As earnings season closed, the window for insiders opened. And they took great advantage of this opportunity, with dozens of executives, directors and key shareholders making six figure investments in their own company stock. That window will soon close for most insiders as year-end reports are prepared, making this a good time to review some of the savviest trades of the past month.  After poring over all of the action, these four companies should be on your radar. (All data supplied by InsiderInsights.com) Hertz Global Holdings, Inc. (NYSE: HTZ) This vehicle rental firm has… Read More

As earnings season closed, the window for insiders opened. And they took great advantage of this opportunity, with dozens of executives, directors and key shareholders making six figure investments in their own company stock. That window will soon close for most insiders as year-end reports are prepared, making this a good time to review some of the savviest trades of the past month.  After poring over all of the action, these four companies should be on your radar. (All data supplied by InsiderInsights.com) Hertz Global Holdings, Inc. (NYSE: HTZ) This vehicle rental firm has had a miserable few months. The company revealed a long period of financial mismanagement that will lead to the re-statement of results for 2011, 2012 and 2013. #-ad_banner-#​While the board was cleaning house, it concluded that the company’s operations had grown too bloated, and authorized a plan to cut operating expenses by $100 million. Part of Hertz’s woes stem from acquisition indigestion related the 2013 purchase of Dollar Thrifty. The board also brought in a new CEO, John Tague, an outsider with extensive experience in the fields of airlines and logistics.  “The… Read More

Roughly seven years ago, commodity prices were surging to record highs as Western economies grew at a decent pace and Asian economies experienced supercharged growth. Though the 2008 financial crisis led to a pullback, commodity prices began moving higher again in 2009 and 2010 as economists predicted a synchronized global economic rebound. We now know that such a widespread rebound never took root, and by the spring of 2011, commodity prices were showing signs of a breakdown. Fast forward to 2014, and this asset class is now deeply out of favor. The underperformance relative to stocks, in that time, has… Read More

Roughly seven years ago, commodity prices were surging to record highs as Western economies grew at a decent pace and Asian economies experienced supercharged growth. Though the 2008 financial crisis led to a pullback, commodity prices began moving higher again in 2009 and 2010 as economists predicted a synchronized global economic rebound. We now know that such a widespread rebound never took root, and by the spring of 2011, commodity prices were showing signs of a breakdown. Fast forward to 2014, and this asset class is now deeply out of favor. The underperformance relative to stocks, in that time, has been quite striking. Of course the secret to great investing is “rotation, rotation, rotation.” As certain asset classes appreciate and others slump, savvy investors tend to book profits on winning categories and re-deploy assets into the biggest losers — such as commodities. My colleague Dave Forest devotes a considerable amount of time in Scarcity & Real Wealth to commodities, identifying the best investments for current and future market climates. A number of stocks in his portfolio holds clear current value — in relation to their balance sheets and future cash flows. #-ad_banner-#But investors also like to get reassurance from a macro-economic perspective. Read More

You know the old saying, “the rich get richer…” Well, when it comes to Bill Gates, it surely is true. He amassed a multi-billion dollar fortune when he ran Microsoft Corp. (Nasdaq: MSFT), and he’s making a lot more money through his two investment firms, Cascade Investments and the Bill & Melinda Gates Foundation Trust. (Credit also goes to a savvy right-hand man, Michael Larson, who by one recent account, has helped Gates grow his post-Microsoft nest egg to $82 billion from $5 billion.) That’s why so many investors track the ongoing portfolio moves by Gates,… Read More

You know the old saying, “the rich get richer…” Well, when it comes to Bill Gates, it surely is true. He amassed a multi-billion dollar fortune when he ran Microsoft Corp. (Nasdaq: MSFT), and he’s making a lot more money through his two investment firms, Cascade Investments and the Bill & Melinda Gates Foundation Trust. (Credit also goes to a savvy right-hand man, Michael Larson, who by one recent account, has helped Gates grow his post-Microsoft nest egg to $82 billion from $5 billion.) That’s why so many investors track the ongoing portfolio moves by Gates, Larson and their team. Simply following in their wake can help generate solid portfolio gains. But there’s a catch. These folks don’t make short-term trades, they make long-term investments. I profiled that approach a few years ago as Gates and his team kept buying shares of AutoNation, Inc. (NYSE: AN), even as shares repeatedly hit new highs. In an ideal world, you can find a stock that Bill Gates loves, and buy it for a lower price than even the tech legend paid. And we found a stock that fits the bill: It’s fallen in value since Gates bought shares,… Read More

Michael Corbat has circled Jan. 5, 2015, on his calendar. That’s when his administrative staff at Citigroup (NYSE: C) will turn in reams of paperwork for the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR). And when regulators get back to Corbat in subsequent weeks, he may finally be able to breathe a big sigh of relief.  Citigroup has tried — and failed — to get the green light before, which has prevented the bank from pursuing a massive stock buyback and dividend hike. Not only would a clean bill of health in the CCAR pave the way for a… Read More

