Thursday, June 18, 2015

Checklist for women who take financial decisions

He is against generalising any form of investment for any age or category of people. He prefers it being specific and personalised to each individual, be it men or women.

He advises against putting all your eggs into one basket, irrespective of how good a particular asset class might look. Based on individual profile, investment profile, time horizon and the goals, an investor needs to make an asset allocation plan wherein he or she decides how much funds will go into equities, how much into debt and how much into any other say real estate or precious stones, he says.

According to him, the idea is to make that kind of an asset allocation plan and allocate money based on that plan, and not as per the timing of the market.

Below is the verbatim transcript of Harshvardhan Roongta's interview on CNBC-TV18

Q: Do you think women are perhaps better placed to be making financial decisions and are you seeing a lot more women come to you for queries, I don't want to say anything but perhaps we are just intrinsically better organisers of finances?

A: Women otherwise are known to be better organised then men. I am not getting into comparing the habits of people but generally I would say that since women have multiple roles, they work, manage their house and office as well. So, the idea is in recent times we are seeing women coming forward to take charge of the finances.

Earlier it was all left on their husbands to do it or their parents to take charge of the finances, but recently we have seen that paradigm shift wherein women want to take charge. They are trying to take keen interest in their own finances so that they can be independent and they can take decisions on their own. So, answering your query yes we see that kind of awareness being created these days and hopefully it will only increase as days go by.

Q: Are the rules for women investing different from that of men and secondly just classifying them into three buckets say one single working women, secondly married and working and thirdly married with a family but not working. Most of the women would perhaps fall in one of these three, so what is the advice for each of them?

A: When you talk about personal finance, the requirements and what you do with your money is completely dependent on your current situation. So, if there is a woman who is single there are different goals that she has, there are different requirements that she has so there is a different thing that she does with her money.

So, similarly if there is a woman who is married without children there are different kind of set of investments and if a woman is independent and has a child as well there are different kinds of schemes for them.

So, it will be very difficult to generalise that all women who are not married need to do a particular set of things. All 35 year olds cannot have a simple and a straight forward blanket investment pattern. If a person has some liabilities in the short-term, he needs to make provisions for that vis-à-vis another person who has no liabilities in the short-term makes different set of investments. So, I would say let us not generalise any form of investment for any age or a category of people, let it be very specific and personalised to each individual, be it men or women.

Caller Q: I have some investment in public provident fund (PPF) and my trade period is approaching very soon. I want to invest that money, approximately Rs 7 lakh, in stocks like Reliance Industries ( RIL ), Hindustan Unilever ( HUL ), ITC , Tata Consultancy Services ( TCS ), Infosys , Sun Pharma , Lupin , etc. Is it worth entering maybe via mutual fund or direct equity now to get more returns?

A: The first thing would be that there is a general rule you do not put all your eggs into one basket. So, irrespective of what the market situation or what the conditions currently are you want to take benefits of the market being at lows and there is rupee depreciation. So, if you are considering these things then considering equity because of that reason I would say no, do not do that.

Understand there is a risk in every investment that you make. Like for instance in a bank fixed deposits (FD) there is a risk of inflation, though the capital is safe there is a risk of inflation. In equities there is a risk of capital, but inflation risk is taken care of. So, the idea is irrespective of however good a particular asset class looks at any given point in time you do not put all your eggs into one basket.

Based on each individuals profile, the investment profile, time horizon and the goals you need to make an asset allocation plan wherein you decide how much funds will go into equities, how much into debt, how much into any other say real estate or precious stones.

So, the idea is you need to make that kind of an asset allocation plan for yourself and allocate money based on that plan not as per timing of the market. So, I would suggest if you can take high risk you may chose to allocate more into equity, but not everything into equity. So, answering your query, no I would not suggest that you shift from PPF only because market conditions are favouring equities. You make an asset allocation plan and divide your money and invest accordingly.

Q: Is there a thumb rule on diversification because the caller has her money in fixed deposits, how much of that portfolio should she shift into equity?

