gold Inc. engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. It also explores for copper, molybdenum, zinc, and silver metals. The company's portfolio includes 7 operating gold mines namely Chapada; El Pen Advisors' Opinion:

  • [By Doug Ehrman]

    On the earnings call, Goldcorp reiterated full-year guidance of 2.55 million ounces-2.8 million ounces; the annual all-in sustaining cost is still expected to come in between $1,000 and $1,100 per ounce. While currently planned expansion projects remain on track, the company emphasized the need for discipline and careful management. Controlling costs across grade qualities was also a theme of the discussion. Savings was also a theme of Yamana Gold's (NYSE: AUY  ) release earlier this week, with the firm targeting $150 per gold equivalent ounce in production cost reductions over the course of 2013.

  • [By Dan Caplinger]

    On Tuesday, Yamana Gold (NYSE: AUY  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

  • [By Sean Williams]

    If you're willing to roll the dice even further, my suggestion would be to look at the two most cost-efficient gold miners: Yamana Gold (NYSE: AUY  ) and Goldcorp (NYSE: GG  ) . Both Yamana and Goldcorp stood atop my top-performing gold miners leaderboard in the first-quarter thanks to extremely low mining costs associated with byproduct metal sales. Yamana has been particularly strong, turning in remarkable production growth, while Goldcorp offers investors one of the lowest debt-to-equity ratios in the sector thanks to its strong operating cash flow. To add, Yamana and Goldcorp both offer yields of 2% and are valued at just 10 and nine times forward earnings estimates.

  • [By Seth Jayson]

    Yamana Gold (NYSE: AUY  ) is expected to report Q1 earnings on April 30. Here's what Wall Street wants to see:

    The 10-second takeaway
    Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Yamana Gold's revenues will wither -0.2% and EPS will drop -24.0%.

5 Best Canadian Stocks To Buy Right Now: Great Basin Gold Ltd.(GBG)

Great Basin Gold Ltd. engages in the acquisition, exploration, and development of precious metal deposits. It explores for gold, silver, and aggregate. The company has two material projects, including the Hollister gold project consisting of a total of 950 unpatented, federal mining claims, covering approximately 69 square kilometers located in Ivanhoe Mining District, Elko County, Nevada; and the Burnstone gold mine comprising mineral rights covering approximately 35,000 hectares located in the Witwatersrand Basin goldfields in South Africa. It also holds interests in early stage mineral prospects, such as the Tsetsera Property in Mozambique; and properties in Tanzania and the island of Kurils in eastern Russia. The company was founded in 1986 and is headquartered in Sandton, South Africa.

5 Best Canadian Stocks To Buy Right Now: Higher One Holdings Inc.(ONE)

Higher One Holdings, Inc. provides technology and payment services in the United States. It offers a suite of disbursement and payment solutions for higher education institutions and their students. The company provides OneDisburse Refund Management product that offers higher education institutional clients with a technology service for streamlining the student refund disbursement process. It also offers CASHNet Payment suite that includes software-as-a-service products and services, such as ePayment to securely accept online payments for tuition, charges, and fees from students through credit card, pinless debit, and ACH; eBill to automate payer billing and processing functions; MyPaymentPlan to personalize students? payment plans; eMarket that allows academic, athletic, and other departments to take alumni donations, sell event tickets and other merchandise, and accept payments of event and conference registration fees; and Cashiering to operate and manage cashiering fu nctions, back office payments, and campus-wide departmental deposits. In addition, the company provides OneDisburse ID, which offers an option to combine the company?s debit card with the institution?s ID cards; OneDisburse Payroll to distribute payroll and other employee-related payments; OneDisburse PLUS product to distribute Parent PLUS loan refunds to parents on behalf of the school; and Financial Intelligence to students with an online class. Further, it provides student-oriented banking services to campus communities. Additionally, the company offers OneAccount product for students, as well as faculty, staff, and alumni, with an FDIC-insured online checking account and a debit MasterCard ATM card. Higher One Holdings, Inc. was founded in 2000 and is headquartered in New Haven, Connecticut.

Advisors' Opinion:
  • [By Roberto Pedone]

    One under-$10 business services player that looks poised for a run higher is Higher One (ONE), which provides technology-based refund disbursement, payment processing and data analytics services to higher education institutions and students. It also provides banking services to campus communities. This stock has been hit hard by the bears so far in 2013, with shares down by 26%.

    If you take a look at the chart for Higher One, you'll notice that this stock has been downtrending badly for the last three months, with shares plunging from its high of $11.93 to its recent low of $6.97 a share. During that downtrend, shares of ONE were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ONE have recently formed a double bottom chart pattern at $7.05 to $6.97 a share. This stock has now started to rebound sharply off that double bottom and move within range of triggering a near-term breakout trade.

