Hedge Fund titan Jon Paulson pulled off the greatest trade of all time in 2007, raking in a cool $15 billion in his bet against subprime mortgages - according to the International Business Times who ranked the top ten greatest trades of all-time. Some were brilliant masterminds, others were just plain lucky.
The Top Ten Greatest Trades of All-Time
1. John Paulson’s bet against sub prime mortgages made him $15 billion in 2007
2. Jesse Livermore’s call on the Crash of 1929 (a legendary trader featured in the popular book, Reminiscences of a Stock Operator).
3. John Templeton’s foray into Japan in the 1960s (a true investment pioneer, Templeton foresaw the rise of Japan after World War II and profited hugely from it).
4. George Soros’ breaking of the Bank of England in 1992 (Soros made $1 billion).
6. Andrew Hall’s $100 oil prediction (with oil trading at $30 per barrel in 2003, Hall bet prices would rise to $100 in 5 years; they did and he took home a personal paycheck of $100 million in 2008).
7. David Tepper’s 2009 bet on financials (as the market hit its low in early 2009, Tepper bought financial services stocks & his fund earned $7 billion that year ($4 billion of that went to Tepper).
8. Jim Chanos’ prescient shorts (his sharp analysis led him to predict the demise of Enron, WorldCom, and other firms, and he is known as the best short-seller in the world).
9. Jim Rogers’ early call on commodities (he was bullish on commodities back in the 1990s & has been riding them to great profits ever since).
10. Louis Bacon’s geopolitical play (he correctly predicted that Saddam Hussein would invade Kuwait in 1990 & profited handsomely by going long on oil & shorting stocks, which helped his fund return 86% that year).
Most of these trades were ‘global macro’ plays where huge, concentrated bets were made by analyzing fundamental economic/business conditions. These investors excelled at turning a great observation about the world into a great investing idea. But, while these make the headlines, you never hear about the other investors who made a big call and missed, and ended up out of business.
It’s almost impossible for regular investor folks to make a ‘big score’ like these traders. Rather than trying to throw a touchdown pass on every play and make a big score like these traders, the smarter game plan is to focus on trying to get consistent first downs. Do your homework, watch market/sector developments, don’t chase stocks up or down. Do that, and the score may take care of itself.
Source: International Business Times
If you currently own Bank of America (NYSE: BAC) then you have been a strong supporter of the new direction the bank is going in and have been loving the impressive run the stock has been on, +83% year-to-date, +183% over the past 20 months. Just take a look at both of the BofA charts below and you’ll see why investors have been loving BofA’s recent stock performance. While BofA’s recent rally has been nothing short of stellar, it didn’t come from nothing. It was supported by the fact that fundamentally BofA is a strong company from top to bottom. Overall, there is a lot to like about Bank of America and the new direction the company is going in under the watch of CEO, Brian Moynihan.
Bank of America has clawed its way back from oblivion to the delight of traders and investors alike, who have profited on the stock’s advance. BofA has been a great momentum trade and going forward we expect shares to continue to soar. BofA is a great value play and as you can see, the stock is gradually recovering, climbing back to where they were trading before the financial markets collapsed.
Bank of America’s Past 12-Months Stock Performance: +82.13%
Bank of America’s Past 20-Months Stock Performance: +182.97%
BofA’s Legal Worries & Future Concerns
Some of the biggest concerns investors have when it comes to Bank of America are the bank’s legal woes, pending lawsuits and the potential financial ramifications from these lawsuits. Some speculate that the legal settlements could cost the bank and its shareholders billions of dollars. When it comes to investing, I prefer to look at the fundamentals of a company rather than giving into fear and listening to all the rumors. Right now all these numbers being thrown around are nothing but speculation and in the end BofA will pay a lot less in legal penalties than originally expected. Just examine all of the past legal cases against Bank of America and analyze the amount BofA actually paid out versus what analyst’s originally speculated, it’s consistently been a lot less. Many can attribute this success to the work of CEO Brian Moynihan, who before embarking on a career in banking was a high-powered Boston Lawyer. In all seriousness, this legal onslaught is a battle that the company has been at for several years now, as CEO Brian Moynihan has been systematically knocking lawsuits out of the way slowly, steadily, and one at a time.
With all the legal worries soon to be behind them, investors should now be focusing on the many great prospects Bank of America currently has going for them. The two biggest factors that make Bank of America successful are their ability to innovate their products to attract new customers while cutting costs and also their ability to produce strong sales numbers.
BofA’s Impressive Sales Growth
A strong indicator for past and future success for Bank of America has been their impressive sales growth. BofA has increased their sales growth across all segments of their business. In their 2Q earnings report, BofA’s five main operating segments all posted impressive growth rates and earnings. Compare the two figures below to see just how substantial BofA’s sales growth has been:
2nd Quarter of 2013: $1.4 Billion
2nd Quarter of 2012: $184 Million
Bank of America’s 2013 2nd Quarter net income ballooned to $1.4 billion vs $184 million prior year driven by higher net interest and non-interest income. BofA’s net income multiplied 7.6 times in one year, a very impressive figure and a strong indicator for continued future success. What was more impressive was the factthat it was a balanced performance with BofA seeing all five segments of their business improve:
- Retail Banking: Despite banking center consolidation and cost reduction, BofA saw a significant increase on the retail side in deposits, new accounts, plus credit/debit card usage.
- Mortgage/Loans: Real estate services managed to come in with $1 billion in revenue and marks a great improvement over last year’s -$186 million.
- Wealth Management: Revenues in investment management literally skyrocketed 10-fold to $4.5 billion with net income increasing 261% to $758 million. The segment now has a 17% net income-margin.
- Global Investment Banking: Global banking revenues increased to $4.1 billion up from $231 million in the same period last year driven by investment banking activity and loan origination. Global banking now has a 31% net income-margin and is highly profitable.
- Equity Trading: Global markets revenue, driven by equity revenue came in at $4.2 billion and profits at $959 million.