A: First parameter of choosing an asset allocation plan, one of the primary factors is age, the other is goals. If a person is young but if she requires the money after two years then she certainly cannot invest into equities irrespective of age being on her side. So, general thumb rule then whatever is her age that much money gets invested into debt. Therefore, whatever her age is, probably that much could be in debt and the rest could be in equities provided she has no short-term requirements with those funds.

Caller Q: Which mutual fund should I invest in?

A: Mutual fund has schemes which suit all types of investors. So, what you have referred to is an asset class which is equity. So, there are different kinds of schemes in equities such as you have funds which invest only into large cap companies, some will invest into mid caps, a combination of them. There are some sector funds which invest only in a particular sector such as banking or pharmaceutical or technology. So, within the equity category there are different kinds of options available within debt - there are investments, there are schemes which allow investors to invest money for couple of days and going up to couple of years.

I do not want to throw up names to you. I want to throw up categories and one of the safest ways to invest into equities is to begin with index funds. So, in case you do not have an index fund in your portfolio, you can choose to invest in an index fund or if you want to start investing into equities again then there is another option available which is a balanced fund, a part of the money that you give, goes into debt and a part into equities. So, to begin with these are the options available.

As you progress into investing and you get comfortable with equity investing, you can choose schemes which are actively managed; you can choose a large cap fund and then going down a midcap and a small cap and then last would be sector fund. So, if you wish to know names in equity schemes then Franklin India Index Fund is one fund you can start with or you can start with an equity aggressive balanced fund, which is in HDFC Prudence Fund and if you want debt aggressive balanced fund then HDFC Monthly Income Plan (MIP) would be a scheme to start with.

Wednesday, June 17, 2015

How Are Q2 Earnings Shaping Up? - Ahead of Wall Street

Monday, July 22, 2013

The Q2 earnings season takes the spotlight with almost one-third of all S&P 500 members reporting results this week and little in terms of the Fed and other economic data distractions. We will know more about the broader earnings picture at the end of this week, but having seen results from almost one-third of the total market capitalization of the S&P 500 index by this morning, we have a representative enough sample with which to judge the results thus far.

Total earnings appear on track to reach a new all-time quarterly record in Q2, surpassing the level reached in 2013 Q1. On conventional metrics of earnings season performance like aggregate growth rates, beat ratios, and guidance, the Q2 season thus far is tracking what we saw in Q1. We should keep in mind, however, that this not-so-bad picture may be misleading as strength in the Finance sector is helping hide a lot of weakness elsewhere.

We will know more this week as many non-financial companies report Q2 results, but this morning's disappointing numbers from McDonald's (MCD) and last week's soft results from Google (GOOG), Microsoft (MSFT) and others are likely pointing towards an enduring trend - the earnings picture outside of Finance is fairly weak.

The Q2 Scorecard for the broader S&P 500 as of this morning (July 22) shows results from 107 S&P 500 companies or 21.4% of the index's total membership that combined account for 32.4% of its total market capitalization. Total earnings for these 107 companies are up +7.9%, with 61.7% beating earnings expectations. On the revenue side, we have a growth rate of +4.5%, with 49.5% coming ahead of top-line expectations. The earnings and revenue growth rates and the revenue beat ratio seen thus far are broadly in-line with what we saw from the same group of 107 companies in Q1, while the earnings beat ratio is modestly on the lower side.

Strong results from the Finance sector are playing a big role in keeping the agg! regate Q2 data for the S&P 500 thus far in the "not-so-bad" category. It is very hard to be satisfied with the aggregate numbers once Finance is excluded. Total earnings for the Finance sector are up +34.1% on +10.7% higher revenues, with beat ratios of 76% for earnings and 68% for revenues. Strip out Finance from the reports that have come out already and total earnings growth turn negative – down -2.9%. This is weaker than what these same companies reported in Q1. There are few positive surprises outside of Finance as well, with the earnings and revenue beat ratios outside of Finance tracking below Q1's levels.