    Traders should now look for long-biased trades in ONE if it manages to break out above some near-term overhead resistance at $7.85 a share and then once it clears its 50-day moving average at $8.11 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 196,360 shares. If that breakout triggers soon, then ONE will set up to re-test or possibly take out its next major overhead resistance levels at $9 to its 200-day moving average of $9.77 a share. This stock could even tag $11 a share if that 200-day gets taken out with volume.

    Traders can look to buy ONE off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $7.39 a share, or below $7 a share. One can also buy ONE off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Saturday, October 19, 2013

France Threatens Veto of EU-U.S. Trade Deal

STRASBOURG, France (AP) -- A cloud is hanging over the upcoming free-trade talks between the European Union and the United States after France said it won't back any deal that threatens the country's prestigious film, radio or TV industries.

The stakes are high because any deal could have major implications for global trade and could serve as a model for future deals. Together, the U.S. and the EU make up nearly half the world economy and 30 percent of global trade.

The audiovisual sectors have traditionally been excluded from global free-trade agreements under what is known as the "cultural exception," which allows governments to subsidize and protect them. In general, free-trade agreements are supposed to limit or ban such support.

"France is asking for an exclusion from the negotiation of what it considers of course to be cultural products but which are also a mark of European identity," French Trade Minister Nicole Bricq said in an interview with The Associated Press.

Bricq said the latest draft of the negotiating mandate, to be presented to EU ministers Friday, still has audiovisual services on the table -- and that's not acceptable to France.

European officials have said the "cultural exception" would be preserved. But many are concerned that once audiovisual services are on the table, their protections could be eroded in the back-and-forth tussle of tough negotiations.

William Kennard, the American ambassador to the EU, said that it's exactly because the negotiations will be tough that the U.S. has pushed for everything to be on the table.

"We know our negotiators are going to have to be creative and innovative," he said, and so they need the maximum flexibility to reach a comprehensive deal. "If Europe insists on taking issues off the table, it's natural it will come at a cost."

France and others don't have the power to block the negotiations from going forward at this point, but any treaty will eventually need the backing of all 27 EU member countries.

And Bricq said the European Commission, the EU's executive body which is tasked with negotiating with the U.S., would be unwise to move ahead without the support of the bloc's second-largest economy.

Concerns over the talks have prompted European actors, writers and directors to head to Strasbourg on Tuesday to make an appeal at the European Parliament to protect their work. The parliament has already voted to keep audiovisual services off the table.

Berenice Bejo, the French actress who hit the global stage with the black-and-white film, The Artist, said the fear is there would only be big commercial films if the exception is scrapped.

She and others said that the cultural exception -- and the subsidies it protects -- are vital to maintaining a diverse offering at movie theaters. Polish director Dariusz Jablonski also noted that subsidies are vital to film industries in countries with languages not widely spoken elsewhere.

"For example, The Artist was a film that nobody wanted because no one wanted to show a silent, black-and-white film in prime time," said Bejo. "And in the end, we made it, it exists thanks to the cultural exception, thanks to all the subsidies we have in France."

Those subsidies are one of the reasons the cultural exception is most associated with France, where 770 million euros ($1 billion) were handed out last year to films. France also has strict quotas for how much content on television and radio must be French or European.

But the French are not alone. European culture ministers, including those from Germany, Austria, Spain and Italy, signed a letter last month calling for culture to maintain its special status.

"It's an entire policy of the EU and its member-states that will be compromised if the exclusion that we're asking for isn't insured," the letter said.

But even Bricq concedes that others may not be willing to go as far as the French.

The Irish government, which holds the rotating presidency of the EU, says the cultural exception is the last major sticking point before a mandate can be approved Friday.

Friday, October 18, 2013

General Electric’s Industrial Revolution

General Electric (GE) is living out its old motto, “We Bring Good Things to Light,” at least for investors.

David Paul Morris/Bloomberg

GE’s shares are heading higher today after blue-chip conglomerate reported earnings of 40 cents a share, ahead of forecasts for a 35 cent profit. Profits fell 8.6% during the quarter, but that was largely due to weaker financial revenue–an area that GE has been trying to reduce its exposure too (also the businesses that helped GE beat earnings over and over again during the 2000s).

These earnings were all about GE’s industrial lines. Citigroup’s Deane Dray explains:

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The Industrials-driven beat, high quality of earnings absorbing more restructuring, impressive order growth, and reaffirmation of the 2013 earnings framework should drive a low to mid single-digit positive reaction in GE shares on Oct-18. Skepticism of the 70 bps Industrial margin expansion target was rampant into earnings and the +120 bps in 3Q and reaffirmation of the 2013 target is a positive surprise.

Shares of GE have gained 3.5% to $24.54 at 1:08 p.m. today. United Technologies (UTX) has dropped 0.6% to $107.37, Koninklijke Philips (PHG) has gained 0.8% to $33.40, Siemens (SI) has risen 1.5% to $124.40 and 3M (MMM) has ticked up 0.1% to $122.75.

