Friday, January 31, 2014

Virtual Currency Is Here to Stay, Bitcoin or No Bitcoin

You'd better start getting used to the idea of virtual currency.

While the much talked about Bitcoin is the most prominent and widely used virtual currency, it is not the only one.

Bitcoin is not even the first, as the earliest digital currencies emerged as far back as the early 1990s (most of them are long gone).

Today there are more than 80 kinds of virtual currency, with an array of odd names like feathercoin, bbqcoin, fireflycoin, and zeuscoin.

They're called virtual currency because they don't exist in the physical world as coins or paper bills. They only exist in cyberspace.

But the fact that there are so many types of virtual currency shows that this is a concept that is not going away.

And while critics like to point out that a virtual currency is backed by nothing, like gold or a national government, and has no intrinsic value, they can serve an important purpose.

A successful virtual currency enables the transfer of money between parties anywhere in the world without the need for intermediaries like banks or payment processors or the fees they like to charge.

And a decentralized digital currency like Bitcoin is also outside the control of any central bank or government.

Virtual Currency Still in its Infancy

Still, the era of virtual currency is just getting started and is littered with the bones of its pioneers. Many early efforts from the 1990s, such as Beenz and Flooz, fell victim to fatal flaws in their design.

More recently, in May of this year, the U.S. government shut down the virtual currency Liberty Reserve after an investigation showed it was used almost exclusively by criminals around the world to launder money.

And yet the digital currencies continue to grow in popularity, a testament to the power of the concept.

Bitcoin itself is a great example of the resiliency of the ideas driving virtual currency. Over its five-year history, it has endured several crashes in the Bitcoin prices, but has recovered in each instance to reach new highs.

And while Bitcoin has the advantage of being the dominant virtual currency right now, that by no means guarantees it will win out as the digital money of the future.

A lot of very smart, innovative programmers continue to work to improve upon the virtual currency concept, building on existing currencies and seeking to correct what they see as flaws.

In fact, quite a few of the new digital currencies that have emerged in the past couple of years are based on Bitcoin, but with significant tweaks.

But the world does not need or want 80 digital currencies. Consolidation is inevitable, and nearly all of them will eventually fall away. Only a handful will survive.

So the only question is, which ones?

Here are the top candidates...

The Digital Currencies Most Likely to Succeed Bitcoin: For now, the top candidate to emerge as the world's main virtual currency has to be Bitcoin. It's gotten a great deal of attention over the past year, and far exceeds the value of all other digital currencies. As of today (Friday), the total value of the Bitcoin market is $8.79 billion, while the combined value of the other major digital currencies was in the neighborhood of $310 million. More importantly, a number of startups, such as Coinbase and Bitpay, have structured their businesses around the Bitcoin economy. Such startups have attracted $12 million in venture capital in the second quarter of 2013 alone. With that kind of money behind it, a surge in interest from Chinese investors, and Wall Street rumored to be sniffing around as well, Bitcoin is the odds-on favorite. Litecoin: The brainchild of former Google Inc. (Nasdaq: GOOG) programmer Charlie Lee, Litecoin is Bitcoin's little brother. Like many other nascent digital currencies, Litecoin is based on Bitcoin code, but differs in that it processes transactions four times faster. It is the second-most valuable virtual currency at $234 million. Litecoins are also created at a faster rate and have a maximum limit of coins four times that of Bitcoin. "The idea was to create silver to Bitcoin's gold," said Lee, now a software engineer at Coinbase. "I wanted to create something that was a bit cheaper in value and easier to transact." Ripple: This virtual currency, which is more of a hybrid digital currency and online payment system, has the best chance to dethrone Bitcoin. Ripple was founded by former Bitcoin developers as a next-generation virtual currency. It not only allows payments through cyberspace, but in the process provides cheap and easy conversions between itself, other digital currencies, and even government-issued fiat currencies. Like Litecoin, Ripple is much faster at processing payments than Bitcoin. And there's some money behind Ripple, too - last week the company in charge of Ripple's development announced $3.5 million in financing from six investors. ???coin: With the virtual currency universe so young and unsettled, don't count out the possibility that a yet-to-be invented digital currency will become the de facto standard. Remember, Microsoft Corp. (Nasdaq: MSFT) was not the first or only vendor of operating systems back in the early days of the PC, but only emerged the winner after its landmark deal with IBM Corp. (NYSE: IBM). With Litecoin and Ripple both proving that much more innovation is possible, a completely new entrant could become the iPhone of virtual currency and sweep away everything that came before it.

Editor's Note: Michael Robinson, Money Morning's Director of Technology Investing, is getting ready to release the most comprehensive Bitcoin guide ever created. This guide covers Bitcoin A to Z. Not only does it give you the full history of Bitcoin and the technologies driving it... it also serves as a step-by-step "how-to" manual for putting into action the best Bitcoin investing opportunities. If you would like to receive this guide for free as soon as it's available, just sign up below. You'll also get Michael Robinson's weekly updates from Strategic Tech Investor, where you'll learn about the best technology investing ideas on the planet right now.

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More on Bitcoin: Federal Officials Give Bitcoin Market the Nod of Approval It Needed

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Virtual-Currency Craze Spawns Bitcoin Wannabes The New York Times:
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The Best and Worst Run States in America: A Survey of all 50

How well run is your state? It can be difficult to objectively assess the quality of a state's management. The economy and standard of living can be affected by decisions made decades ago, forces outside the control of the state's government and administrators, as well as the government’s own actions.

Every year, 24/7 Wall St. tries to answer this question by conducting an extensive survey of every state. To determine how well states are managed, we examined their financial data, as well as the services they provide and their residents’ standard of living. This year, North Dakota is the best-run state in the country for the second year in a row, while California is the worst-run for the third year in a row.

Identifying appropriate criteria to compare the 50 states can be challenging because they vary so much. Some states have abundant natural resources, while others rely on services or innovation. A few have been burdened by struggling industries. Some are more rural, while others are more urban. Because of such differences, a spending or tax policy that can be beneficial in one state can be disastrous in another.

Many of the best-run states in the nation benefit from an abundance of natural resources. North Dakota, Wyoming, Alaska, and Texas, among the best-run states, are all among the states with the greatest concentration of GDP in the mining industry, which includes activities such as oil and natural gas extraction, as well as coal mining. The presence of this industry benefits states in several ways. North Dakota and Texas led the nation in real GDP growth in 2012, while Alaska has used its oil revenue to establish a permanent fund that pays residents an annual dividend.

The housing crisis has had a major negative impact on a number of the worst-run states. It caused a drastic decline in construction employment in states like Arizona, California, and Nevada. Many of these lost jobs have yet to be replaced. In the hardest-hit states, this has resulted not only in worsening unemployment, but increased poverty and budget shortfalls. Although the economies of these states have largely improved, the residual effects of the housing crisis remain.

While these can be considered extenuating circumstances, the fact is that each state must deal with the cards it is dealt. Governments must plan for worst-case scenarios, including the collapse of an industry. Several resource-rich states have squandered their advantages and rank poorly on our list. Good governance involves raising and spending enough to provide for the well-being of the population without risking the state's long-term stability.

To determine how well the states are run, 24/7 Wall St. reviewed hundreds of data sets from dozens of sources. We looked at each state's debt, revenue, expenditure, and deficit to determine how well it was managed fiscally. We reviewed taxes, exports, and GDP growth, including a breakdown by sector, to identify how each state was managing its resources. We looked at poverty, income, unemployment, high school graduation, violent crime and foreclosure rates to assess the well-being of the state’s residents.

While each state is different, the best-run states share certain characteristics, as do the worst run. For example, the populations of the worse-off states tended to have lower standards of living. Violent crime rates in these states were usually higher and residents were much less likely to have a high school diploma.

The worst-run states also tended to have better fiscal management reflected in higher budget shortfalls and lower credit ratings by Moody's Investors Service and Standard & Poors.

The better-run states tended to display stable fiscal management. Pensions were more likely to be fully funded, debt was lower, and budget deficits smaller. Credit ratings agencies also were much more likely to rate the well-run states favorably. Only two poorly run states received a perfect credit rating from either agency. California and Illinois, which are ranked worst and third worst, received the lowest ratings from both agencies.

The states that were well-managed also tended to have lower unemployment rates. Eight of the 10 states with the lowest unemployment rates ranked as the best-run states. California, Illinois, and Nevada — the states with the highest unemployment rates as of 2012 — were among the five worst-run states.

These are the best- and worst-run states in America.

Best Buy and Campbell Dampen the Dow's Run at 16,000

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

It was another middling day for stocks, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) again broke 16,000 this morning but finished short of the big, round number, closing down 9 points, or 0.06%. A disappointing holiday forecast from Best Buy (NYSE: BBY  ) weighed on the market, while investors also reacted to a record $13 billion settlement between JPMorgan Chase (NYSE: JPM  ) and the Department of Justice, which puts to rest the bank's and its acquisition's legal malfeasance dating back to the financial crisis. JPMorgan shares are up about 5% in the last week in anticipation of the deal. At a speech tonight to the National Economists Club, Federal Reserve Chairman Ben Bernanke seemed to imply that the stimulus program would continue over the near term, saying: "The economy has made significant progress since the depths of the recession. However, we are still far from where we would like to be, and, consequently, it may be some time before monetary policy returns to more normal settings."

Best Buy shares finished down 11% despite beating earnings estimates, as the big-box retailer warned that a heavily promotional holiday retail environment would put pressure on its fourth-quarter margins. Even with the sell-off, Best Buy shares have tripled this year as new CEO Hubert Joly's "Renew Blue" turnaround strategy has taken hold. The initiative features cutting of up to $725 million in annual costs, partnering with vendors such as Samsung to open store-in-store kiosks, and retraining employees to provide better service. The strategy seems to ne paying off as domestic same-store sales improved 1.7%, even as overall revenue was flat, and adjusted per-share profits jumped from $0.04 a year ago to $0.18.