Sales are what drive Bank of America as a company and to see this kind of growth across all segments of their business is very impressive and a bullish indicator for future success.
BofA’s Ability to Innovate
Innovation has always been something that has distinguished Bank of America as a company and made them stand out from their competitors. BofA’s ability to innovate new products, making the lives of their customers easier while cutting costs has been a winning strategy. The newest innovation will be BofA’s ‘Teller Assist‘ ATM machines that will allow customers to do the following:
- Cash checks for the exact amount, including receiving change.
- Receive cash withdrawals in a variety of denominations ($1, $5, $20 & $100).
- Deposit checks with cash back.
- Split a deposit into two or more accounts.
- Make loan or credit card payments.
Bank of America has consistently been making strides to go automated in its entirety, in terms of banking; similar to the way tons of food stores now have implemented self-scan devices for checkout. The more machines in place, the more automation, the fewer tellers needed, the less the bank spends. This has been an initiative that the bank has been working on for the past few years, and I believe that this forward looking “automation innovation” is going to yield the bank tangible results in terms of cost cutting and general efficiency in the future. Katy Knox, Retail Banking and Distribution Executive at Bank of America says it perfectly in the following quote:
“We know that customers want to bank on their schedule – not ours – so we are constantly looking at how to deliver more convenient banking options to them. This technology gives customers easy, convenient access to ATM banking services with the added option of having a personal interaction and the support of a teller available at the push of a button.”
In one new innovation, Bank of America will be simplifying the lives of their customers while cutting costs and saving money in the long-run. It’s a win-win if you ask me and it’s innovations like the Teller Assist ATMs that will lead BofA to prosperity.
BofA’s Stock is Significantly Undervalued
When it comes to valuation, BofA is significantly undervalued compared to its peers as it has a book value discount of 28% and a forward P/E of 10.5. Bank of America trades at the largest discount to book value while Goldman Sachs (NYSE: GS) and Wells Fargo (NYSE: WFC) already manage to trade at a premium. Even though Bank of America had a great Q2 with an EPS estimate beat of 28%, its valuation continues to lack its peers. While the P/B industry average stands at 1.1, Bank of America is comparatively cheap with a near 30% discount from book value and near 10% earnings yield providing investors with a significant margin of safety.
What to Expect from BofA’s 3Q Earnings?
Bank of America surprised everyone with their 2Q earnings, reporting a 70% increase in profits, primarily through cost cutting measures. Overall revenues grew 3.5% however BofA’s stock price and valuation still lag compares to its immediate peers. While reducing uncertainty with respect to book value credibility and legal risks, Bank of America’s valuation remains low and attractive. I also expect that Brian Moynihan will be a man of his word and Bank of America will step up its shareholder remuneration policy with an estimated annualized dividend yield of 2-3% in 2014/15.
I expect BofA to once again beat the analyst’s expectations reporting strong 3Q earnings. BofA has been making strategic cuts to reduce overall costs while increasing revenues & strengthening the core parts of their business. Merrill Lynch continues to be BofA’s most profitable division & expect Merrill’s profits to continue to increase going forward as the two companies become more integrated with one another. Overall, BofA is a great long-term investment and a strong BUY for investors. Those who currently own the stock, simply hold onto your shares and over time watch them grow!
Conclusion: What to Expect from BofA Long-Term?
Investors need to look past the newspaper headlines and short-term outrage against Bank of America and instead analyze the core parts of BofA’s business. Bank of America combines a market-leading, deposit-strong banking franchise with impressive sales and earnings growth, declining/encouraging delinquency and loss trends, and a low valuation. Dividends and share buybacks can further add fantasy to the stock. Under Moynihan’s ‘Project New BAC’, BofA has been able to leave its legal troubles behind and focus on fundamentals and cost cutting. Going forward the company is going to remain a lean and clean sales machine for investors.
Innovation continues to be a strength of BofA as consistently they have been able to innovate their consumer bankingproducts to attract the highest number of customers and in return deposits. Over 50% of Americans currently has some form of relationship with Bank of America whether it’s a checking/savings accounts, credit card, mortgage, auto loan, investments, you name it.
As the economy improves, Bank of America should profit from higher consumer spending and an increased transaction business with a strong possibility to outperform EPS estimates. Fueled by its innovation, future steady dividend and the recovering housing market, I recommend investors to buy BAC. My 12-month price target for Bank of America is $24 per share, a yield of +65%.
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Across the board, 2013 has already been a strong year for oil and natural gas companies and we’re only five months into the year! What we have seen is that many of these oil and natural gas stocks have already made double digit gains on the year alone. This is one of the main reasons we have decided to focus this week on getting you invested in the right energy stocks.
When it comes to energy stocks, all we have been seeing is huge gains across the board and that’s why we believe this is a great time to invest in the energy sector. More importantly, we believe American based energy companies are set to produce some of the biggest returns over the next few years as there is a lot of speculation that we are entering an American Energy Boom that will propel these stocks higher. So here you go, our list of our Top 10 Energy Stocks:
Halliburton (NYSE: HAL) Projections: +57.2%
A little over 19 months ago, we first recommended investors to BUY Halliburton as we saw it as a strong long-term investment. During those long 18 months, we unfortunately have nothing to show for it as shares are now trading at the same levels of where they were when we first initially invested. Our timing for HAL was originally wrong as we invested at the wrong moment as shares fell over 40% in the first 9 months due to falling oil prices and overall weakness in our global economy. Since then however, HAL has recovered quite nicely as shares are up +27% over the past 6 months and up +40% over the course of the past year as share prices are now back to where they were when we first initially invested. Fundamentally we still like Halliburton for all the same reasons, read our original article to find out more details.
Going forward, HAL’s outlook is very bullish with 91% of analysts covering HAL issuing a BUY rating or higher. Overall there are 32 analysts currently covering HAL and all but 3 think it’s a great BUY opportunity. If that doesn’t make you feel comfortable then maybe this will, HAL is represented in the equity portfolio of Soros Fund Management who holds a $34 million stake.