Wednesday, October 16, 2013

IBM Proves the Death of Growth, $20 EPS Target Just Too Costly

International Business Machines Corp. (NYSE: IBM) is proving that it has very limited growth opportunities in new revenues. The only saving grace for the rest of us these days is that IBM is now no longer the largest DJIA stock since Visa Inc. (NYSE: V) is a DJIA stock.

Big Blue’s earnings came in up 10% at $3.99 per share on an adjusted basis and sales came in down 4% at $23.72 billion. Thomson Reuters was calling for estimates of $3.96 EPS but on sales of closer to $24.75 billion. Our view is that there is very little to get excited about in this earnings report and shares are taking it on the chin as a result.

If you back out restructuring and one-time charges, IBM’s earnings would have been $3.68 per share and that is up 11%. Operating margins were 49.1% on an adjusted basis and 48% on a net basis. IBM also maintained its operational earnings guidance of $16.25 to $16.90 per share versus estimates from Thomson Reuters of $16.89 per share.

IBM is still maintaining that it expects to achieve its long-term plan of $20.00 in earnings per share by the end of 2015. 24/7 Wall St. believes that this earnings target is coming at too high of a price on its core business and that it is possibly gutting itself in the years beyond that target.

The key metric we pay attention to is the backlog of services and this was $141 billion as of the end of the quarter. Last quarter this was put at $141 billion as well. Here are some of the key metrics:

Software revenue was up 1 percent, and up 2 percent adjusting for currency; Key branded middleware up 3 percent; up 4 percent adjusting for currency; Services revenue was down 3 percent, up 1 percent adjusting for currency; Global Business Services revenue flat, but was up 5 percent adjusting for currency; Services backlog was up 2% to $141 billion, but this would have been up 6 percent adjusting for currency; Systems and Technology revenue was down 17 percent, and down 16 percent adjusting for currency; System z mainframe revenue was up 6 percent; and up 7 percent adjusting for currency; Growth markets revenue were down 9 percent, but down only 5 percent adjusting for currency; Business analytics revenue was up 8 percent year to date; Smarter Planet revenue was up over 20 percent year to date; Cloud revenue was up over 70 percent year to date.

IBM shares closed up 1.1% at $186.73 against a 52-week trading range of $178.71 to $215.90, but now shares are trading down over 5% and at a 52-week low in the after-hours trading session.

Tuesday, October 15, 2013

6 things to watch during profit reporting season

NEW YORK -- Political dysfunction in Washington and fears of financial calamity that economists predict if the U.S. defaults on its debt have overshadowed the all-important third-quarter earnings season.

But while the drama in Washington is attention-grabbing, it's earnings that really determine the direction of stock prices, says Jeff Kleintop, chief market strategist at LPL Financial.

"While Washington drives market volatility, the market trend is determined by earnings growth," Kleintop noted in a report, The Six Trends to Watch This Earnings Season.

TUESDAY: How markets are doing

Heading into this week's busy earnings schedule, in which 69 companies in the Standard & Poor's 500-stock index are slated to report, analysts expect earnings to grow 3.8% vs. the same quarter a year ago, according to Thomson Reuters I/B/E/S.

Earlier Tuesday, drug maker Johnson & Johnson topped analyst estimates for earnings per share and revenue. In contrast, Citigroup's earnings came in shy of estimates as revenue from bond trading came in lighter than expected.

Six trends Kleintop says investors should keep an eye on:

1. Analyst profit projections. In recent quarters, corporate earnings have come in around 4% above analysts' estimates. If that trend persists, overall earnings for the S&P 500 would finish up 7% to 8%, which would mark the strongest growth rate in over a year, Kleintop says.

2. Impact of government shutdown. While Kleintop doesn't expect a lot of companies to cite a negative impact from the government shutdown, he says it "adds to the combined drag on business from spending cuts, higher taxes . . . the rollout of the Affordable Care Act and overhanging uncertainty of more fiscal battles to come."

The key, he says, will be if higher stock prices and stronger global growth will offset some of the negatives.

3. Improving outlook. More businesses are likely to cite improvement in the global economy, which should "boost confidence in futur! e earnings growth." The Institute for Supply Management's Purchasing Managers Index (PMI), for example, is in expansion mode and has a good record of forecasting future profit growth, says Kleintop.

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4. Stronger overseas demand. China, Europe and Japan also have rising PMIs. And that bodes well for profits for American firms, as roughly 40% of S&P 500 profits come from global sources. "Demand is firming around the world," says Kleintop, citing sales of machinery and vehicles.

5. Dividend increases. Dividend payouts by S&P 500 companies are up 15% in the past year and are 26% above their level back in 2008, Kleintop says. He expects companies to continue boosting payouts for investors in search of income.