The composite Q2 growth rate, where we combine the results for the 107 that have come out with the 393 still to come, is for +1.2% total earnings growth on +0.1% higher revenues. Excluding Finance, the composite earnings growth rate drops to a decline of -4.1%. Bottom line, the earnings picture outside of Finance is very weak in Q2, but expectations for the second half of the year reflect a meaningful recovery.

Current consensus estimates for Q3 reflect total earnings growth rate of +4.3% and +10.9% in Q4, followed by +11.1% growth in 2014 as a whole. Hard to envision these growth rates holding up given the overall negative tone of company guidance thus far. The question is whether investors will continue to shrug the resulting negative estimate revisions or will finally start paying attention to the underwhelming earnings growth picture? We will have to wait a few more weeks to find out. But if past performance is any guide on that front, then we probably don't need to lose much sleep over it.

Sheraz Mian
Director of Research

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Sunday, June 14, 2015

Why Ruby Tuesday Shares Got Trashed

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

What: Shares of Ruby Tuesday (NYSE: RT  ) were giving investors indigestion today, falling as much as 17% after a lackluster fourth-quarter earnings report.

So what: The restaurant chain reported a $0.12 adjusted-per-share profit, short of expectations of $0.19. Without excluding those additional items, Ruby Tuesday would have seen a $0.49 per-share loss. Revenue was down 11%, to $316.1 million, as it closed some restaurants in the past year, while same-store sales at namesake Ruby Tuesday restaurants dipped 3.1% in company-owned locations, and 5.1% at franchises, indicating organic weakness. CEO JJ Buettgen said the company sees a same-store sales decline of high-single digits in the current quarter, but expects it to turn positive in the second half of the fiscal year due to new menu items and marketing campaigns.

Now what: It's hard to see the positive in this report, but the company is in a transitional phase, having exited the chains Marlin & Ray's, Truffles Grill, and Wok Hay over the past year, in order to focus on the core Ruby Tuesday business, and growing Lime Fresh, a Chipotle competitor. Lime Fresh may be valuable as a future revenue stream, but the company did take a goodwill impairment charge last quarter for its earlier acquisition, which seems to bode poorly. And with just 24 Lime Fresh locations in operation, compared to 783 Ruby Tuesday locations, the vast majority of the business is in its namesake brand. At the very least, I'd wait to see comparable sales moving in the right direction before putting faith in Ruby Tuesday.  

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Tuesday, June 9, 2015

NetSuite to Offer $270 Million in Convertible Notes

NetSuite  (NYSE: N  )  plans to offer $270 million worth of its convertible senior notes due 2018 to qualified institutional buyers, with the initial purchasers getting an option to buy up to $40 million more solely to cover overallotments. 

While the initial conversion rate, interest rate, and certain other terms of the notes still need to be worked out between NetSuite and the institutional buyers, when the notes are eventually issued they will be senior unsecured obligations of NetSuite that will pay interest semiannually and will mature on June 1, 2018, unless first repurchased or converted.

If the note holders want to convert the notes before March 1, 2018, certain conditions would first need to be completed. Upon conversion, however, holders will receive cash, NetSuite stock, or a combination of the two at NetSuite's election. Yet holders of the notes will have the right to require NetSuite to repurchase all or some of their notes at 100% of their principal, plus any accrued and unpaid interest, if certain events occur. Those events were not specified in the press release announcing the offering.

NetSuite intends to use the net proceeds from the offering for working capital and other general corporate purposes, including acquisitions of and investments in complementary businesses, products, services, technologies, and capital expenditures. It also anticipates using a portion of the proceeds to buyback as much as $30 million of its shares either through privately negotiated transactions or on the open market.

NetSuite notes that by buying back its stock, it may increase the value of its stock or limit a decrease in it. NetSuite's shares closed at $89.52 on May 28.

Monday, June 8, 2015

Does This Move Make Annaly a Better Buy?