Campbell Soup (NYSE: CPB  ) was also cooling off the market, as its shares fell 6.2% after an unappetizing earnings report. The world's largest soup-maker badly missed estimates, reporting earnings per share of $0.63 against expectations of $0.86, while revenues fell 1.8% to $2.17 billion, missing the analysts' mark at $2.3 billion. Guidance was also below estimates. Campbell blamed a late Thanksgiving, marketing expenses, and a change in retailer buying patterns for the earnings shortfall, but broader food shopping patterns may also be at play, as fresh produce and organic packaged goods have gained favor with the population amid the rise of Whole Foods Market and other natural-foods grocers.

Finally, Home Depot (NYSE: HD  ) managed to score a win for retailers, gaining 0.9% after a solid earnings report this morning. Sales at the home-improvement retailer improved 7.4% to $19.5 billion, topping estimates of $19.17 billion, as same-store sales jumped 7.4%, indicating the housing market continues to heat up. That sales improvement was good for a 28.4% increase in adjusted earnings per share to $0.95, cruising past the analyst mark at $0.89. Home Depot also lifted its full-year EPS guidance to $3.72, slightly ahead of the consensus. The results bode well for fellow home-improvement retailer, Lowe's, which reports earnings tomorrow morning.

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Honeywell International Inc. (HON): Why China Matters To Honeywell?

Honeywell International Inc.'s (NYSE: HON) future China growth should outperform, even China's overall pace of economic expansion were to slow further.

China's slower pace of economic expansion (over the past 1-2 years) may ultimately not revert toward a re-acceleration the way many aspire. However, the growth across dozens of tier 2, 3 and 4 cities (1 million persons plus) should provide significantly faster growth opportunities than the overall market as these centers industrialize while economic expansion broadens throughout the country.

Pollution presents a serious problem in several cities such as Beijing. Government appears serious toward halting the problem, although this could take a long time

[Related -Honeywell International Inc. (HON): Sales, Margins To Get A "Turbo" Boost]

"Significant business opportunities could ensue, such as more rapid growth of Honeywell's Life Safety respirator masks and building air and water filtration solutions – Honeywell filtration solution content in an "average" sized commercial building in China is roughly $5mm," Deutsche Bank analyst John Inch wrote in a note to clients.

U.S. MNCs have substantially ramped Chinese R&D by over 20x over the past 15 years, according to the American Chamber of Commerce in Shanghai. Chinese companies have been increasingly aligning with U.S. multi-national corporations.

Honeywell's future China (non-Aerospace, principally ACS/Turbo) growth will be derived from tier 2+ cities. The company is anticipating adding roughly 85 percent of new headcount in these cities over the next 5 years that will account for about 60 percent of the company's workforce in China.

[Related -Will The Dividend And Buyback Frenzy Continue?]

Meanwhile, aerospace growth in China in the near term is expected to be slow – particularly aftermarket – as central government cutbacks specifically reduce business-class air travel demand, resulting in spare de-stocking among Chinese airlines.

"Se! gment growth is expected to be flat this year, down from 13-15% growth last year. Spare/R&O revenues represent the high majority of Honeywell Chinese Aerospace profit. Overall, high Chinese aerospace infrastructure expansion appears to remain on track," Inch noted.

Honeywell technology (eg, Ground Based Augmentation System or GBAS) continues to distinguish the company in terms of electronics aerospace-industry product development. This quarter, HON faces tough China Aerospace comparisons because of pre-buying a year ago.

The company anticipates the proliferation of Maintenance Service Agreements (MSAs) to drive future regional segment expansion. Long term segment growth to be driven by Chinese flight hour expansion – prospectively high single digits.

"Turbocharger growth in China appears on track for sustainable double-digit growth in future years – Honeywell is the leading global turbocharger player in China along with BorgWarner. Chinese regulation to drive 40% higher fuel economy requirements to approximately 5 liters/100KM by 2020," Inch said.

Honeywell expects industry sales to at least double to 10 million units by 2018 and the company is expected to outgrow the market and is currently in the process of increasing Chinese volume capacity by 2.5x. Honeywell is launching on 13 new vehicle platforms over the next 18 months.

Meanwhile, Honeywell's Process Solutions (HPS) launch of mid-range "PlantCruise" product about15 months ago, having taken only 9 months to develop, and reportedly meeting high success – accounting for 1/3rd of 150 in-country projects currently underway. Total China process market (for Honeywell served market) approaching $3 billion.

Honeywell shares leading position with competitors Emerson and Yokogawa, among other industry players. HPS sales mix roughly 80 percent installation and 20 percent service (service growing at 2x installation growth).

"In our view, Honeywell has developed substantially greater (localized) critical mass! over the! past few years, both within the key China market and across high growth regions globally," Inch added.

With its leading positions across all segments, the company could benefit from up to a point of annual margin improvement from internal initiatives before the contribution benefit of future volume increases.

Thursday, January 30, 2014

How entrepreneurs can balance work, life demands

Urgent client requests that arrive at 6 a.m. — as well as 10 p.m.

Employees calling and texting with business questions on a Saturday afternoon.

Customers commenting 24/7 on sites such as Yelp and Facebook.

There is little time for a business owner to turn off, and turn away, from work duties.

Entrepreneurship can be a rewarding, fulfilling — and all-encompassing — career path. If not kept in check, working too hard for too long can take a toll on a business owner's health, as well as affect his or her relationships with others.

SMALL BUSINESS: Complete coverage of small-business issues

It's tough to find balance, says Katie Hellmuth Martin, co-founder of Tin Shingle, an online community and resource provider for small-business owners.

Entrepreneurs who put an excessive focus on business can inadvertently damage relationships with friends and family, as well as burn themselves out. In addition, those who answer e-mails and take calls during non-traditional business hours may broadcast the message that they are available to work day and night.

"If you're doing too much work, you might be creating false expectations about what you can do," she says.

Recent surveys show that small-business owners are toiling hard.

Nearly 4 in 10 are working more hours per week than they were five years ago, according to a survey from business management software provider Sage. Four in 10 are taking significantly or somewhat less vacation time compared with five years ago.

SMART SMALL BUSINESS: How to start a small business with smarts

VIDEO: What has been your toughest financial challenge?

Slightly fewer than half of small-business owners planned to take a vacation of at least one week this summer, down from 54% in 2012, according to the American Express OPEN Small Business Vacation Monitor survey from earlier this year.

This summer, business owner Ami Kassar felt the physical ramifications that can arise if an entrepreneur takes on t! oo much. He felt dizzy and lightheaded, and headed to the emergency room. There was no definite diagnosis of what caused his symptoms, but he thinks stress was the culprit.

"Growth brings stress," says Kassar, CEO of MultiFunding, a firm that helps small-business owners figure out the best loan and working capital options.

As for his ailments, "I think I just fried my motherboard," he says. With too much work and not enough maintenance, devices such as laptops "can eventually fry out," he says, "and if we're not careful, we can do that, too."

He made some adjustments to get on a better track, such as delegating more work and unsubscribing from unnecessary e-mails that cluttered up his inbox.

He also "listens to his body" a bit more and knows when he should take some downtime or to go to bed.

"You've got to pick your priorities," he says — and sometimes sleep wins out.


Just like Kassar and other entrepreneurs, the participants in USA TODAY's Smart Small Business series have jam-packed personal and professional schedules. For instance:

•Ann Chung Mellman, co-founder of the We Rub You brand of Korean barbecue sauces, is nurturing a fledgling business as well as caring for a baby daughter.

•The Giacomini family, who run Point Reyes Farmstead Cheese, sometimes have to focus on not talking about business when they get together for family time.

•Reuben Canada, founder of Canada Enterprises, is planning his upcoming wedding while also working on expansion plans for his beverage business.

•Brook Eddy is raising her 9-year-old twins — which means carpooling, laundry and making lunches, among other tasks — while also managing her Bhakti Chai tea company.

"As a single mother running a burgeoning company, there's no way around working at night, on the weekends and every possible moment," says Eddy.

GROWING YOUR BUSINESS: Can small firms grow to fast?

VIDEO: Smart advice for small business gro! wth

She often tries to multitask, but that can mean delays when she takes on too much. Sometimes her kids say things such as, "Why are you always late? Why are you always rushed?" she says.

She is working on solutions, such as a two-hour "no phone sabbatical" while she's making dinner and doing homework with the kids.

"We need a few hours for decompressing," she says. "But as soon as they are tucked into bed and asleep, both my phone and laptop are back into action."

Canada, creator of a Jin+Ja-branded drink line, says that using his digital devices has actually helped him to achieve a better system for work/life balance.

"Technology has made it so much easier to stay connected," he says. "Instead of looking at it as a distraction from personal relationships, it can be a tool to stay more connected."

SOCIAL MEDIA: Digital tools play big role in small business growth

VIDEO: What goes into picking a small business name?

Canada also offers this overall advice to overtaxed entrepreneurs who have limited resources: "Figure out what is important, and say no to everything else," he says. Focus on areas "that are going to have the most impact."

He has the same philosophy for the personal life side of things. "The relationships that matter should be attended to first and foremost," he says.

Wednesday, January 29, 2014

Obama's new retirement savings plan: 'MyRA'

WASHINGTON — A new savings plan will allow Americans to buy savings bonds in a starter retirement account that "guarantees a decent return with no risk of losing what you put in," President Obama said Tuesday evening in his State of the Union address.

"Today, most workers don't have a pension. A Social Security check often isn't enough on its own. And while the stock market has doubled over the last five years, that doesn't help folks who don't have 401(k)s," he said.

Obama said he would direct the Treasury Department to create new "MyRA" accounts to allow people to more simply invest in Treasury bonds. "It's a new savings bond that encourages folks to build a nest egg," he said.

FULL TEXT: Obama's State of the Union Address


Safe: The new savings bonds would have its principal guaranteed by the U.S. government, much like a traditional savings bond.