6. Rising interest rates. Interest expense isn't a big cost for U.S. companies, but higher borrowing costs can impact rate-sensitive industries, such as housing. In early September, the yield on the 10-year U.S. Treasury note almost hit 3%, its highest level since July 2011. The 10-year was yielding 2.7% in early trading Tuesday.

"We will be watching," Kleintop says, "for the impact on bank lending and refinancing activity along with demand for homebuilders."

Sunday, October 13, 2013

World’s wildest reality show drives market

The stock market exhaled higher on Thursday as perception of a political compromise infused hope that the debt ceiling would be pushed and a US default will be avoided.

While some argue this is a Band-Aid on a broken bone, the disaster scenario was perceived to have been avoided. As that was priced into the market, stocks had one of their best days of the year. Take that, Karl Marx.

The action in the credit markets supported -- and some would say, drove -- the equity move. November and December T-Bill rates ratcheted higher on Friday, however, suggesting that significant concerns remain into year-end.

Thus far in 2013, market corrections have been extremely tame, with a 7.5%, 4.8%, and the latest 4.8% pullback littering an otherwise stellar uptrend. The question is whether we've seen the last spate of fear before performance anxiety kicks in—or if that's just what they want us to think.

The bulls will argue that the big money, many of whom are up 20% or more, won't let their gains slip away as they want to get paid. The bears view the conditioned complacency of dip buyers as a recipe for disappointment, if not disaster, as we edge into the meat of the quarterly reports.

Gold continued to lose luster and Friday's decline triggered a head-and-shoulders pattern that "works" to $1,180 through a pure technical lens. Mr. T can't be happy.

The earnings avalanche will continue this week with Citigroup, Intel, Yahoo, Coca-Cola, Blackrock, Bank of America, Pepsi, American Express, IBM, Goldman Sachs, Google, and Morgan Stanley. Thursday will bring the October 17 debt deadline, which is widely expected to be pushed out, and China's third-quarter GDP will be released on Friday.

Other offerings from Minyanville:

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This story was originally published on Minyanville. Its content is produced independently of USA TODAY.

Saturday, October 12, 2013

Iron Mountain Drops as Barclays Says REIT Conversion Unlikely

Shares of Iron Mountain (IRM) have dropped today after Barclays said the company’s conversion into a real-estate-investment trust is unlikely to succeed.

The downgrade comes following yesterday’s announcement that that Iron Mountain’s CFO, Brian McKeon, would exit that position leave the company at the end of the month. He will remain at the company until the end of the year to help with the transition. Barclays’ analyst Manav Patnaik believes that’s a sign that a REIT conversion won’t happen. He writes:

It has been 4-6 months since IRM received the "tentatively adverse" ruling from the IRS and the REIT working group was formed. We viewed our 30% conversion probability as cautious, and the announced CFO departure gives us a catalyst to lower it to 10%, which is at the low end of the market's estimated range of10-20%…

Our lower-than-historical average applied multiples are based on our view that increasing enterprise mobility, along with improvements in cloud security, will precipitate a secular decline (albeit a 'slow bleed' for now) of physical storage in favor of cloud storage. Assuming a 5-7 year statute of limitations, an inflection point that makes this "bleed" accelerate is our concern – and hence a lower multiple. We estimate that fundamental downside, assuming IRM is unsuccessful in converting to a REIT, is $21 – based on FY14E.

With that, Patnaik cut Iron Mountain to Underweight from Equal Weight with a price target of $23.

Shares of Iron Mountain have fallen 2.3% to $25.72 today, while comparable have been mixed. Leidos Holdings (LDOS) has ticked up 0.6% to $46.28 and Amdocs (DOX) has risen 0.8% to $37.20. Maximus (MMS), on the other hand, has fallen 1.2% to $46.22 and Xerox (XRX) is off 0.3% to $10.62.

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Analyst Manav Patnaik reached out to me after the close on Oct. 11 to clarify that the downgrade is not solely based on the CFO’s exit. This is what he said:

As you write in the second paragraph, I am not solely basing Mckeon's departure as a sign that a REIT conversion won't happen. I have other reasons for my revised conversion probability. The news of McKeon's departure simply gave me a timely reason to publish them; that's what I meant in my report when I say: "…gives us a catalyst…"


Friday, October 11, 2013

Anchorman’ Will Ferrell pitches Dodges

Dodge turned to legendary 1970s TV anchorman Ron Burgundy — a.k.a. comedian Will Ferrell — to promote the Dodge Durango in TV ads that will run through yearend.

"He very much like Dodge. He is unapologetic. He is irreverent. He has a great deal of attitude," Olivier Francois, Chrysler's chief marketing officer, told the Free Press.

Francois aims to market Dodge as a brand that stands out from rivals because of bold styling and features such as the Durango's giant side-to-side tail lamp with 192 LED lights. That, Francois said, made Ferrrell's Burgundy character perfect.