At yesterday's annual Annaly Capital  (NYSE: NLY  ) shareholders meeting, a measure to externalize the company's management was voted upon and passed. In the following video, Motley Fool financial analysts David Hanson and Matt Koppenheffer discuss what this move means for shareholders, and why David thinks it shows that Annaly has one of the best management teams in the mortgage REIT sector today.

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The Real Reason the Dow's Steady This Morning

Having propelled the stock market to record after record, investors have gotten used to seeing every small bit of news as reason for a big market move. But over the long haul, muted days like today are much more typical as a lack of big-picture news forces investors to focus more on individual companies. Although many analysts pointed to the ongoing debate about what the Federal Reserve should do next as the reason for the market's ambivalence this morning, the simpler explanation is that in the absence of major news, there's little reason for prices to change. By 10:45 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI  ) were down about four points, while the S&P 500 had risen a fraction of a point.

Within the Dow, most stocks are similarly quiet. JPMorgan Chase (NYSE: JPM  ) has fallen 0.3% as the company prepares for tomorrow's annual shareholder meeting, at which investors will determine the fate of chairman and CEO Jamie Dimon. With many investors calling for Dimon to relinquish his dual leadership roles, the stock has nevertheless soared recently, reflecting skepticism that major institutional investors will do anything to change the course that has led to a strong recovery for the bank despite obstacles including the "London Whale" scandal.

But outside the Dow, merger-and-acquisition news has dominated the headlines. Yahoo! will spend $1.1 billion to buy Tumblr in a deal that could boost the online-search company's reach into the social-media realm. Smaller companies have seen much more dramatic moves. Pactera Technology (NASDAQ: PACT  ) has skyrocketed 30% after the IT services and consulting company got an offer to go private for $7.50 per share. Even after the jump, shares are trading about 10% below that offer, suggesting that investors aren't certain the deal will go through.

Finally, Chinese solar company JA Solar (NASDAQ: JASO  ) has spiked 47% after announcing better-than-expected solar-cell shipments in its first-quarter report. Although many of its Chinese peers have come under pressure from extensive debt, JA Solar pointed to strength in sales to Japan in helping the company beat its initial forecast for deliveries during the quarter. Nevertheless, JA Solar still faces a tough road ahead in dealing with big net losses and weak margins, and increased volume will only go so far in remedying the company's woes without overall improvement in industry pricing conditions.

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Thursday, June 4, 2015

Littelfuse Buying Hamlin Inc. for $145 Million

Littelfuse (NASDAQ: LFUS  ) has signed an agreement to acquire Key Safety Systems' Hamlin subsidiary for $145 million in cash, Littelfuse announced Monday.

The deal will add Hamlin's portfolio of sensors for the automotive industry to Littelfuse's holdings, which Littelfuse CEO Gordon Hunter called "a major step forward in our strategy to build a global, automotive sensor platform." Hamlin also makes sensors for the electronics and industrial markets.

Hamlin is headquartered in Wisconsin with manufacturing, engineering, and sales offices in the U.S., Mexico, Europe, and Asia. Hamlin had sales of approximately $76 million in 2012.

Littelfuse expects the acquisition to help it achieve double-digit sales growth going forward, and to add $0.35 per share in profit in 2014.

The $145 million Littelfuse is paying for Hamlin works out to a 1.9-times-sales valuation on the deal, a slight discount to the 2.2 price-to-sales valuation Littelfuse's own shares currently command.

The transaction, which is subject to antitrust oversight and other closing conditions, is expected to close by the end of May.


Tuesday, June 2, 2015

The Keryx (Nasdaq: KERX) Media Blunder Will Add to Our 700% Gain

On August 29, 2012, shares of Keryx Biopharmaceuticals, Inc. (Nasdaq: KERX), a company focused on pharmaceutical products for patients with renal disease, closed for the day's session at $2.06. Exactly two years later, on August 29, 2014, the same stock closed at $18.19.

That's right. Investors made a 780% profit over their original position, and it looked like the price per share (PPS) was destined to climb considerably higher.