Tax benefits: The MyRA bond would be like a Roth IRA: Your contributions would not be tax-deductible, but your earnings would be free from tax when you withdraw it. As with a Roth, your contributions can be taken out tax-free at any time.

Affordable: Minimum initial investment could be as low as $25, and subsequent investments could be as little as $5, through payroll deduction. Savers can keep the same account when they change jobs.

Rates: Savers will earn interest at the same variable interest rate as the federal employees' Thrift Savings Plan (TSP) Government Securities Investment Fund. The fund earned 1.74% last year.

Availability: The MyRA would be open to households earning up to $191,000 a year through their employers. Employers won't incur any cost to offer the MyRAs. You'll be able to save up to $15,000 a year for up to 30 years before transferring to a private Roth IRA.

The proposal was not the most controversial proposal the president unveiled, but it was a brand new idea he hadn't previously announced. The White House said it would release more details Wednesday, as the preside! nt embarks on a tour to expand on themes of the speech.

Retirement accounts aimed at small investors are often high-cost, in the case of brokerages, mutual funds and insurance companies. Bank retirement accounts often get sold up to high-cost investments when they grow large enough. But someone who uses a MyRA to save $15,000 could switch to a low-cost, broadly diversified fund, such as Vanguard Total Stock Index. Cost for one year: $7.50.

Employers who offer the option won't have to administer them. And if they automatically enroll employees -- which they won't be required to do -- those employees will have a greater chance of accumulating retirement savings. At Fidelity Investments, pans with auto enrollment have an 84% participation rate vs. a 53% participation rate for plans without auto enrollment.

"It remains to be seen whether the MyRA is a better mousetrap," says Gary Schatsky, a New York financial planner. "For many, it could be first time they are participating in retirement savings in any meaningful way."

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Follow @johnwaggoner on Twitter.

Tuesday, January 28, 2014

The state of the minimum wage

minimum wage state of the union

Protests have been cropping up across the country, urging employers and lawmakers to pay more and raise the minimum wage.

NEW YORK (CNNMoney) President Obama is expected to shine a spotlight on the minimum wage in his State of the Union address on Tuesday evening, as pressure mounts in Washington to create a framework to address inequality.

Washington debates an increase: Last year, a group of Democrats introduced the Fair Minimum Wage Act, which proposed raising the minimum wage to $10.10 per hour. The current federal minimum wage is $7.25.

If the legislation passed, a full-time minimum wage worker would see a bump in pay from about $15,000 a year to roughly $21,000. That could lift a family of three above the poverty line.

The increase directly and indirectly could raise pay for up to 28 million workers, according to estimates from the liberal Economic Policy Institute.

The legislation has received backing from 75 economists, but its passage remains a political long shot.

On Tuesday, the White House said Obama would announce Tuesday that he issue an executive order to increase the minimum wage for new federal contract workers.

States take action: Regardless of federal legislation, the American public has already taken action in some pockets.

Last year, New Jersey residents voted to raise the state's minimum wage by $1 an hour to $8.25.

Voters in SeaTac , a tiny town centered around the Seattle-Tacoma airport in Washington, also voted to raise its minimum wage to $15 per hour. It could soon spread to all city workers in Seattle; new mayor Ed Murray has made raising the minimum wage a key part of his agenda.

And on January 1, 12 other states and three other cities raised their wage floors, as well.

Wage hike protests catch fire: The low wage issue was thrust into the spotlight last year, with workers from McDonald's (MCD, Fortune 500), Wendy's (WEN), Wal-Mart (WMT, Fortune 500) and other stores joining an increased number of protests nationwide for higher pay, better hours and benefits.

Fast food workers in particular have been calling for $15 per hour wages. The movement began with a small walkout in New York City in 2012 and has since gathered momentum. Strikes this past December drew fast food workers in more than 100 cities, organizers said.

Sta!   te of Obama's economy   State of Obama's economy

Americans support an increase: With attention on wages growing, polls are showing that more and more Americans support a wage hike.

According to a January 8 Quinnipiac poll, 71% of American voters support raising the minimum wage. This includes a majority of Republicans, 52% of whom support it.

About one third of voters were behind raising the minimum wage to the $10.10 per/hour level, the same level as the Democratic proposal, and 18% support increasing it to an even higher level than that.

A Pew Research poll also found that 65% of adults believe the gap between the rich and everyone else has increased in the last 10 years.

Minimum wage is not a living wage: While most believe the federal legislation is unlikely to pass due to partisan gridlock, experts agree that even the proposed number may not be enough to live on for most people.

Amy Glasmeier, a Massachusetts Institute of Technology professor who studies wages, points out that there is a gap between a minimum wage and a living wage -- the cost of paying the most basic, necessary bills based on where a person lives.

Glasmeier's research, which breaks down the cost of living by counties in the country, found that a living wage can range between $12 and $25 an hour, based on where a person lives.

Obama's been here before: President Obama touched on raising the minimum wage in last year's State of the Union, calling for Congress to raise the federal level to $9 per hour.

"This single step would raise the incomes of millions of working families," he said. "It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead."

But there's been no Congressional action since then.

Critics say a higher minimum wage will hurt jobs. Their argument is that employers will hire fewer people or reduce their hours. And they may compensa! te for th! e extra expense in other ways that can hurt consumers, for instance by raising prices.

Some studies show a negative effect on jobs. But others show a positive effect or no effect at all. To top of page

Stocks: How Big a Problem are Earnings?

With earnings season in full swing–and bellwethers like Microsoft (MSFT), Bank of America (BAC) and JPMorgan Chase (JPM) already reporting–its clear that earnings are still growing–just not as fast as some had expected.

Agence France-Presse/Getty Images

Deutsche Bank’s David Bianco and team, for instance, lowered their earnings growth forecast in a report on Friday. They explain why:

We still think 4Q results will be the strongest S&P EPS and sales growth since 1Q12, but is unlikely to be double-digit as we were previously forecasting. We cut our 4Q13E EPS to $28.50, up 8% y/y from $29.00, up 10% y/y previously. 4Q results are healthy, but are softer than what macro data, particularly US and global PMIs suggested. Generating strong operating profit growth remains difficult given: 1) slow loan growth at Banks, 2) moderate capex growth  (Industrials healthy, Tech still slow), and 3) intense competition at most Consumer industries.

Morgan Stanley’s Adam Parker and team don’t believe the rate of growth will matter to investors as long as earnings continue to grow:

With 31% of the S&P 500 market cap reported, aggregate earnings are tracking 4.5% ahead of expectations. Financials have had strong results, on net, with beats from both [Bank of America and JPMorgan Chase] (both in our portfolio). Exfinancials, the earnings upside has been 4.0%, driven in large part by technology ([Microsoft, Oracle (ORCL) (December), and SanDisk (SNDK)], among others). Our view is the recent market sell-off will abate as we doubt investors will worry about a real corporate earnings decline, something we think is required for a material market decline.

Shares of Microsoft have dropped 1.3% to $36.33 today at 2:21 p.m., while Bank of America has dipped 0.3% to $16.40, JPMorgan Chase has gained 0.6% to $55.44, Oracle has fallen 1.2% to $36.68 and SanDisjk is up 0.3% at $69.67.

Monday, January 27, 2014

One For the Books: Man Arrested for Overdue GED Guide

Inmate in the Nebraska State Penitentiary studying for his GED, General Equivalence Diploma.Alamy This is one for the books: a Texas man who checked a book out of his local library in 2010 and failed to return it was arrested and jailed. According to KWTX-TV, 19-year-old Jory Enck of Copperas Cove, Texas, was put behind bars Wednesday over an unreturned a GED study guide. His booking is a result of a local ordinance the city put in place nearly four years ago that allows police to arrest patrons for not returning overdue library materials after at least 90 days and failing to promptly respond to phone calls or emails from the library. "The reason they passed it was that they were spending a tremendous amount of money replacing these materials that people just didn't return," Copperas Cove Municipal court Judge Bill Price said. Price said that the ordinance has faced more than a little resistance, saying local reaction has been one of, "Universal hatred, nobody wants to get arrested over a library book." "The other side of that is people that go to our library and can't have these materials, they're put out, too," he added. Sergeant Julie Lehmann of the Copperas Cove Police Department confirmed that if police come across a patron during a routine stop who has been issued with a library warrant, they will always make an arrest. Enck was later released on a $200 bond, which Price said is standard. According to the Killeen Daily Herald, Enck was also arrested in 2012 for a much more serious crime. The publication reported at the time that Enck, then 18, was a suspect in a string of 13 vehicle burglaries that took place overnight. Enck was jailed on $50,000 bond. However, Enck is apparently not the first, or youngest person to run into trouble from the law for an overdue library book.

Sunday, January 26, 2014

The Andersons, Inc. (ANDE): Secret Grain Leader Up 58% In 2013 And Still A Buy

It's been a tough year for agriculture stocks. With the prices of corn, beans and wheat pulling back after surging higher last summer on a record drought in the Midwest, agriculture stocks have trailed the overall market by a sharp margin.

That weakness shows up in Market Vectors Agribusiness ETF (MOO). As you can see in the chart below, MOO is still down 2% on the year in spite of a recent bounce while the S&P 500 has gained 20%.

While I believe that is merely short-term weakness in an otherwise bullish long-term trend in the food and agriculture industry, there is one company that has dodged any weakness what so ever.

The Anderson's, Inc. (ANDE) is an agriculture conglomerate, operating in 5 divisions that includes a rail shipping and nutrient business. But its Grain division is its biggest, accounting for more than 60% of revenue, where the company is a wholesaler of grain and grain storage services. The company's share price has been hot in 2013, posting a market and industry crushing return of 58%. Take a look below.

Let me help you beat the S&P 500 by 200% with my premium newsletter the iStock Growth Trader. Click on the link for a free 4-week trial and sample update!

But looking forward, the company and investors are in position for more gains.

The biggest trend that will fuel The Andersons is the growing global population that continues to pressure food and grain resources. A record drought in the Midwest last summer pushed grain prices to all-time highs. Surging demand out of emerging markets such as China and India are also tail winds. The global food scarcity story is well in play, and the Andersons is a great way to play it.