2013 has been a good year for HAL investors for several reasons. For one, HAL’s share price has appreciated +18% year-to-date, secondly in February Halliburton announced a +39% increase in its quarterly dividend to $0.125 per share, and finally in its most recent quarter (Q1 2013), the oil and gas E&P play reported a record $7.0 billion. Halliburton’s management has stated that it’s focused on improving North American margins in the intermediate-term and we have no reason to doubt that they won’t accomplish this goal, as historically they have always been one of the most efficient management teams worldwide. If you’re looking from George Soros point of view, he might see HAL as the best way to play America’s energy boom.
Halliburton’s strength in the tight oil and gas space is underrated. Trading at 10.7 times forward earnings, HAL is cheap especially compared to its peers. Going forward we are very optimistic about HAL’s long-term outlook and believe that the company will continue to outperform against their competition and we believe they will position themselves as the leader of the American energy boom. As a result, we believe shares of HAL will be trading at $65 per-share 12-months from now which included with their annual dividend of 1.20% works out to be a total net yield of +57.2%.
Rex Energy (NYSE: REXX) Projections: +21%
Rex Energy has been a favorite of ours along with being one of our top-performing stock picks for both 2012 and 2013. We first recommended REXX as a strong BUY opportunity around a year ago. In that short time period, shares have soared over +78%. This probably lead to many investors to sell off their whole position thinking that the stock couldn’t rise any higher without however actually reanalyzing the company’s past and future performance, long-term projections, and overall outlook to see if there in fact is more potential still there. We did in fact take the time to reanalyze REXX and what we found was that while it had been a great year there was nothing to suggest that this run would stop or that REXX would lose value going forward. In fact, many key indicators led us to continue to be bullish on REXX. We did however sell half of our position recommending our readers to do the same as in case of a market correction it would protect our portfolio allowing us to play with the houses money rather than still having all our original starting capital at risk. To find out why we like REXX going forward simply click on the LINK below:
Going forward we expect REXX to continue to outperform their peers and have placed a 12-month price target of $20 per share, a total net yield of +21%.
Range Resources (NYSE: RRC) Projections: +27%
Range Resources stock price has steadily climbed throughout the past year as shares are up +21% year-to-date and +38% over the course of the past 12 months. Going forward, there is nothing to doubt that RRC won’t continue to rise higher as the company foresees production to grow between 20% to 25% over the course of the next few years. RRC’s total resource potential is estimated to be anywhere between 50 to 70 trillion cubic feet equivalent of natural gas. Being a low-cost producer, RRC should yield exceptional profits from these upbeat production numbers.
We also believe that RRC’s new strategy and focus on per-share growth instead of focusing on growth at all costs will be a big driving force for the company going forward and we believe it will be a key factor in sending share prices even higher. With increased production and exports expected to continue to grow there is little to suggest that Range Resource’s stock won’t stop continuing to steadily rise higher. In fact, we think RRC will be a big winner going forward and we expect shares prices to hit $95 over the course of the next 12 months, a total yield of +27%.
Southwestern Energy (NYSE: SWN) Projections: +40%
Southwestern Energy has made some key recent capital investments that we believe will only further strengthen the company’s long-term outlook as well as sending share prices significantly higher. SWN recently doubled down on its Marcellus acreage, purchasing 162,000 acres from Chesapeake Energy for $93 million. Being the discoverer of the Marcellus play, SWN made the most of its first-mover advantage as they have continued to improve their operations within the acreage. This strategic investment has greatly strengthened SWN’s overall outlook going forward leading to an increase in their overall projections across the board.
Even as SWN expands, the bulk of their assets are still in the Fayetteville Shale. SWN’s strategic capital investments have been crucial providing the company with a low-cost structure that will help SWN profit even if gas prices were to fall or weaken. Shares of SWN rose +37% over the course of the past year, to many investors that is a great return but when you dig deeper and see the long-term potential you realize that SWN is just getting started. The combination of both SWN’s smart and strategic investments along with their luck in what they discovered has led to increased optimism on SWN’s overall long-term outlook. These findings have also led to many analysts across Wall Street upping their projections adding an additional +30% upside to SWN from current levels. The biggest news of all might be that SWN’s recent acquisitions has led to them becoming a new position in the hedge fund managed by George Soros, the fund disclosed a $16.7 million position in Southwestern Energy.
Following a strong first quarter where SWN posted an annual increase in production of 11% along with earnings of $0.36 per share versus $0.30 EPS just a year ago representing solid growth. Add in the recent developments, acquisitions, and investments and SWN has become a much more interesting play and one that holds a lot more potential and value now going forward. We project shares of SWN to be trading at $52 per-share 12-months from now, a total net yield of +40%.
Ultra Petroleum Corp (NYSE: UPL) Projections: +63%
Just like RRC, Ultra Petroleum is another low-cost producer utilizing a new strategy to increase overall future production. UPL are now using their cost position to focus on profitable growth. UPL has cut back its capital program to make sure they invest within their cash flow. In doing so, they were able to trim off more than a billion dollars from their capital plans for this year alone. Going forward, the company will have the ability to spend more capital as cash flow increases. UPL’s management team has chosen this strategy to keep the business more efficient and cash flow positive. They want to avoid the possibility of any possible cash flow problems going forward and this new strategy will allow for them to stay within their means and only spend what they can afford to.
UPL has robust projections when it comes to future production, as they believe that by 2016 they can grow their production by 42% while their EBITDA will more than double. These conservative projections only assume a minimal rise in natural gas prices, however it’s very likely that the price of natural gas will rise above the $4.50 price that Ultra is modeling it to be by 2016. If this is true and natural gas prices do rise higher, then UPL will easily exceed their projections benefiting the business in many different positive ways. For one, higher natural gas prices will lead to an increase in both total revenue and overall profit for UPL. In turn, this will lead to higher cash flow numbers giving UPL more capital to reinvest back within the business which will only further promote increased growth and production. In turn, all of these added benefits will lead to a stronger long-term outlook for UPL, leading them to beat all future earnings estimates which will only further propel the stock to rise higher and higher.