In fact, analysts had set their average first-year target for the stock at about $23. And there was every reason to believe KERX would reach and break through that target after the FDA approved it for marketing in the United States on its PDUFA date, set for September 7.

But then something odd happened...

The FDA rendered its decision early, on September 5, and although the news was good -KERX's drug had been approved - the stock fell more than 11% by the session opening the following Monday and continued falling over the next few weeks - giving traders today an opportunity to take advantage of the situation and make huge profits.

Here's why...

A Great Drug with Phenomenal Potential

The developmental drug undergoing review, ferric citrate (formerly Zerenex), treats high phosphate levels (hyperphosphatemia) in patients with chronic kidney disease (CKD) who are on dialysis. People with this condition can end up with bone disease, vascular calcification, cardiovascular disease - and early death. Ferric citrate demonstrated that it could significantly lower phosphate in the blood, with an excellent safety and tolerability profile.

But that isn't its only benefit.

As it turns out, the drug can simultaneously treat iron deficiency anemia (IDA), a common secondary disorder in CKD patients with high phosphate levels. This, of course, would be a separate indication for the drug, and the FDA would not be reviewing both indications at the same time.

In fact, the agency would be unlikely to approve a separate indication for the treatment of IDA, because this isn't a drug you would want to give to patients who don't have hyperphosphatemia. Still, both the medical community and Wall Street viewed this as a huge plus for ferric citrate, lifting it head and shoulders above its competitors.

In fact, it could quickly knock its competitors out of the ring and earn very, very big profits. For dialysis patients alone, it would be in the $250 million to $500 million range, but KERX hopes to expand that market to include pre-dialysis patients, which would put it in the $1.2 billion range - a blockbuster.

So you might think Wall Street would hold a parade on approval of a drug like this one. But it was not to be. Instead, the press, along with many so-called "experts" on the Web, completely misunderstood and misrepresented the agency's decision and actually turned great news into bad.

The Media Apologizes

You see, as KERX was preparing its press release to announce the FDA approval, it requested a temporary halt to trading in its stock. This is a common practice among pharmaceutical companies when they're about to make an important announcement that may affect stock market sentiment.

During the halt, the Associated Press (AP), a not-for-profit cooperative of news organizations, released a story that the approval came with a caveat: the label would have to include a warning that instructed physicians to monitor blood iron levels in patients who were already on iron replacement therapy-that is, were already taking drugs for IDA. So as a result of this "unexpected" warning, the AP story said, the price-per-share (PPS) for KERX had already dropped by nearly six 6%.

That's right. The story made this claim while trading was still halted...

It is true that the stock had dipped nearly 6% and then rebounded a couple of points before the trading halt, but that actually had nothing to do with anything on a warning label. It was the kind of trading activity we often see before a binary regulatory catalyst, as traders executed options and cashed in on the run-up. AP got it wrong, and as a result, started an avalanche of panic selling.

AP eventually sent out a "correction" of the original article as soon as it realized its mistake.

But too late. The damage was done. And there would be more to follow, because not only had AP misstated the facts about what had happened before the halt, but it completely misinterpreted the importance of the warning label.

The story's position was that the warning label was unexpected and would dampen sales, and that what had been perceived as a great benefit of ferric citrate - its ability to increase iron levels in the blood and thus control IDA - was actually a big problem. To make matters worse, after AP published this explanation, nearly all of the "experts" on the Web, instead of thinking for themselves, repeated it.

And it was all nonsense.

The Real Story

Anyone who has any familiarity with medication labeling would know immediately that there is absolutely nothing unusual or unexpected about the way FDA instructed KERX to label its product. Every prescription drug ever manufactured has come with precautions on the label, and many, many of them carry warnings about use with other medications - especially ones that either work in the same way as the prescribed drug or that might combine with the drug to make it more powerful. If your family doctor prescribed an aspirin product for you, for example, he or she would certainly want to monitor any aspirin you might be taking from another source to prevent aspirin poisoning.

As for the label instruction to monitor iron levels in the blood if the patient is taking other iron supplementation - the fact is that all dialysis patients on prescription iron supplements are already monitored.