Michael Corbat has circled Jan. 5, 2015, on his calendar. That’s when his administrative staff at Citigroup (NYSE: C) will turn in reams of paperwork for the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR). And when regulators get back to Corbat in subsequent weeks, he may finally be able to breathe a big sigh of relief.  Citigroup has tried — and failed — to get the green light before, which has prevented the bank from pursuing a massive stock buyback and dividend hike. Not only would a clean bill of health in the CCAR pave the way for a string of such shareholder perks, but the stock should make a rapid beeline up to book value, implying 25%-30% upside from current levels.  Further, the longer-term potential upside is significantly higher thanks to strong positioning vis-a-vis interest rates and the U.S. housing market. #-ad_banner-#The previous rejection of the bank’s dividend and stock buyback plans was a serious black eye, as it suggested Citi had failed to clean up its act more than five years after the financial crisis began.  Regulators expressed concern that Citigroup’s business model was too unwieldy and not yet capable of weathering another deep financial crisis. They… Read More

There is a pretty straightforward rule to every high-yield stock. If the dividend looks safe, then it’s likely a wise investment. And if the dividend appears poised for a cut, then you should head for the exits. But what if the looming dividend cut is likely to be a lot smaller than the crowd is anticipating? Such stocks, counter-intuitively, are a great buying opportunity. The current dividend concerns surrounding upstream master limited partnership Linn Energy, LLC (Nasdaq: LINE) help paint the picture. (Upstream energy producers acquire existing oil and gas properties once they are already in… Read More

There is a pretty straightforward rule to every high-yield stock. If the dividend looks safe, then it’s likely a wise investment. And if the dividend appears poised for a cut, then you should head for the exits. But what if the looming dividend cut is likely to be a lot smaller than the crowd is anticipating? Such stocks, counter-intuitively, are a great buying opportunity. The current dividend concerns surrounding upstream master limited partnership Linn Energy, LLC (Nasdaq: LINE) help paint the picture. (Upstream energy producers acquire existing oil and gas properties once they are already in production.) Linn, in fact, is the nation’s largest upstream MLP, with a strong track record of generating cash flows from acquisitions well in excess of its purchase costs. Oil’s price slump means that the company’s future cash flows won’t be as robust as was expected just a few months ago — when West Texas crude traded for $100 a barrel. Reflecting a more challenging environment in 2014, management recently trimmed the dividend to $2.90 a share, from last year’s $3.14 a share. The key question for investors: Can the company still support the current dividend? Considering its yield… Read More

The market sell-off in September and October was especially tough on small cap stocks. They often suffer from a flight to quality as investors seek the safe haven of blue chips when the seas get rough. Since the market’s trough, some oversold small caps began to rebound, but many remain closer to the 52-week low than the 52-week high. Indeed among stocks in the S&P 600 small-cap index, you can find dozens of stocks trading well below the forward broader market multiple of 15.5.  Here’s a list of 10 small-cap stocks (trading in that index) that now trade for less… Read More

The market sell-off in September and October was especially tough on small cap stocks. They often suffer from a flight to quality as investors seek the safe haven of blue chips when the seas get rough. Since the market’s trough, some oversold small caps began to rebound, but many remain closer to the 52-week low than the 52-week high. Indeed among stocks in the S&P 600 small-cap index, you can find dozens of stocks trading well below the forward broader market multiple of 15.5.  Here’s a list of 10 small-cap stocks (trading in that index) that now trade for less than 10 times earnings. The key trait these firms share: All of them are expected to post higher earnings per share, or EPS, in 2015, and yet-higher EPS in 2016. Company 2014 EPS 2015 EPS 2016 EPS 2015 P/E Cash America Int’l (CSH) $4.42 $4.54 $4.78 5.4 AK Steel (AKS) $ (0.21) $1.07 $1.20 6.1 EZCORP (EZPW) $1.33 $1.59 $1.67 6.9 Microsemi (MSCC) $2.78 $3.20 $3.53 8.4 Encore Capital Group (ECPG) $4.46 $5.13 $5.76 8.7 TTM Technologies (TTMI) $0.44 $0.78 $0.98 8.8 Hornbeck Offshore Services (HOS) $2.52 $3.30 $3.57 9.4 General Cable (BGC) $0.73 $1.48 $1.89 9.4 Synaptics (SYNA) $4.85… Read More

Jack Welch, the legendary former CEO of General Electric Co. (NYSE: GE), repeatedly cited a 1975 report in the Harvard Business Review. It said that market share leaders are the better company compared to the peer group, as they “are likely to have a higher profit margin, a declining purchases-to-sales ratio, a decline in marketing costs as a percentage of sales, higher quality and higher priced products.” That strategy was well-honed by chip giant Intel Corp. (Nasdaq: INTC), which has consistently taken market share from rivals such as Advanced Micro Devices, Inc. (NYSE: AMD). The proof… Read More