UPL is already having a strong year in 2013, as share prices are up +28% year-to-date. Going forward, we firmly believe that UPL will be a quick riser and we project shares to be trading at $37 per-share 12 months from now, a total net yield of +63%.
Anadarko Petroleum (NYSE: APC) +33%
Anadarko Petroleum (NYSE: APC) is a large, United States based, crude oil and natural gas exploration and production company. The firm markets, processes, produces, develops, and explores for crude oil, natural gas, and natural gas liquids. Most of Anadarko’s revenues come from onshore United States as well as deep-water operations in Algeria and the Gulf of Mexico. Other deep-water operations include operations along both coasts of Africa, Brazil, China, Indonesia, and New Zealand. Proved oil and gas reserves were 2,560 million barrels of oil equivalent BOE in 2012 with a reserve mix of 46% liquids and 54% natural gas. Last year total production increased 10% and we expect this number to increase going forward as Anadarko plans to spend about $5.5 billion on onshore capital expenditures in the United States in 2013 alone. Due to current low natural gas prices, Anadarko plans to reduce activities at Marcellus and Pinedale/Jonah to free-up resources for more profitable projects.
Last year international production accounted for 27% of total revenues and we expect this number to increase as APC plans to spend $1 billion in capital expenditures on its international operations. In 2012, APC made some significant discoveries of oil in Ghana and natural gas in Mozambique. The natural gas discovery in Mozambique is very large with a base estimated at 35-65 trillion cubic feet equivalent. We think APC is a great value stock especially at its current price. Anadarko is trading at $86.10 per share with a total market cap of more than $43.1 billion. Anadarko has an inexpensive forward earnings multiple of 16.5 times 2013 earnings as well as a PEG ratio of 1.04. APC has strong analyst coverage as well, 90% of the 30 analysts covering the stock have a BUY rating or higher.
APC has the right mix of onshore U.S. developments and foreign exploration projects to continue to thrive and produce great revenue numbers going forward. New discoveries such as the recent APC findings in the Gulf of Mexico and in Mozambique should be very profitable in the long run. Another strength about APC is despite natural gas prices being really low, they have continued to remain profitable despite the fact they are a major natural gas producer. This is why APC will be such a big winner if natural gas prices increase. APC is a great oil play to own and the added benefit of having exposure to natural gas markets is a huge bonus. We believe natural gas prices have bottomed and will inevitably rise. The consensus on Wall Street among analysts is the same. When that does happen, Natural Gas producers like APC will reap large profits. For all these reasons mentioned above, we believe APC is a great BUY opportunity. The current average 12-month price target for APC is $110, we believe in 12-months APC will be trading at $115, a 33% total yield!
Apache (NYSE: APA) +37%
Apache is an oil & gas company operating in several countries including the U.S., Canada, the U.K North Sea, Argentina, Australia, and Egypt. At the end of 2012, it had around 2.85 billion BOE in proved reserves, concentrated in the U.S. and Canada. The proved reserves and the Permian/Central Resources total around 11.7 billion BOE, four times higher than the current proved reserves. The U.S. Permian Basin accounted for around 28% of the company’s total reserves. The company is considered the most active driller in the Permian Basin with around 38 operating rigs.
What makes me interested in Apache is its conservative capital structure. As of March 2013, it had nearly $32 billion in equity, $248 million in cash, and only $11.5 billion in long-term debt. Moreover, Apache is a consistent dividend payer. Its dividend increased from $0.21 per share in 2003 to $0.66 per share in 2012. For the full year 2013, Apache expects to push its costs down, increase its dividend, and restructure its asset portfolio. The company expects to divest $4 billion in assets, and then it would use $2 billion to reduce its debt level and the remaining amount to repurchase 30 million shares. APA currently has a great revenue numbers and management has shown its effectiveness as they have produced great ROE & ROA numbers. Apache is trading at $84.90 per share with a total market of nearly $33.3 billion. The market values Apache at only 9.5 times its forward earnings.
While the markets and competing oil stocks have had a great year so far with S&P up 15%, APA on the other hand has been sluggish appreciating only 8%. Despite this, APA is held by many famous investors, most importantly oil guru, T. Boone Pickens as APA accounts for 9.5% of Pickens portfolio, his second largest position. Compared to peers Anadarko Petroleum (NYSE: APC) and ExxonMobil (NYSE: XOM), Apache is valued the cheapest. As a result, investors should invest in APA due to its lowest earnings valuation, strong balance sheet, and the potential asset sales. If it could divest $4 billion in assets this year, Apache could drive its EPS higher, thanks to the potential share repurchases and debt reduction. Analysts across Wall Street agree that APA is undervalued with an average 12-month price target of $110. We believe Apache will be trading at $117 in 12-months, a yield of 36%. Add on a 0.90% dividend and you have a total yield of 36.90%!
Eni SpA (NYSE: E) +26%
Eni SpA (NYSE: E), an integrated energy company, engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. Eni SpA has a market cap of $84.9 billion and is part of the energy industry. Year-to-date E is down 8%, opening up a buy opportunity for many investors. We consider Eni SpA to be a great BUY opportunity. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels.
We feel these strengths outweigh the fact that the company shows weak operating cash flow. Revenue growth has been a strength for E as they greatly exceeded the industry average of 6.9%. On top of that, revenues rose by 42.8% over the past year. Growth in the company’s revenue appears to have helped boost the earnings per share. We expect this kind of earnings growth to continue propelling ENI SPA and sending the stock price higher. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 65.5% when compared to the same quarter one-year prior, rising from $1,972.25 million to $3,264.41 million.