The AP piece also suggested that some analysts had expected the label to highlight the drug's ability to treat anemia. This is utter nonsense. KERX never submitted the drug for this indication, so there was absolutely no way the FDA would allow the manufacturer to do this. In fact, the only place on the label where the information about the drug's effects on serum iron levels could possibly appear would be with the "warnings," that is, the side effects, etc.

And that is a very good thing. It gives the KERX sales force the legitimate opportunity to discuss, inform, and educate doctors about the drug's marvelous effects on serum iron levels. It tells physicians that the FDA sees and recognizes these effects. It is, in fact, exactly what KERX needed to penetrate and snag a big portion of a $1.2 billion market.

With the confusion out of the way, it's our turn to make a move...

Now There's a Big Opportunity

Currently, KERX is perfectly positioned to take that market by storm. At the same time, the share price for KERX stock is artificially depressed due to the blunders and misunderstandings of the media.

So investors currently have an extraordinary opportunity - maybe a once in a lifetime opportunity - to get in on this stock at a deep discount.

I say "investors" rather than "traders" because this is a long-term play. KERX is poised to do great things over the next couple of years, and taking full advantage of the opportunity will mean getting in and staying with the company for at least that long. But the results will make the wait worthwhile.

Monday, June 1, 2015

10 Best “Strong Buy” Stocks — BITA SHPG TRGP and more

RSS Logo Portfolio Grader Popular Posts: 10 Oil and Gas Stocks to Buy Now15 Oil and Gas Stocks to Sell NowBiggest Movers in Energy Stocks Now – NGLS EXXI WTI TPLM Recent Posts: Biggest Movers in Healthcare Stocks Now – PBYI AGN PRGO EXAS Biggest Movers in Basic Materials Stocks Now – BCPC KS CMP WOR Hottest Technology Stocks Now – SUNE MLNX NSIT BRCD View All Posts 10 Best “Strong Buy” Stocks — BITA SHPG TRGP and more

This week, these ten stocks, all currently earning A’s (“strong buy”) on Portfolio Grader, have the best year-to-date performance.

Since the first of the year, shares of Bitauto Holdings Ltd. Sponsored ADR () have soared 57.9%. Bitauto provides Internet content and marketing services for the automotive industry, primarily in the People'’s Republic of China. .

Since January 1, Shire PLC Sponsored ADR () has climbed 61.9%. Shire, a biopharmaceutical company, researches, develops, manufactures, sells, and distributes pharmaceutical products. .

Shares of Targa Resources () have risen 62.9% since January 1. Targa Resources provides midstream natural gas and natural gas liquid (NGL) services in the United States. The stock’s dividend yield is 2.6%. .

Since January 1, Texas Pacific Land () has jumped 64.8%. Texas Pacific Land Trust derives revenue from all avenues of managing land, such as royalties from oil and gas and land sales. .

Since January 1, Illumina, Inc. () has shot up 66.8%. Illumina develops, manufactures and markets integrated systems for the large-scale analysis of genetic variation and biological function. .

The price of Forest Laboratories, Inc. () has seen a 69.1% boost since the first of the year. Forest Laboratories develops, manufactures, and sells both branded and generic forms of ethical products which require a physician’s prescription. .

The price of Green Plains Inc. () is up 72.9% since the first of the year. Green Plains Renewable Energy constructs and operates dry mill, fuel-grade ethanol production facilities. .

Repligen Corporation () has risen 73.2% since the first of the year. Repligen is a biopharmaceutical company that develops therapeutics for radiology and neuropsychiatry. .

Since January 1, the price of Questcor Pharmaceuticals, Inc. () has grown 74.9%. Questcor Pharmaceuticals develops and commercializes novel central nervous system-focused therapeutics that address significant unmet medical needs. .

Since the first of the year, the price of EQT Midstream Partners LP () has swelled 75.4%. EQT Midstream Partners provides natural gas transmission, storage, and gathering services in Pennsylvania and West Virginia. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.