Jack Welch, the legendary former CEO of General Electric Co. (NYSE: GE), repeatedly cited a 1975 report in the Harvard Business Review. It said that market share leaders are the better company compared to the peer group, as they “are likely to have a higher profit margin, a declining purchases-to-sales ratio, a decline in marketing costs as a percentage of sales, higher quality and higher priced products.” That strategy was well-honed by chip giant Intel Corp. (Nasdaq: INTC), which has consistently taken market share from rivals such as Advanced Micro Devices, Inc. (NYSE: AMD). The proof of the scorched earth strategy was found in the numbers: Intel’s gross profit margins surged to 65% in 2010 from 52% in 2007. To be sure, Intel has endured a challenging slowdown in the PC industry, yet an impressive share price rebound over the past two years suggests the worst of the PC storm has passed. As we have said on a number of occasions: we think Intel possesses the key ingredients of a “Forever Stock” — a wide moat around its business and a solid history of buybacks and dividends. But even the best companies need to be assessed… Read More

Let’s face it, there are good buyback programs and bad buyback programs. The bad ones generally fall into the category of “we just want to offset the generous stock options packages for our executives,” or “we have no other uses for our cash, even though our shares are very richly valued.” On the flip side, my favorite kind of buyback program has one simple factor: shares trade below tangible book value. #-ad_banner-#Buying back shares when they trade at a discount to book value is a no brainer. That’s because the share count can be cut by an even greater percentage… Read More

Let’s face it, there are good buyback programs and bad buyback programs. The bad ones generally fall into the category of “we just want to offset the generous stock options packages for our executives,” or “we have no other uses for our cash, even though our shares are very richly valued.” On the flip side, my favorite kind of buyback program has one simple factor: shares trade below tangible book value. #-ad_banner-#Buying back shares when they trade at a discount to book value is a no brainer. That’s because the share count can be cut by an even greater percentage than shareholder’s equity, which means that the price-to-book value will actually move lower. One of my favorite insurance stocks is putting this strategy into action. Municipal bond insurer Assured Guaranty Ltd (NYSE: AGO) is using its massive cash hoard to buy its own shares on the cheap and will likely keep doing so until shares have risen 35% from current levels. I wrote about this company nearly a year ago when management had just moved its headquarters to the United Kingdom — solely to speed the way to a faster pace of buybacks. Read More

Some investing concepts hold a powerful allure, simply because they are so successful. Year in and year out, these investment approaches show their ability to meet or exceed the major market benchmarks. For example, we have been big believers in the power of buybacks and we know the approach works because the PowerShares Buyback Achievers ETF (Nasdaq: PKW) has delivered a 19.3% annualized return over the past five years. That beats the S&P 500 by around five percentage points, according to Morningstar. #-ad_banner-#Another take-it-to-the-bank investing theme is owning companies that consistently defend their market share against poachers. These companies, known… Read More

Some investing concepts hold a powerful allure, simply because they are so successful. Year in and year out, these investment approaches show their ability to meet or exceed the major market benchmarks. For example, we have been big believers in the power of buybacks and we know the approach works because the PowerShares Buyback Achievers ETF (Nasdaq: PKW) has delivered a 19.3% annualized return over the past five years. That beats the S&P 500 by around five percentage points, according to Morningstar. #-ad_banner-#Another take-it-to-the-bank investing theme is owning companies that consistently defend their market share against poachers. These companies, known for their “wide moats” exert such a powerful force on their industries that they can call the shots on pricing and innovation. (For a deeper look at wide-moat companies, please click here.) The other virtue of wide-moat companies: they typically have superior financial management strategies. If you know how your business will fare each year, then you can make better strategic resource allocation strategies and boost returns in the process. That’s why some market strategists suggest that the companies with the strongest moats also have the highest returns on equity, or ROE. Read More

Implementing all of the facets of the Affordable Care Act, commonly referred to as Obamacare, has come with an unfortunate side effect: So much time and money has been spent on adapting processes like ICD-10 (a mandated set of codes that enables healthcare data to be more freely exchanged among providers) that there has been little time or money to address other needs. #-ad_banner-#The good news: The heavy lifting to meet the mandates is now mostly done, and the healthcare industry is again focusing its IT resources on a burgeoning new trend: Digital technology. As analysts at Leerink Partners note,… Read More

Implementing all of the facets of the Affordable Care Act, commonly referred to as Obamacare, has come with an unfortunate side effect: So much time and money has been spent on adapting processes like ICD-10 (a mandated set of codes that enables healthcare data to be more freely exchanged among providers) that there has been little time or money to address other needs. #-ad_banner-#The good news: The heavy lifting to meet the mandates is now mostly done, and the healthcare industry is again focusing its IT resources on a burgeoning new trend: Digital technology. As analysts at Leerink Partners note, “the same digital revolution that re-ordered the media sector has now arrived at the healthcare sector, creating winners and losers.” Frankly, the entire healthcare profession seems to be just exiting the dark ages. Let’s quote from the Leerink analysts again: “While U.S. businesses were pioneering world-class productivity, collaboration and automation systems in offices and factories, healthcare’s payers and providers seemed stuck in a darkly-humorous parallel universe of old and kludgey technology, including telephone answering services, color-coded manila folders, large film negatives, paper clips, monochrome computer screens, multiple computer key-function codes from 1980s DOS manuals, handwritten phone messages on pink sheets… Read More