"People think they already know the Durango, so then you have to be twice as engaging in a marketing campaign," said Francois. "What could be more engaging and entertaining … than to explain all of the new technology and features through the eyes of a guy who comes from the '70s?" said Francois.

The deal will make Chrysler part of the buzz for "Anchorman: 2, The Legend Continues," the sequel due Dec. 20 from Paramount Pictures. Financial terms weren't disclosed.

The original, "Anchorman: The Legend of Ron Burgundy," is a cult hit that's grossed $85.2 million in the U.S. since its 2004 release, according to the website Box Office Mojo.

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Josh Greenstein, Paramount Pictures chief marketing officer, said the studio likes to partner with auto brands. "We had an incredible experience working BMW on 'Mission Impossible,' and we also have a long-standing relationship with General Motors on 'Transformers.' "

In the TV ads that began airing over the weekend and in web ads, Burgundy is continually shocked by the horsepower, fuel economy and high-tech features of the refreshed 2014 Durango, going on sale now.

Durango could use the buzz. Its U.S. sales are up 48.6% this year, but its 44,650 total is about half the sales of three-row SUV rivals such as Ford Explorer,! and Toyota Highlander.

Francois has frequently turned to Hollywood and music stars to build buzz for Chrysler brands since he become marketing chief in 2009. He landed Eminem for a Super Bowl ad in 2011 and Clint Eastwood for one in 2012. Jennifer Lopez and Charlie Sheen have pitched the Fiat 500.

But it's not just abut having a star, Francois said. "It has to be unexpected; it has to be noticeable ... and lastly, it needs to really tie into the brand," Francois said.

With "Anchorman," Francois said Dodge has an opportunity to become part of the cult following that has embraced the movie. Nearly 10 years after its release, many people still repeat lines from the movie — such as "You stay classy, San Diego," and "I'm kind of a big deal."

"Some of these lines in the commercials are so incredibly memorable that my hope is that they become become part of the Anchorman culture," Francois said.

The volume of material Francois has to work with gives him a good shot. Paramount and Ferrell originally agreed to film six ads. But in two-days, Ferrell and his production company — Funny or Die — filmed 70.

Francois said not all of the commercials are suitable for television. Still, Chrysler plans to post most of them on Dodge's YouTube Channel, Facebook, Instagram, Twitter and Tumblr. They'll also be posted on Ferrell's

Greenstein said Ferrell and director Adam McKay had full control over the scripts for the commercials, which were produced with Wieden+Kennedy, Dodge's ad agency.

In one spot comparing Durango's horsepower with that of a real horse, Ferrell gets into an unplanned staring contest with the horse.

"(Ferrell) is a genius of improvisation," Francois said. "The staring contest with the horse was just something that happened because the horse was staring at him."

Thursday, October 10, 2013

The Echo Therapeutics Cat is Out of the Bag (ECTE)

Truth be told, Echo Therapeutics Inc. (NASDAQ:ECTE) doesn't look like a particularly impressive stock right now. At $2.92 per share, ECTE is just trading right around where it was a few days ago, not to mention a few weeks ago. And, without any real "news" from the company in months, it's tough to think the market's going to be getting excited about the stock anytime soon. When you take a closer look at Echo Therapeutics though, a few subtle-but-compelling clues start to appear.

ECTE is, in simplest terms, a biopharma name that's developed a handful of specialized medicines, delivery devices, and monitoring devices. Its flagship product - if it has one - is the Symphony glucose monitoring systems for diabetes patients, though it's also working on a needle-free drug delivery product as well. For all intents and purposes, Echo Therapeutics Inc. isn't bearing revenue right now; most of its' (and investors') hopes right now rest on the Symphony trial currently underway in Europe. Those results should be unveiled during the current quarter, with a filing for European approval later in Q4.

Those details are academic at this point, however. What matters most right now is the way the chart's been acting of late, and the way it acted today.

As was noted, at first glance ECTE doesn't look particularly compelling. It's not really gone anywhere since the big plunge in June that stemmed from chatter about a secondary offering (which came to pass, by the way). And, today's effort to finally blast past the key 100-day moving average line has ultimately failed, with shares pulling back under that mark. The cat, however, is out of the bag. The bulls have shown they're interested in buying into this stock and paying a fairly lofty price for, and they've shown they're willing to do so even in the absence of news. The next try (or maybe the one after that) should be one that "sticks", carrying Echo Therapeutics Inc. shares above the 100-day average on a more permanent basis.

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That being said, it must be noted that the lead-in to today's temporary surge makes it much easier to view today's action in a bullish light. We saw a higher high from ECTE in September, and a higher low from the stock with the low from just a couple of days ago. Though volatile, the undertow has already revealed itself to be a net-bearish one. Between today's high volume and early strength, we're all but over the hump. That first close above the 100-day moving average line (which could still be today) should get the ball rolling all the way back to the $6.00-ish area.