The company has come along ways in a year. Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market’s overall trend during that period and the fact that the company’s earnings growth has been robust. While ENI SPA doesn’t receive much analyst coverage with only 3 analysts covering the stock (1 Strong Buy, 1 Buy, 1 Hold) that doesn’t mean it’s not a great investment opportunity. The fact it is relatively unknown adds to more potential as if they continue to increase earnings year after year they will soon get recognized and soar significantly higher as a result. ENI SPA is also a great dividend play with a dividend yield of 5.20%. Overall, we believe ENI SPA is a great long-term BUY opportunity and have a 12-month price target of $65 per share, a yield of 21%. Add to that a dividend of 5.20% and you have a total yield of 26.20%
Chevron (NYSE: CVX) +23%
Chevron is the second largest U.S. integrated energy company. For investors who like strong growth, dividend stocks then Chevron is the right pick for you. CVX has been an avid dividend grower for decades, with an average annualized dividend growth of 9.1% over the past five years. Its dividend growth rate over that period was lower than its EPS growth rate, which stood at 13.7%, on average. Among its main competitors, CVX has had the highest rate of dividend growth since 2004. Even though the company is expected to post a paltry EPS CAGR of less than 1% for the next five years on average, its solid cash flow generation will likely support continued dividend increases. Chevron explicitly states that one of its consistent financial priorities is to “maintain and grow dividend.”
CVX has a strong balance sheet, with $17.3 billion in cash and only $12.1 billion in long-term debt. Its long-term debt is only 8.6% of its stockholders’ equity. CVX has the highest profitability per barrel among its peers and the highest cumulative cash flow per share expansion over the past five years. Thus, its case is supported by leading earnings and cash margins, strongest future volume growth among its main peers, and solid shareholder value enhancement potential.
It should be noted that the company is known for its generous share buyback programs – it returned $5 billion in share repurchases last year alone. Chevron is currently covered by 25 analysts, of which 67% hold a BUY rating or higher. We are among the group that believes CVX is a great buy opportunity and we hold a 12-month price target of $145, a yield of 20%. Add to that Chevron’s 3.20% dividend and CVX is set to return a 23.20% annual return.
Total SA (NASDAQ: TOT) +45%
Total SA is the main French integrated oil company, operating worldwide and employing more than 95,000 people worldwide. The company deals with all aspects of the oil & gas chain, from exploration to production, refining, transportation and marketing. Total keeps announcing new oil discoveries, a growing production and improving results and dividends. Moreover, the French company’s strategy is now to focus on exploration and invest in riskier/growing sectors such as shale gas in the U.S. or bituminous sand in Canada. Total has been ramping up its efforts to rejoin the big boys of the oil and gas sector. The company has achieved a strong production base in Africa, and for the next three years, it is striving to capitalize in the Middle East as well by building a $1.5 billion condensate refinery in Qatar.
Total SA is currently undergoing several other projects to position itself as one of the most competitive in the industry along with the goal of increasing its profits and market share. These, in turn, will more likely improve the market share of the company and its stock price. The P/E ratio of the company stands at ’10.17’, which shows that the stock price is equally valued. On the other hand, P/B indicates that the stock price is discounted relative to the industry average of ‘2.49’, making it attractive to investors. Price to Earnings per Growth indicates the Total is currently trading at a premium as compared to the industry average. However, it is trading at a discount compared to major players in the industry. Other major reasons to buy Total are, for one they are the leaders in the oil & gas sector and invest massively in exploration. The company just got several licenses in the new potential Artic fields. Total is also investing in the solar and biomass energies, which should drive the revenues at long term. Total’s objective is to invest $22 Billion annually between 2012 and 2014 while selling off $20 Billion of assets by 2014. TOT also offers a great dividend yield of more than 4.5% right now, which has kept growing over the years. Total developed a good payout ratio of 45% in 2011 as well as a strong link with its investors over the years.
Overall we believe TOTAL SA is a great BUY opportunity based on their attractive valuation level as seen in its P/E which is well discounted in comparison to the industry average. On top of that, the company shows outstanding financial performance as seen in its high earnings yield and high revenue growth. The future outlook of the company looks promising as it continuously embarks on several modernization and innovative projects such as the Antwerp refining and Port Arthur shale gas which can boost its profit and position the company as one of the most competitive company in the industry. Our 12-month price target for TOT is $72 per share, a yield of 40%. Add on a 4.5% dividend and you have a total net yield of 44.5%.
There is no meaningful difference between the schemes adopted by Bernie Madoff and our Social Security system. Madoff did to his investors what the government has been doing to wage earners for over 60 years with Social Security.
Why did Bernie Madoff go to prison? He persuaded people to invest with him, but he didn’t invest their money. As Madoff built his portfolio over time, he simply took the money from the new investors to pay off the old investors. Eventually, there were too many old investors and not enough money from new investors coming in to keep the payments going. Madoff’s scam was finally debunked; he went to jail and became one of the most hated men in America.
Soooo…. there is fundamentally no difference between Social Security and Bernie Madoff’s scam – except that one was operated by a private individual who is now in jail and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions. Here’s a nifty little chart with a side-by-side comparison.
|BERNIE MADOFF||SOCIAL SECURITY|
|Takes money from investors with promise money will be invested & made available to them later.||Takes money from wage earners with promise money will be invested in a “Trust Fund” & made available later.|
|Instead of investing money Madoff spends it on yachts & nice homes in the Hamptons.||Instead of depositing money in a Trust Fund, politicians use it for general spending & vote buying.|
|When the time comes to pay investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.||When benefits for older investors become due the politicians pay them with money taken from younger & newer wage earners to pay the geezers.|
|When Madoff’s scheme is revealed, all hell breaks loose. New investors won’t give him more cash.||When Social Security runs out of money, they simply force taxpayers to send them some more.|
|Bernie Madoff is in jail.||Politicians remain in Washington.|
Shares of the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR) has soared throughout 2013 and has even hit its 52-week highs trading at $77.38. Turkey as a whole has been experiencing robust growth as the Borsa Istanbul National 100 has surged to its highest levels in the past 25 years. We have been huge supporters of TUR dating back to August 8th, 2011 when we issued our first ‘BUY’ rating for the ETF in our article ‘iShares Turkey ETF (TUR) Poised for Success‘. Since then, TUR has appreciated +69.67% over the past 22 months.