That bullish trend has analysts calling for impressive earnings growth of 28% in 2014 and 12% annual earnings growth in the next 5 years.


But it's not just all about sales and earnings growth. In spite of big gains in 2013, the Anderson's forward P/E of 16x is in line with the S&P 500 and only a slight premium to its 10-year average of 13. It's PEG ratio of 1.16x is only a slight premium to the benchmark of 1 for value.

The Takeaway

The Anderson's has had a great year, with shares up 58% on strong sales and earnings growth. But the outlook remains bullish, with analysts calling for annual earnings growth of 12% in the next 5 years. Shares currently trade at 16x forward earnings, directly in line with the S&P 500 in spite of a 58% gain on the year. That makes The Andersons a great way to cash in on the bullish trend in food and agriculture as a leading player in the international grain market.

For more top stock picks and analysis, check out a 4-week free trial to Michael's premium newsletter the iStock Growth Trader. The iStock Growth Trader is loaded with the hottest trends, the best stocks and detailed analysis that will keep your portfolio one step ahead of the game.

[video] Quick Take: Housing Starts Rise -- What It Means

NEW YORK (TheStreet) -- Data show housing starts in August increased, but not by as much as expected, TheStreet's Chris Ciaccia told Brittany Umar.

Single-family housing starts rose while multi-family housing starts dropped. According to Ciaccia, this is a good thing because families are moving out of apartments and condos and into their own homes. Ultimately, this creates more jobs for the economy.

The Federal Reserve's FOMC meeting will conclude on Wednesday, and the market is expecting about $10 billion to $12 billion in tapering bond purchases.

Ciaccia said if the Fed only tapers its Treasury bond purchases, then mortgage rates should be fine. However, if the Fed cuts its MBS (mortgage-backed securities) purchases, then there could be some serious repercussions. However, he said he does not expect the Fed to touch MBS and that it would be surprising if there was no taper at all. Should the Fed not taper, bond yields would likely crater and housing permits would start to jump. Ciaccia concluded that with or without tapering, he expects the housing recovery to continue, just at a slower pace. The Fed has been -- and will remain -- accommodative to the housing market. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell

Friday, January 24, 2014

What’s Next for Barrick Gold?

Cowen’s Adam Graf and Misha Levental try to answer that question about Barrick Gold (ABX):


[At a] recent investor conference, [Barrick Gold] management commented that 2013 production guidance has been achieved and that 2014 production is expected to be lower.

Over the last several months, ABX has been divesting non-core assets. Starting in mid-2013, the company sold its non-core energy assets. Since then, focus has been on selling Australian gold assets. As we have stated previously, we believe the company will continue to sell noncore assets, focusing primarily on its interests in North America. Barrick had been previously seeking a suitor for its 74% interest in African Barrick (ABGLF); to date, the company remains unsuccessful in disposition of the ABG interest. In addition, we would not be averse to seeing Barrick sell off some or all of its copper assets, if they can get the right price.

As a result of the divestitures, Graf and Levental lowered their price target slightly to $15.37 from $15.46.

Shares of Barrick Gold have dropped 1.6% to $19, among the biggest losers in the gold mining sector. Goldcorp (GG) has dropped 0.2% to $24.01, Newmont Mining (NEM) is off 1% at $24.93 and the Market Vectors Gold Miners ETF (GDX) fallen 0.5% to $23.61.

Tricks to avoid a scary tax bill next year

We've yet to see this one at our house, but many years we joke that the scariest costume on Halloween could be an IRS agent showing up at your door. Maybe the little kid could skip the costume and just hand out copies of the 1040?

Here, kid, take all the really good candy we've been hiding for ourselves and go!

Right now, many of us would like to move into November thinking about carving that turkey instead of figuring out how to cut our taxes. But careful year-end planning could take the bite out of the bill when tax season hits.

Be warned, though, that it could take a bit longer to receive your refund cash, thanks to the 16-day federal government shutdown. The start of the 2014 filing season will be delayed by about one week to two weeks. More details will be announced in December.

James Jenkins, president of Jenkins accounting firm in Southfield, said some people who depend on big refunds might want to consider changing their withholdings now to see more of their paycheck.

Other tips:

• How does a 0% rate on long-term capital gains sound? It's not some ghostly vision.

• Some retirees and others might want to review their income for the past year, talk to their tax preparers and consider selling some stock they have held for more than a year at a gain.

• The 0% long-term capital gains rate applies in 2013 if a married couple filing jointly has taxable income of $72,500 or less; the limit is $36,250 for single filers.

• If you hold onto stock for longer than 12 months, you can benefit from a reduced tax rate on long-term capital gains.

But remember, your taxable income is going to include capital gains.

One option to consider: Sell some stock at a loss in 2013 to offset some gains.

George W. Smith IV, a certified public accountant and partner at George W. Smith in Southfield, said some investors might want to harvest capital losses before year-end to avoid the new 3.8% excise tax on net investment income, too. The new tax ki! cks in for higher income households.

The big news in 2013 is that the top capital gains rate has climbed up to 20% from 15% last year. The change was made as part of a last-minute fiscal cliff deal reached during the final hours of 2012.

The maximum 20% long-term capital gains rate applies to married couples filing jointly with taxable income above $450,000 and singles above $400,000.

Smith noted that the net investment income tax effectively turns that 20% rate into a 23.8% rate.

A 15% capital gains rate applies to households between $72,501 and $450,000 for married couples filing jointly; the limit for singles is $36,251 and $400,000.

A new tax that's part of the Affordable Care Act hits in 2013.

Under the new law, taxpayers could be subject to an additional 3.8% tax on net investment income. This tax would apply only to married couples whose adjusted gross income exceeds $250,000 if filing jointly, and singles whose adjusted gross income exceeds $200,000.

The 3.8% tax does not apply to money taken out of a qualified retirement plan or IRA.

But this year, tax experts warn that someone might think twice about converting a traditional IRA into a Roth IRA. That's because the required inclusion of income from that conversion would drive up your adjusted gross income.

Tim Steffen, director of financial planning at Robert W. Baird, an investment banking firm based in Milwaukee, said multiyear planning could be necessary where someone does smaller conversions over a few years to avoid extra taxes.

An additional Medicare tax of 0.9% on gross income from wages and self-employment would be imposed on taxpayers earning more than $200,000 single or $250,000 for joint-filers.

Given the new tax, some taxpayers want to make sure they're having enough money withheld by year-end 2013, said Jim Van Grevenhof, senior tax analyst at Thomson Reuters.

Are you the sort who likes to hand out big candy bars at Halloween? Do you want to give a chunk of you! r IRA to ! charity?

Van Grevenhof said some IRA owners and beneficiaries who are 701/2 or older might find this tax break attractive, if they're making sizable charitable contributions, anyway. The tax benefit is that the money from the IRA is not included in your taxable income, as would be the case otherwise. Up to $100,000 would be permitted to be donated directly from IRAs. No, you do not get a charitable deduction, as well. But you've essentially taken an immediate 100% federal income tax deduction without having to worry about restrictions that can delay itemized charitable write-offs, Van Grevenhof said.

Mark Luscombe, principal analyst for CCH, a Wolters Kluwer business, said if someone were interested in making a one-time gift out of an IRA, it might be better to do so this year because it's unknown if the tax break would still be around in 2014. The provision currently expires in 2013.

It's best not to wait until the last week in December to try this one, though. The money must be directly transferred to the charity from the IRA; you cannot withdraw the money yourself and send a check and claim this tax break.

Tompor can be reached at

Thursday, January 23, 2014

Green Automotive's GoinGreen Now Has Something for Everyone (GACR)

So much fuss has been made over its battery-powered bus division (Newport Coachworks) and its EV maintenance and design division (Liberty Electric Cars) that it's been easy - too easy - to overlook a Green Automotive Co. (OTCMKTS:GACR) entity that's just as compelling.... GoinGreen. That may be because the first two units have had much more to tout of late, like the fact that Liberty is involved in the development of a new electric vehicle that's being sanctioned and managed by an EU consortium. Meanwhile, it's only been the past few months that Newport Coachworks completed the assembly of its first 100% electric buses. Or, perhaps GoinGreen hasn't gotten much media attention because it's the most ubiquitous of the three business under the GACR umbrella. Whatever the reason, the situation is being remedied today, on the heels of a major announcement from Green Automotive Company about GoinGreen.

In simplest terms, GoinGreen - a UK-based dealer for a variety of electric vehicles - will now be offering battery-powered motorcycles. The addition of a true street and highway bike pretty much rounds out the product line that Green Automotive Co. offers via its GoinGreen dealerships.

It already offered electric scooters, and the Mia minivan was a fully-functional family-sized car. It also carries the Jolly 2000 electric delivery vehicle, and it's even a reseller of the G-Wiz car... a "get around" car that may have been low on looks but high on functionality (not to mention is the best-selling electric car for the past ten years). But, there was a hole somewhere in the middle of the EV size/functionality spectrum of what you could find in a GoinGreen showroom.... that is, there was a hole. The addition of electric motorcycles, from Brammo, fills in that gap and means GoinGreen now has something that will appeal to anybody looking for a green-friendly mobility solution.

The addition of a performance-bike line to the GoinGreen lineup isn't the only reason a current or prospective GACR investor may want to get excited though. There's a much bigger reason to get excited here. What's compelling about the full lineup on a GoinGreen lot is that this is a glimpse of the future. Electric vehicles may be a niche now, but they'll be common in a few years. In several years, combustion-engine cars will be passe. By being the first to the market as an all-inclusive deals, Green Automotive Co. has all but secured its place as the leader - perhaps even the shaper - of things to come.

