It’s funny where money is made sometimes. I have a friend who decided a decade ago to buy a bankrupt motel in the middle of the swamp in northern Alberta. Most of the passers-by here were forestry workers, dropouts looking for a place to disappear, or migratory birds.  At the time, it seemed crazy. #-ad_banner-#I saw the same friend a few years after the purchase. The hotel, he told me, was booked solid for the next five years — upward of 300 rooms at $250 per night.  The modest investment paid him millions over the course of the next several… Read More

It’s funny where money is made sometimes. I have a friend who decided a decade ago to buy a bankrupt motel in the middle of the swamp in northern Alberta. Most of the passers-by here were forestry workers, dropouts looking for a place to disappear, or migratory birds.  At the time, it seemed crazy. #-ad_banner-#I saw the same friend a few years after the purchase. The hotel, he told me, was booked solid for the next five years — upward of 300 rooms at $250 per night.  The modest investment paid him millions over the course of the next several months.  This incredible turnaround was spurred by some big changes in the area that were driven by natural resources development. My friend bought the hotel just as the oil industry in that part of the world was on the cusp of commercializing vast deposits of unconventional petroleum lying just below the swamps. Those billion-barrel fields would quickly become such a big story in the petroleum business that the formerly unknown town became a household name on the tongues of politicians, industrialists and investors globally. That place was Fort McMurray — ground zero for the development of the Canadian oil sands. Read More

Thanks, Old Man Winter. Consumers have already been in a sour mood, and you’re not helping matters. Icy roads and bitter winds have left many people to stay at home — and keep their cash in their pocket. #-ad_banner-#For companies that have been looking for signs that retail spending is finally ready to grow, this roadblock has been unwelcome. The bleak winter likely explains why retail spending on goods and services like cars, restaurants and gas stations slipped 0.4% in January on a seasonally adjusted basis, according to the National Retail Federation. Yet before you conclude that the era of… Read More

Thanks, Old Man Winter. Consumers have already been in a sour mood, and you’re not helping matters. Icy roads and bitter winds have left many people to stay at home — and keep their cash in their pocket. #-ad_banner-#For companies that have been looking for signs that retail spending is finally ready to grow, this roadblock has been unwelcome. The bleak winter likely explains why retail spending on goods and services like cars, restaurants and gas stations slipped 0.4% in January on a seasonally adjusted basis, according to the National Retail Federation. Yet before you conclude that the era of robust consumer spending will never return, consider an interesting stat offered up by J.P. Morgan: In just the past two years, consumers’ net worth has expanded by $13 trillion. So if consumers have stronger balance sheets, why aren’t they spending? The key takeaway from these economists: “It is our view this is likely just a delayed reaction and that the increase in net worth will ultimately translate into stronger spending.” To be sure, much of the increase in wealth is attributable to a surging stock market. Many may feel that such gains are ephemeral, especially after seeing their net worth… Read More

At the height of his fame, one of history’s top investors, Peter Lynch, regularly marveled at how often one good stock could lead to another in the same industry. And that’s just what happened to me recently while reading up on one of my own holdings, Toyota (NYSE: TM). #-ad_banner-#This other “automobile stock” isn’t a household name like Toyota, but maybe it should be. It’s up about 135% in the past 12 months. And it still has plenty of attractive upside left to offer. One reason I believe this: The company has very robust sales, which have been climbing more… Read More

At the height of his fame, one of history’s top investors, Peter Lynch, regularly marveled at how often one good stock could lead to another in the same industry. And that’s just what happened to me recently while reading up on one of my own holdings, Toyota (NYSE: TM). #-ad_banner-#This other “automobile stock” isn’t a household name like Toyota, but maybe it should be. It’s up about 135% in the past 12 months. And it still has plenty of attractive upside left to offer. One reason I believe this: The company has very robust sales, which have been climbing more than 10% a year, from $2.9 billion in 2009 to $4.3 billion last year. Also, the firm’s earnings per share (EPS) growth has been rallying strongly since the nasty $7.19-a-share loss of 2009, when the recession was really raging. Now that the auto industry is on a roll again, consensus estimates are for EPS to rise 24% a year to $6.63 in 2019 from the current $2.26. However, this “auto stock” could earn $1,000 a share and still never threaten Toyota’s position as the world’s #1 automaker. Indeed, the company hasn’t sold one car in its 35-year existence. That’s because… Read More