What Attracts Investors to TUR
Investors looking to play the Turkish markets have few options. iShares MSCI Turkey Investable Market ETF (TUR) originally launched in 2008 is the only option available to investors seeking a pure play exposure in the Turkish equity space. TUR is also the only ETF with dedicated Turkish exposure. The banking sector also plays a prominent role in the investable market in Turkey and TUR has a high concentration of financials in its portfolio.
What To Expect Going Forward
When it comes to Turkey, it has been the talk of a higher sovereign debt rating that has been lifting TUR, the lone ETF devoted exclusively to the country. Turkey, which has been engaged in a multi-decade conflict with Kurdish militants in the Southeast part of the country, is working to end the conflict. The government there is in negotiations with Abdullah Ocalan, the jailed leader of the Kurdistan Workers’ Party or PKK, in a bid to end the bloodshed.
Just last month, Moody’s Investors reported that Turkey’s ongoing efforts to bring an end to the conflict could be a positive credit step. Fitch Ratings upgraded Turkey’s long-term foreign currency Issuer Default Rating (IDR) to BBB- from BB+ back in November and the Long-term local currency IDR to BBB from BB, this is huge news as it’s giving Turkey its first investment grade ratings in nearly two DECADES.
This has been great news for investors as the speculation of a possible credit rating upgrade has lifted Turkish banks shares. TUR is heavily centered on the Turkish financial sector with 51.9% of its holdings in financial services stocks, quadruple its next largest sector weight, industrials.
Turkey’s economy has some good signs heading their way. Beyond this falling inflation rate, investors should note that Turkey has seen a plunging growth rate as well.
Turkey has good medium-term growth prospects and a diverse economy. The nation’s debt-to-GDP ratio stands at 39.9%, much lower than the debt-to-GDP ratio of many developed economies. On top of this, the country has a low employment rate, government reforms, strong, solid banking system, and improved credit rating. Adding all these solid growth factors together and Turkey could prove to be a great investment market in Europe for years to come.
If you have any further questions on either TUR, Turkey’s economy or any investment at all don’t hesitatet to contact us at all by emailing us at jameshartje@StocksonWallStreet.com or Follow our Contact Form
Also make sure to tune in later this week for our long-term outlook on TUR along with more detailed analysis on both Turkey and other emerging markets.
Everyone make sure to tune into ABC tomorrow night at 8:00 PM to watch a new episode of their hit show, Shark Tank. For those of you who’ve never see the show, your missing out. Shark Tank is where five successful entrepreneurs fight over promising startups, and ruthlessly chew up the unprepared or those who aren’t business minded. Anyone who is interested in the world of business, venture capital, or money will love this show. It provides a wealth of knowledge about what venture capitalists need to hear before they invest in your company. Plus the fighting between the sharks alone is as great as entertainment can come. The key to being successful when you come into the shark tank is as easy as three steps:
- Have a great idea that either makes money or has potential to.
- Be prepared, from top to bottom know the in’s and out’s of your business and have everything to present to wow the sharks. Being unprepared, stuttering, or having any mix-ups will get you eaten alive through harsh criticism and ruthless comments and leave you empty handed.
- Have the X-Factor, something to wow the Sharks and get them opening their checkbooks to get a part of your business. If you nail the presentation and wow the Sharks your financial worries will be all over as you’ll have every Shark their willing to not only give you and your business the money needed to grow and expand but they will provide you with the necessary resources and contacts to take your business to the next level.
Like the business world, things can get quite ruthless in the Shark Tank and there is no holding back. It’s what makes the show such a hit and so entertaining the constant battling not only between the entrepreneurs and the sharks but the sharks themselves. Before we get into the many great business lessons you can learn from the show we first have to let you in on who the five sharks are that you will be presenting to, ranked from net-worth:
Mark Cuban, Net Worth $2.3 Billion: You might all know Mark Cuban as the flamboyant, outspoken owner of the Dallas Mavericks. You see all these great qualities in full effect during Shark Tank where Cuban constantly battles Kevin O’Leary as the most critical and harsh of the all Sharks. Cuban started out his career by launching a company, MicroSolutions, which was a system integrator and software reseller. He sold it to H&R Block for $6 million and used this seed capital to launch his next venture, Broadcast.com an online sports webcasting company. He capitalized by selling Broadcast during the dot come boom to Yahoo for $5.9 billion. Since then along with running the Dallas Mavericks and being a prominent figure on Shark Tank, Cuban runs his own investment company and has become a rather outspoken, popular media mogul.
Kevin O’Leary, Net Worth $300 Million: Kevin like Cuban is by far one of the most entertaining of the bunch. It’s because his ruthless behavior and no limits deliver great punch lines, sometimes they can be quite mean, as he doesn’t hold back. While some people might be offended others find it hysterical as if you like Simon Cowell from American Idol and the X-Factor and his harsh criticism then you will love Kevin, as it’s hard to imagine but he’s even more ruthless than Simon. The guy only cares about one thing and that’s making money. If you have a great idea then he’ll be your best friend but if you stutter or goof up at all during your presentation be ready for his ruthless comments. O’Leary has had a successful business career making the majority of his wealth by creating an education software program that he sold to Mattel for $3.8 billion. Since then along with his duties on Shark Tank and being a venture capitalist he runs O’Leary Funds, a mutual fund company that targets buy and hold investors.
Robert Herjavec, Net Worth $100 Million: Robert is the kindest of all the male Sharks however he can dish out criticism from time to time. A software guy himself he founded an Internet security company that he later sold to Nokia for $225 million. He currently is CEO of Herjacveck Group, a security software program he founded in 2003 along with being a venture capitalist through his Shark Tank duties.