The deal with Brammo also underscored another aspect of the dealer model of the future. The days of a car lot only offering one manufacturers' vehicles are numbered. Consumers want choice - especially EV shoppers - and that means carrying a wide variety of electric vehicle manufacturers. Traditional dealers may eventually catch on to the fact that brand names are becoming less important than functionality, but it's pretty clear that electric vehicle dealers  (and GoinGreen in particular) are well ahead of the curve on that movement.

Bottom line? While today's news from GACR is truly an encouraging step for GoinGreen and its shareholders, what today's announcement says about where we are in the EV evolution's timeline - and how Green Automotive Co. fits into that timeline - is the really big deal. The industry is most definitely "here", and Green Automotive is one of the key leaders of the charge.

For more on Green Automotive, visit the SCN research page here.

NFLX – 3 Reasons Netflix Stock Is Still a Screaming Sell

RSS Logo Lawrence Meyers Popular Posts: 3 Secret Dividend Stocks That Have Paid for 30+ YearsDon't Gamble on Wynn Resorts – Sell WYNN Stock Now3 ‘Secret’ Dividend Stocks With Loud Yields Recent Posts: NFLX – 3 Reasons Netflix Stock Is Still a Screaming Sell 3 Secret Dividend Stocks That Have Paid for 30+ Years Don't Gamble on Wynn Resorts – Sell WYNN Stock Now View All Posts

There's always insanity surrounding Netflix (NFLX) quarterly earnings. With the latest results released after the bell yesterday, we’re going to dig a bit into the Netflix earnings report … but we also want to make sure the numbers are put in context with regards to NFLX stock as a long-term investment.

nflx-stock-netflix-earnings Source: Flickr | Flickr

Still, let’s start with Netflix earnings. NFLX exploded after-hours yesterday thanks to a few strong data points. Take a look:

Netflix earnings came to 79 cents per share — a dramatic improvement from earnings of 13 cents per share a year ago, and 13 cents above forecasts. Revenue rose by over 24% to a whopping $1.18 billion. NFLX stock investors were most impressed by subscriber growth, though. Netflix added 2.3 million U.S. streaming subscribers in the quarter, which was about 15% above estimates. Plus, Netflix gobbled up another 1.7 million international streaming subscribers. Looking forward, that growth should continue. NFLX expects to add roughly the same number of subscribers in the first quarter. And looking back, Netflix ended 2013 with over 33 million domestic and almost 11 million international subscribers, making for a grand whopping total of 44 million.

Once again, though, a few solid numbers from the Netflix earnings report aren’t enough to make a call long-term. So to really decide if Netflix stock is worth your money, we need to look at the details behind the company’s revenue, expenses, profit and cash flow.

Current and potential NFLX stock investors can pull these numbers from a spreadsheet on the company’s website … and doing so shows some waving red flags for sizzling Netflix stock.

Why NFLX Stock Could Be In Trouble: No International Profits

The international streaming segment saw paid subscribers double year-over-year during the fourth quarter, generating a 120% increase in revenues with only a 45% increase in cost of revenues and a 10% increase in marketing. So, yes, Netflix is adding these subscribers efficiently.

Meanwhile, domestic paid streamers increased from 25.5 million to 31.7 million year-over-year during the same period — a 25% gain, creating an almost equivalent percentage gain in revenue. That came on a 17% increase in cost of revenues but a 34% increase in marketing costs.

The bad news: The international segment still lost $57.3 million in the quarter. That should definitely concern NFLX stock investors … especially considering other troubles on the horizon.

Why NFLX Stock Could Be In Trouble: Thinning Margins

The Netflix DVD business is dying, as we all expected. DVD paid members tallied 6.8 million last quarter, down from 11 million in Q4 of 2011. The segment contributes $100 million to profit, about half of what it was two years ago. Investors should expect this profit stream to slowly erode over time as the world moves to streaming.

Which brings us to some uglier numbers. The contribution profit of all segments came to $226 million, but there was another $144 million in other operating expenses. Operating profit for the quarter thus came in at $82 million, while the operating profit for the full-year was $228 million. Knock off another $29 million in interest payments, and NFLX ends with $171 million in net income before taxes.

This compares very favorably year-over-year, but is half of the Netflix earnings reported in fiscal 2011. The takeaway? The DVD business has much higher margins (48% now) compared to domestic streaming (20%). And remember, international streaming still isn’t profitable at all.

So Netflix is transitioning to a lower-margin business, which means lower profits over the long term. That should definitely worry NFLX stock investors.

Why NFLX Stock Could Be In Trouble: Off-Balance-Sheet Obligations

Now let's head over to Netflix balance sheet. Operating cash flow for the year after taxes was $112 million. Cash and short-term investments sit at $1.2 billion. And the company has $500 million in long-term debt. But the key to understanding NFLX going forward is its relationship to studios … which comes in the form of around $7.3 billion in off-balance-sheet content obligations.

Netflix stock fans must ask themselves the obvious question: How can NFLX afford to pay that when it has just $1.2 billion in cash and is only generating $112 million in operating cash flow annually? Even if NFLX keeps adding subscribers and raises prices (which it will have to do eventually), there is no way these obligations can be met (even with additional equity or debt capital raises).

This is the ultimate problem with Netflix stock as a long-term investment. As I also wrote here, NFLX will never have a cash hoard or generate free cash flow of any significance because it will never be able to meet its content obligations. Furthermore, this problem comes as its high-margin business declines, replaced by a lower-margin domestic business that will require a price increase … and as its international business is still losing money.

The Bottom Line for NFLX Stock

Ultimately, NFLX stock is a risky bet because it’s based on a perpetually cash-hungry business with eternal obligations that will never be met. If you ask me, Netflix stock will inevitably implode … although it still has that intrinsic value as distributor. In the end, I expect someone will purchase it — probably a content provider.

But that doesn’t necessarily affect where NFLX stock stands as of today. As of now, Netflix stock is set to open at almost $390, giving it a market cap of around $23 billion. Just so we are all clear, Netflix earnings for the full-year showed, once again, operating cash flow of $112 million. Do people really think NFLX stock is worth over 200 times operating cash flow? I sure don't think so. Not even close.

Of course, Netflix is a momentum stock, so it's completely irrational. But eventually the market will come to its senses and price NFLX stock accordingly. When that happens, I hope I'm short.

Lawrence Meyers does not hold any position in NFLX stock as of this writing.  Just prior, he held 50 shares short at $333, and was long 1 Jan 31 $350 call. Those trades were closed prior to writing this article.

Wednesday, January 22, 2014

Investor Beat, Jan. 22, 2014

In this video from Wednesday's edition of Investor Beat, host Chris Hill and Motley Fool analysts Matt Koppenheffer and Mike Olsen dig into the biggest investing stories from the market today.

The Dow index was singlehandedly dragged down by one stock today, as IBM reported fourth-quarter earnings. Despite growing profits by 6%, overall revenue fell by more than 5%, which sent the stock tumbling. In the lead story from today's Investor Beat, Matt and Mike discuss just how bad this quarter was for Big Blue, and whether investors should be optimistic about the company's turnaround plan.

Then the guys take a look at four stocks making moves on the market today. Coach fell after disappointing second-quarter results, stating that foot traffic at North American stores was "substantially lower." Norfolk Southern rose after reporting strong Q4 earnings, with increases for the railroad company in most of its shipping categories. AMD was the most traded stock on the New York Stock Exchange, with shares trading down after the chipmaker lowered guidance for the first quarter. And The Wall Street Journal is reporting that is in discussions with media companies to distribute their channels online.

And finally, there are two stocks our analysts will be watching closely this week. Mike talks about LKQ, and why the largest operator of junkyards has turned its scale into an incredibly well-run business, and Matt looks into McDonald's, which reports earnings tomorrow. After a rough period for McDonald's as the competitive landscape shifts toward fast-casual dining options such as Panera and Chipotle, Matt will be looking for signs in the earnings report that the strategy at McDonald's to adapt and shift its business focuses is coming to fruition.

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Best Casino Companies To Watch In Right Now

Imagine you've just purchased your dream home. It's everything you wanted. Three bedrooms, a backyard, a porch, and a great neighborhood near a nice park. You paid $300,000, which you regard as a fair price and one that fits your budget. You could not be happier.

Then one day you wake up in horror. You check to see your new home's estimated value, and are met with a "page not found" error. Zillow's servers are having a bad morning. A few minutes later the site is back up, but is missing data and offers no estimate of your home's value.

Panic sets in.

"Sweatheart, we have to get out of here," you holler to your wife.

"Take the kids to the neighbors. It's not safe here anymore."

Minutes later Zillow is back and running, verifying your home's estimated value at the same $300,000 you paid for it.

Still, you feel cheated. "We have to sell this place," you inform your family. "It's too dangerous. The value of our home lost 100% of its value before breakfast, and then gained it all back just as fast. I love our home, but this just feels like a casino."

Best Casino Companies To Watch In Right Now: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Dan Radovsky]

    Pinnacle Entertainment (NYSE: PNK  ) has reached an agreement in principle with the Bureau of Competition of the Federal Trade Commission that would allow the company to complete its proposed acquisition of Ameristar Casinos (NASDAQ: ASCA  ) , Pinnacle announced today.

  • [By Ben Levisohn]

    Pinnacle Entertainment (PNK) has gained 56% this year; Las Vegas Sands (LVS) has climbed 38%. And Deutsche Bank has nice things to say about both today.


    First Pinnacle. Deutsche Bank’s Carlo Santarelli ponders the stock’s big move and comes away still seeing value in its shares. He writes:

    When we upgraded PNK in April, our thesis centered on the FCF strength of the combined entities [Pinnacle completed its acquisition of Ameristar Casinos on Aug. 14], a handful of favorable catalysts, easing regional gaming comps, & an inexpensive relative valuation. Given the shares’ sizeable move since then, we believe it is worth revisiting the investment case. Post the announcement of several asset sales and the closing of the transaction, we are adjusting our estimates, raising our PT to $30 from $24, and maintaining our bullish view at current levels given what we still believe to be an attractive free cash flow valuation, meaningful potential synergy realization beyond the $40 mm of announced benefits, and a free option on a lagging regional recovery.