Micron Technology (Nasdaq: MU) manufactures semiconductors, memory chips, flash memory drives and other related products worldwide. Its products are everywhere — in smartphones, solid-state drives, tablets and computers, as well as other industrial and automotive applications. As you can see in the chart, MU is trending upward quite nicely. The 50-day exponential moving average (EMA) is acting as solid support. #-ad_banner-#It was recently announced that Greenlight Capital, the hedge fund run by David Einhorn, purchased $1 billion worth of MU shares during the fourth quarter. Greenlight’s year-end investor letter had mentioned the purchase (at $16.49 a share) without… Read More

Micron Technology (Nasdaq: MU) manufactures semiconductors, memory chips, flash memory drives and other related products worldwide. Its products are everywhere — in smartphones, solid-state drives, tablets and computers, as well as other industrial and automotive applications. As you can see in the chart, MU is trending upward quite nicely. The 50-day exponential moving average (EMA) is acting as solid support. #-ad_banner-#It was recently announced that Greenlight Capital, the hedge fund run by David Einhorn, purchased $1 billion worth of MU shares during the fourth quarter. Greenlight’s year-end investor letter had mentioned the purchase (at $16.49 a share) without giving details about the position size. Einhorn, who previously shorted the stock, wrote, “A decade of poor results exposed every flaw in the business and killed any love for the stock.” He added, “The sell-side group think has reversed: the mostly bearish analysts now contort themselves to justify earnings estimates that are too low, price targets that are too pessimistic, and stock ratings that are too negative.” In early January, Micron reported results for the fiscal first quarter of 2014, which ended Nov. 28. Revenue of $4 billion was up 120% compared with a year ago, and earnings per share… Read More

More than seven decades ago, in their investing bible “Security Analysis,” the famed value investors Benjamin Graham and David Dodd explained the core basis of a stock’s value. #-ad_banner-#They wanted investors to view a company in the context of its liquidation value, as a means of ensuring that a stock was a bargain. “By the liquidating value of an enterprise we mean the money that the owners could get out of it if they wanted to give it up. They might sell all or part of it to someone else, on a going-concern basis. Or else they might turn the… Read More

More than seven decades ago, in their investing bible “Security Analysis,” the famed value investors Benjamin Graham and David Dodd explained the core basis of a stock’s value. #-ad_banner-#They wanted investors to view a company in the context of its liquidation value, as a means of ensuring that a stock was a bargain. “By the liquidating value of an enterprise we mean the money that the owners could get out of it if they wanted to give it up. They might sell all or part of it to someone else, on a going-concern basis. Or else they might turn the various kinds of assets into cash, in piecemeal fashion, taking whatever time is needed to obtain the best realization from each. Such liquidations are of everyday occurrence in the field of private business.” When those words were written, a wide variety of companies could be bought for prices below their liquidation value. These days, such stocks are hard to find. Of the 1,500 companies in the S&P 400, 500, and 600, less than 2% of them trade for less than their liquidation value, or what we today cite as being below tangible book value. Yet there is a compelling reason… Read More

Although Feb. 14 is better known as Valentine’s Day, it’s also a date of particular significance for investment managers. #-ad_banner-#For investment managers overseeing a fund with assets under management north of $100 million, Feb. 14 is the deadline to file a Form 13F with the SEC. The 13F outlines certain types of a fund’s assets, predominantly long exchange-traded positions, certain debt positions, and some equity options. Taken as a snapshot at the end of each quarter, these disclosures can give individual investors valuable insight into the minds of the investing elite. Although typically filed 45 days after the end of… Read More

Although Feb. 14 is better known as Valentine’s Day, it’s also a date of particular significance for investment managers. #-ad_banner-#For investment managers overseeing a fund with assets under management north of $100 million, Feb. 14 is the deadline to file a Form 13F with the SEC. The 13F outlines certain types of a fund’s assets, predominantly long exchange-traded positions, certain debt positions, and some equity options. Taken as a snapshot at the end of each quarter, these disclosures can give individual investors valuable insight into the minds of the investing elite. Although typically filed 45 days after the end of a quarter, some funds release their documents early. Bridgewater Associates recently did so for last year’s fourth quarter. Founded by legendary billionaire Ray Dalio in 1975, Bridgewater now commands roughly $150 billion in capital, a staggering amount that makes it the largest hedge fund in the world. Dalio’s own net worth has crept up to nearly $13 billion, according to Forbes. I’ve dug into Bridgewater’s 13F with two criteria in mind: Find stocks paying yields higher than 3%, and see which of the bunch were added to by the fund between the third and fourth quarters… Read More