Daymond John, Net Worth $100 Million: The original founder of the popular clothing line, FUBU. John is a true story of rags to riches as he use to sew and make his clothes himself in his mothers basement making $800 a day until he and his mother mortgaged their house for $100,000 to generate startup capital. Well this great risk paid off, as FUBU has become a prominent global clothing brand that at its peak has generated over $400 million in revenue in a single year. Along with being current CEO & President of Fubu, John is an active venture capitalist, which is why he has been a great addition to the show. While critical he is very articulate and educated when it comes to giving advice and voicing his opinion.
Barbara Corcoran, Net Worth $50 Million: Barbara is a real estate mogul and has been doing it for quite some time. She originally founded her company, The Corcoran Group, in 1973 with the help of her wealthy boyfriend, who fronted her the original loan. After having a successful career she sold her company for $66 million in 2003 and now along with being an investor on Shark Tank she has become a motivational speaker, author, and popular television personality. Considered the nicest of the bunch also being the only woman, Barbara often sides with female entrepreneurs and gangs up against the men calling them ruthless pigs. However don’t let her pretty face fool you, she can get down and dirty and be just as ruthless as the boys at times.
So now you know who the Sharks are make sure to tune into ABC every Friday at 8:00 PM to watch the show!
Becoming a success investor is not rocket science but it does take some intelligence along with setting out a plan of action. Below are Five of Stocks on Wall Street’s Rules to Becoming a Successful Investor:
1. Invest without emotions. Use your head not your heart. Emotions get in the way of logic, make a plan that will let you be accountable and disciplined. Don’t get overcomplicated with your plan either. It can be a simple trading strategy with simple rules. Like Warren Buffet always has said, “you don’t need to be a genius to make good money investing.”
2. Don’t set your expectations too high, be realistic. Don’t expect to make $1,000 off a $2,500 investment in six months time. While it is always doable, don’t count on it. Set realistic expectations and then be happy when you exceed them.
3. Don’t think a trade is always going to recover; sometimes it’s the smarter move to take a small loss now instead of taking a large loss later.
4. Don’t always think a good company is going to make you good money. You make money from the company’s performance. Sometimes good companies will struggle and the stock can go down whereas sometimes-bad companies stocks will soar.
5. End of day do your own research and be comfortable with the trade before you make it. Don’t make a trade solely on what someone else says, do your own analysis and if you agree with their investment idea then be confident and make the trade.
We are always hear to help you with any of your investment questions or needs. Two programs we now offer are Free Portfolio Reviews where we will overlook your investments, let you know what we think about each position, inform you on whether or not you have a balanced portfolio, & give you a detailed report on our findings.
Also if you don’t invest at all we do comprehensive Free Brokerage Account Setup’s where we will get you setup with the right brokerage account that fits your personal financial needs along with giving you an investment plan to help you reach financial freedom.
Want to be a successful businessman? Want to rule an industry? Want to be hated because you’re the best at what you do? Well if you wish for any of these, then just mimic everything Ari Gold does. For those of you who’ve never watched HBO’s proclaimed comedy ‘Entourage’ then you are sure missing out. In the show, one of the stars is Ari Gold, the star-studded agent and ruthless negotiator. You’ll quickly learn that the tactics that make Ari Gold so great at his job are the same tactics that make everyone else hate him. This is why we love Ari Gold and why we believe he has the characteristics, behavior, attitude, and tools to succeed in any industry:
1. His swag, his style. His quick twitch, ADD behavior which is a wrecking ball to anyone who gets in his way. He never takes NO as an answer.
2. Ari Gold may be considered an a**hole to many, but results don’t lie and that’s something everyone needs to learn in life. The key in life is to get the job done. If your boss asks you to do something, do anything to get it done. Of course follow some form of moral/ethical code as we don’t want to create another Bernie Madoff here but beside the point, always get the job done. If you can get the job done & produce results you’ll have a job forever!
3. Ari Gold knows how to work the system. Never cheat the system, just use it to your advantage. It’s not lying if you don’t tell them the full extent of the truth. Find out the information you want to know first then let them in. Always leverage everything you have, even if it’s very little. Find flaws in the system and take advantage and capitalize on them.
4. Ari Gold is scared of no one, no opportunity, no challenge. In many cases throughout the life, take the path less traveled. Don’t be scared to take risks, as it’s those risks that will pay off the biggest rewards and if you do fail then it’s just another learning opportunity and a step towards success. Remember, you miss 100% of the shots you don’t take.
5. Ari Gold knows how to convince anyone in any situation. Learning to convince people to side with you, take a chance in you, believe in you is the key in life. If you can convince one person, you can convince the world.
6. Ari Gold has a compassionate side and knows the importance of friendship & relationships. Throughout the series you will see the bond that grows between Vince and Ari. Never burn bridges that hold you up. There is no satisfaction in success if there is no one to share it with.
Recently we were thinking about movies with some kind of financial lesson. The financial side of making films has always intrigued us. Historically the Oscars have always been proof that the biggest budget doesn’t always give the best ROI. In 2010, the lowest grossing Oscar winning film in history – The Hurt Locker – beat out the highest grossing picture in history – Avatar.
Here’s my list of the top 10 movies ever made that have a financial lesson inside of them.
1. Boiler Room (2000) – A college dropout gets a job and enjoys fast success at a brokerage house selling phony stock. However, the job turns out not be as legit as it sounds. This film is mix of Wall Street and Glengarry Glen Ross thrown in. Although there’s no character here that can compare to Michael Douglas’ Gordon Gekko.
Lesson: Great morality lesson dealing with the desire to get rich quick, regardless of the consequences.
2. Wall Street (1987) – “Greed, for lack of a better word, is good”. This line by ruthless corporate raider, Gordon Gekko, summed up the business ethics of the 1980s, when greed, corruption and the predatory nature of the financial world was at its most conspicuous. The film charts the ascent of a young, ambitious stockbroker who’s taken under Gekko’s wing and struggles with whether it’s better to have money or integrity. Gekko is the embodiment of corporate malfeasance, but also portrayed as a business guru. His glamor and power probably inspired a lot of young men to enter investment banking over the last two decades. As Gekko said, “It’s all about bucks, kid. The rest is conversation.”