    Santarelli also revisited Las Vegas Sands and there too, he likes what he sees. He writes:

    With…LVS at [a share price level] that have been challenging to break from over the last year plus, we believe this time is different and hence we see continued upward momentum…In the case of LVS, we see; 1) meaningful mass market strength continuing through year end, setting the stage for upward company and market estimate revisions for 2014, 2) continued cash flow appreciation and capital returns serving as downside protection and positive catalysts, and 3) continued shared gains, largely driven by table optimization and mass market strength, driving both estimates and sentiment.

    He also likes Wynn Resorts (WYNN), despite its 34% gain.�Santarelli writes:

    As for WYNN, we believe near-term estimates continue to take a back seat to capital return

Best Casino Companies To Watch In Right Now: Umax Group Corp (UMAX)

Umax Group Corp., incorporated on March 21, 2011, is a development-stage company. The Company focuses to develop and distribute its product to the arcade and entertainment industry. The Company�� products include Rocket Launch, is Strength testing game which allows players to test their pushing/ throwing strength; Space Hockey, is a two player hockey game - each player must score as many as possible goals and Boxer, is a Simple punch testing game: insert coin/token/bill, press start button, hit the punch bag, wait for result, and try to beat opponent�� score or high score.

As of April 30, 2013, the Company had no revenues. The Company has developed its business plan, and executed exclusive distribution contract GEO a private enterprise, where it engages GEO as an independent contractor for the specific purpose of developing, manufacturing and supplying games for the Company.

Top Heal Care Companies To Invest In 2014: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:
  • [By Paul Ausick]

    Penn National Gaming Inc. (NASDAQ: PENN) completed on Monday the spin-off of its real-estate holdings into a new REIT, Gaming and Leisure Properties Inc. (G&LP) (NASDAQ: GLPI). The spin-off was first announced a year ago. Shares in GLPI are trading at around $46.51 after opening at $45.76 this morning.

  • [By Roberto Pedone]


    Penn National Gaming (PENN) is a diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties. This stock closed up 1.4% at $56.13 in Monday's trading session.


    Monday's Volume: 1.11 million

    Three-Month Average Volume: 824,334

    Volume % Change: 73%



    From a technical perspective, PENN jumped modestly higher here right above some near-term support at $54.71 with above-average volume. This move is quickly pushing shares of PENN within range of triggering a breakout trade. That trade will hit if PENN manages to take out some near-term overhead resistance at $57.44 to some past resistance at $58 with high volume.


    Traders should now look for long-biased trades in PENN as long as it's trending above Monday's low $55.65 or above more support at $54.71 and then once it sustains a move or close above those breakout levels with volume that this near or above 824,334 shares. If that breakout hits soon, then PENN will set up to re-test or possibly take out its 52-week high at $59.93. Any high-volume move above $59.93 will then give PENN a chance to hit $65.


  • [By Paul Ausick]

    Stocks on the Move: BlackBerry Ltd. (NASDAQ: BBRY) is down 16.4% at $6.50 after announcing that no buyout bid will be forthcoming. Penn National Gaming Inc. (NASDAQ: PENN) is down 76.7% at $13.75 after spinning-off its real-estate holdings into a REIT. Suntech Power Holdings Co. Ltd. (NYSE: STP) is up 15.5% at $1.53 following the acquisition of its major operations in Wuxi.

Best Casino Companies To Watch In Right Now: Nevada Gold & Casinos Inc (UWN)

Nevada Gold & Casinos, Inc., incorporated on April 7, 1977, is primarily a gaming company involved in financing, developing, owning and operating gaming projects. Through the Company's wholly owned subsidiary, Gold Mountain Development, LLC, the Company owns approximately 268 acres of undeveloped land in the vicinity of Black Hawk, Colorado. On January 27, 2012, through the Company's wholly owned subsidiary, NG South Dakota, LLC, the Company acquired A.G. Trucano, Son & Grandsons, Inc. (South Dakota Gol). On July 18, 2011, through the Company's wholly owned subsidiary, NG Washington III, LLC, the Company acquired Red Dragon mini-casino in Mountlake Terrace, Washington (Washington III). On May 25, 2012, the Company sold all of the assets, including rights in the Colorado Grande name and gaming-related liabilities, of the Colorado Grande Casino to G Investments, LLC (GI).

Commercial Gaming Projects

The Company owns and operates 10 gaming facilities in Washington, and a slot machine route operation in South Dakota. These properties are wholly owned and operated by the Company: the Crazy Moose Casinos in Pasco and Mountlake Terrace, Washington, the Coyote Bob�� Casino in Kennewick, Washington, the Silver Dollar Casinos in SeaTac, Bothell and Renton, Washington, the Club Hollywood Casino in Shoreline, Washington, the Royal Casino in Everett, Washington, the Golden Nugget Casino in Tukwila, Washington, and the Red Dragon Casino in Mountlake Terrace, Washington (Washington Gold), and the South Dakota Gold slot route operation in Deadwood, South Dakota.

Commercial Casino Projects

The Company own two mini-casinos operating in Mountlake Terrace. The Red Dragon mini-casino, located in western Washington State, has a total of 15 table games, including Player Banked Poker, Baccarat, and other banked table games. The mini-casino is located within 14 miles of downtown Seattle. South Dakota Gold is a slot machine route that operates over 900 slots at approximate! ly 20 locations in Deadwood, South Dakota, which represent about 24% of the total number of slot machines in that market. Deadwood is a town of 1,300 residents located in the Black Hills, South Dakota, in the southwest corner of the state.

Best Casino Companies To Watch In Right Now: Wynn Resorts Limited(WYNN)

Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Garrett Baldwin]

    Sin Stocks to Buy: Wynn Resorts (Nasdaq: WYNN)

    Wynn Resorts Ltd (Nasdaq: WYNN) currently pays out a $1 per share dividend each quarter, which provides a 2.4% dividend yield at its current stock price. And it's thriving because of the international markets.

  • [By Dan Caplinger]

    Moreover, corporations assisted taxpayers in achieving the same goal by making larger-than-usual dividend payments to their shareholders. Casino giant Wynn Resorts (NASDAQ: WYNN  ) , warehouse-club retailer Costco (NASDAQ: COST  ) , and hundreds of other companies declared special dividends that sent billions of dollars into investors' hands, much of which they had to count as taxable income. Moreover, many other companies decided to take dividends they had planned to pay in 2013 and make payments early instead. Wal-Mart (NYSE: WMT  ) paid its usual January dividend in December, while Oracle (NYSE: ORCL  ) actually made three quarters' worth of dividend payments at the end of 2012.

  • [By Sean Williams]

    Competition can also be a bit of a concern for Las Vegas Sands. Wynn Resorts (NASDAQ: WYNN  ) presents formidable competition in Macau because of its attractiveness to upper-income earners. Also, the prospect of legalized online gaming could put Las Vegas Sands at a distinct disadvantage, since its CEO, Sheldon Adelson, has no desire to align his company's plans for such a future. Should online gaming be legalized, social-media dud Zynga (NASDAQ: ZNGA  ) could become a stud with the infrastructure already in place to help reap the rewards of the $36 billion global online gaming industry. Then again, without online gaming, Zynga is a muddled mess ... but that's an entirely different story altogether.

  • [By Paul Ausick]

    U.S.-based casino operators Las Vegas Sands Inc. (NYSE: LVS), Wynn Resorts Ltd. (NASDAQ: WYNN), and MGM Resorts International (NYSE: MGM) already operate resorts and casinos in Macau and these companies would be much smaller without them.

Best Casino Companies To Watch In Right Now: Boyd Gaming Corporation(BYD)

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:
  • [By Travis Hoium]

    Earnings from Boyd Gaming (NYSE: BYD  ) surprised investors last week, but there's still a lot of fundamental weakness for the company. Revenue is declining across the country as more supply is added to the market, and the only way to grow is through acquisitions. The Fool's Erin Miller sat down with Travis Hoium to see how to play the gaming market now.�

  • [By Dan Caplinger]

    The real question is whether Zynga can hold off experienced casino operators if online gambling becomes a reality. Already, alliances are forming, with Boyd Gaming (NYSE: BYD  ) and MGM Resorts (NYSE: MGM  ) having linked up with -- the same company Zynga tapped for its real-money Zynga Poker -- to help Boyd take advantage of newly legal online gambling in New Jersey. Zynga has the obvious edge with its social savvy, but established casino companies will have huge incentives to defend their turf if Zynga starts to make a serious dent in the industry.

Best Casino Companies To Watch In Right Now: NanoTech Entertainment Inc (NTEK)

NanoTech Entertainment, Inc. (NanoTech), formerly Aldar Group, Inc., is a provider of gaming technology for the coin-op arcade, casino gaming and consumer gaming markets. The Company operates as a manufacturer, developing technology and games, and then licensing them to third parties for manufacturing and distribution. As of June 30, 2009, the Company�� products included MultiPin, Xtreme Rally Racing, NanoNET Online System, Pinball Wizard, Mot-Ion Adapter, Opti-Gun Adapter and Retr-IO Adapter. In April 2009, the Company acquired NanoTech Entertainment, Inc. In July 2013, NanoTech Entertainment Inc completed the acquisition of Clear Memories, Inc. of Napa California. Effective August 9, 2013, NanoTech Entertainment Inc acquired Worldwide Global Entertainment, a developer of prepackaged software.

The Company�� physics engine and motion sensors allow MultiPin to accurately recreate the experience of a mechanical pinball machine, while providing players with a variety of classic and modern pinball games to choose from. Xtreme Rally Racing is a driving machine that features three modes of game play: Xtreme Off-Road-Race Head to Head against other players and the computer to checkpoints while driving anywhere on the map with no preset course; Timed Rally Stages-Classic Rally Racing on real world courses. Players will be able to race in five different countries on real world rally courses, and Xtreme Stadium Racing-Custom Stadiums designed for Xtreme racing, including a figure eight multi-lap course with huge jumps. NanoNET Online System is remote operator control of machines, including diagnostics, accounting reports, and automatic software updates and enhancements downloaded over the net.