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Wednesday, October 9, 2013

U.K. Stocks Decline Amid U.S. Debt-Limit, Budget Impasse

U.K. stocks fell for a third day, extending a three-month low, as U.S. lawmakers continued to wrangle over raising the government's debt limit before next week's deadline and a spending measure to end a shutdown.

Vedanta Resources Plc tumbled to a three-month low after reporting a decline in copper output in Zambia. N Brown Group Plc dropped 5.1 percent after first-half profit missed estimates. Persimmon Plc and Barratt Developments Plc rallied at least 3.5 percent each after Goldman Sachs Group Inc. said it expects a strong recovery in the U.K. housing market.

The FTSE 100 Index (UKX) retreated 27.92 points, or 0.4 percent, to 6,337.91 at the close in London, as U.S. President Barack Obama picked Janet Yellen to head the Federal Reserve. The equity benchmark has decreased 4.3 percent from a high on Sept. 19. The broader FTSE All-Share Index also lost 0.4 percent today, while Ireland's ISEQ Index fell 0.7 percent.

"I'm surprised by the lack of pragmatism displayed by U.S. politicians," said Espen Furnes, who helps oversee $75 billion as fund manager at Storebrand Asset Management in Oslo. "The fact that they're willing to let the U.S. economy and indeed the U.S. citizens suffer from the need to make political statements is hard to grasp and a bit scary. The Yellen nomination takes away some worries about who will be named and gives more clarity on future Fed policy."

Tesco Plc, Aviva Plc and five other companies traded without the rights to their latest dividend today, shaving off 3.7 points from the FTSE 100.

Shutdown Continues

Republicans and Democrats remained divided on the terms of an emergency budget and raising the $16.7 trillion debt ceiling even as a partial U.S. government shutdown entered its ninth day. The closure has placed thousands of federal employees on unpaid leave and led to the suspension of some services.

Obama said yesterday the world's largest economy risks a recession if Congress fails to raise the debt limit. He said he is willing to talk to Republicans on changes to his health-care act after lawmakers unconditionally raise the ceiling and agree on a budget to end the shutdown. Republican Speaker John Boehner has said the House can't pass a bill to increase the limit without conditions.

The Treasury has said it will exhaust measures to avoid breaching the debt limit on Oct. 17. If that happens, the U.S. will run out of money to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

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Obama will today nominate Janet Yellen to replace Ben S. Bernanke as the next Fed chairman, a White House official said in an e-mailed statement. Yellen is now the vice chairman of the Fed.

Zambian Copper

Vedanta tumbled 4.7 percent to 1,020 pence, its lowest price since July 8. The India-focused metal and oil producer said copper production in Zambia fell 26 percent in the fiscal second quarter because of a suspension of mining operations. Vedanta also said iron-ore mining in the states of Goa and Karnataka remained suspended.

Separately, Morgan Stanley cut its rating on the shares to underweight, similar to sell, from equal-weight, saying the company's Konkola unit is trading at an unwarranted premium to its global peers.

N Brown Group Plc tumbled 5.1 percent to 489 pence, the biggest drop since December 2011, after reporting first-half pretax profit excluding some items of 45 million pounds ($72 million), trailing the 45.5 million-pound median estimate of analysts in a Bloomberg survey. Overall gross margin fell by 80 basis points to 52.5 percent because of an increase in bad debts, the retailer said in a statement.

Housing Market

Persimmon, the U.K.'s biggest homebuilder by market value, advanced 5 percent to 1,131 pence and Barratt climbed 3.6 percent to 320 pence.

"Lead indicators in the U.K. housing market point towards a strong rebound following five years of depressed activity levels," Goldman Sachs analysts Raghav Bardalai and Eshan Toorabally wrote in a note. "We expect the 'Help to Buy' scheme to stimulate market transactions," they wrote, referring to the British government's equity-loan plan.

Crest Nicholson Holdings Plc gained 4.2 percent to 343.5 pence as Goldman Sachs started coverage of the homebuilder with a buy recommendation.

Greggs Plc added 2.6 percent to 438.4 pence after the U.K.'s biggest bakery chain said a decline in same-store sales slowed to 0.5 percent in the third quarter, compared with a drop of 2.9 percent in the first half.

The volume of shares changing hands in FTSE 100-listed companies today was 10 percent lower than the daily average in the past 30 days, according to data compiled by Bloomberg.

Tuesday, October 8, 2013

Stocks weak as U.S. shutdown looms

sp 500 futures 730

Click on chart to track premarkets

NEW YORK (CNNMoney) Stock markets are set for a sell-off Monday as political squabbling in Washington threatens to lead to a government shutdown at midnight.

U.S. stock futures were all down by roughly 0.8% as investors lose faith in their political leaders and worry about the effect that a shutdown could have on the U.S. economy.

"If nothing is agreed by tonight, which seems likely, there will be an economic hit as some [government] employees are put on unpaid leave and non-essential government services close," explained economist Robert Wood from Berenberg Bank.