Lesson: Greed is good. What’s worth doing is worth doing for money. Lunch is for wimps. If you need a friend, buy a dog. So goes the wisdom of Gordon Gekko, ruthless investor, legendary financier – and the star of one of the best movies ever made about money. This film also provides a great backdrop to the landscape that led to the financial crisis of 2008.
3. Glengarry Glen Ross (1992) – Times are tough. This is the ultimate real estate high pressure sales environment film where making money is the bottom line. A desperate group of Chicago investment property real estate salesmen suffer in a down market, a sales contest is launched and anyone who fails loses his job.
Now that the property bubble has burst, some real estate offices may soon seem a little bit more “Glengarry”. There’s no room for losers, only ‘closers’ will get the good sales leads. Some regarded this film as a critique of the impact of Reaganomics.
Lesson: Too much pressure to succeed can boil over into tragedy with unforeseen consequences.
With the upcoming premiere of the film “Wall Street – Money Never Sleeps” it got me thinking about movies with some kind of financial lesson. The financial side of making filmshasalways intrigued me. This year’s Oscars were yet again proof that the biggest budget doesn’t always give the best ROI. In 2010, the lowest grossing Oscar winning film in history – The Hurt Locker – beat out the highest grossing picture in history – Avatar.
Here’s my list of the top 10 movies ever made that have a financial lesson inside of them.
4. Maxed Out. Hard times. Easy Credit. The Era of Predatory Lending (2006) – This documentary shows how the modern financial industry really works. It explores America’s love with credit and leveraged debt and tells us why the poor are getting poorer and the rich getting richer. When Hurricane Katrina ravaged America’s coast, it revealed that America was far from the world’s wealthiest nation. It also highlighted America’s crumbling beneath a staggering burden of individual and government debt. Maxed Out shows how predatory lending was out of control, including credit cards pumped to college kids who had no income. This is a great movie. It’ll make you feel different about your money.
Lesson: It delivers a great lesson on how to borrow and shows why you don’t want to live on credit. Credit is the devil. Do you know anyone who got into trouble because they didn’t borrow too much money? Maxed Out paints a picture of a national nightmare which is all too real for most of us – out of control spending and an irrational use of credit.
5. Enron: The Smartest Guys in the Room (2005) – Before Bernie Madoff, there were Ken Lay and Jeff Skilling who ran the Houston energy firm that was going to reinvent how energy was going to be done in America. Enron was highly profitable, had a great amount of cash flow and earnings and the stock price soared. Its executives cashed out options worth millions and told employees their best 401K option was Enron stock. Thousands lost all their retirement savings because they put all their bets on one company. Took Enron 16 yrs to from 10b assets to 65b assets, but it took them 24 days to go bankrupt. It won the Academy Award for best documentary.
Lessons: Have a financial plan, have a discipline. If you have a stock that looks too good to be true and it just keeps going up, up, up, it’s probably too good to be true. Diversify, Diversify, Diversify. Don’t put all your eggs into one basket.
6. Working Girl (1988) – Melanie Griffith plays Tess McGill. Endearing 80s film. Ultimately she takes a job as a secretary but she wants to rise in investment world. Wants to rise to power, combines her business degree from night school w/ her street smart acumen & pulls of a mega-merger. Total fantasy. Prince charming happy ending w/ Harrison Ford. “I have a head for business and a body for sex.”, says Melanie Griffith’s character. Go back to night school, go back & get a degree. Go get educated, you’ll get leverage. No one can take your education away from you.
Lessons: Your education, your smarts can’t be wiped out in a recession. Your earning power is rooted in your skills, in your education. Provides an entertaining reminder that if you have something to offer your co. & they don’t seem too interested, then take your skills elsewhere. If you are a super powerful earner at one job, you can make yourself a super powerful earner anywhere.
7. Treasure of the Sierra Madre. 1948. Classic western cautionary tale about how not to launch a venture. If you took everything that Howard Dobbs & Kutan did in this movie: “Get rich quickly without a credible business plan.” “Badges, we don’t need no stinking badges.” Don’t swing blindly, don’t come up w/ a get rich quick scheme, don’t do a pyramid scheme, don’t sell products from your house to your friends or recruit your friends.
Lesson: In life, as in baseball, you’re gonna strike out. You don’t want to strike out blindly while your pursuing a huge home run. You gotta know your business, know your partners, know where you are in all of this.
8. Mr. Blanding Builds His Dream House (1948) – Was remade into The Money Pit, starring Tom Hanks & Shelly Long. Owning a home ain’t cheap. It can turn into a massively expensive ordeal. Home is really a money pit. Owning a home comes w/ a lot of responsibility, gotta have credit, gotta have a down payment, pay your bills, maintain the home, gotta know the risks up front. It’s expensive. You gotta know the worse case scenarios, all the risks, the downside.
Lesson: Shows how the American dream of owning a home can go terribly wrong. Home ownership is not for everybody and shouldn’t be promoted as such by the government.
9. Confessions Of A Shopaholic (2009) – About a chic who’s struggling with a debilitating obsession with shopping and has 12 maxed out credit cards. She unintentionally lands a job as a financial journalist and falls for a wealthy entrepreneur. Don’t buy a $400 watch because it quickly depreciates to nothing. I will buy a $4,000 Rolex – nothing less than a Rolex — because it can still be sold 10 yrs after you buy it for what you paid for it. You use credit to buy things of value: an education, a car to get you to work, (I prefer to buy 2-yr old used cars because it loses half its value up front when you drive it off the lot, but you can still get 50-60,000 miles out of it.)
Lesson: Only use credit for things that have value. Pay cash for everything else.
10. Brewster’s Millions (1985) – The ultimate spending spree is something that most of us have daydreamt about at some time. A minor league baseball player, Montgomery Brewster, (Richard Pryor) has to waste $30m in 30s days in order to inherit $300m; however, he’s not allowed to tell anyone about the $300m deal.
Lesson: How corruptible too much money can be and how difficult it can be to use it responsibly.