The Company has created the input device designed to give the pinball players a way to experience real pinball controls on their personal computer. Based on the technology developed for the MultiPin product it has built a controller that lets people play pinball using traditional controls and! the ability to shake and nudge the table. The Mot-Ion adapter is a universal serial bus (USB) adapter that allows do it yourself Pinball enthusiasts to build their own cabinet using real pinball controls providing analog inputs for nudging and bumping. The OptiGun adapter is a USB adapter that allows players to connect Arcade Light Guns to any USB based system. The Retr-IO adapters provide a standard JAMMA interface for USB based systems.

Advisors' Opinion:
  • [By Bryan Murphy]

    Call them hunches (because that's all they are), but now would be a great time to get out of a NanoTech Entertainment, Inc. (OTCMKTS:NTEK) position and/or get into an ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). NTEK looks like its reached its maximum potential - for the time being - while ACAD looks like it's ready to start rolling higher again.

  • [By Peter Graham]

    Nyxio Technologies Corp (OTCMKTS: NYXO), COREwafer Industries Inc (OTCMKTS: WAFR) and NanoTech Entertainment, Inc (OTCMKTS: NTEK) are three small cap stocks in some very diverse industries. In fact, one of these stocks just bought a 3D ice sculpture business. So will investors see their investment melt with that small cap stock�along with the other two? Here is a closer look to help you decide for yourself:��

Best Casino Companies To Watch In Right Now: Caesars Entertainment Corp (CZR)

Caesars Entertainment Corporation, incorporated on November 2, 1989, is a diversified casino-entertainment provider. The Company�� business is primarily conducted through a wholly owned subsidiary, Caesars Entertainment Operating Company, Inc. (CEOC), although certain material properties are not owned by CEOC. As of December 31, 2012, it owned, operated, or managed, through various subsidiaries, 52 casinos in 13 United States states and seven countries. The majority of these casinos operate in the United States, primarily under the Caesars, Harrah��, and Horseshoe brand names, and in England. In November 2012, the Company sold its Harrah's St. Louis casino to Penn National Gaming, Inc. In December 2012, the Company purchased all of the net assets of Buffalo Studios, LLC, a social and mobile games developer and owner of Bingo Blitz.

The Company�� casino entertainment facilities include 33 land-based casinos, 11 riverboat or dockside casinos, three managed casinos on Indian lands in the United States, one managed casino in Cleveland, Ohio, one managed casino in Canada, one casino combined with a greyhound racetrack, one casino combined with a thoroughbred racetrack, and one casino combined with a harness racetrack. The Company�� land-based casinos include nine in England, two in Egypt, one in Scotland, one in South Africa and one in Uruguay. As of December 31, 2012, its facilities had an aggregate of approximately three million square feet of gaming space and approximately 43,000 hotel rooms. In southern Nevada, Caesars Palace, Harrah�� Las Vegas, Rio All-Suite Hotel & Casino, Bally�� Las Vegas, Flamingo Las Vegas, Paris Las Vegas, Planet Hollywood Resort and Casino, The Quad Resort & Casino (formerly the Imperial Palace Hotel and Casino), Bill�� Gamblin��Hall & Saloon, and Hot Spot Oasis are located in Las Vegas and draw customers from throughout the United States. Harrah�� Laughlin is located near both the Arizona and California borders and draws customers primarily from! the southern California and Phoenix metropolitan areas and, to a lesser extent, from throughout the United States through charter aircraft. In northern Nevada, Harrah�� Lake Tahoe and Harveys Resort & Casino are located near Lake Tahoe and Harrah�� Reno is located in downtown Reno. These facilities draw customers primarily from northern California, the Pacific Northwest, and Canada.

The Company�� Atlantic City casinos, Harrah�� Resort Atlantic City, Showboat Atlantic City, Caesars Atlantic City, and Bally�� Atlantic City, draw customers primarily from the Philadelphia metropolitan area, New York, and New Jersey. Harrah�� Philadelphia (formerly Harrah's Chester) is a combination harness racetrack and casino located approximately six miles south of Philadelphia International Airport and draws customers primarily from the Philadelphia metropolitan area and Delaware. The Company�� Chicagoland dockside casinos, Harrah�� Joliet in Joliet, Illinois, and Horseshoe Hammond in Hammond, Indiana, draw customers primarily from the greater Chicago metropolitan area. In southern Indiana, it owns Horseshoe Southern Indiana, a dockside casino complex located in Elizabeth, Indiana, which draws customers primarily from northern Kentucky, including the Louisville metropolitan area, and southern Indiana, including Indianapolis. In Louisiana, the Company owns Harrah�� New Orleans, a land-based casino located in downtown New Orleans, which attracts customers primarily from the New Orleans metropolitan area. In northwest Louisiana, Horseshoe Bossier City, a dockside casino, and Harrah�� Louisiana Downs, a thoroughbred racetrack with slot machines, both located in Bossier City, cater to customers in northwestern Louisiana.

The Company owns the Grand Casino Biloxi, located in Biloxi, Mississippi, which caters to customers in southern Mississippi, southern Alabama, and northern Florida. Harrah�� North Kansas City dockside casino draws customers from the Kansas City metropolitan ar! ea. Harra! h�� Metropolis is a dockside casino located in Metropolis, Illinois, on the Ohio River, drawing customers from southern Illinois, western Kentucky, and central Tennessee. Horseshoe Tunica, Harrah�� Tunica, and Tunica Roadhouse Hotel & Casino, dockside casino complexes located in Tunica, Mississippi, are approximately 30 miles from Memphis, Tennessee and draw customers primarily from the Memphis area and, to a lesser extent, from throughout the United States through charter aircraft. Horseshoe Casino and Bluffs Run Greyhound Park, a land-based casino and pari-mutuel facility, and Harrah�� Council Bluffs Casino & Hotel, a dockside casino facility, are located in Council Bluffs, Iowa, across the Missouri River from Omaha, Nebraska. At Horseshoe Casino and Bluffs Run Greyhound Park, the Company owns the assets other than gaming equipment, and leases these assets to the Iowa West Racing Association (IWRA), a nonprofit corporation, and it manages the facility for the IWRA under a management agreement expiring in October 2024. The license to operate Harrah�� Council Bluffs Casino & Hotel is held jointly with IWRA, the qualified sponsoring organization.

The Conrad Resort & Casino located in Punta Del Este, Uruguay (the Conrad), draws customers primarily from Argentina and Uruguay. In November 2012, the Company announced that it had entered into a definitive agreement with Enjoy S.A. (Enjoy) to form a strategic relationship in Latin America. Under the terms of the agreement, Enjoy will acquire 45% of Baluma S.A., its subsidiary, which owns and operates the Conrad, and the Company will become a 10% shareholder in Enjoy upon consummation of the agreement. Upon the closing of the transaction, which is subject to certain conditions, including the receipt of all regulatory and governmental approvals, Enjoy will assume primary responsibility for management of the Conrad. Enjoy will have the option to acquire the remaining stake in Baluma S.A. between years three and five following closing. The cl! osing of ! the transaction remains subject to a number of conditions, including regulatory and governmental approvals in both Uruguay and Chile.

The Company owns four casinos in London: the Sportsman, the Golden Nugget, The Playboy Club London, and The Casino at the Empire. Its casinos in London draw customers primarily from the London metropolitan area, as well as international visitors. The Company also owns Alea Nottingham, Alea Glasgow, Alea Leeds, Manchester 235, Rendezvous Brighton, and Rendezvous Southend-on-Sea in the provinces of the United Kingdom, which primarily draw customers from their local areas. Pursuant to a concession agreement, it also operates two casinos in Cairo, Egypt, The London Club Cairo (which is located at the Ramses Hilton) and Caesars Cairo (which is located at the Four Seasons Cairo), which draw customers primarily from other countries in the Middle East. Emerald Safari, located in the province of Gauteng in South Africa, draws customers primarily from South Africa. It owsn and operates Bluegrass Downs, a harness racetrack located in Paducah, Kentucky.

The Company owns three casinos for Indian tribes: Harrah�� Phoenix Ak-Chin, located near Phoenix, Arizona, Harrah�� Cherokee Casino and Hotel, and Harrah�� Rincon Casino and Resort, located near San Diego, California. The Company manages Caesars Windsor, located in Windsor, Ontario, which draws customers primarily from the Detroit metropolitan area, Horseshoe Cleveland casino in Ohio, which it manages for Rock Ohio Caesars LLC (ROC), a venture with Rock Ohio Ventures, LLC (Rock Gaming), in which it has a 20% equity interest, and the Horseshoe Cincinnati casino in Ohio for ROC for a fee under a management agreement that will expire in March 2033. It also has a minority interest in Sterling Suffolk Racecourse, LLC (Suffolk Downs), which owns a horse-racing track in Boston, Massachusetts, and the right to manage a future gaming facility. The Company also owns ans operates a golf course on 175 acres of prime real! estate t! hrough a land concession on the Cotai strip in Macau.

Advisors' Opinion:
  • [By Rick Munarriz]

    Paula Deen has seen her future earnings prospects dim after her admission of using a racial slur. She lost her show. Several retailers have stopped stocking the celebrity chef's products. However, Deen has also lost lucrative endorsements with casino operator Caesars Entertainment (NASDAQ: CZR  ) and packaged pork products producer Smithfield Foods (NYSE: SFD  ) .

  • [By Dan Caplinger]

    MGM has built a history of being the odd player out in many of the most lucrative opportunities in the gaming industry. In Macau, the company is stuck in the slower-growth area of the Asian gaming destination. In Las Vegas, the new CityCenter area in the mid-Strip has watered down MGM's opportunities and has created another potential barrier for patrons coming from the northern end of the Strip to its namesake MGM Grand property. And in New Jersey, where online gaming has boosted prospects for Caesars Entertainment (NASDAQ: CZR  ) and Boyd Gaming (NYSE: BYD  ) , MGM has no exposure.