Investors are getting scared again. On February 3, the S&P 500 fell 2.1% — its largest one-day drop since June. The pullback sent the CBOE Volatility Index (VIX) — a gauge used to judge fear in the marketplace — to 21.4, its highest level in 18 months. Defensive assets have also been rallying. Treasury bonds and gold bullion are both up more than 4.5% since the beginning of the year. People are likely returning to these “safe haven” assets as they brace for more turbulence in the equity markets. So should you follow their lead? After all, the S&P 500… Read More

Investors are getting scared again. On February 3, the S&P 500 fell 2.1% — its largest one-day drop since June. The pullback sent the CBOE Volatility Index (VIX) — a gauge used to judge fear in the marketplace — to 21.4, its highest level in 18 months. Defensive assets have also been rallying. Treasury bonds and gold bullion are both up more than 4.5% since the beginning of the year. People are likely returning to these “safe haven” assets as they brace for more turbulence in the equity markets. So should you follow their lead? After all, the S&P 500 gained 32% (including dividends) last year — its third-best annual performance in two decades. After such a mind-blowing year, surely the pullback is the start of a much bigger correction… right? Not necessarily. #-ad_banner-#While 2014 may have started as a lackluster year, it’s still way too early to give up on stocks. Here’s why… For starters, even with the Federal Reserve starting to “taper,” the low-interest rate environment that’s been fueling the recent bull market is unlikely to change anytime soon. Based on the Fed’s Open Market Committee meeting last week, the U.S. central bank plans to keep interest rates… Read More

Throughout the first seven weeks of 2014, the stock market has shown a wide range of emotions.#-ad_banner-# Fear-based selling in January has been replaced by a euphoric buying spree since early February. Yet don’t let the S&P 500’s rebound back to all-time highs fool you. Many individual stocks are now trading far from their 52-week highs, and a rising number of them are now plumbing 52-week lows. A look at the list of 52-week lows might evoke the old saying that you shouldn’t try to catch a falling knife. These stocks are being sold for good reason, and if the… Read More

Throughout the first seven weeks of 2014, the stock market has shown a wide range of emotions.#-ad_banner-# Fear-based selling in January has been replaced by a euphoric buying spree since early February. Yet don’t let the S&P 500’s rebound back to all-time highs fool you. Many individual stocks are now trading far from their 52-week highs, and a rising number of them are now plumbing 52-week lows. A look at the list of 52-week lows might evoke the old saying that you shouldn’t try to catch a falling knife. These stocks are being sold for good reason, and if the bad news continues, then they’ll keep making fresh 52-week lows. But contrarians love to look at these kinds of stocks. Warren Buffett’s maxim that you should love stocks when they are hated applies to the broader market action, but many value investors take that maxim more literally: Any individual stock that is deeply out of favor has a better chance of winning new support than stocks that are already fully loved by the crowd. Here’s a look at some recent stocks making fresh 52-week or even multi-year lows in recent sessions. Slumping IPOs It’s not unusual to… Read More

In the history of the U.S. economy, a handful of dates stand out as truly game-changing. #-ad_banner-#Examples include when insider trading was banned in 1934, the implementation of Medicare in 1965, the issuing of the first bank credit card in 1946, and the April day in 2001 when the New York Stock Exchange switched to using decimal prices instead of fractions. Each of those events left an indelible mark on the U.S. economy — and earned prescient investors a pretty penny in profits. Another game-changing date is on the horizon, one for which investors can begin preparing now. On Oct. Read More

In the history of the U.S. economy, a handful of dates stand out as truly game-changing. #-ad_banner-#Examples include when insider trading was banned in 1934, the implementation of Medicare in 1965, the issuing of the first bank credit card in 1946, and the April day in 2001 when the New York Stock Exchange switched to using decimal prices instead of fractions. Each of those events left an indelible mark on the U.S. economy — and earned prescient investors a pretty penny in profits. Another game-changing date is on the horizon, one for which investors can begin preparing now. On Oct. 1, 2015, Visa (NYSE: V) is scheduled to reverse liability on fraudulent credit card transactions. Historically, credit card companies have taken responsibility for fraudulent transactions — but on that date, Visa will no longer absorb the losses from fraud stemming from traditional swipe-and-sign credit cards. Visa will instead transfer those losses to the merchants themselves. This is the endgame in the long process of switching U.S. consumers and merchants to the worldwide standard of EMV payment technology. The United States is the last major market to adopt EMV, which is expected to be the accepted standard by October 2015. EMV… Read More