Monday is the last day of the month and the third quarter. Both the Dow Jones industrial average and the S&P 500 index have risen by well over 3% so far in September, hitting record highs as investors cheered continued stimulus by the U.S. Federal Reserve. All three indexes are up for the quarter, led by the Nasdaq, which has risen 11%.

But markets have pulled back as the shutdown looms and the U.S. nears its debt ceiling, a limit on the amount it can borrow. If the government hits its debt ceiling in mid-October, it will not be able to pay its bills and will default, though many people believe a last-minute solution will be found.

U.S. stocks fell Friday. The Dow and S&P finished the week with a 1% loss, though the Nasdaq eked out a gain.

European markets were all falling in midday trading, with renewed political turmoil in Italy further undermining sentiment. Of the major indexes, the CAC 40 in Paris was deepest in the red, declining by 1.3%.

Italian markets took a hit after Silvio Berlusconi pulled his support for the country's coalition government over the weekend, threatening early elections. The main Italian stock index fell by over 1.5% and yields on ! 10-year government bonds edged higher.

"Berlusconi has thrown Italian politics into potential chaos again after ordering his five ministers to resign from the coalition," wrote Deutsche Bank analyst Jim Reid, in a market report. "It's an impressive feat to knock off a potential U.S. government shutdown from top billing but Berlusconi might have achieved it."

Asian markets closed with losses, though the Shanghai Composite index bucked the trend and moved higher. China launched a free trade zone in the city on Sunday, an experiment in promoting trade, expanding foreign investment access and liberalizing the financial sector. To top of page

Monday, October 7, 2013

UBS gains adviser with $4.8B from Morgan Stanley

adviser, ubs, morgan stanley

John Rasweiler, a prominent Morgan Stanley adviser in New Jersey, has joined UBS Financial Services Inc.

Mr. Rasweiler, a 45-year veteran of the industry, joined UBS's Florham Park, N.J., office last Friday, according to Financial Industry Regulatory Authority Inc. registration records.

Mr. Rasweiler's team handles $4.8 billion in assets and has trailing 12-month production of $10 million, said UBS spokesman Gregg Rosenberg.

Joining Mr. Rasweiler were team members John Cusate, Jack Riley, Michael Jordao, Jesse Kent and William Burke.

Mr. Rasweiler did not return a call yesterday.

Christine Jockle, a Morgan Stanley spokeswoman, confirmed Mr. Rasweiler's departure, but declined further comment about his move.

Mr. Rasweiler is a “huge producer who handles large stock plans like Exxon,” said Frank LaRosa, head of Elite Recruiting and Consulting, which recruits for UBS.

A legacy Smith Barney broker, Mr. Rasweiler “is legend at the firm,” said Mr. LaRosa, who was not involved in Mr. Rasweiler's move.

Sunday, October 6, 2013

Will rising rates push MLP investors to traditional bond instruments?


Financial market participants, economists, home owners, central bankers, and everyday people have all been discussing one major financial question for the past few years. It has consumed gobs of press ink, hours of pundit discussions, acres of blog posts, and untold speculative chatter. We were told alternatively to not worry about it, to prepare prudently for it, or to make plans for our impending doom when and if it happened.

What was it that occasioned all this angst? A rise in U.S. interest rates. It seems for the past few years the world has been continuously debating when interest rates on U.S. Treasuries would rise. Rates finally did rise significantly in the latter part of the second quarter, with the 10-year U.S. Treasury yield rising from a low of 1.64% in early May to a high of 2.59% on June 25th before ending the quarter at 2.48%. The increase in Treasury yields prompted sharp responses throughout the fixed income market; for example, mortgage rates rose the most in one week since 1980 just after the Fed comments. While still low by historic standards, long Treasuries ended the quarter near the highest levels in almost two years. Rates had been rising modestly since early May but accelerated after Fed President Ben Bernanke announced in mid-June that the labor market was a bit better than previously thought and that the Fed might start scaling back its buying of bonds sooner than previously announced. No matter that Bernanke hedged his comments with many caveats; his words obviously touched a nerve with investors. Government, corporate, mortgage, and high yield bonds sold off fairly dramatically after his announcement.

Investors have been worrying for a long time about the potential of rising interest rates shifting investor interest from MLPs and MLP-related securities to traditional fixed income instruments. Like Pavlov's dogs responding to stimuli, some investors instinctively sold off MLPs in response to rising rates. The Alerian MLP Index(1), which had risen modestly early in! the quarter, fell 8% from a peak in late May to a trough in late June.

But then a funny thing happened. Treasuries leveled off and then retreated a bit at the end of June. This appears to have allowed investors to refocus on fundamentals, resulting in MLPs staging a nice rally in the last week of the quarter regaining a good bit of ground that they had lost. When all the dust settled, the Alerian MLP index returned 2.0% in the quarter, bringing its year-to-date return to 22.1%.