  • [By Travis Hoium]

    The next step
    The top end of the market has been doing well over the past two years, and Las Vegas Sands (NYSE: LVS  ) and Wynn Resorts (NASDAQ: WYNN  ) have been the beneficiaries. Las Vegas Sands's Las Vegas�revenue was up 7% in the first quarter, while Wynn's�was up 6.6%. But MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (NASDAQ: CZR  ) haven't seen the same success in the lower end of the market.

  • [By AlphaStreetResearch]

    Caesars Entertainment Corporation (CZR) is a highly overvalued gaming, hotel, and entertainment company with deteriorating fundamentals on all levels in a highly competitive environment. The company's stock has seen a massive run to the upside on the coattails of other casino and entertainment companies in the space. A considerable catalyst for the push higher in these stocks is the good news coming out of Macau, but this is an area where Caesars has absolutely no exposure and will be locked out of for the foreseeable future after failing to take appropriate licensing measures. Below is our introduction into the business model, its weaknesses, and the new selling or shorting opportunity that exists for CZR after the recent appreciation in share price. Investors will soon realize that there is little upside value in this company and that there are much better opportunities in this space. The company is now amidst a major struggle from a debt standpoint with major deadlines approaching over the next year and a half. The company is in no position to thrive going forward unless major steps are taken to overhaul the company's capital structure. Caesars Entertainment has a market cap of $3.19 Billion after the stock has moved up over 225% year to date and reports its next quarter on October 31, 2013. With this in mind, we value CZR at $21.00 by year-end of 2013 and $14.00 by August 1, 2014, a decrease of 40% from current levels. We will later highlight:

Monday, January 20, 2014

GM Falls Behind Japan in Customer Satisfaction

Despite strong new models like the Impala sedan, a new survey found that GM's Chevrolet brand still trails most rivals in customer satisfaction. Photo credit: General Motors.

A new survey released last week showed that the top Japanese automakers lead General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Chrysler in customer satisfaction -- and despite Detroit's recent quality gains, the gap may be widening.

What's going on, and is this something that could derail GM's turnaround? In this video, Fool contributor John Rosevear digs into the survey and offers his view on the real reason GM still lags Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) in customer satisfaction.

GM still has some work to do, but Ford's turnaround has already rewarded shareholders. But for Ford's stock to really soar, a few more critical things need to fall into place. In The Motley Fool's special free report titled "5 Secrets to Ford's Future" we outline the key factors every Ford investor needs to watch. Just click here now for your free report.

Saturday, January 18, 2014

Vanguard Offers Retirement Plan Tools for Mobile Devices

Vanguard says that it recently started letting retirement plan investors make transactions on mobile devices and updating them on the status of these transactions by text messaging.

The fund giant, which shared news of the move on Monday, also notes that it is one of the first in the industry to offer investors such tools.

As of May, nearly 20% of Vanguard’s online business with retirement plan investors now takes place via a mobile device versus 4% in January 2011. Six months ago, Vanguard started a text-messaging service that is now used by about 30% of investors who work on their accounts online.

“Retirement-plan participants are increasingly using mobile devices, and Vanguard’s mobile transaction and text messaging services lets them manage their accounts the way they want to manage them,” said Amy Cribbs, head of Vanguard Participant Experience, in a press release.

Retirement-plan investors can, for instance, change their contribution levels, switch fund investments, changing their portfolio mix and rebalance their holdings. In addition, they may use Vanguard’s mobile app for actions like checking account balances and performance data or reviewing transactions and account statements.

“Vanguard’s mobile users tend to be very engaged in long-term planning and investing, and we expect that the mobile transaction capabilities will be used as an added convenience,” Cribbs added.

The company manages more than $2.2 trillion in U.S. mutual fund assets. It recently adjusted the benchmarks of 22 of its 160 index and actively managed funds sold to U.S. investors to lower costs paid by investors. It also provides investments to nearly 4,000 defined-contribution plan.

According the industry group ICI, total U.S. retirement assets now top $20.5 trillion; assets in individual retirement accounts stand at about $5.7 trillion, and those in defined-contribution plans at $5.4 trillion.


Check out Retirement Assets Continue to Recover: ICI on AdvisorOne.

SEC, DOL Enforcement: Cohen’s SAC Capital Faces Criminal Charges

Among recent enforcement actions were: a criminal indictment filed against SAC Capital for insider trading; charges by the Securities and Exchange Commission against the City of Miami and its former budget director over fraud in municipal bond offerings; and the agreement by the trustee of a defunct New York garment company’s pension plan to restore missing funds to the plan in settlement of a Department of Labor suit.

Cohen’s SAC Capital Faces Criminal Charges; Cohen May Also

While Steve Cohen faced SEC administrative charges last week for failing to prevent insider trading at the hedge fund firm he founded, SAC Capital Advisors, the firm itself was indicted on criminal charges filed Thursday. Unrivaled by any case since the charges against former Goldman Sachs director Rajat Gupta, the SAC controversy promises plenty of revelations, since according to the government it involves some 20 companies and spans 14 years, going back to 1999.

Although the SEC declined to file civil fraud charges against Cohen, federal prosecutors are reportedly continuing to explore their options against him. They had no such reservations about pursuing his company.

The result of a six-year-long crackdown on insider trading, the indictment of SAC Capital from a grand jury included four counts of securities fraud and one count of wire fraud.

The federal indictment could sound the death knell for the $15 billion hedge fund whether the government makes its case or not, since investor withdrawals from the fund have mounted along with the reputational damage to the firm, already facing criminal cases against two employees. In addition, in a parallel civil action, the government said that SAC must forfeit “all property, real and personal, which constitutes or is derived from proceeds traceable to the commission of those offenses.”

Cohen was charged by the SEC with failing to supervise employees and with failing to recognize “red flags” allegedly indicating insider trading by two of those employees, portfolio managers Michael Steinberg and Mathew Martoma. Both Steinberg and Martoma face criminal insider trading charges, and both have pleaded not guilty.

The SEC said: “On at least two separate occasions in 2008, [Steinberg and Martoma] provided information to Cohen indicating their potential access to inside information to support their trading. However, Cohen stood by on both occasions instead of ascertaining whether insider trading was taking place.” In fact, the agency added, “instead of scrutinizing their conduct, Cohen praised Steinberg for his role in the suspicious trading and rewarded Martoma with a $9 million bonus for his work.”

According to a Reuters report, a company spokesman said in a report that Cohen plans to vigorously defend the SEC’s failure to supervise charge.

SEC Charges City of Miami, Former Budget Director on Muni Bond Fraud

The SEC has announced charges against the City of Miami and its former budget director, Michael Boudreaux, for making materially false and misleading statements and omissions about some interfund transfers in three 2009 bond offerings totaling $153.5 million. They were also alleged to have provided false and misleading information in the city’s fiscal 2007 and 2008 comprehensive annual financial reports (CAFRs) received by investors, particularly those who have invested in previously issued city debt.

According to the SEC, Boudreaux initiated a transfer of approximately $37.5 million in city money between the funds, so that city bond offerings would get favorable credit ratings from rating agencies. The transfer was necessary so that Miamic ould meet, or come close to meeting, its own requirements for reserve levels in the general fund. The city was experiencing increasing deficits in its general fund, which is regarded as a major indicator of financial health. Boudreaux’s transfers of money from Miami’s capital improvement fund to the general fund masked the situation, and the city kept quiet about them, the SEC charges.

Miami allegedly never told its bondholders that that money included legally restricted dollars that, under city code, may not be commingled with any other funds or revenues of the city. It also apparently never revealed that the transferred funds were allocated to specific capital projects that still needed those funds as of the end of the fiscal year, or that in some instances had already spent that money.

Problems arose when Miami was forced to reverse most of the transfers after its Office of Independent Auditor General (OIAG) issued a report. The reversal meant the city could no longer meet statutorily mandated general fund levels, which led the city to declare a state of fiscal urgency. As might be expected, bond rating agencies then downgraded their ratings on the city’s debt.

The SEC charges the city with violating a cease-and-desist order that it issued in 2003 for similar misconduct. The agency seeks injunctive relief and financial penalties against Miami and Boudreaux, as well as an order commanding the city to comply with an SEC cease-and-desist order issued in 2003 for similar misconduct.

This is not the first time the SEC has alleged further wrongdoing by a municipality subject to an existing SEC cease-and-desist order, and it’s not the first municipality the SEC has gone after.

Other entities include:

Pension Funds to be Restored in Settlement of DOL Suit Against Trustee

The trustee of two defined benefit pension plans for Manhattan-based Sadimara Knitwear Inc. and Stallion Knits Ltd. has agreed to settle a Department of Labor lawsuit by restoring missing assets to the plans. She will also be barred permanently as a fiduciary.

Sadimara Knitwear Inc. and Stallion Knits Ltd. were garment companies headquartered in Manhattan. The companies, which are no longer in operation, sponsored the plans to provide pension benefits to their employees. Colette Mordo was the trustee and fiduciary to both plans.

After an investigation by the Employee Benefits Security Administration's (EBSA) New York regional office, the DOL alleged that she had authorized the pension plans to make improper loans and transfers of plan assets over several years to multiple recipients, including members of the Mordo family and International Design Concepts LLC and Apparel Group International LLC, two companies in which Mordo had an ownership interest.

In settlement of the suit, Mordo admitted to entering into $4.23 million in alleged unlawful plan transactions between 2002 and 2010.

According to the judgment, Mordo is removed from any and all fiduciary positions with respect to the plans, and is permanently barred from serving as a fiduciary to any ERISA-covered plan. The judgment also appoints David Lipkin of Metro Benefits Inc. as the independent fiduciary who will administer the plans, determine and pay out benefits to participants, and terminate the plans.

The Labor Department is also authorized to seek a contempt order if Mordo violates any terms of the judgment.