We believe that the long term prospects of energy infrastructure assets remain attractive, especially in an environment where numerous growth projects offer visible paths to distribution increases; however, this recent rise in interest rates, which took so many “experts” by surprise, is a reminder of the uncertain nature of the financial markets. A further rise in interest rates, or some other unforecastable event, could again negatively impact MLPs in the short run. Unfortunately these short run perturbations are inevitable and we endeavor to not overreact to them. While we remain vigilant to the risks to investing in MLPs and MLP-related securities in the short run, we continue to be guided by our assessment of long term total returns of individual companies.

During the second quarter of 2103, MLP managements announced a number of new investments, bringing estimated capital expenditure for new growth projects to $29 billion for 2013, the highest annual amount of organic capital projects on record. Additionally a number of MLPs and MLP-related securities announced significant purchases of assets from associated companies or third parties. MLPs and MLP-related securities maintained their record pace of capital raising by floating over $6 billion in equity. A significant amount of debt capital was also raised as both investment grade and non-investment grade MLPs and MLP-related securities continued to take advantage of record low interest rates to lock in long term financing at favorable terms. Companies issued low cost debt mainly to fund construction projects and to refinance h! igher cost debt, both of which could increase the available cash flow for distribution going forward.

The MLP sector has been able to raise equity capital at such a brisk pace due to the expansion of MLP dedicated funds. In addition to closed-end funds, which have been a major source of new investor capital into the MLP space for many years, open-end funds, ETNs and ETFs have become a significant source of new investor capital in the past two years, and this past quarter was no exception. Open-end mutual funds focusing on MLPs are the newest and fastest growing source of funds to the sector. Analysts estimate that money in MLP open-ended mutual funds has grown from $5.0 billion at the beginning of the year to $9.1 billion at the end of May, an annualized growth rate of 140%. While this growth is dramatic, many of these new investment vehicles are relatively young and a small fraction of the total sector market cap. Recently it was estimated that investment products linked to MLPs represent approximately 7% of the total MLP market cap; by comparison, it is estimated that REIT investment products represent approximately 27% of the REIT universe. It appears that these new investment vehicles are still in the early innings of raising investor funds and may be significant source of demand for years to come.

Underlying this need for capital is the requirement for infrastructure to develop new hydrocarbon basins. As we have noted previously, dramatic increases in production of oil, gas, and natural gas liquids from North America have been unleashed by new technologies improving recoveries from previously uneconomic shale formations. U.S. oil production rose by 1 million barrels a day in 2012, the biggest annual gain in the nation's history, according to a recent report by BP. Natural gas production in the U.S. rose the fastest of any major region last year, and the U.S. remains the top producer in the world. The quantity and quality of potential investment opportunities currently facing MLPs reminds us of ! a quote b! y Yogi Berra about a nice hotel, “The towels were so thick there I could hardly close my suitcase.” In our opinion, the current abundance of new hydrocarbons from different geographies has created many potentially good investment opportunities for MLPs to choose from.

Announcements of large potential projects just keep coming. Williams and Boardwalk Pipelines finalized an agreement to develop the Bluegrass Pipeline project to bring NGLs from the Marcellus and Utica shale basins to petrochemical and export markets on the Gulf Coast. Enterprise Products also announced plans to expand and repurpose parts of the ATEX Express Pipeline to bring Northeast NGLs to their hub at Mt. Belvieu, TX. Energy Transfer Partners and Enbridge Partners started signing up producers to transport crude oil from the Midwest to refining markets along the Mississippi and Louisiana Gulf Coast on the Eastern Gulf Crude Access Pipeline. There are a number of proposals for LNG export terminals awaiting approval from the Department of Energy, which, if approved, would occasion another set of new project announcements by various MLPs. Florida Power and Light is currently entertaining proposals from a number of MLPs to build a multi-billion dollar natural gas pipeline to supply its power plants.

The acquisition market also remains robust. Wells Fargo estimates that year-to-date MLPs and MLP-related securities have announced $20.9 billion of acquisitions. During the quarter Spectra Energy Partners announced that it would purchase all of its parent Spectra Energy's U.S. gas transmission and storage assets by the end of the year (this is in addition to its purchase of a 50% interest in the Express-Platte crude oil system earlier this year); TC PipeLines also announced the purchase of $1 billion in natural gas pipelines from its parent, TransCanada Corp; Inergy, LP announced it would spin off its shares of Inergy Midstream, LP and merge it with Crestwood Midstream Partners; and a number of smaller deals were announced during! the quar! ter.

We continue to believe that a major change in the tax status of MLPs is not likely to occur any time soon. Our outlook is based on discussions with analysts and political figures who have rated the prospects of a general tax reform from this Congress to be low. One interesting political development is a proposal by a bipartisan group of Senators and Representatives to expand the MLP business structure to renewable energy companies. Called the Master